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In the first six chapters of their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, the authors Mikel Harry, Ph.D., and Richard Schroeder explain the fundamentals of Six Sigma.   In chapter 7, they reveal the “meat” of the book, which is what the Six Sigma breakthrough strategy actually entails.

In this post and the next, I introduce the levels and the stages of the breakthrough strategy implementing Six Sigma.  However, before explaining the eight stages of the strategy, in this post I would like to explain the three levels of implementing the strategy according to the authors of this book.

Here are the three levels, how they are applied within an organization, what they are used for, who ends up implementing them, and how long the implementation period can take on a typical basis.   These three levels need to be coordinated within an organization so that they are smoothly meshed gears.

1)  Business Level–applying the Six Sigma Breakthrough Strategy in a methodical and disciplined way throughout the corporation.   Used to improve market share, increase profitability, and ensure long-term viability.   A Deployment Champion can take 3-5 years to implement.

2)  Operations Level–applying the Six Sigma Breakthrough Strategy through projects which are correctly defined and executed, and incorporating the results of these projects into running the day-to-day business of the corporation (the focus is more tactical as opposed to the strategic focus in the Business Level).   Used to improve yield, eliminate “hidden factories” (rework and/or scrap of units found to have defects), and reduce labor and material costs.   A Project Champion can take 12-18 months to implement.

3)  Process level–applying the Six Sigma Breakthrough Strategy to individual processes that make up the day-to-day operations the corporation.   Used to reduce defects, variation, and to improve process capability in order to improve profitability and customer satisfaction.   A Black Belt can take 6-8 weeks to implement.

The next post shows the eight stages of implementation of the Breakthrough Strategy.

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In the last post, the authors Mikel Harry, Ph.D., and Richard Schroeder of the book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, discussed the fact that first-time yield (the percentage of units that are defect-free) is a crude measure of quality, whereas throughput yield (the percentage of defects per defect opportunity) is a better measure of quality.

However, both first-time yield and throughput yield are terms that apply to a single step of the manufacturing process.   What are the equivalent concepts for multiple-step manufacturing processes.     The final yield is the multiple-step version of the first-time yield.    If out of 100 units that go into the assembly line, 90 units come out of the final step of the assembly process defect-free, then the final yield is 90%.    Now the multiple-step version of throughput yield is called the rolled throughput yield.   

If a product goes through four steps in the manufacturing process, and at each step the throughput yield is 50%, then the rolled throughput yield will be 50% x 50% x 50% x 50% = 6.25%.    However, it is unlikely that each step of the process will have a throughput yield that is the same; they will likely all differ.    If you have four throughput yields of 100%, 50%, 25%, and 50%, this will also create a rolled throughput yield of 6.25%.

If you have a rolled throughput yield and you want to find out what the “normalized” yield is of each process, what you are doing is computing the throughput yield that each process would have to have, on average, to create that rolled throughput yield.   To do this, if you have n steps in the manufacturing process, then the normalized yield will be the nth root of the rolled throughput yield.  In the example given on pp. 88-89 of the book, a rolled throughput yield of 36.8% for a process with 10 steps has a normalized yield of 90.5%.    This is because 90.5% multiplied by itself 10 times would create a rolled throughput yield of 36.8%.

In the same way that throughput yield is a more accurate metric than first-time yield, rolled throughput yield is a more accurate metric than final yield.    Using the more accurate metric is a way of really getting a handle on the quality of one’s products.   So a metric is essentially a type of mathematical tool for creating change.   But creating change that improves quality takes more than the right tool; it takes the right strategy, which is the subject of the next chapter “The Breakthrough Strategy”.  It is this chapter which is the subject of the next series of posts.

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In the last post, the authors Mikel Harry, Ph.D., and Richard Schroeder of the book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, discussed the fact that first-time yield is a crude measure of quality.

To recap their argument, first-time yield takes the number of units that go out of an inspection point defect-free, and divides it by the number of units that go into that inspection point.   So if 100 units go in, and 50 are defect-free, the first-time yield is 50%.   The problem about this metric is that, if you have two product assembly lines, and they both have a first-time yield of 50%, can you both say they have equal levels of quality?   Well, that would depend on the complexity of the parts involved.

If the units on assembly line A are very simple parts that only have 2 ways that each part could be defective, and the units on assembly line B are very complex parts that have 200 ways that each part could be defective, then a 50% first-time yield of product B is actually a lot more impressive than a 50% first-time yield of product A.    By concentrating on the parts that are defect free, it doesn’t tell you how many defects are in each unit that aren’t defect free:   are there 2 defects, 8 defects, or 28?    The first-time yield metric doesn’t give you this information.

The more accurate measure is throughput yield.  This is the number of defects per defect opportunity.    Let’s take our product A and product B from the previous example.    They both have first-time yield of 50%.   What are their respective throughput yields?  Let’s assume each unit has only defect found.    Product A has 2 ways that each part could be defective, so it has a throughput yield of 50%.    Product A has 200 ways that each part could be defective, so it has a throughput yield of 0.5%.   Product B is of a higher quality than product A, and this is readily borne out by the throughput yield metric.

However, as you probably can guess, there are very few manufacturing processes that have only one step.    Most manufacturing processes have several steps.   How do you calculate the yield for multiple-step manufacturing processes?   That is the subject of the next post.

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In the sixth chapter of their book Six Sigma:  The Breakthrough Strategy Revolutionizing the World’s Top Corporations, by Ikel Harry, Ph.D., and Richard Schroeder, called “Unmasking the Hidden Factory,” the authors discuss the metric called “yield”.  The basic concept of yield is that it takes the number of units that leave an inspection point after passing inspection, called the “output”, and divides it by the number of units that enter that particular inspection point, known as the “input”.   So if 100% of the units pass, the yield is 100%, but if only 50% of them pass, the yield is 50%.   This is sometimes referred to as “first-time yield” if the yield is measured at the first point of inspection.   The “final yield” would be, in contrast, the yield measured after the final point of inspection.

What is the problem with this metric?   Well, the problem with is that not all yields are created alike.   From a quality perspective, the total defects per unit is a better measure of the quality of a unit.   If 50% of the units of product A and product B are found to have at least one defect, then the yields would be considered the same.    But a better metric comparing product A and product B would be the total number of defects per unit (TDPU).   So if product A has 2 defects per unit and product B only has on average 1 defect per unit, then product B has higher quality.

First-time yield therefore does not give an indication of quality as reliable as the TDPU.   Another way that it is not a reliable indicator is the factor that, if an inspection shows that 5 out of 10 units contain defects, and the inspector throws out the 5 defect-containing units, then someone down the line may think, “wow, all of the units coming out of the last inspection point are defect-free; we must be doing high quality work!”   Unfortunately, this is only if the cost of the 5 scrapped units are not taken into consideration.

So that is why it is important to have a good metric of “yield”, because not all yields are created alike.

The next post goes into more detail about the difference between first-time yield, the total number of units with one or more defects, and throughput yield, the total number of defects per defect opportunity.

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In the sixth chapter of their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, the authors Ikel Harry, Ph.D. and Richard Schroeder bring up a fascinating concept of the “Hidden Factory.”

What is a factory?  It is a place where things are made.   Theoretically, the materials and staff in the factory should all be engaging in processes which either directly involve manufacturing or indirectly support those efforts.    However, the problem with a company that is producing products and services at quality levels of four Sigma or lower is that a lot of its time and attention are focused on detection and correction of defects.   The correction may involve reworking those products that contain defects, or it may involve scrapping those products if they are beyond repair.   Those processes in a factory that detect and correct mistakes made during the originally conceived manufacturing process are termed “the hidden factory.”   They are called “hidden” since these processes for correcting mistakes are not part of the original plan for the factory.

Whether planned for or not, the costs associated with these processes, whether they cover the extra material and labor costs involved, end up hurting the bottom line of the company.   Those companies that base their financial strategy on the profitability of the factory will find that those strategic targets may end up not being met because of the unanticipated costs created by the hidden factory.

So it should be the goal of every company that runs a factory where the processes are the level of four Sigma or lower to unmask the hidden factory.   Unmasking it is the first stage in dismantling it, and how to unmask it is the subject of the next post.

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In their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, Ikel Harry, Ph.D., and Richard Schroeder discuss the topic “Changing What Companies Measure” in chapter six.

In the last post, I discussed the importance of CTQ or Critical-to-Quality characteristics and how they need to be linked first and foremost to customer satisfaction, and then to the processes which a company needs to focus on improving in order to increase quality.   Again, it is important to remind the readers that the common sense of the meaning “quality”, that is, the absence of defects, is a necessary but not sufficient condition for quality.   Meaning that yes, the product has to be defect-free, but it also has to be what the customer wanted.   Necessary but not sufficient means that if the product is defect-free, but is not what the customer wanted, then the customer won’t buy it.   So “quality” in the world of manufacturing has to mean “a product the customer wants which is free of defects.”

The purpose of this post is to delve a little more deeply into what “customer satisfaction” means.  There are three areas:

1. Products that are high-quality (no defects and in line with customer requirements)
2. Products that are delivered on time
3. Products that are at the lowest possible cost (while being consistent with 1 and 2)

Why is this important for companies to focus on?   Many companies focus on quantities like “production time”, or how fast the products are being put through the manufacturing line, which do not correlate with 1, 2 or 3 above.   One of the famous scenes in the I Love Lucy series is the one where Lucy and Ethel decide to get a job in a chocolate factory.   They do okay during the first line test, so the supervisor yells “SPEED IT UP!” and it goes so impossibly fast that the hapless pair end up cramming the chocolates into mouths, pockets, and anywhere they can in order to make sure none of the chocolates end up going unwrapped through the conveyor belt to the next station.    The chances that some chocolate may have defects in them (like Lucy and Ethel’s teeth marks) has been increased by the unreasoning “need for speed” on the part of the supervisor.

And just because the chocolates are shooting out of the conveyor belt at lightning speed doesn’t mean they’ll get to the customer on time, because that will depend on delivery trucks, etc.    And the fact that there may need to be some “rework” on the assembly line will increase the cost of the product, not decrease it.

So this is an example of how the company is focusing on something that impressed the supervisor and may even impress someone in the board room but does not correlate to customer satisfaction in any way, shape or form.   Although this is a ridiculous example taken from a classic comedy show, the authors assure us that there are examples such as ridiculous out there in the world of manufacturing, with one difference:   the stories told by those companies more often as not end up not being comedies, but tragedies.

In the last post on this chapter, the authors talk about the difference between product technology and process technology, which is why many inventions created in America, from the transistor back in the 1950s to the fax machine in the1960s, were only made profitable by the Japanese.   This culture difference is the subject of the next post.

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In their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, the authors Ikel Harry, Ph.D., and Richard Schroeder discuss in chapter six the issue of changing what it is that companies measure.   One of the ways that companies can “measure” customer satisfaction is with a set of characteristics called “CTQ” or Critical-To-Quality.

Archimedes, the Greek mathematician and engineer, once said “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.”   In the world of manufacturing, you want to be able to move customer satisfaction, because that is what will get the customers buying your product and making your company profitable.

In the world of quality, the lever with which you move customer satisfaction is “CTQ” or “Critical-To-Quality” characteristics.   These are the characteristics which correlate with customer satisfaction.   And where is the fulcrum, the place you position the lever?   That is determined through Six Sigma–you have process metrics which reflect how well your processes are creating products and services which meet the CTQ characteristics and thus have a positive impact on customer satisfaction.

The problem is “satisfaction” is a quality internal to the customer, and so you must interpret what features in the external world correlate to that inner sense of satisfaction.   This is where skillfully written surveys, or even better yet, focus groups come into play.   Sometimes the customer cannot articulate what it is about a product that moves him or her to buy it, because the features may trigger some unconscious reaction that the customer, by definition, is not consciously aware of.

Note that creating a defect-free product, which is what people normally think of as “quality”, is a necessary condition for a product to create customer satisfaction, but it is not a sufficient condition.   In other words, if a product has no defects but is not what the customer ordered, well then the customer isn’t going to buy it no matter how defect-free it is.

So the key here is make the following links:

customer satisfaction ↔ critical-to-quality characteristics ↔ manufacturing and/or business processes

Companies who either don’t find out the CTQ characteristics that correlate to customer satisfaction, or who don’t correlate their process improvement with those same CTQ characteristics are going to find that their “quality wheels are spinning without any traction.”

To go into this matter further, let’s discuss the “customer satisfaction” part of the equation in more detail, which I will do in the following post.

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