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Six Sigma's Missing Link

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Six Sigma’s Missing Link Re-Visited

(You will notice text that is bold & italic and corresponds to recent revisions to this continuing Six Sigma story). 

• Did you know that many individuals in your organization will grasp “defect free performance” faster than the Six Sigma concept of 3.4 defects per million opportunities (DPMO)?

Shipping 235 out of 240 orders on-time over the past 30-days will result in a 97.92% defect free performance

(5-defects out of 240 shipments).

The Sigma Rating (SR) is basically equal to the NORMSINV Microsoft Excel function plus a typical standard adjustment of 1.5 OR Sigma Rating = NORMSINV(defect free performance) + 1.5

For this example,
SR = NORMSINV(235/240) + 1.5 = 2.037+ 1.5 = 3.54 Sigma Rating

For the Six Sigma example,
SR = NORMSINV((1,000,000-3.4)/1,000,000) = 4.50 +1.5 = 6.00 a defect free performance rating of 99.999660% results in a Six Sigma Rating (the 1.5 standard adjustment tells you that the sigma curve is shifted to the left or right from center 1.5 sigma, but we will discuss this a little later along with the DPMO for a perfectly centered six sigma curve).

The standard 1.5 correction can be used for most calculations unless you manufacture thousands of the same item every day or you are a Six Sigma Green Belt, Black Belt or majored in statistics. Want to learn more about Six Sigma? 

The internet is loaded with great websites for Six Sigma and Lean Six Sigma.

Which can you visualize?

97.92% of your orders over the past 30-days have shipped on-time

OR

your company has a 3.54 Sigma Rating for on-time shipments?

Did you know that some companies have found a clever way to use the Sigma Rating to monitor performance, http://www.qualitymag.com/articles/84444-small-companies-see-the-money , 

but set individual or department goals based on defect free performance?

So, why should you consider Six Sigma if 97.92% of your orders ship on-time? You don’t even manufacture any products, you buy in bulk and package the parts for shipment to your Customers. Has your business model changed? Yes, your Customers still charge a liquidated damages penalty if the shipment is late, but they no longer pay a bonus for early deliveries. Now they demand Just-In-Time (JIT) shipments. They also started charging a penalty if you ship the wrong parts. You now have 2-opportunites for defects in every shipment (late and incorrect shipments). 

Now your Six Sigma calculation is slightly more complicated, but we will discuss that a little later.

On average you ship 12-packages a day and work 5-days per week for a total of 240 shipments per month. Last month the penalties totaled $5,000. You have now started working on Saturdays to try and find a way to reduce the penalties, to try and find the root cause of the problem or problems. Root Cause Analysis is just one problem solving tool available in the Six Sigma Toolbox.  Here is a brief list of additional Six Sigma Tools – Pareto Chart, Scatter Diagram, Brainstorming, Failure Mode and Effects Analysis (FMEA) , Data Collection, Cause & Effect/Fishbone Diagram.  

Use any Google Search to find more examples of Six Sigma Tools or additional details about the above-mentioned tools.

What does SUDOKU and SIX SIGMA have in common? Most business problems and all SUDOKU puzzles have a logical solution. SUDOKU puzzles have a basic set of rules that you must follow to solve the puzzle (entering numbers into a grid so that each row, column, and 3 by 3 block of cells each contain every number from one through nine). Even the easy SUDOKU puzzles require concentration and skill to apply the puzzle solving rules. This is also an important skill for solving business problems. Have you ever worked on a difficult SUDOKU problem and someone tells you about a new technique to help you solve the puzzle? SUDOKU helps you train your brain to concentrate, stay focused, and find the solution to the problem.

Some individuals decide to take the easy route and guess at the next number in a SUDOKU puzzle. Trial & error, however, when solving business problems can be expensive and waste valuable resources.

Six Sigma, as noted above, has a basic set of tools to help you solve business problems. Six Sigma Green & Black Belt training is one way to learn how to use these tools and problem solving techniques. Articles, Websites, Memory Joggers, and Books for Dummies also exist to guide you to the solution to your business problems. 

Do you need to understand all of the Six Sigma Tools before you can solve your business problem?  No.  If you are building a doghouse for your puppy, you do not need to purchase every woodworking tool at the local home improvement store.  You just need a basic toolbox to build the doghouse.  If you start to mass produce doghouses for friends, family & neighbors, then you probably will need additional tools for your toolbox to make the process more efficient (e.g., a nail gun, just like the excellent  RYOBI® AirStrikeTM  18Ga Cordless Brad Nailer, No Compressor, No Gas Cartridge, No Hose Needed, just In-Tool Air Compression using the 18v One+ battery system).

Do you need to be a Six Sigma Greenbelt before you can solve your business problem? No.  For example, Brainstorming, Data Collection, and a Pareto Chart were used to help focus on the reason for the late shipments from your company.  Your Production Crew held a Saturday brainstorming session and determined that the late shipments were due to delays caused by Quality Assurance (QA).  QA checks the shipments on a random basis for compliance to Customer requirements which resulted in delayed shipments.  The Production Crew noted that the QA checks were a waste of time because your Quality Control (QC) Crew completes a 100% inspection of every order prior to staging the order in the Shipping Department.  Before you confronted QA, you wanted facts, so the following Saturday the Production Crew collected data and summarized the results in a chart.  The Pareto chart showed 75% of the delays were due to QA, 12% of the delays due to restocking the order because parts were borrowed for expedited shipments, 7% on unrealistic delivery dates for expedited shipments, 5% due to min/max inventory levels that have not been adjusted to support the increase in business activity, and 1% miscellaneous factors.

In the past, orders were shipped as they were completed.  Now orders are staged in shipping until the Just-In-Time ship date.  Your Production Crew noticed that the Expediting Crew “borrowed” parts from the completed orders due to shortages caused by the current min/max levels.

QA agreed they delayed shipments, but were surprised they were responsible for 75% of the late shipments.  QA noted that approximately 12-shipments are processed every day and QA selects three of these orders on a random basis for verification checks.  If they discover an order with incorrect parts, then they select an additional order or two for verification.  QA advised they do not recall ever checking more than 6-shipments in any given day.  The maximum delays associated with QA should never exceed 50%, not 75%.  Several of the orders they checked this week  prior to shipment contained incorrect parts. This resulted in late shipments, but prevented penalties due to the shipment of incorrect parts to the Customer.  QA noted that QC Inspection does a great job checking the orders against the pick list, but QA checks the order against the Customers purchase order.  QA is currently working on a Root Cause Analysis to see why the internal pick list does not match the Customer purchase order which is resulting in incorrect parts staged for shipment.  QA also mentioned that since your company now has 2-opportunites for defects in every shipment, the Six Sigma calculation for the past 30-days   (5-defects out of 240 shipments) results in the following:

SR = NORMSINV(((240*2)-5)/(240*2)) + 1.5 = 2.311+ 1.5 = 3.81 Sigma Rating

You now understand the power of Six Sigma to help attack your business problems as you separate fact from opinion.  During this exercise you also re-discovered the excellent group of individuals working for your company and decided it is time to sign-up for Six Sigma Green Belt training to guide them along the path of continual improvement.  As an added bonus, the Six Sigma Training course that you selected requires working on an actual business problem to complete the course.  This is perfect since you have a complex business problem that needs to be addressed.

What can Lean Six Sigma add to the problem solving toolbox?  We will discuss Lean Six Sigma a little later.

In an effort to understand the data discrepancies between departments, you invite the QA Staff to a Saturday meeting.  QA advised they increased the random and progressive verifications prior to shipment (based on a "suggestion" from Management to double check the orders) due to recent penalties for shipping incorrect product and the “Quality” problems developing at your company.  QA also responded to your question about notification when the order is ready for QA checks.  Orders are moved into the staging area by the Production Crew the day before the JIT (Just-In-Time) shipping date.  QA selects 3-orders at random and releases the other orders for processing to the Shipping Crew.  If discrepancies are found, then the next day QA selects 4 or 5 orders instead of three.

You wonder out loud, “What changed to cause these discrepancies and defective shipments?”  QA advised one possible reason is the new order processing software which eliminated the need for part descriptions on documents.  The computer based system is now extremely efficient and allows your company to process more orders with less people.

Your internal process is now based on a unique code number for every order and every item you sell.  The computer generates the pick list for every order.  The Receiving Crew checks the description of the part when it arrives from your Suppliers, but all remaining processes are based on just the code numbers.  All the Production Crew needs to do is printout the order and pick all of the required items marked with the code numbers off the shelf to complete the order.

QA verification, however, includes a check of the Customer purchase order descriptions compared to the actual parts staged for shipping.  It appears that in some cases the code number on the computer generated list does not match what the Customer ordered.  A good example is a part that requires special certifications for the international market.  The parts look the same, have the same description, but the certification markings are different and therefore have 2-different code numbers.  The Production Crew just uses the pick list to fill the order.  QC Inspection just verifies the code number matches the pick list.  A Production Crew employee was recently told to remove the name of the Customer from the computer generated list because it was no longer required.  The employee advised, in the past, it really helped her look for incorrect product for your regular Customers.  The Production Crew Manager gave her a 2-day unpaid vacation.

This reminds you of an excellent article on Tribal Knowledge http://www.qualitymag.com/articles/90911-tribal-knowledge?v=preview  , but now you can see how your company may have removed some of the hidden tools used by employees to be effective and take pride / ownership in their work.

Next stop, Six Sigma Green Belt training.

REFERENCES

1. Robert J. Gnibus, “Six Sigma’s Missing Link,” Quality Progress, November 2000.

2. Robert J. Gnibus, “Monitoring Supply Chain Performance,” ASQ Six Sigma Forum, May 2003.

3. Rik Krull & Robert J. Gnibus, "Small Companies See the Money," Quality Magazine, August 2003.

4.  Robert J. Gnibus, Six Sigma Green Belt, "Breakthrough Management Group", January 2001.