Transcript Six Sigma Leadership Workshop

Design for Success
DFSS: Design For Six Sigma
Mark M. Skinner
Q.
What do sports eyewear and
retirement plans have in common?
A.
Process
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Six Sigma:
Quality
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Q.
What is quality?
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What is Six Sigma...
is a business concept that answers customers’ demand for high
quality and defect-free business processes.
 Six Sigma
 Six Sigma
was born when Motorola published its Six Sigma quality program
in 1987.
 Six Sigma
is a unified approach to process excellence.
 Six Sigma
has transformed some of the most successful companies in the
world (Motorola, Allied Signal, GE).
 Six Sigma
is a target (Fewer than 3.4 defects or errors per million
opportunities – 99.99966 perfection).
 Six Sigma
is an approach to aiming at that target by changing the culture of a
company. It involves everyone in the company.
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What is Six Sigma...
 Six Sigma
can be used to design in excellence and then make continuous
improvements.
 Six Sigma
is used to bring new products and services to market (Define,
Measure, Analyze, Design, Validate) by methodically laying everything
out first.
 Six Sigma
identifies problems in a process, sets up projects within the
process, evaluates the process and works through the projects (Define,
Measure, Analyze, Improve, Control) to improve the process.
 Six Sigma
aims to raise customer satisfaction by reducing the number of
defects in a process, thereby raising the Sigma rating.
 Six Sigma is a
culture which permeates a company in the desire of all
staff to achieve targets, increase customer satisfaction, lower costs and
improve profitability.
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 Greek Letter
 Measure of variation
– aka: standard deviation
 Process Quality Measurement
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Perfection
99.7%
99.9%
99.99966%
 Incorrect drug prescriptions
54,000
4,000
1 every 25 years
2
1
1 second every
16 years
5
2
1 in 10 years at
all U.S. airports
1,350
500
1 in 20 years
10,000
3,000
10
 Lost mail per hour
54,000
4,000
1
Sigma Level
4.3
4.6
6
each year
 Unsafe drinking water;
hours per month
 Missed landings each day at
London’s Heathrow airport
 Incorrect surgical operations
per week
 Newborn babies dropped by
doctors and nurses each year
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Q.
Can you give an example of something
that didn’t represent quality?
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Q.
Can you describe something of
high quality?
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Six Sigma Precepts
 Customer and process focused
– Focus is on the things that matter
 Data driven decisions
– Act on fact
 Reduced variation in process performance
– Variation is the enemy
 Reduction in cycle time
– Faster is usually better
 Prevention of defects
– Proactive not reactive
 A new perspective of performance
– 99% is not good enough
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Core Principles of Six Sigma
 Customer
 Profit
satisfaction
improvement
 Project-by-Project
 Prioritization
improvements
of improvements
 Process-driven
approach to managing the business
 DMADV / DMAIC
 Near Perfection
as a goal of performance
 Teamwork draws
 Recognition
on experience, knowledge and dedication
- expression of respect for employee contribution
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The Six Sigma Difference
 Assigns and trains improvement experts
 Involves all/most organizational members
 Targets significant and lasting improvements
 Requires the use of proven statistical tools
 Attacks the root cause of problems
 Focuses on improvements that have financial impact
 Provides a single measure to compare disparate processes
 Pushes processes to achieve near-perfect quality levels
 Six Sigma is a permanent long-term program
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Q.
What 3 skills are critical?
 Communication
 Teamwork
 Mathematics
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Q.
What is Communication?
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Q.
What is Teamwork?
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Q.
What is Mathematics?
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Customer Perceptions...
A View of Process Improvement Opportunity
Processes that Influence
Processes that Influence
Processes that Influence
Perception of Value
Strength of Relationship
Perception of Service
• Attention to
Customer Feedback
• Sales Management
• Access and Availability
• Account Management
• First Experience
• Brand Management
• Customer Wait Time
• Hiring and Staffing
• Inquiry Investigation
• Employee Development
• Transaction Execution
• Customer Needs Analysis
• Creation of Innovation
Solutions
• Product Development
• Pricing
• Attention to Employee
Feedback
• Risk Management
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Business Definition
Quality: No coffee stains on tables
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Business Definition
Quality: The delivery of a hot steak,
cooked medium rare
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Lunch is a Process
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Six Sigma DMAIC Model
1.
IDENTIFY OPPORTUNITIES
2.
3.
FORM TEAM & SCOPE PROJECT
Identify Customers
and Requirements
Process Flow Analysis
4.
ANALYZE CURRENT PROCESS
Process Flow Analysis
Establish Process
Boundaries
DEFINE DESIRED OUTCOMES
FOR IMPROVED PROCESS
Define Performance
Measures
Benchmarking
Agree on Goals
Analyze Available
Data
SURVEY
Pareto Analysis
YES NO
A
HISTORY
REPORT
Tree Diagram
B
Check Sheet
GOAL
CHECK SHEET
C
D
9.
ACKNOWLEDGE TEAM AND
COMMUNICATE RESULTS
5.
IDENTIFY ROOT CAUSES & PROPOSED SOLUTIONS
Brainstorming
Process Redesign
TEAM RESULTS
REPORT
Why-Why
Diagram
Nominal Group Technique
Cause & Effect
Diagram
EFFECT
6.
RECYCLE IF NECESSARY
8.
MEASURE PROGRESS & HOLD
GAINS
7.
Level Loading
Design of
Experiments
PRODUCTION DAYS
1 2 3
REFINE AND IMPLEMENT
SOLUTIONS
Brainstorming
Force Field Analysis
SPC
C+
90.00
83.67
30
A
Phase
B
77.33
C-
71.00
64.67
Trend Chart
PRIORITIZE, PLAN AND TEST
PROPOSED SOLUTIONS
C-
C
52.00
C+
A-
GANTT Chart
Training & Procedures
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Step(s)
D
58.33
A+
Define
Measure
Analyze
Improve
Control
Pull System
NEXT
OPERATION
PRIOR
OPERATION
22
1&2
3&4
5
6&7
8&9
Using Successive Projects for Cycle Time and
Defect Reduction
Cycle Time and Defects
Hi
Low
Time
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DMAIC
 Define
– What is important?
 Measure
– How are we doing?
 Analyze
– What is wrong?
 Improve
– Fix what’s wrong
 Control
– Ensure gains are maintained to guarantee performance
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Define
 Identify our internal and external customers
 Determine what our customers want
 Identify our suppliers
 Determine what we need from our suppliers
 Identify problems
 Identify the process that contributes to the problems
 Identify improvement opportunities
 Scope the improvement project
 Select the right players
 Set goals and objectives
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Measure
 Review the current process
 Identify key inputs and outputs
 Develop baseline and entitlement metrics
– Performance
– Cost
 Collect and organize data
 Evaluate the performance of the process
– Defects
– Cycle time
 Assess the amount of variation
– In the process
– In the measurement system
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Analyze
 Identify issues that occur at each step in the process
 Assess customer impact of problems
 Prioritize most critical inputs
 Assess the effect on outputs or performance
 Determine root causes
 Generate solutions
 Select most likely solutions
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Improve
 Develop Action Items
 Prioritize improvements
 Test solutions
 Determine best combination of inputs and controls
 Refine solutions
 Document solutions
 Implement solutions
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Control
 Measure progress
 Capture and quantify benefits of the process improvements
 Document the project
 Communicate for organizational learning
 Recognize the team’s efforts and success
 Monitor and manage to hold gains
 Adjust for continuous improvement
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Tools & Templates by DMAIC Phase
Tool
Action Item/Implementation Plan
Affinity Diagram
Brainstorming
Business Impact (ABM)
Cause & Effect Matrix
Check Sheet
Control/Reaction Plan
Control Chart
Cycle Time Analysis
Design of Experiment (DOE)
Decision Matrix
DPMO to Sigma Conversion Table
Five Whys
Failure Mode and Effects Analysis (FMEA)
Force Field Analysis
Four Up
Histogram
Define Measure Analyze Improve Control
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Note: The relationship between the specific tool and the DMAIC phase is based on most likely usage as opposed to possible usage.
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Tools & Templates by DMAIC Phase continued
Tool
Define Measure Analyze Improve Control
Ishikawa (Fishbone)
Measurement System Evaluation (MSE)
Multivoting
Pareto Chart
Process Capability
Process Costing Tool
Process Maps
Problem Statement/Critical Business Issue (CBI)
Requirements Analysis
Run Chart
Scatter Diagram
Sigma Calculator
SIPOC Chart
Story Board
SWOT Analysis
Team Charter
Thought Process Map
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Note: The relationship between the specific tool and the DMAIC phase is based on most likely usage as opposed to possible usage.
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Define - Team Charter
 What is the focus of the
team’s efforts?
Service Impacted
The timely and accurate
payment of commissions and
collection of carrier payments
Division & Function
CitiStreet RSD
Commissions, Finance
Black Belt
Green Belt
Executive Sponsor
Pete Ferlita
John Cirillo
Bob Dughi
Bill Valentine
Andy Lovasz
1/1/03
Telephone Number(s)
Ext 2566
Ext 2477
Ext 2001
Ext 2014
Ext 2179
9/01/03
Champion
Start Date
 What are the boundaries
of the effort?
Element
1. Process:
2. Problem Statement:
3. Objective:
outcome?
5. Team members:
6. Project Scope:
 Why is this important?
 Who are the key players?
7. Benefit to Customers:
8. Schedule of Key Milestone
Dates:
The process in which the
opportunity exists.
Describe the critical business
issue that is being addressed.
What performance
improvements are targeted and
what impacts are expected on
Revenue, Expense, Cost/Risk
Avoidance and Capacity
Rework (ABM)?
Design for Success
Team Charter
Carrier Billing, receipt of payments, and payment of AE
Commissions
Financial transactions are not being recorded in the Commission
Accounting System resulting in deferred or lost carriers payments
and incorrect payment of AE commission.
Area of
Improvement
Goal
$2 M
Target
Date
7/1/03
(DPMO,%,$)
1,485,530
-50%
9/1/03
%
$72,964,70
4
-75%
7/1/03
%
Revenue
PAEF
Records
PAEF
Premium
Unit of
Measure
Baseline
$
What functional areas of the
organization will realize the
benefits?
Who are the team members?
Commissions, Account Executives
Which part of the process will
be investigated?
Who are the final customers,
what benefits will they see and
what are their most critical
requirements?
Determine why certain transactions are not bridging to CAS.
Eliminate records from entering the Premium Applied Error File.
Account Executives – will be paid on time and correctly.
Commissions Team – will take less inquiry calls from AE’s
questioning incorrect payments.
Citistreet – will recognize all revenue due from carriers in a timely
manor.
Project Start
January 2003
D – Define
M – Measurement
A – Analyze
I – Improve
C – Control
9. Support Required:
Target Completion Date
Description
 What is the expected
4. Business Results:
Telephone Number(s)
Do you anticipate the need for
any special capabilities,
hardware, trials, etc?
Dawn Simpson, Chris Hsieh, Melissa Kopsco, Bob Mezier, Deon
Van Renburg, Andy Lovaz, Ralph Winnicker, Pete Ferlita
John Cirillo, Mike Bikofsky
“M” Completion
“A” Completion
“I” Completion
“C” Completion
Project Completion
Possible IT support.
February 2003
April 2003
September 2003
October 2003
October 2003
32
Define - Thought Process Map
 What is the problem?
 Do we have any data and
information on the problem?
 What processes are being
considered?
 What are the key questions
that need to be answered?
Problem Statement
Assets reflected on the Travelers and CitiStreet record keeping systems are not in balance on a
daily basis. This results in daily reconciliation issues, extensive manual effort and significant
exposure to market value adjustments.
.
.
.
.
Information and Data with Respect to the Problem
Approximately 10% of our accounts are out of balance on a daily basis (e.g. fixed cell issues).
There are approximately 500-700 reconciling items per day (plans and funds).
Assets are out of balance by approximately $2MM Inception to Date .
There are approximately $120M of receivables > than 5 business days out of balance YTD 2002.
Processes to be Considered
Plan Setup, Product Definition, Fund and Case Translation, Trading/Transmission/Pricing, Cash
Settlement, Monthly Travelers Bill, Transaction Processing, Reconciliation.
.
.
.
.
.
.
Key Questions
Why do we have rejects every day?
Are the systems functioning according to the latest specifications?
Will we have IT resources available to work on this project?
Do we need two record keeping systems?
Do we need two transmissions (money in/money out)?
Does Travelers need to be made aware of the daily reconciling items?
.
.
.
.
.
.
.
Actions and Tools to Address the Key Questions
Develop daily metrics and source of error for out of balance situations.
Develop daily metrics and source of error for manual adjustments being sent to Travelers.
Perform root cause analysis on all sources of error .
Compile and review the complete set of systems specifications and perform a gap analysis.
Evaluate the need for two systems.
Evaluate the possibility of having one daily feed versus two.
Develop a list of Subject Matter Experts for the "Processes to be Considered".
.
.
.
.
.
Action Plan
Collect base line metrics.
Conduct an As Is session in Hartford the week of 9/23/02.
Conduct a Should Be session in E. Brunswick the week of 10/14/02.
Implement process improvements.
Implement a control plan.
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Define - Top Level Process Map
Benefit Distributions - Top Level Map
 What is the starting point
Plan Participant
requests,completes and
mails a Distribution Request
of the process?
Field Office/Outside Carrier
receives the request
- Office Manager Reviews
- Carrier Reviews
- Mails request to National Office
 What is the end point of
the process?
Mail Room (N.O.)
receives application
- Opens Mail
- Sorts Mail
- Delivers to Benefits Department
 What are the major steps in
Benefits Area sorts by plan
- Opens Mail
- Sorts by Plan
- Distributes to Processors
the process?
 Who is involved in the process?
Benefits Processor reviews
and processes applications
- Review for good order
- If not in good order, recycles
- If in good order, processes
Mailroom sends check to the
Plan Participant
Benefits Processor
processes the check
- Reviews check to Distribution
Form
- If in good order, mails
- If not in good order, voids
check and reprocesses
Plan Participant receives
the check
- Places check in envelope
- Sends out the check
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Measure - DPMO and Sigma
 What is the output volume
Time Period covered 12 months
TOTAL UNITS PRODUCED
of the process?
1
0
0
parts / unit
 What are the opportunities
process step / unit
performance opportunity / unit
total opportunities / unit
TOTAL OPPORTUNITIES
for error?
DPMO
SHORT TERM SIGMA =
 How many defects
are produced?
319,366
level of the process?
3.18
TOTAL DEFECTS
14,869
LONG TERM SIGMA =
1.68
Plan Call Completion
66,651
1
0
0
process step / unit
performance opportunity / unit
total opportunities / unit
total process step defects
total performance defects
1,253
0
0
TOTAL DEFECTS
1,253
LONG TERM SIGMA =
2.08
total part defects
1
TOTAL OPPORTUNITIES
66,651
DPMO
18,799
SHORT TERM SIGMA =
3.58
(Defects per million opportunities)
Design for Success
14,869
0
0
46,558
parts / unit
 What is the performance
total part defects
total process step defects
total performance defects
1
Time Period covered 12 months
TOTAL UNITS PRODUCED
Participant Call Completion
319,366
35
Measure - Descriptive Statistics
 Is our data normally distributed?
 What are the confidence intervals?
 Can we use our data for
further analysis?
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36
Measure - Control Charts
Percent of Transactions Rejected
 What are the
 Is variation within the
normal range?
Individual Values
performance trends?
70
60
50
40
30
20
10
0
 Is the process stable?
UCL=69.85
X=40.83
LCL=11.81
J
F
M
A
M
J
J
A
S
O
N
D
40
 Is the process capable?
Moving Range
URL=35.64
30
20
mR=10.91
10
0
Design for Success
LRL=0
37
Measure - Detailed Process Map
 Who are the suppliers
ADP/ACP Testing - As Is Process
Get data to define
the testing
population
Start
and customers?
ERISA
BP via Mainframe Dump
MM/SK via Excel DB
Core via ERISA Lotus Notes DB
A
1
Through
Generate a
hardcopy census
Create year-end
packages
customized by
market
ERISA - BP
ERISA
13
Through
17
27
18
12
22
Through
Through
25
Mail year-end
packages
ERISA/Marketing/Vendor
BP via Vendor
CR/MM/SK via in-house
20
21
48
28
26
40
Through
36
No
 What are the inputs
Wait for
information
from plan
Information
received by
follow-up date?
ERISA
Execute
follow-up
letter process
No
B
41
Log receipt of
information
A
ERISA
Marketing
and outputs?
28
37
38
ERISA
39
43
Through
52
Yes
Review census
 Which inputs are controllable?
Missing or
unreadable
information?
Yes
Note source of
problem on cover
sheet or check
sheet
ERISA
54
C
55
Image the census
and log image
numbers on the
Excel spreadsheet
ERISA
56
53
57
Resolvable by a
phone call?
ERISA - BP
Through
60
42
43
65
Through
70
No
No
Yes
 Where do we have issues?
Call client for
information
Return original
information to client
with request for
additional
information or
clarifications
BP - Account Management Team
CR - Case Managers
MM/SK - ERISA Specialists
BP - Account Management Team
CR - Case Managers
MM/SK - ERISA Specialists
Information
obtained?
61
No
Yes
62
Image and send
the hardcopy
census to the
vendor for data
entry
Data enter census',
send an electronic
copy via e-mail, and
return the hardcopy
to BP - ERISA
BP - ERISA
Data Entry Vendor
B
64
 What impacts cycle time?
71
74
64
72
74
Log the hardcopy
census' and
distribute them to
the ERISA
Specialists for
testing
IT Operations
BP - ERISA
80
 Is there a hidden factory?
Through
Load P-Census to
the AS400 which
automatically
populates the
AS400, OMNI and
ERISA Workstation
81
82
Import data to
ASC
BP/MM/SK - ERISA Specialists
CR - Case Managers
 What % of the steps
83
84
75
Extract data from
the ERISA
Workstation
Request the OMNI
data on the ERISA
Workstation
BP/MM/SK - ERISA Specialists
CR - Case Managers
85
Through
BP/MM/SK - ERISA Specialists
CR - Case Managers
92
Review and scrub
data in ASC
Data complete
and accurate?
BP - ERISA Specialists
No
Yes
To
Page 2
add value?
38
79
Import data to
Excel, review and
scrub
MM/SK - ERISA Specialists
CR - Case Managers
93
C
Design for Success
Through
94
Measure - Issues List
 What goes wrong at each
step in the process?
 Where are the majority
of the problems?
 What functional areas
Issues Categories
Data and
Data Entry
1, 2, 3, 5, 6, 9, 10,
12, 16, 21, 22, 23,
25, 27, 32, 52, 53,
54, 55, 76, 77, 78
79, 80, 81, 89, 90,
94, 97, 102, 115,
118, 132, 135, 143,
145, 150
Mailing and
Carriers
14, 26, 28, 29, 30,
31, 32, 118, 119,
120, 121, 122, 123,
130
Year End
Package and
Other Client
Communication
18, 19, 20, 33, 34,
35, 36, 38, 60,
124, 126, 128,
131, 132, 139,
156
Internal
Education
Client Education
Quality Control
and QC Processes
31, 36, 65, 73, 104,
110, 166
19, 38, 53, 54, 59,
60, 61, 94, 03, 111,
139, 143
53, 65, 80, 81, 90,
98, 99, 100, 101,
118, 135, 145, 148,
150, 153, 154, 159,
169
Printing
Systems Software
13, 14, 15, 17, 109
91, 92, 95, 96, 104,
105, 106, 113
Staffing and
Scheduling
3, 17, 18, 23, 29,
43, 44, 83, 84, 101,
103, 108, 128, 155,
169
ERISA
Workstation
81, 85, 86, 87, 88,
93
Tracking and
Sorting
1, 2, 4, 7, 10, 11,
12, 24, 25, 30, 31,
38, 41, 43, 44, 45,
52, 57, 58, 63, 66,
67, 70, 71, 72, 83,
107, 116, 117,127,
128, 129, 133,134,
140, 141, 149, 152,
154, 161, 162, 163
Process and
Standards
39, 40, 41, 42, 47,
54, 56, 57, 62, 63,
73, 86, 87, 93, 111,
131, 135, 141, 144,
147, 149, 151, 155,
157, 158, 159, 160,
162, 164, 165, 166,
167, 168
Census and Plan
Connect
46, 48, 49, 50, 51,
54, 74, 75, 81, 82
are most affected?
Imaging
68, 69, 70
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Policy
8, 64, 112, 126,
136, 137, 144, 146
Analyze - Cause and Effect Matrix
 What are the most important
Process:
Recycled Paperwork - Benefits Distributions
Customer Requirements
7
10
40
28
10
Total Value
Fast Payment
4
7
4
Request Form
Phone Number
10
1
Request Form
Address
2
Screen Request Guidelines
10
2
Screen Request Plan Information
10
3
Send Form
Contact
10
3
Send Form
Address
10
4
Fill Out Form
Form
1
4
Fill Out Form
Instructions
1
4
Fill Out Form
Signatures
1
5
Return Form
Return Envelope
1
5
Return Form
Return Address
1
6
Process Form
Correct Form
1
6
Process Form
Procedures
1
6
Process Form
Processor
1
6
Process Form
Required Information
1
6
Process Form
Required Signatures
1
1
40
4
7
7
100
4
7
4
7
1
4
7
1
10
4
7
1
10
1
4
10
7
1
4
10
7
40
78
16
4
10
1
144
40
10
Note:
Rating scale 1, 4, 7, 10
Design for Success
168
10
100
10
1
84
40
10
1
7
1
1
100
7
126
16
4
10
1
4
1
40
7
168
28
7
4
1
1
7
70
7
129
40
10
7
1
1
100
7
129
28
7
10
1
1
10
7
156
28
7
1
1
1
10
70
276
28
7
1
10
1
1
700
4
7
100
70
126
28
7
10
10
1
1
10
Total
4
7
100
7
132
16
4
10
1
1
1
10
1
4
7
40
28
132
4
1
4
4
1
1
10
Address
40
7
10
7
270
4
1
1
1
10
1
10
Send Payment
4
70
10
7
270
16
4
1
1
1
10
10
7
4
49
70
7
135
16
4
7
1
1
7
10
1
4
7
70
49
174
4
1
7
7
1
1
10
Check
28
7
10
28
129
4
1
1
4
7
1
70
28
4
1
10
1
10
7
1
100
Send Payment
4
28
1
49
7
1
4
100
7
1
1
100
4
4
78
400
1
10
7
880
1
100
469
4
196
Contact
259
Request Form
10
improvement efforts?
Correct Payment
7
40
10
 Where should we focus our
Return Instr.
of major process steps
and inputs to customer
requirements?
10
Process
Step
1
Assistance
 What is the relationship
Weight
Easy to Make
Output
Inputs
Make Request
customer requirements?
40
Analyze - Ishikawa (Fishbone)
 Which of the process
inputs are likely to
contribute to the problem?
Major Cause
Forms
Major Cause
Plan Participant
Unaware of requirements
Poorly Designed
Hard to Follow
Not trained
Form Congested
Don’t Re ad Instructi ons
 What are the categories
of root causes?
Not Trained
No Procedures
Didn’t get instructions
Call Carrier Directly
Inconsistent use of title
Inconsistent Across Products
Don’t instruct PP
Too busy
Don’t underst and instruct ions
Contract/Legal Language Used
Major Cause
Field Office/HELPLINE
Provide Wrong Instructions
Not trained
Provide Wrong Form
Not trained
No guidelines
Hard to Follow
Legal Concerns
Don’t want responsibility
No return envelope
No return instructions
Not Sent
Forget to Sign
Provide wrong forms
Legal Language
Missing
Turnover
Not trained
Problem Statement
Employer Signature missing
on over 30% of forms
Provide generic or no
instructions
Unaware of Requirements
 What are the most
Major Cause
Instructions
Major Cause
Employer
Major Cause
Carriers
likely root causes within
each category?
Design for Success
41
Analyze - Pareto
 What is the frequency
Pareto by Reason Code
of occurrence of each
potential root cause?
100
1500
likely to contribute
most to our defects?
1000
40
500
20
 Which root causes
should we focus
on first?
60
0
0
Defect
8
17
4
11
10
5
13
14
3
9
12
6
he
Ot
Count
Percent
Cum %
484
263
183
143
140
92
91
61
31
22
11
9
13
31
17
12
9
9
6
6
4
2
1
1
1
1
31
48
60
70
79
85
90
94
96
98
99
99
100
Design for Success
42
rs
Percent
 Which root causes are
Count
80
Analyze - FMEA
 How can our product,
service or process fail?
 What are the consequences
of failure?
 How likely is the failure
to occur?
 How likely is the customer
to be affected?
Design for Success
43
Analyze - Components of Variation (COV)
Nested Hierarchy
 Where are the major
sources of variation?
Mutual
Travelers
Carrier
 How much variation
L
Form Type
is present at each level
of the hierarchy?
Reason
Code
S
L
S
L
1234 1234 1234 1234
 Where should we
focus our efforts to
reduce the variation?
Nationwide
S
1234 1234
Dot Frequency Diagram
.
Reason Codes
3
2
1
1
2
3
ML
4
1
Design for Success
2
3
MS
4
1 2 3 4
NL
1 2 3 4
NS
1 2 3 4
TL
44
1 2 3 4
TS
Improve - MSE
 How real is the
variation that
we observe in
our process?
1. Enter information (#
More than two raters
Yes
of questions, # of raters,
category values) in
Two raters only
No
column below
3. Once worksheet contains
data, appropriate calculations
will appear below
RAW DATA
Multiple Raters (> 2)
Number of questions
n=
20
Number of raters
m=
3
Categories
 Does the measurement
system contribute to
the variation?
2. Then enter data in
indicated worksheet:
1
2
3
4
5
6
2
sum x
ij
=
sum p*q =
0.5
 overall  1 
P
R
7
8
9
10
11
14
Koverall =
i 1 j 1
Pobserved =
Pchance =

 PRaters
PobservedTwo
chance
1  Pchance
Koverall or individual =
Kappacategory for
 x m  x 
n
ij
 category  1 
ij
> 2 raters
Category
i 1
nm ( m  1) p j q j
15
 Is the measurement
system adequate?
Design for Success
1
k
nm ( m  1)  p j q j
j 1
12
13
k
n
nm 2    x ij2
180
45
Kappa
P
1
R
1
Improve - DOE
Hardship Withdrawals DOE Data Matrix
 Which of the
improvement ideas
identified with other
tools represent the
largest payback with
respect to the CBI?
StdOrder RunOrder
Checklist
Instructions
Language
Sample
I*L
I*S
L*S
Complete Withdrawals
12
1
1
1
-1
1
1
-1
1
-1
1
-1
18
7
2
-1
1
1
-1
-1
-1
1
1
-1
-1
13
16
3
1
1
1
1
1
1
1
1
1
1
19
11
4
-1
1
-1
1
-1
1
-1
-1
1
-1
16
10
5
1
-1
-1
1
-1
-1
1
1
-1
-1
18
8
6
1
1
1
-1
1
1
-1
1
-1
-1
17
15
7
-1
1
1
1
-1
-1
-1
1
1
1
16
5
8
-1
-1
1
-1
1
-1
1
-1
1
-1
14
4
9
1
1
-1
-1
1
-1
-1
-1
-1
1
16
1
10
-1
-1
-1
-1
1
1
1
1
1
1
11
13
11
-1
-1
1
1
1
-1
-1
-1
-1
1
14
3
12
-1
1
-1
-1
-1
1
1
-1
-1
1
11
14
13
1
-1
1
1
-1
1
1
-1
-1
1
18
2
14
1
-1
-1
-1
-1
-1
-1
1
1
1
15
6
15
1
-1
1
-1
-1
1
-1
-1
1
-1
16
9
16
-1
-1
-1
1
1
1
-1
1
-1
-1
15
 Do multiple
improvements work
in concert to produce
a better result?
C*I C*L C*S
Pareto Chart of the Effects
(response is Complete Withdrawals, Alpha = .10)
A:
B:
C:
D:
A
D
CD
Checklist
Instructions
Language
Sample
C
B
ACD
ABD
BD
BCD
AD
BC
AC
ABCD
ABC
AB
0
Design for Success
1
2
3
46
Improve - Action Items
 Which of the validated
improvements are we
going to implement?
 What is the
expected benefit?
 What are the
key deliverables?
 What is the
implementation schedule?
 How will we know
that the Action Item
was successfully
implemented?
Action Item Description: Develop and implement a process to establish product profitability expectations and to track
and evaluate financial performance against the expectations.
Expected Benefits: Ensure that the profitability expectation is positive prior to committing to the product.
Key Deliverables: Standard unit costs; Data capture process; P&L Model.
Appraisal Criteria: P&L model is implemented that meets with the approval of Finance. P&L model serves the
needs of the Product Review Team, Product Review Board and Post Mortem Team.
Team Members
Name (*-Action Item Owner, &-Backup, +-Mentor)
* Ralph Winnicker
Theresa LaPlaca
Glenn Lovrich
Organization - Location
Operations Quality
Finance
Finance
Skill Set or Knowledge Expected
Interdependencies/Linkage to other Action Items:
AI#
5
6
7
10, 15
18
Description of Dependency
P&L model will be used to assess financial benefits.
P&L model will be used to review financial benefits.
Standard unit costs will be used for the detailed product specifications.
P&L model will be used to assess the impact of rework due to performance issues.
P&L model will be validated during the post mortem.
Implementation Plan:
Milestone
Develop and publish standard unit costs.
Develop a data capture process with respect to
project activity so that standard unit costs can be
applied.
Develop and implement a P&L model that
evaluates product profitability in conjunction with
the applied standard unit costs and the pricing
model.
Target Date
Revised
Target Date
Actual
Completion Date
Status
10/31
11/15
Contingent on target date of Action Item 8.
12/15
Contingent on the completion of milestone 2.
Recent Accomplishments:
Date
Description
10/11
Reviewed data elements of the current Pricing Model with Glenn, and outlined a plan to develop a stripped-down version
for use with the Product Specification Template (AI 7).
10/22
Glenn developed a stripped-down version. We determined that too much “off template” detail was required to develop the
Product P&L. We decided to utilize the new Pricing Model (currently being developed), and to modify it to reflect Productlevel versus Case-level data.
11/4
Reviewed the new Pricing Model, and scoped out changes required to make it Product-level.
11/5
Next step is to review Model and proposed changes at 11/5 Action Item Review.
AIMS Review:
Date
11/5/02
Prepared By
Ralph Winnicker and Glenn Lovrich
Design for Success
Remarks
47
Control - Control and Reaction Plan
 Do the key outputs
meet the performance
standard?
 What are the most
likely causes of an
out-of-standard
condition?
 What actions need
to be taken?
 Who is responsible
to take the actions?
Control/Reaction Plan for Distributions
Out of Control
Measurement
Condition Measurement Frequency
Probable Cause
Reason Code Recycle
Daily/Weekly  Screening
1,3,5,6,11,12,14, Database,
personnel not
16,18,19 or 20 pareto and
trained
 Screening
exceeds 10%
DPMO chart
and DPMO target
personnel do not
exceeded by 5%
have adequate
guidelines.
Reason Code Recycle
Daily/Weekly  Fulfillment
2 Send
Distribution 5,11, or 19
Database,
personnel not
Package exceeds 10%
pareto and
trained.
 Fulfillment
and DPMO target DPMO chart
exceeded by 5%
procedures not
understood or not
used.
 System address is
incorrect.
Process step
1 Screen
Request for
Distribution
Form
3 Plan
Participant
Completes
the
Distribution
Forms
Reason Code Recycle
Daily/Weekly
2,4,5,8,9,10,13, Database,
15, 17,19 or 20 pareto and
exceeds 10%
DPMO chart
and DPMO target
exceeded by 5%
4 Plan
Participant
Returns the
Distribution
Forms as
directed
Reason Code 4, Recycle
Daily/Weekly
11, or 19
Database,
exceeds 10%
pareto and
and DPMO target DPMO chart
exceeded by 5%
What to Check
Actions to Take
 New hires/transfers  Train/retrain
or changes made?
personnel.
 Guidelines and
 Update guidelines
checklists up to
and checklists.
 Enforce use of talk
date?
 Talk sheets used?
sheets.
 New hires/transfers
or changes made?
 Procedures
distributed to all
personnel?
 Procedures up to
date?
 Address updates
need to be
processed?
 Instructions may be  Current instructions
complex, unclear, or
and forms sent?
may not have been  Instructions and
sent with the
forms up to date?
package.
 Plan Participant was 
not provided with
return instructions.
 Plan participant was 
provided incorrect
return instructions.
 Train /retrain
personnel.
 Enforce use of
procedures.
 Update procedures.
 Update address
information on
system.
 Field Office and HELPLINE
Management
 Field Office and HELPLINE
Management.
 Field Administrative
Services and HELPLINE
Management
 Benefit Distributions
Processors
 New hires or transfers join the
area or process changes are
made.
 Daily
 New Plan introduced or Plan
changes made.
 Plan participant changes
residence.
 Maintain current
 Field Office and HELPLINE  New Plan introduced or Plan
inventory of
Management.
changes made.
 Marketing and Field
 New Plan introduced or Plan
instructions and
forms.
Administrative Services
changes made.
 Update instructions
and forms.
 Maintain current
Return envelope
and instructions
inventory of
sent?
envelopes and
instructions.
Return envelope
and instructions up  Update envelopes
to date?
and instructions.
Kappa Score is MSE for 3
January, July  Benefit distribution  New hires/transfers 
5 Benefits
Distribution lower than .7
Raters and 20
processors not
or changes made?
 Rating guidelines 
Department
Transactions
trained.
 Different processors
reviews and
being used?
processes
 Reason codes being 
using different
the request
criteria.
used?
Design for Success
Responsible
When
 Field Office and HELPLINE  New hires or transfers join the
Management.
area or process changes are
 Marketing.
made
 Field Office and HELPLINE  New plan introduced or plan
changes made
Management.
 Daily
 Field Office and HELPLINE  New Plan introduced or Plan
Management.
changes made.
 Marketing and Field
 New Plan introduced or Plan
Administrative Services
changes made.
 Benefit Distributions
Train/retrain
Personnel.
Management
Enforce use of rating  Benefit Distributions
guidelines.
Management
 Benefit Distributions
Enforce use of
reason codes.
Management
48
 New hires or transfers join the
area or process changes are
made
 Daily
 January and July, annually.
Control - Control Charts
Percent of Transactions Rejected
 What are the
 Are we holding the
gains from our process
improvements?
40
Individual Values
performance trends?
UCL=34.92
30
X=20.42
20
10
LCL=11.81
0
20
 Is any further action
required?
Moving Range
URL=17.82
10
mR=5.45
LRL=0
0
Design for Success
49
Control - Business Impact (ABM)
 What is the business
impact of the process
improvement?
 How should the savings
be reflected in the
current plan or forecast?
 Does the improvement
free up capacity to
satisfy new demand?
ABM Cost Model Per Repair
Non-Financial
Cost Takeout
•Processing
•10 Minutes
•Imaging
•Mailroom
•05 Minutes Cost Avoidance
•05 Minutes
•Office Manager
•10 Minutes
Mail &
Phone Cost
Market Risk
Rework
Manpower
Cash Flow
$20,000
Market
Value
Adjustments
Reduce NonValue Added
$250,000
•Account Executive •30 Minutes
•Help Desk
•10 Minutes
•Benefit Load
•17.4%
•Supplies & Mail •$.80
•Long Distance
•$1.00
Design for Success
Cash Flow
Growth
Increased
Sales
Improved
Customer
Satisfaction
Repeat Sales
and Revenue
Retention
$20,000
$250,000
50
$270,000
Control - 4 Up
 What is the CBI that
Six Sigma Monthly Update for: _______________
we are addressing?
Project Deliverables/Results/Financial Benefits:
Project name:
 What are the Issues?
Original Problem Statement
:
DMAIC Phase
:
 What are the
Action Items?
 What is the status
Projected Financial Benefits
:
Completion Date
:
Key Issues by Category:
I
II
III
IV
Action Items/Comments
:
of the project?
Black Belt/Green Belt:
Design for Success
Champion/Team Leader:
Executive Sponsor:
51
Some Final Thoughts About Tools
 Select tools based on what you need to do
 Use of tools is a good way to share knowledge among
team members
 The sequence of tool use documents the team’s thought process
 Never use a tool that’s more complex than the
problem that you’re trying to solve
 Use enough tools to guarantee the success
of the project
 But…Don’t become a slave to the tools
Design for Success
52
Some Last Thoughts on Six Sigma
 In many areas, Six Sigma is not reasonably attainable.
 Regardless, a goal of every performance improvement project
should be to raise the Sigma rating.
 Six Sigma is about continuous improvement.
 In the words of Jack Welch, former Chairman of GE: “It’s the
only program I’ve ever seen where customers win, employees
are engaged and satisfied, and shareholders are rewarded.”
By the way, if Tiger Woods could putt at a level of Six Sigma, he
would only miss one putt approximately every 150 years!
Design for Success
53
3 Critical Skills
 Communication
 Teamwork
 Mathematics
Design for Success
54
Does Six Sigma have an application?
Design for Success
55