Introduction To Six Sigma

The Second step of DMAIC – Measure

Thursday, November 5th, 2009

Measure is the second step of the Six Sigma five step process DMAIC. The objectives of Measure are two fold. First is, using GEMBA, factually understand the existing process. For those that have not heard of GEMBA it means “go see” and in Six Sigma we use the term to imply that you need to get up and go out to the process that you are going to improve and actually “see” what is really happening. You can NOT do this is a conference room or at your desk alone. The process may in fact be all done at your desk but you need to have other with you looking at what is done to collect the actual way things are done. Second, you then compile that data into a characterization of the current state. Many times you will hear this called the process Baseline.

In measure it is important that you capture exactly what is really happening and do not take for granted that everything is being done exactly to procedure. It usually is not. If more than one person is doing this process check them all as you will find they all are doing it slightly different. Different is not necessarily bad but that difference IS the variation in your process. So to help me (and you) capture the current state I have a series of questions that if you address them will help insure you complete this step. Here they are:

1. How does it work now?
2. What are the Key metrics for this process? Are they valid?
3. What is the Current Sigma level of the process?
4. What are the Detail steps of the process?
5. What is good about the process you want to keep?
6. What are the problems and their causes?

It is very important that you get all of these answered. Some that stand out are identifying key metrics and identifying what is good about the process. You need to always look and find out how the process is currently being measured. How does any one know that things are going good or bad with this process? They have to have some “measure” they take to get that idea. Yes sometimes it is a gut feel but you will have to back it up with data so if they say it takes to long; time it and see how long it takes. The second key question that many forget is what works well in the process. This is key because you want to make sure that when you improve the bad you have not made things worse in the good areas. Those you do not want to touch.

To answer the question above it may take several tools and techniques to collect the “facts and data” to answer these questions. We like opinions, they help guide us, but we need data that validates the opinions. So in answering these questions many times you will get opinions but you still need to gather the data to show the opinion is true (or false). So here in Measure, there are several good tool and techniques that can help get you that data.

Descriptive Statistics –These are generally calculated from a sample of information (data) off your process. They tend to be in three areas of interest about your data group (distribution). They are location, it’s spread and it’s shape.

Location _______Spread ________Shape

Location or Central Tendencies – These are the mean (average), Median (or middle value) and the Mode (the most frequent value).

Spread or Dispersion – The most popular are Range (The difference or spread between the highest value and the lowest value) or the Standard Deviation a calculated measure of variation around the Mean or Average.

Shape – Two things determine shape. One is it Skewed to one side or the other (you can calculate this) and two is it flat or peaked (again you can calculate this [kurtosis])

Dot Plots – Are just that a plot of every data point on a chart.

Histograms – These are a pictorial of the data. They are created by grouping the data into what is called bins or cells.

Run Charts – Similar to the dot chart, the run chart plot the data over time, in time sequence.

Control Charts – Like the Run Charts, Control Charts plot data over time. Unlike Run Charts they have control limits plotted on the chart as well. Although you can plot individual data points like the one below, a control chart many time plots Summary data over time.

Gauge R&R (Repeatability & Reproducibility) – These studies are important to understanding how much of the variation that you see is due to the process and how much is do to the measurement system (the way the measurements are taken). Many times this is overlooked but you have to understand that everything varies including the way you measure (collect) your data.
Pareto Charts – This is a special type of Histogram that arranges the Bins or Cells (categories) into an order of highest frequency to the lowest. This is done so one can see what the major categories are.

Process Observation Log – This is just a log sheet that you list the process steps in order, how long they take and what the yield is at each step. Sometimes people include a column that identifies the step as value added or Non value added.
Process Flow Diagramming – This is a diagram draw to show the sequence of steps from the process observation log. People draw these because it is easier to understand and see what is happening in the diagram then the log list.

DE & UDE – DE (Desired Effect and Undesired Effect) is just a list of those things that are desirable (things you want to keep) and undesirable (things you do not want). This seems simple, and it is, but we forget to write these things down so that when we get into the heat of things we can not remember them unless they are written down.

Plus here are two more that I talked about in Define: Brainstorming and the 5 Whys.

Well there you have it. A little more understanding of the Measure step of the Six Sigma 5 step DMAIC process.

Peter Bersbach

Six Sigma Master Black Belt

Bersbach Consulting

From Process to Profits

1.520.829.0090

Tags: DMAIC, DMAIC Measure
Posted in Introduction to Six Sigma, Six Sigma Tools | 1 Comment »

The First Step of DMAIC – Define

Tuesday, October 27th, 2009

DMAIC – Define

Define is the first step of the Six Sigma five step process DMAIC. The objectives of Define are two fold. First is to define the issue (problem) and the real need to improve it (The Burning Platform). Second is to then get alignment and commitment to solve this issue from the sponsor and project team (including their supervision). Define is one of the critical steps of this five step process. Many times, we do not gather enough of the right information to properly define the issue we are trying to solve. So to help me (and you) I have a series of questions that if you address them will help insure you complete this critical step. Here they are:

1. What is the Burning Platform? Why do you need to do this NOW?
2. What company goal does this support and what is its priority?
3. What is the Top level process flow?
4. Who are its – Suppliers and their inputs & Customers and what outputs do they receive?
5. What is your vision of the future?
6. What are you trying to accomplish and the process needing improvement?
7. What benefits will the organization realize?
8. Whom & what do you need to accomplish this project?
9. What is the expected outcome of the project (quantified goals / objectives)?

10. How do you know you are done (exit criteria)?

11. Who are the committed/aligned team members?

It is very important that you get all of these answered. Some that stand out are alignment to company goals and having a good vision of the future. Goal alignment is critical if you want your team to stay together and finish the project. If your project is not aligned you can bet team member supervisors will have other priorities that, in their mine, are higher than the ones for your project and will pull team members to work their priorities. Every project needs a good vision so the whole team will know where they are headed with the project. That increases the team alignment.

To answer the question above it may take several tools and techniques to collect the “facts and data” to answer these questions. Remember that in Six Sigma we like opinions, they help guide us, but we need data that validates the opinions. So in answering these questions many times you will get opinions but you still need to gather the data to show the opinion is true (or false). So here in define, there are several good tool and techniques that can help get you that data.

SIPOC – Stands for Supplier, Input, Process, Output, and Customer. It is a very top level process flow of the process you are trying to improve, but it includes more than just the process flow. It has inputs to the process and who supplies those inputs. Plus it also has the output of the process with who (customer) will receive the output.

GEMBA – Is just a Japanese term for “Go See” and here we use it to remind us to get out to the area where the process is working and really watch and see how it works. Nothing can be solved in a conference room or sitting at a desk.

Creative Thinking/ Brainstorming – This is just a method for coming up with as many ideas as one can conceive of. They can be wild and crazy ideas because in them, just like the ore in mines, we will find the golden nuggets.

LCS – Stands for Likes Concerns and Suggestions. This is one of the best and simple tools I have ever used. In any meeting (or even conversation), if all parties follow LCS you will eliminate divergence and create alignment in the discussion. Here how it works. There are three basic rules that anyone in the group must follow to comment on another person’s statement.
First, you must states something you like about what the person said. This tells them you understood what they said and gets alignment and agreement on what you liked.
Second (NOTE!!! you can only do this second step if you also have the third in mind otherwise you must stop on the fist step only!!!) Tell them you concerns about what they said.
Third, you must always follow your concerns with your own suggestions for correcting your concerns.

This really gets folks moving forward on issues they disagree on as we build ways around the disagreement through suggestions.

Affinity Diagramming – usually follows brainstorming where you have all those wild and crazy ideas. Now we take them all and group them into area of similarities. This helps see those nuggets I was talking about before. A lot of times, I use post it notes in brainstorming so I can easily move them around and place in groups that are similar. It helps and gets everyone on there feet moving around.

Multi-Voting – is a method of deciding or prioritizing ideas or tasks. The basic rule here is to give everyone an amount of votes (usually it is 20% of the number of ideas or tasks that you are trying to work) and let them vote on the ones they like best. Right away, you will see certain ones are more important than others to the group.

5 Whys – This gets us back to our childhood a bit but to get at the true root of something many times we have to ask why several times. It is simple but true. If we don’t ask “why” enough times we may not get to the bottom of the issue. But you will know when it is too many when you get there. Usually it is about 5 times.

Well there you have it. A little more understanding of the define step of the Six Sigma 5 step DMAIC process.

Peter Bersbach

Six Sigma Master Black Belt

Bersbach Consulting

From Process to Profits

1.520.829.0090

Tags: DMAIC, Method, Need
Posted in Introduction to Six Sigma, Six Sigma Tools | 4 Comments »

The Roadmap to a Successful Six Sigma Project

Thursday, October 8th, 2009

There are a lot of reasons that Six Sigma projects fail but they do not have to IF you can stick to the roadmap. I have done lots of projects most very successful but some have failed. In every case we stepped off of the tried and true path to success, the DMAIC roadmap. As simple and easy as these five steps seem to be, you will many times find them difficult to complete. But if that is happening, my advice to you is to “stay on the path”. Don’t skip a single step. If you stay on the path, you will find success.

DMAIC The five step process

So what are the five steps of this DMAIC roadmap? They are Define the issue, Measure the current state, Analyze and identify opportunities, Improve by implementing the best opportunities, and Control the new process to maintain the gains. You start every project at Define working your way through each step until you have put in place Controls to maintain your gains. What many of us do without thinking is we see a problem (Define)and go solve (improve) it. Most of the times you will find that within a year or maybe even a month or week the problem is back. What went wrong? We missed the other steps of the DMAIC roadmap. So let me spend some time talking about each step.

D – Define

The objective of Define is to define the issue (problem) and the real NEED to improve it. I call this need “the burning platform”. It can not be a nice thing to do, it has to be something that will have an impact on the bottom line of the company.

The second part of the define objective is to get alignment and commitment to solve this issue from the project sponsor and the project team. It also includes the team member’s supervision. We need them committed so they will not pull the team member for priorities lower than this project.

M – Measure

The objective of Measure is to go as a team, to where this process is physically and factually understand the existing process. This means collect facts and data not opinions. Everyone has an opinion but few have the facts to back up the opinion. I am not discounting opinions because most folks down in the trenches (and that is where you have to go) are the experts and have excellent idea of what is happening. The thing they lack is the data to prove it. So we listen to them carefully and then collect the data to prove what is happening. Note I said happening, that is not always what the expert says. But with the facts and data we can now go back to the expert and see if they now agree with what we found. Usually they do and are surprised by the findings.

The second part of the Measure objective is to then compile that data you have collected into a characterization of the current state of the process (the baseline for your project). This will show how bad things are or are not. Most of the time things will be worse than they first thought. In some cases, you may find that things are not bad at all. Then you need to explain your results to the sponsor and if the sponsor agrees close the project. You see sometimes even sponsors opinion of what is wrong is not backed by facts and data. So when you collect them it becomes obvious that this was not an issue.

A – Analyze

The objective of Analyze is to take the current state data and analyze it to determine the root causes of the issue. These root causes become opportunities to improve. Measure data shows you the “surface effects” or “pain” the company feels but not usually the deeper root of the issue. Because of that, you will usually find that you need to collect more data related to the measure data that validates the teams opinion of what is causing the current state issue to exist. So here in Analyze we have to take a “Deep Dive” into areas that measure pointed out as really needing improvement.

I – Improve

The objective of Improve is to develop and implement the best plan for improvement of the opportunities (root causes) identified in the Analyze step. There are two key phrases in this objective. “Develop the best plan” and “implement the best plan”. Develop takes some brainstorming and then some experimenting to validate that what you came up with would work. Second in develop is a plan. In the plan you will need several options so that when the time comes for getting an OK to implement it is not one or done (no action taken). Give the sponsor options to choose from but pick your best set and pitch it to them with a why it is best (remember facts and data).

The second key phrase is “implement the best plan. Whatever is picked, you need to create a detailed implementation plan. Create a time line and stick to it.

C – Control

Note: this is the most forgotten step. The objective of Control is to develop and implement the best controls to maintain the gains that the new process is producing. With anything new, things never work perfect. When things go wrong, as they will, you need a plan/ controls that will guide everyone as to what to do. If you do not do this when things go wrong, those involved will revert back to what they know and have done for years. A control plan can be as simple as a log of what happened, or as complex as a statistical control chart. What ever it is it needs to help the people working the new process continue to follow it.

There is a second part to control that has nothing to do with control but has everything to do with recognition. People on and off the team have worked very hard during the project to solve the issue and to keep things going while the team has worked to solve the issue. There needs to be a celebration and rewards for everyone involved to celebrate the success and their contribution to the solution. In today’s business world, we are faster to tell folks what is wrong than what is right so make sure you celebrate your success.

This is just a quick look at the DMAIC process and has not even address questions that should be answered in each step. My plan is to write five more articles each one addressing one of the steps in the DMAIC process in more detail. If you don’t see them at this blog, you will find them at the Six Sigma Knowledge Center.

Peter Bersbach
Six Sigma Master Black Belt
Bersbach Consulting LLC
(520) 829-0090

Tags: Method, Need
Posted in Introduction to Six Sigma, Six Sigma Tools | 2 Comments »

The Seven Types of Waste a Summary

Wednesday, September 30th, 2009

You may have seen a couple of posts I have done on the seven types of waste. I have completed seven articles on all seven types of waste you might find in your organization. Below is a listing and a short description for each of the seven types of waste plus a link to the full article. I believe if you read these articles you will have a new way of looking at your business.

The Seven Types of Waste:

Correction – Corrections are and time you redo, rewrite, rework, repair, or scrap something. This can be as simple as rewriting a grocery list. Say you have a grocery list but you want to rearrange the items on it in the order you will encounter them in the store. Even though it will speed things for you shopping it had to be redone instead of thinking of making the list ordered in the first place. Redoing the list did not add any value to you; it took longer to write it a second time instead of doing it right the first time.

Overproduction – Overproduction is when you make too much of something or you perform too much of a service for some one. Have you ever held a meeting and made copies for that meeting? Most people make a few extra, do you? That is overproduction they will end up in the trash. Or have you every as a question about something in a store and the salesman goes on an on answering your question when all you wanted was the simple answer? That salesman was overproducing

Movement of material or information – This type of waste is when you take any material for information and have to move it from one place to another. You may ship it or carry it your self but that movement does not create any value for the customer in fact it is lost time because it delays your product or service from getting to your customer

Motion of employees – This type of waste is when you or an operator has get up and walk or travel to get something to do their job. Just like movement of materials and information, motion of the operator does not create value. In fact the “thing” in the process is not changing at all

Waiting – This type of waste is when you, other employees, customer, material, or equipment sits idle waiting. Think about all the waiting rooms there are. As a customer do you want to wait? No but we sometime have come to expect the wait. I have been to doctor’s office where the waiting room is empty or full did not matter but in some I was seen on time and other I have waited over an hour.

Inventory or other resources - This type of waste is not just supplies and materials on shelves but also any recourse your company has that is not being utilized. We normal see inventory as parts and supplies sitting on a shelf like boxes of cereal in the grocery store. But here inventory also include equipment that is standing idle or in storage and employees that have skill that are not being used to their fullest.

Processes - This type of waste is when you are doing more than required by the customer. This is a hard one to understand because sometimes doing more for free has a WOW factor for your customers. That is why it is important to know what is of value and what is not. You see sometime you do sometime more that you think the customer wants and they do not care. That is when it becomes a waste.

Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com
1.520.829.0090

Tags: Method, Seven Types of Waste
Posted in Introduction to Six Sigma, Six Sigma Tools | 7 Comments »

The Seven Types of Waste (Processes)

Tuesday, September 29th, 2009

Bersbach Consulting LLC provides Six Sigma training coaching and support across Arizona, including the Tucson, Phoenix, Sierra Vista, Nogales, Yuma areas. At this time we would like to thank our friends and clients for their support. If you have landed here looking for our Six Sigma training, coaching or support services in Tucson, then please follow this Six Sigma Training link.

This is the seventh in a series of articles on the Seven Types of Waste[1]. This article addresses Processes.

Processes

This type of waste is when you are doing more than required by the customer. This is a hard one to understand because sometimes doing more for free has a WOW factor for your customers. That is why it is important to know what is of value and what is not. You see sometime you do sometime more that you think the customer wants and they do not care. That is when it becomes a waste.

Also many time we do things that customer thinks are great but then customer values change and the process did not. Those also become waste. Ever hear some one explain what they do as “… because we have always done it that way”. That is a flag that this could be a waste and needs to be changed. Just because we have ALWAYS done it that way does not make it the best or most efficient way to do it. Customer values change and so does the technology that is used to create value.

Take a letter for instance, once upon a time we hand wrote letters and sent them in the mail. Then there were typewriters; then computer; and now we have Email. So you see the world is constantly changing and as such so do you processes. Change to insure they are always creating the best value for your coustomers.

Some symptoms of Process Waste that you can look for are:

Unnecessary work

Extra equipment

Longer lead time

Reduced productivity

Extra material movement

Sorting, testing, inspection

Inappropriate use of resources

Excess energy consumption

Processing by-products

Look around your place of work or at home and see if you can see any of these. They are just the flag that there is a cause for these that needs to be identified and addressed. What are some of the root causes associated with these symptoms? Let me list them as well. I would associate them with the symptom but many times a root cause shows more than one symptom. So as you read this list of root causes look at the symptoms above and see how many of them it could cause.

Some Root Causes of Process Waste are:

Product changes without process changes
Just-in-case logic
Old Habits (it’s always been done)
Lack of communication
Redundant approvals
Extra copies, excess information
Undefined customer requirements
“Stop-gap” measures that become
part of the process
Lack of reuse / recycling

I invite you to post what you see around you that are Process Waste that could be changed.

If your business is located anywhere in the World including the US, Tucson, Oro Valley , Oracle, Phoenix, Glendale, and Scottsdale, Marana, Green Valley Arizona or beyond and you would like to learn more about our Six Sigma training, coaching and support services please call Bersbach Consulting LLC at 1-520-829-0090 or go to our website.

[1] The seven types of waste are: Corrections, Overproduction, Movement of material or information, Motion of operators, Waiting, Processes or other resources that are not being used, and Processing.

Tags: Method, Seven Types of Waste
Posted in Introduction to Six Sigma, Six Sigma Tools | 6 Comments »

The Seven types of Waste (Inventory)

Tuesday, September 22nd, 2009

This is the sixth in a series of articles on the Seven Types of Waste[1]. This article addresses Inventory.

Inventory

This type of waste is not just supplies and materials on shelves but also any recourse your company has that is not being utilized. We normal see inventory as parts and supplies sitting on a shelf like boxes of cereal in the grocery store. But here inventory also include equipment that is standing idle or in storage and employees that have skill that are not being used to their fullest.

Some times we do not realize how much we spend on skilled employees that are actually doing work that does not maximize their skill set. Take a look at any given skilled employee and think about what they are actually doing during their days work. Now ask your self how much of that required their special skills; I believe you would find that there are a lot of activities they are doing that do not need their skills. Those activates could be off loaded to someone else at a lower pay scale to do. Meanwhile the skilled worker could be working on another active that does require their skills. In this way you decrease costs and increase throughput.

Equipment is usually a capitol expense and as such if it is not working it is costing you money in floor space and maintenance and maybe even loans. I have an old truck at my house that I very rarely use. But I have kept it to “haul stuff” when I need to (have you heard that). I have to pay insurance and maintenance on it even if it sits. Plus I have to run it once in a while just to keep it in working condition. It takes up space in my driveway as well. I should sell it, freeing up the space and saving all the expenses of insurance and maintenance. If I need to haul things I could rent a trailer or buy one which would cost me less than what I am currently doing with the truck.

You get the idea!

Some symptoms of Inventory that you can look for are:

Complex tracking systems
Extra storage & handling
Extra rework / hidden problems
Paperwork / documents
Stagnated information flow
High disposal costs
Obsolete material
In-process packaging
High utility costs

Some Root Causes of Inventory:

Product complexity
Incapable processes
Unleveled scheduling
Poor market forecast
Unbalanced workload
“Just-in-case”
Unreliable supplier shipments
Inadequate measurement
Misunderstood communications
Reward system (wrong metric)

I invite you to post what you see around you that are Motions of Operators that could be changed.

[1] The seven types of waste are: Corrections, Overproduction, Movement of material or information, Motion of operators, Waiting, Inventory or other resources that are not being used, and Processing.

Tags: Method, Seven Types of Waste
Posted in Introduction to Six Sigma, Six Sigma Tools | 6 Comments »

The Seven Types of Waste (Waiting)

Tuesday, September 15th, 2009

This is the fifth in a series of articles on the Seven Types of Waste[i]. This article addresses waiting.

Waiting

This type of waste is when you, other employees, customer, material, or equipment sits idle waiting. Think about all the waiting rooms there are. As a customer do you want to wait? No but we sometime have come to expect the wait. I have been to doctor’s office where the waiting room is empty or full did not matter but in some I was seen on time and other I have waited over an hour.

Ever gone to a meeting only to have to wait because some one was late? Or maybe you showed up late. Think of all the dollars in pay being spent while employees sit wait to start.

How about that order form that you filled out online but did not get filled until the next day. How many times did that sit and wait? Or have you seen key equipment sitting waiting to be repaired? What kinds of cost are there in that delay?

Waiting is a big one in my book. Why, because many times we, as customer, have come to expect it in some companies or industries and yet we don’t in others. Why is that? It’s because that is the way it always has been. But we as customer pay for it just as your customer pay for the waiting that happens in your organization.

Some symptoms of Waiting that you can look for are:

Under-utilization of resources
Reduced productivity
Increase in investment
Idle equipment
Large waiting / storage rooms
Equipment running, not producing
Unnecessary testing

Some Root Causes of Waiting:

Unbalanced work load
Late start of meetings
Unplanned maintenance
Long process set-up times
Misuse of automation
Quality problems
Unleveled scheduling
Ineffective layout
Specialization
Batch processing
“Things” not at right location

I invite you to post what you see around you that are Motions of Operators that could be changed.

[i] The seven types of waste are: Corrections, Overproduction, Movement of material or information, Motion of operators, Waiting, Inventory or other resources that are not being used, and Processing.

Tags: Method, Seven Types of Waste
Posted in Introduction to Six Sigma, Six Sigma Tools | No Comments »

The Seven Types of Waste (Motion of Operators)

Tuesday, September 8th, 2009

This is the fourth in a series of articles on the Seven Types of Waste. This article addresses excessive motion of operators/employees.

First before I get into motion let me explain what waste is in six sigma. Waste is any activity that does not produce value, value in the “eyes” of the customer, not you. The seven types of waste are:

Corrections
Overproduction
Movement of material or information
Motion of operators
Waiting
Inventory or other resources that are not being used
Processing

Motion of Operators

This type of waste is when you or an operator has get up and walk or travel to get something to do their job. Just like movement of materials and information, motion of the operator does not create value. In fact the “thing” in the process is not changing at all. Let’s take the simple act of changing the oil in your car. If you do it yourself then to have to travel (motion) to get the oil and tools to change it and then afterwards you have to put the tools away and dispose of the old oil both motions.

If you take your car to a service shop to have the oil changed you will notice right away that they have the oil and tools right there in the service bay. Once they are done the tools are place back in their place in the bay and the used oil is held in a large container that will later be taken (motion) to be disposed of. This disposal has been combined with several others thus reducing the motion of the disposal…

Many times when we have a job to do around the house it is not the job we mind but the setup. Why, because instead of just doing the job we have to go around and gather what we need to get the job done first (motion). Plus usually, if you are like me, we missed a few things and have to go back to the store to get them (Correction and motion happening at the same time).

Some symptoms of motion of operators that you can look for are:

Reduced productivity
Large reach / walk distances
Longer lead times
Excess handling
Reduced quality
People / machines waiting
High energy cost
Inappropriate use of resources

Some Root Causes of Motion of Operators:

Poor ergonomics / layout
Machine / process design
Inconsistent work methods
Poor workplace organization & housekeeping
Extra “busy” movements while waiting

I invite you to post what you see around you that are Motions of Operators that could be changed.

Tags: Method, Seven Types of Waste
Posted in Introduction to Six Sigma, Six Sigma Tools | 5 Comments »

What is Six Sigma

Wednesday, May 27th, 2009

Bersbach Consulting LLC provides Six Sigma training, coaching and support across Arizona, including the Tucson, Phoenix, Scottsdale, and Glendale areas. At this time we would like to thank our friends and clients for their support. If you have landed here looking for our Six Sigma training, coaching or support services in Tucson, then please follow this Six Sigma Training link.

_________________________________________

Six Sigma is a process improvement methodology that has been proven to make step function improvement in any business environment. I define Six Sigma as a 5 step process based on facts and data focused on your customer’s values to grow your business.

It is not a one time project to fix a problem. It is not a topic that you can talk to your customers about without applying it to your business. It is not a “Flash in the Pan”, “Flavor of the month” program that will go away. Six Sigma is a new way to approach your business issues. Let’s look at the three major elements of the definition.

Business Growth:

Business growth is a shift from a business without Six Sigma to one that has made Six Sigma a part of their business culture. If Six Sigma is embraced and implemented into one’s culture you can achieve about a 20% margin improvement, 15% capacity improvement and/or a 20% capital reduction. Hard to believe?

The Motor Vehicle Department of the State of California reduced its check processing from 77 days to 23 days using Six Sigma methods. That means getting their money in the bank 54 days earlier than before[1].
Technimark Packaging, a company that packages other companies’ products for retail, was taking 3 hours to change the tooling over from one customer to another. Applying Six Sigma they got the time down to 30 minutes. Remember every minute they are not packaging customer product is a loss.[2]
General Electric applied Six Sigma across their company in 1997 and it delivered more than $300 million dollars in savings that year.[3]

So How Does it Work?

It uses facts and data focused on customer value.

Customer Value:

Six Sigma defines customer value as a product or service that is received by a customer at the right:

Location
Cost
Point in Time
and Functions

All of these as defined by the customer, not you. Many time we see customer value as the “functions” part only — that the product worked or the service did what is was suppose to do. But we forget that Customer value INCLUDES the delivery process that is made up of the other three items above; location, cost, and point in time.

Does the customer always know what they want? Many companies will say no but I believe that they do. An associate of mine felt that they do not know and used himself as an example. He stated that he needed to get his wife a birthday gift but had no idea what to get her. I asked him where he would go to look for this gift and he replied Target. I asked why Target and he replied because they carry a variety of things at a good cost and that his wife shops there a lot. HHHmmmm – so he had a vague idea. His basic need was a gift. But he did not know in detail what the gift should be. He also knew where she liked to shop.

Just like my associate, the customer may be not know in detail what they want, but they came to your company because they thought it could fill their basic need, that it had something of value that they wanted. He walked in there vs. a hardware store because he felt his success would be better there. If you were the Target employee you need to LISTEN to what he needs and help him find it by asking questions about his wife. You will find out if you have something that will meet his need (customer value) or not. If you can not fill his need, you want to send him on his way and maybe help him to the right store that can fill it.

In the example above did you notice that we were talking mainly about function? But he was implying that he needed it NOW from this STORE and at a GOOD PRICE (the delivery process). What if you do not meet those other three? He’s gone most likely. Below is a Customer Value Loyalty Grid that has on the left side the product or service “Functionality” and at the bottom the delivery process.

If you look at your business you want it to be in the green area otherwise you are at risk of loosing your customer.

So how do I define Customer Values? There are three criteria that define Customer value an everything that is performed that adds value to the customer meets all three of these criteria. The are:

Does the customer care about it? (Is the customer willing to pay for it to be done)
Does the activity physically change the item? (in a service environment it could be that a form is filled in)
Is it done right the first time? Customers are not willing to pay for “redo’s”.

Based on Facts and Data

Six Sigma uses facts and data to understand, reduce and control variation in your business processes, variation that you now compensate for which cost you money. An Experienced employee, even you, can look at simple problems and solve them 80% of the time but when the problem gets to be complex your experience will only solve it about 20% of the time. In Six Sigma we say “GEMBA” (Go See) go out on the floor (office business, or production) and collect real data on how things are done. You will be amazed as to the difference between what you thought and what is really happening. There is variation everywhere. To reduce it or eliminate it your first have to understand it. Understanding and addressing variation helps you predict outcomes that you had to compensate for before; outcomes that impact your customer needs. In Six Sigma we collect these facts and data on the variation to come up with conclusions by seeing the patterns in the shifting (variability) of the process.

[1] 56th AQC – Ron Bane Leading Edge Quality Approaches in Service, Education, Shipping, Government Non Manufacturing Organizations

[2] 56th AQC – Ron Bane Leading Edge Quality Approaches in Service, Education, Shipping, Government Non Manufacturing Organizations

[3] General Electric 1997 Annual Report

Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com
1.520.829.0090

Tags: Customer Value, DMAIC, Leadership, Method, Six Sigma Success
Posted in Introduction to Six Sigma | 3 Comments »