Calidad 6 Sigma

September 2000 Results that you can count on...

The Six Sigma Approach - Hemant Urdhwareshe,

General Manager, Supplier Quality Assurance

Cummins India Ltd.

Close your eyes and try to visualize that:

• Every train arrives on time and leaves on time!

• In a company employing 100 employees, no employee is late throughout the year!

• All the passengers get their luggage at the destination.

Are we crazy? No! These are examples to illustrate the meaning of six sigma quality level. Six sigma is one idea that is adopted by organizations to become world class. It is aimed at reducing the defect levels in products and processes to a level of less than 3.4 defects per million opportunities.

Evolution of Six Sigma

The six sigma approach was first introduced and developed at Motorola in early 1990s. Later in the mid-nineties, it was adopted by General Electric and Allied Signal. According to Jack Welch CEO of GE "Six sigma is the most challenging and potentially rewarding strategy GE have ever undertaken" GE listed tremendous benefits of the approach in their annual report in 1997. These benefits included:

• 10 fold increase in the life of CT scanner x-ray tubes at Medical Devices

• Improved yield resulting in increased capacity without additional investments at Superabrasives - their industrial diamond business

• 62% reduction in turnaround time at the repair shops of the railcar leasing business

• Addition of 300 million pounds of new capacity . This was equivalent to adding new plant!

In GE, Significant portions of the bonuses were linked to the introduction of six sigma. Six sigma was originally centered around manufacturing improvements. The reason for this was knowledge of the statistical tools in the manufacturing functions and the ease with which we can quantify the benefits. However these improvements were not readily seen by the customers. The approach was therefore broadened to all business operations. The success of these companies with the six sigma approach caught the attention of Wall Street making it a popular strategy that is being adopted by many organizations worldwide. Indian organizations such as Wipro, Hero Motors, Godrej-GE have also adopted six sigma strategy to improve their businesses (Reference- Business Today, Sept 22, 1999).

What is six sigma?

Six sigma is a highly disciplined approach used to reduce the process variations to the extent that the level of defects are drastically reduced to less than 3.4 per million process, product or service opportunities (DPMO). The approach relies heavily on advanced statistical tools. While these tools have been known earlier, these were primarily limited to the statisticians and quality professionals. Sigma is Greek letter that is used to describe variability. In statistical quality control, this means "standard deviation". Most of us may be familiar with the normal distribution and its properties. We are aware of the properties of normal distribution:

• 99.73% of the area lies within mean m ± 3%

• 95.46% of the area lies within mean m ± 2%

• 68.26% of the area lies within mean m ± %

When we proudly mention that our process capability Cp is 1.33, our process spread is ± 4. This would mean and estimated defect rate of 0.0063% or 63 defective parts per million (PPM). Moreover, when we deploy processes in production, the mean of the process can shift to the extent of approximately 1.5 in such case the defect rate will increase to a much higher value. This would be about 6200 PPM! If the process capability is improved to a Cp of 2.0 the PPM level will come down to 0.002. With a shift of 1.5 the Cpk will drop down to 1.5 and the number of parts defective will be about 3.4 PPM. A Cp of 2.0 corresponds to the process spread of ± 6. This is shown in the figures below.

Let us consider an example of an assembly with 30 parts and 5 steps. This means that there are 30x5 or 150 opportunities for a defect to occur. If we find that there are 100 defects in every 100 assemblies. This means one defect per assembly or 1 million defects in one million assemblies. This can be converted to 1000000 x (1/150) or 6666 defects per million opportunities (DPMO). This approximately corresponds to a sigma level of 3.97. The sigma quality level can be approximately determined using the equation (Schmidt and Launsby 1997):

Refer to the following table for relation between sigma quality level and PPM. The PPM values are calculated considering a shift of 1.5

Another concept that is used as a metric in six sigma is Rolled Throughput Yield (RTY). Let us assume that a part goes through ten operations. At each stage 99% parts are good and 1% are reject. It is not very difficult to calculate that we get good 90.43 % parts at the end of the tenth stage. This means if we start with a batch of 1000 parts, we get 904 good parts and scrap or rework 96 part! The RTY of the process is 90.43%.

While we are talking about the statistical basis of the PPM levels, six sigma is not only about statistical methods.

The backbone of a successful six sigma approach is strong commitment of top management. This is like any other successful programs. Moreover, all improvements planned through six sigma projects must have a direct benefit that can be measured in terms of improvement in the bottom-line.

The Six Sigma Methodology:

The projects having large impact of customer satisfaction and significant impact on bottom-line are selected. Top management of the organization has very important role during selection of projects and leaders. The projects are clearly defined in terms

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