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CHAPTER 9
Process Improvement and Six Sigma
Teaching Notes
This chapter brings process improvement and the Six Sigma concept into a sharp focus, and builds
on the need to integrate a performance management framework with operational requirements in
managing quality. In this chapter, we introduce the statistical basis for Six Sigma, and outline the
requirements for Six Sigma implementation. This chapter also extends the concepts of Chapter 5 on
process focus and Chapter 6 on statistical thinking and introduces the 7 QC Tools used for kaizen --
continuous improvement -- Six Sigma and “lean” projects. Key objectives for this chapter should be
to assist students:
• To review the definition of a process as a sequence of linked activities that is intended to
achieve some result, such as producing a good or service for a customer within or outside
• To appreciate that Six Sigma can be described as a business improvement approach that
seeks to find and eliminate causes of defects and errors in manufacturing and service
processes by focusing on outputs that are critical to customers and a clear financial return
Process Improvement and Six Sigma 2
• To compare some of the contrasting features between TQM and Six Sigma which
include: TQM is based largely on worker empowerment and teams; Six Sigma is owned
by business leader champions. TQM activities generally occur within a function, process,
or individual workplace; Six Sigma projects are truly cross-functional. TQM training is
• To understand that a six sigma quality level corresponds to a process variation equal to
half of the design tolerance while allowing the mean to shift as much as 1.5 standard
• To learn that a defect, or nonconformance, is any mistake or error that is passed on to
the customer. A unit of work is the output of a process or an individual process step. A
common measure of output quality is defects per unit (DPU), computed as Number of
defects discovered/Number of units produced, and in Six Sigma metrics, defects per
• To learn about and practice problem solving -- correcting deviations between what is
happening and what should be happening. Quality related problems often fall into five
categories: conformance problems, unstructured performance problems, efficiency
problems, product design problems, and process design problems.
• To appreciate that a structured problem solving process provides employees and teams
with a common language and a set of tools to communicate with each other.
• To develop understanding of the Six Sigma DMAIC process stages of: 1) Define - the
Process Improvement and Six Sigma 3
• To explore the use of Pareto distributions which are histograms of the data from the
largest frequency to the smallest. Pareto diagrams help analysts to progressively focus in
on the most appropriate problems.
• To understand the benefits of a project charter, which defines the project, its objectives,
and deliverables, and represents a contract between the project team and the sponsor. A
project charter will typically define the problem in a simple fashion, the project objective,
the project team and sponsor, the customers and CTQs on which the project focuses,
existing measures and performance benchmarks, expected benefits and financial
justification, a project timeline, and the resources needed to carry out the project
• To appreciate that projects are the vehicles that are used to organize team efforts and to
implement the DMAIC process. Being able to manage a large portfolio of projects, as
would be found in Six Sigma environments, is vital to organizational success.
• To know that project teams are a vital part of Six Sigma efforts and are comprised of
champions, master black belts, black belts, green belts, other team members, who each
provide different levels of knowledge and expertise in solving problems.
• To study factors that should be considered when selecting Six Sigma projects including:
financial return, impacts on revenues and market share, impacts on customers and
• To become familiar with, and learn to apply the "seven QC tools" and related tools for
quality problem solving. The seven tools include flowcharts or process maps, run charts,
data sheets or check sheets, histograms, cause-and-effect diagrams, Pareto diagrams,
scatter diagrams and control charts.
• To introduce the concept of lean production which refers to approaches initially
developed by the Toyota Motor Corporation that focus on the elimination of waste in all
forms, including defects requiring rework, unnecessary processing steps, unnecessary
Process Improvement and Six Sigma 4
• To comprehend that tools and approaches used in Six Sigma and lean production are
different, yet complementary. Lean is focused on efficiency by reducing waste and
improving process flow while Six Sigma is focused on effectiveness by reducing errors
• To appreciate that although Six Sigma was developed in the manufacturing sector, it can
The Instructor’s Resource section of the website accompanying this text has a number of links to
ANSWERS TO QUALITY IN PRACTICE KEY ISSUES
An Application of Six Sigma to Reduce Medical Errors
1. Process mapping was an essential early step for Froedtert Hospital to take in order to
identify the points at which failures in the IV infusion process could possibly take place.
2. The teams and task forces were multidisciplinary because the processes crossed
organizational boundaries. For example, the IV’s could be used in emergency rooms,
surgical theatres, maternity wards, etc. They would be of interest and concern to physicians,
nurses, pharmacists, and administrators, as pointed out in the case. The approach has the
benefit of bringing people with different perspectives and expertise together to work on a
Process Improvement and Six Sigma 5
Applying Quality Improvement Tools to an Order Fulfillment Process
1. The DMAIC process from this chapter, and the Deming cycle and the creative problem-
solving process are basically parallel statements of statistical thinking used to solve
problems.
Although not a perfect “fit” these processes can be compared in a parallel fashion as
follows:
Six Sigma
Deming
Creative Problem-solving
Define
Plan
Understanding the "mess"
In the case study the team defined the problem (initially) as “discover ways to reduce order
processing time so that at least 98% of orders would be shipped on time (within 24 hours of
receipt). They then sought to understand the process by gathering facts – the data of times
for processing 50 orders. They then analyzed the data in a search for the causes for variation
2. Although not mentioned in the case, Deming would suggest that the cycle could be repeated
over and over for “continuous improvement.” Therefore, if sufficient time had not been
Process Improvement and Six Sigma 6
Answers to Review Questions
1. The common themes that can be applied to the Deming cycle, creative problem solving
and the DMAIC process of Six Sigma are:
1. Redefining and analyzing the problem: Collect and organize information, analyze the
data and underlying assumptions, and reexamine the problem for new perspectives,
2. The Deming cycle is a simple adaptation of the scientific method for process
improvement. In 1939, Walter Shewhart first introduced this as a three-step process of
specification, production, and inspection for mass production that “constitute a dynamic
scientific process of acquiring knowledge.” The “Deming wheel” consisted of:
1. Design the product with appropriate tests.
2. Make the product and test in the production line and in the laboratory.
3. Sell the product.
3. Six Sigma can be described as a business improvement approach that seeks to find and
eliminate causes of defects and errors in manufacturing and service processes by focusing
on outputs that are critical to customers and a clear financial return for the organization.
The term six sigma is based on a statistical measure that equates to 3.4 or fewer errors or
defects per million opportunities. We use “six sigma” to refer to the statistical measure
Process Improvement and Six Sigma 7
and “Six Sigma” to refer to the management philosophy. The late Bill Smith, a reliability
engineer at Motorola, is credited with originating the concept during the mid-1980s and
selling it to Motorola’s CEO, Robert Galvin. Smith noted that system failure rates were
4. The core philosophy of Six Sigma is based on the following concepts:
1. Think in terms of key business processes and customer requirements with a clear
focus on overall strategic objectives.
2. Focus on corporate sponsors responsible for championing projects, support team
activities, help to overcome resistance to change, and obtain resources.
3. Emphasize such quantifiable measures as defects per million opportunities (dpmo)
that can be applied to all parts of an organization: manufacturing, engineering,
Process Improvement and Six Sigma 8
5. A six sigma quality level corresponds to a process variation equal to half of the design
tolerance (in terms of the process capability index, Cp = 2.0) while allowing the mean to
7. All quality problem-solving can be classified into the following five categories:
a. Conformance problems are defined by unsatisfactory performance by a well-specified
system. Users are not happy with system outputs, such as quality or customer service
levels. Traditional quality improvement tools and Six Sigma methods are often used
here.
b. Efficiency problems result from unsatisfactory performance from the standpoint of
stakeholders other than customers. Typical examples are cost and productivity issues.
8. Projects are the vehicles that are used to organize and to implement Six Sigma. Although
projects are set up as temporary organization structures, their flexibility allows cross-
functional teams to complete significant work in minimum time, if well managed. One of
the challenges of implementing Six Sigma projects is to coordinate them with normal
work activities. Six Sigma teams are comprised of several types of individuals:
Process Improvement and Six Sigma 9
Champions: Senior-level managers who promote and lead the deployment of Six Sigma
in a significant area of the business.
Master Black Belts: Full-time Six Sigma experts who are responsible for Six Sigma
9. Green belts, black belts, and master black belts should have broad knowledge and
management expertise. Specifically, the following are important for their respective roles:
• Champions: Champions understand the philosophy of Six Sigma, select projects, set
objectives, allocate resources, and select and mentor teams. Champions own Six
Sigma projects and are responsible for their completion and results; typically they
also own the process that the project is focused on improving. More importantly,
champions work toward removing barriers—organizational, financial, personal—that
10. Factors that should be considered when selecting Six Sigma projects include the
following:
• Financial return, as measured by costs associated with quality and process
performance, and impacts on revenues and market share
• Impacts on customers and organizational effectiveness
Process Improvement and Six Sigma 10
11. The A3 Report, was created by Toyota to succinctly consolidate and visualize
information for identifying and solving quality problems. They exploit simplicity and
visualization to facilitate process improvement. A3 reports are printed on a single sheet
of 11-inch by 17-inch paper and contain text, pictures, diagrams, and charts, designed to
enrich and clarify the problem and data. The reports are divided into seven sections
which roughly follow the flow of the DMAIC process:
1. Theme, which succinctly states the problem being addressed.
12. Pareto analysis can help identify the most important issue among a mess of symptoms is
Pareto analysis. Joseph Juran coined the term “the Pareto principle,” and popularized it
in 1950 after observing that a high proportion of quality issues resulted from only a few
causes. He named this technique after Vilfredo Pareto (1848–1923), an Italian economist
who determined that 85 percent of the wealth in Milan was owned by only 15 percent of
the people. Pareto analysis clearly separates the vital few from the trivial many and
provides direction for selecting projects for improvement.
13. A SIPOC diagram is a special high-level process map. SIPOC stands for Suppliers-
Inputs-Process-Outputs-Customers. SIPOC maps provide a broad overview of the key
elements in the process and help to explain who is the process owner, how inputs are
acquired, who the process serves, and how it adds value. Inputs are goods and services
Process Improvement and Six Sigma 11
14. A project charter defines the project, its objectives, and deliverables, and represents a
contract between the project team and the sponsor. A project charter will typically define
the problem in a simple fashion, the project objective, the project team and sponsor, the
15. It is also important to develop operational definitions for all performance measures that
will be used. For example, what does it mean to have “on-time delivery”? Does it mean
within one day of the promised time? One week? One hour? What is an error? Is it wrong
information on an invoice, a typographical mistake, or either? Clearly, any data are
meaningless unless they are well defined and understood without ambiguity.
16. There are a number of types of check sheets. They are special types of data collection
forms, which are useful because the results may be interpreted on the form directly
17. A special type of process map is a value stream map. The value stream refers to all
activities involved in designing, producing, and delivering goods and services to
customers. These activities include the flow of materials throughout the supply chain,
transformation activities in the manufacturing or service delivery process, and the flow of
Process Improvement and Six Sigma 12
time, it generally means that waste in the form of overproduction is occurring; when it is
less, the firm cannot meet customer demand. Value stream maps might also include other
18. The goal of problem solving is to identify the fundamental causes of problems in order to
correct them—the root causes. NCR Corporation defines root cause as “that condition
(or interrelated set of conditions) having allowed or caused a defect to occur, which once
corrected properly, permanently prevents recurrence of the defect in the same, or
Root cause analysis is an approach using statistical, quantitative, or qualitative tools to
identify and understand the root cause. You might recall that the purpose of DFMEA
(design failure mode and effects analysis), which we discussed in Chapter 7, is to identify
19. Brainstorming, is a useful group problem-solving procedure for generating ideas, was
proposed by Alex Osborn “for the sole purpose of producing checklists of ideas” that can
be used in developing a solution to a problem. With brainstorming, no criticism is
20. The key tools used in lean production, include:
• The 5S’s. The 5S’s are derived from Japanese terms: seiri (sort), seiton (set in order),
seiso (shine), seiketsu (standardize), and shitsuke (sustain). They define a system for
workplace organization and standardization. Sort refers to ensuring that each item in a
workplace is in its proper place or identified as unnecessary and removed. Set in
order means to arrange materials and equipment so that they are easy to find and use.
structures.
• Visual controls. Visual controls are indicators for tools, parts, and production
activities that are placed in plain sight of all workers so that everyone can understand
Process Improvement and Six Sigma 13
• Efficient layout and standardized work. The layout of equipment and processes is
designed according to the best operational sequence, by physically linking and
arranging machines and process steps most efficiently, often in a cellular
arrangement. Standardizing the individual tasks by clearly specifying the proper
method reduces wasted human movement and energy.
• Pull production. In this system (also known as kanban or just-in-time), upstream
suppliers do not produce until the downstream customer signals a need for parts.
• Single minute exchange of dies (SMED). SMED refers to rapid changeover of tooling
and fixtures in machine shops so that multiple products in smaller batches can be run
on the same equipment. Reducing setup time adds value to the operation and
21. Lean production refers to approaches that originated at the Ford Motor Company in the
early 1900s, but which were refined and modernized by the Toyota Motor Corporation
later in the century. Lean approaches focus on the elimination of waste in all forms,
including defects requiring rework, unnecessary processing steps, unnecessary movement
22. LSS can provide substantial benefits to services. Important similarities exist between
manufacturing and nonmanufacturing processes. Both types of processes have “hidden
factories,” those places where the defective “product” is sent to be reworked or scrapped
Process Improvement and Six Sigma 14
• At CNH Capital, a project was implemented to decrease asset management cycle time
in posting repossessions to a bid list and remarketing website. Cycle time was
reduced 75 percent, from 40 days to 10 days, resulting in significant ongoing dollar
savings.
• A facility management company had a high level of “days sales outstanding.”
Initially, they tried to fix this issue by reducing the term of days in its billing cycle,
which, however, upset customers. Using LSS tools, they found that a large percentage
of accounts with high days sales outstanding received invoices having numerous
Answers to Discussion Questions
1. As with many other criticisms of quality improvement efforts, this Fortune article
focuses on what happens if organizations fail to apply the basic quality concepts to so-
called “improvement initiatives.” Deming frequently said: “There is no instant pudding.”
in making quality work. Thus, the statements in the article are largely bogus.
a. If Six Sigma has no noticeable impact on company financial statements, it’s because
not many “home runs” (large return) projects have been done. One of the strengths of
the Six Sigma concept is that it documents financial impacts of the projects.
Process Improvement and Six Sigma 15
2. Six Sigma projects can be devised to improve activities and processes in such areas as:
Sales and marketing projects
Perceived product value
Overall customer satisfaction
Sales force effectiveness
Complaint reduction
Supply chain management projects
Internal supplier quality measurements
Defect levels
Response time
Customer ratings of prod/service performance
Managing information technology projects
Internal information technology quality measurements
Human resource projects
Root cause analysis and reduction of absenteeism
Root cause analysis and reduction of turnover
3. A set of CTQs that might influence overall service satisfaction for service at an
automobile dealership includes the dimensions of service quality found in Chapter 4, as
well as a couple of related ones (timeliness and time):
Empathy – ability to understand and empathize with the problems of customers who may
Process Improvement and Six Sigma 16
Assurance – with limited technical proficiency, customers have to feel comfortable
relying on the expertise of the repair staff
Reliability – customers wan the problems fixed right, the first time, so that they don’t
have to keep returning, over and over, for the same problem
4. “Resistance to change” is to be expected in introduction of a new approach, such as Six
Sigma, and plays a key part in successful adoption of the concept. As pointed out in
Chapter 6, keys to overcoming resistance to change, more often held by managers than by
first-line employees, are: a) early involvement by all parties, b) open and honest dialogue,
5. Processes that students might encounter at their college or university due to part-time work
on campus might include accounting, budgeting, purchasing, training and development, and
research. Non-educational institutions they might benchmark might be hospitals
6. DMAIC might be used in your personal life. If you want to improve a skill such as
playing a musical instrument, you would define the specific objective, such as learning
Process Improvement and Six Sigma 17
7. The appropriate tools to attack the problems would be:
a. If the significant causes of the copier jams are known, use a flowchart to show the
method for clearing each type of jam so that users would know how to fix them.
b. Use a cause-effect diagram to identify the problem and to focus in on the most
significant one in the engineering publications.
c. Gather data using a checksheet to identify the significant causes of errors with the laser
printer, and then use a Pareto diagram to graph them.
8. Lean concepts similar to those used in small businesses may have applicability to
classrooms, such as:
• Obtain administrative commitment
• Identify key processes and goals
9. Ideally, the skills of technical experts (Green or Black Belts) will complement those of team
members (often called subject matter experts, or SME’s). The two types of experts may be
at odds if they cannot agree ways to analyze problems, what their measures show, and how
10. The DMAIC process for a registration process design/improvement should begin with
customer needs and expectations (expected quality), and end with what the customer sees
and believes the quality of the product to be (perceived quality). These might include
characteristics as follows:
Process Improvement and Six Sigma 18
Attributes Technical Requirements
Convenience Time, dates, internet, phone
Expected quality needs to be considered in the Define stage based on what the customer
assumes will be received from the process as a reflection of the customer's needs. The
university must focus on the key dimensions that are reflected in specific customer needs. If
Technical requirements determine the design quality of the product. Process designers' must
Measure and Analyze not only the technical requirements for providing and registering
students for courses, but also perceptions of their needs, which may differ from what is
feasible. Other “customers” of the process also have some CTQ issues that registration
process designers must be aware of. For instance, while the "average" student might need
11. To balance the who, what, where, when why, and how of Six Sigma implementation, a
manager, assisted by the team, must evaluate them and select the most promising. This
includes confirming that the proposed solution will positively impact the key process
variables and the CTQ’s, and identifying the maximum acceptable ranges of these
variables. Since problem solutions often entail technical or organizational changes, some
Process Improvement and Six Sigma 19
12. An argument can be made on either side of the question. On the positive side, Welch’s
action could be taken as a clear signal that Six Sigma was going to be vital process at
G.E. for both management development and continuous improvement. It is still “alive
13. The problem of proposing changes in one area that cancels out gains in the other area would
appear to be due to a lack of communication between the two project teams. However, it
may also have indicated a weakness in defining the scope of the projects. The team leaders
SOLUTIONS TO PROBLEMS
1. Megasigma Corp. has a process which they believe is operating near the six sigma level
and want to verify this. If the specification for a critical part in the process is 2.75 cm ±
0.05 and the standard deviation for the process is 0.02, at what sigma level is this process
operating?
Answer:
If the specification limits for the process are LSL = 2.70 and USL = 2.80 and if the
process standard deviation is 0.0085, then using equation (9.1), we get:
2. Neverflounder Fish Company advertises that 98.7% of their fish were caught within the
past 36 hours and that all of their products are 100% fresh. How many dpmo does this
claim represent? At what sigma level is this process operating?
Process Improvement and Six Sigma 20
Answer:
3. During one month, MegaInvCo (MIC) processed 51,000 invoices for Alpha Corp,
49,000 for Beta Corp, and 25,000 for Gamma Corp. Of these, 510 of the Alpha, 525 of
the Beta, and 480 of the Gamma invoices had to be reprocessed for errors. What is the
overall defect rate and the sigma level for all of the combined batches? For each
individual batch?
Answer:
To calculate the individual and combined dpmo’s and sigma levels, we get:
4. Expand Table 9.2 for sigma levels from 3.0 to 6.0 in increments of 0.1 on a spreadsheet.
Construct a chart showing dpmo as a function of the sigma level.
Answer:
We must use the relationship dpmo = (1 – NORM.DIST(x,1.5,1,TRUE))*1000000,
where x is the sigma level. We get:
Sigma Level
dpmo
Sigma Level
dpmo
3.0
66807.2
4.6
967.6
