Six Sigma for Organizational Excellence: A Statistical Approach

637 Pages·2015·11.41 MB·English

by  K. Muralidharan (auth.)

K. Muralidharan
Six Sigma for
Organizational
Excellence
A Statistical Approach
Six Sigma for Organizational Excellence
K. Muralidharan
Six Sigma for Organizational
Excellence
A Statistical Approach
123
K.Muralidharan
Department of Statistics
Faculty ofScience
M.S. Universityof Baroda
Vadodara, Gujarat
India
ISBN 978-81-322-2324-5 ISBN 978-81-322-2325-2 (eBook)
DOI 10.1007/978-81-322-2325-2
LibraryofCongressControlNumber:2015932236
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Preface
Organizations run successful business only when they provide satisfaction to
consumers. Competitiveness in quality is not only central to profitability, but also
crucial to business survival. Consumer should not be required to make a choice
between price and quality of products. Manufacturing and service organizations
existiftheylearnhowtomanagequality.Intoday’stoughandchallengingbusiness
environment, the development and implementation of a comprehensive quality
policy is not merely desirable, it is essential. Six Sigma is a business process
improvement tool to achieve customer satisfaction through a systematic problem-
solving approach. It is uniquely driven by close understanding of customer
requirements and reinventingbusinessprocesses. Itfacilitates people excellenceas
well as technical excellence in terms of creativity, collaboration, communication,
dedication and above all increases the accountability of what one does in an
organization.
The Six Sigma philosophy works under a five-phase improvement cycle, called
DMAIC,whereDfordefine,Mformeasure,Aforanalysis,Iforimprovementand
C for control. It can apply to both process improvement and product improvement
orevendesignredesign efforts. ASixSigmainitiative includes enterpriseresource
planning (ERP), e-commerce and services, lean manufacturing, customer relation-
shipmanagementsystems,strategicbusinesspartnerships,knowledgemanagement,
activity-based management, just-in-time inventory and globalization. Organiza-
tional excellence is a result of continuous improvement, which can attain only
throughsystematicreductionofdefectsandvariationsintheprocessactivities.Here
comes the importance of Six Sigma methodology.
Who Will Read?
This book serves three main purposes: first, an academic book for students and
teachers; second, this book can be used as a reference material for engineers and
managers working as Six Sigma professionals and Black Belt trainers; third, this
v
vi Preface
bookcouldbeausermanualforpractitionersandprojectconsultants.Theemphasis
is laid on understanding and applying the concepts of quality through project
management and technical analysis by using statistical methods. The contents are
prepared in a ready-to-use form with continuity established for each phases of Six
Sigma project. This will help practitioners to implement the Six Sigma projects
without any hurdles. Three most important aspects of Six Sigma project—Sigma
estimation, sample size calculation and Sigma-level estimation—are separately
treated in different chapters. Necessary tables, graphs, descriptions and checklists
are provided to ease the referencing of tools and techniques. The concepts are
critically assessed, reasoned and explained to enable their uses in managerial
decisionmaking.Theobjectivesofeachchapteranditscontinuitywithsubsequent
chapters are also clearly established for a smooth reading. Charts and plots, a
numberofworked-outexamples,casestudiesandnecessarytablesareprovidedfor
better understanding of the concepts.
Students of undergraduate, postgraduate and research students can make opti-
mumuseoftheintegratedconceptsofqualityengineeringandmanagementtoolsof
statistics. The science of Six Sigma project management, integrated through engi-
neeringconcepts,isexplainedthroughstatisticaltoolsandthatistheuniquenessof
this book. The book could also serve as a concise book for Six Sigma Green Belt,
Black Belt and Master Black Belt training.
Inspiration
The content is based on the author’s own teaching experience, lecture notes,
research publications, private communications, book references, article citations
and training and consulting materials. The content is highly inspired with some
available books: The Six Sigma Way by Peter S. Pande et al. (2003), Juran’s
Quality Planning and Analysis for Enterprise Quality by Frank M. Gryna et al.
(2008),LeanSixSigmaStatisticsbyAlastairMuir(2005),TheCertifiedSixSigma
Black Belt Handbook by T.M. Kubiak and Donald W. Benbow (2009), Introduc-
tion to Statistical Quality Control by Douglas C. Montgomery (2009), and Statis-
tical Process Control by John S. Oakland (2012). The author has consulted a
number of other books on Six Sigma, lean, management, engineering and general
statistical books for integrating the things, as required by Six Sigma professionals.
About the book
Thisbookintegratesthreemaindisciplines:Science,EngineeringandManagement.
The author has tried to maintain a balance of these three disciplines from a prac-
titioner’s point of view. Chapter 1 is like an introduction to various Six Sigma
concepts practiced by professionals and organizations, globally. Various
Preface vii
perceptions and their implementation styles are critically examined in this chapter.
Chapter 2 details the importance of Six Sigma project management concepts. The
necessity of model-based projects is statistically emphasized. Apart from this, the
importance of quantitative project management and its risk assessment and critical
evaluation are also discussed in this chapter. The importance of process-based
projectsandmodelsareincludedinChap.3.Thisisfollowedbytheunderstanding
of the process variation, which is an essential part of a Six Sigma project. The
sources of identifying variation and possible identification of variations are dis-
cussed in Chap. 4. Since Sigma is being considered as a measure of variation, the
estimationofSigmaisavitalissueinastatisticalstudy.Thisisconsideredindetail
in Chap. 5. A number of methods of estimation of Sigma is considered in the
chapter. Chapter 6 details one of the important issues of project management, and
that is the sample size determination. From a practitioner’s point of view, many
simpleandeasy-to-implementmethodsofsamplesizecalculationsarepresentedin
the chapter. Chapters 7–11 discuss the Six Sigma philosophy, systematically,
detailing with the necessary tools and techniques of statistics to execute a project.
The management quality improvement topics covered in these phases are SIPOC,
voice of customer, value stream mapping, brainstorming, root-cause analysis,
failure-mode effect analysis, seven quality tools, Kaizen, 5S, designed for Six
Sigma, quality function deployment, understanding of defect per unit (DPU) and
defect per million opportunities (DPMO), Sigma-level estimation, cost of poor
quality, etc.
Statistical topics include descriptive statistics, the basic notions on probability
and probability distributions, point and interval estimation of parameters, para-
metric and nonparametric testing, correlation and regression techniques, design of
experiments including factorial experiments, control charts, etc. A care has been
taken to show every method in a simple and practical way without involving any
rigorous theoretical steps involved. The SQC/SPC part of the project management
is given the maximum emphasis, as they naturally become the essential tools to
improve andcontrolthephase ofthephilosophy. Mostofthetoolsandtechniques
are explained through numerical and illustrative examples. The performance of a
SixSigmaprojectisevaluatedthroughitsSigmalevel.TheunderstandingofDPU/
DPMO and short-term and long-term variability of a process, etc., are the
requirements for the Sigma-level estimation. This is carried out in Chap. 12. One
can also refer to this chapter in the beginning of the actual project execution for
setting up the goal and can be used to baseline the performance evaluation. This
chapterwillbehandyforthoseinvolvedwithprojectevaluationandtargetsettingat
any time during the project.
The methods for continuous improvement is presented in Chap. 13, where the
author has discussed various quality improvement programs offered by Deming,
Juran, Feigenbaum, Crosby, Ishikawa, Taguchi, etc. Chapter 14 offers the impor-
tance of Six Sigma marketing, which is a growing area of research in Six Sigma
philosophy.ASixSigmamarketingisafact-baseddata-drivendisciplinedapproach
togrowingmarketsharebyprovidingtargetedproduct/marketswithsuperiorvalue.
Various issues associated with Six Sigma marketing, like strategic, tactical, and
viii Preface
operational processes of marketing, are discussed in the chapter. The chapter on
Green Six Sigma emphasizes the importance of Six Sigma projects from a sus-
tainable business practices. Green Six Sigma is nothing but the qualitative and
quantitative assessment of the direct and eventual environmental effects of all
processes and products of an organization. The activities involve the systematic
usage of infrastructure and manpower, optimum use of technology and account-
ability of sustainable business practices. The benefits of Green Six Sigma are also
detailed in the chapter.
TheprosandconsofSixSigmaarepresentedinChap.16.Adetaileddiscussion
on advantages and disadvantage; various limitations, dos and don’ts of Six Sigma
arealsodiscussedinthechapter.TheconcernaboutthefutureofSixSigmaisalso
given at the end of the chapter. Chapter 17 is allotted to the discussion of case
studies.
Apartfromthis,aseparatesessionon“RelevanceforManagers”isalsoaddedat
the end of each chapter to increase the usefulness of each tools and methods. The
citations and references for each chapter are given at the end of each chapter.
Although Microsoft® Excel®, Minitab® and R® software have been used in the
book for preparing charts and plots, this is not a prerequisite for using this book.
Vadodara, Gujarat, India K. Muralidharan
Acknowledgments
This book has come to fruition because of the generosity shown by many profes-
sional colleagues, friends and well-wishers. I express my deep sense of gratitude
and regards to all of them. I sincerely acknowledge Prof. Subha Chakraborthy
(University of Alabama), Prof. W.H. Woodall (Virginia Tech University), Prof.
D.C. Montgomery (Arizona State University) and Prof. Jiju Antony (Heriot-Watt
University) for their helpful contributions to the content of the book. I sincerely
thank the head, Department of Statistics, University of Pune, for permitting me to
usethestatisticaltables.Inputtingtogethertheprofessionalperspectives,Iplaceon
record many university department heads, colleagues and librarians for their
assistance in materials and academic collaborations.
MycolleaguesattheMaharajah Sayajirao UniversityofBaroda havebeenvery
supportive and cooperative in rendering their assistance towards this project. Two
of my colleagues Dr. (Mrs.) Khimiya Tinani and Dr. (Mrs.) Rupal Shah need
special mention as they have done an excellent job of verifying and correcting the
problems and their solutions in the book. I sincerely acknowledge Prof. Ven-
kateswarluandProf.J.P.ParikhattheDepartmentofEnglish,MaharajahSayajirao
UniversityofBaroda,fortheirassistancetowardsreadingthematerialforlanguage,
grammar and syntax. I also place on record Dr. Aarti Mujumdar and Dr. Milan
Sagar of Cambridge Education for providing their professional editorial service.
IalsothankProf.B.K.Kale(UniversityofPune)andProf.AshokShanubhogue
(Sardar Patel University), asthey remain asa constant inspiration tometotake up
thetaskandassignmentsthroughoutmyprofessionalcareer.Thanksarealsodueto
my industry friends Mr. Rakesh Singh (from Trendz Process Consulting, Hydera-
bad), Mr. Rajesh Nambiar (Panacea Software, Baroda) and Mr. Vimal Vyas (Sie-
mens, Vadodara) for enlightening me on the importance of Six Sigma concepts in
industries and manufacturing industries.
I thank my wife Lathika and sons Vivek and Varun for their patience and
silence, rendered throughout the writing of the book.
If the readers find that proper acknowledgement has not made to any particular
individuals, authors, references, citations, etc., kindly treat this it is not intentional
and request that you bring the same to my notice for future mention.
ix
Contents
1 Six Sigma Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Six Sigma Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 Six Sigma Tools. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.4 Six Sigma Tasks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.5 Six Sigma Deliverables . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.6 Lean Six Sigma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.7 Six Sigma: The Belt Systems. . . . . . . . . . . . . . . . . . . . . . . 14
1.8 Relevance for Managers. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2 Six Sigma Project Management. . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Project Phases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.4 Alignment with the Business Strategy . . . . . . . . . . . . . . . . . 22
2.5 Project Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.6 Managing the Stakeholders. . . . . . . . . . . . . . . . . . . . . . . . . 24
2.7 A Six Sigma Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.7.1 Probability Model-Based Project. . . . . . . . . . . . . . . 27
2.7.2 Regression Model-Based Project. . . . . . . . . . . . . . . 27
2.8 Quantitative Project Management . . . . . . . . . . . . . . . . . . . . 28
2.9 Project Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.9.1 Quantifying the Risk. . . . . . . . . . . . . . . . . . . . . . . 30
2.10 Critical Evaluation of a Project. . . . . . . . . . . . . . . . . . . . . . 31
2.11 Role of Computing Technology in Project Management. . . . . 33
2.12 Launch and Execution Process . . . . . . . . . . . . . . . . . . . . . . 34
2.13 Closure of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
xi