2 - Define - Six Sigma Fundamentals

Define Phase
Six Sigma Fundamentals
Understanding Six Sigma

Process
Process Maps
Maps
Voice
Voice of
of the
the Customer
Customer
Cost
Cost of
of Poor
Poor Quality
Quality
Process
Process Metrics
Metrics
Selecting Projects
Elements of Waste
Wrap Up & Action Items
LSS Black Belt v11.1 MT - Define Phase
Open Source Six Sigma, LLC
What is a Process?
Why have a process focus?

So we can understand how and why work gets done
To characterize customer & supplier relationships
To manage for maximum customer satisfaction while
utilizing minimum resources
To see the process from start to finish as it is
currently being performed
Defects: Blame the process, not the people
process (proses) n. A repetitive and

systematic series of steps or activities
where inputs are modified to achieve a
value-added output
Examples of Processes
We go through processes every day. Below are some

examples of those processes. Can you think of other
processes within your daily environment?
Injection molding
Decanting solutions
Filling vial/bottles
Crushing ore
Refining oil
Turning screws
Building custom homes
Paving roads
Changing a tire
Recruiting staf
Processing invoices
Conducting research
Opening accounts
Reconciling accounts
Filling out a timesheet
Distributing mail
Backing up files
Issuing purchase orders
Process Maps
The purpose of a Process Map is to:

Identify the complexity of the process
Communicate the focus of problem solving
Process Maps are living documents and must be

changed as the process is changed:
They represent what is currently happening not what you
think is happening
They should be created by the people who are closest to the
process
Start
Step A
Step B
Step C
In
sp
ec
t
Process Map
Step D
Finish
Process Map Symbols
Standard symbols for Process Mapping:

(available in Microsoft Office, Visio, iGrafx , SigmaFlow and other
products)
A RECTANGLE indicates
an activity. Statements
within the rectangle
should begin with a verb
A PARALLELAGRAM
shows that there are
data
A DIAMOND signifies a decision

point. Only two paths emerge
from a decision point: No and
Yes
An ARROW shows the
connection and
direction of flow
An ELLIPSE shows the

start and end of the
process
A CIRCLE WITH A LETTER

OR NUMBER INSIDE
symbolizes the
continuation of a
flowchart to another
page
6
High Level Process Map
One of the deliverables from the Define Phase is a high

level Process Map which at a minimum must include:
Start and stop points

All process steps
All decision points
Directional flow
Value categories as defined here:
Value Added:
Physically transforms the thing going through the process
Must be done right the first time
Meaningful from the customers perspective (is the customer
willing to pay for it?)
Value Enabling:
Satisfies requirements of non-paying external stakeholders
(government regulations)
Non-Value Added:
Everything else
Process Map Example
Process Map for a Call Center B
START
REVIEW CASE
TOOL HISTORY &
TAKE NOTES
LOGON TO PC &
APPLICATIONS
SCHEDULED
PHONE TIME?
N
Z
TRANSFER
APPROPRIATE?
TRANSFER
CALL
PROVIDE
RESPONSE
PHONE&
NOTE
DATA ENDS
WALK-IN
N
CALL
PUT ON HOLD,
REFER TO
REFERENCES
PHONE DATA
CAPTURE BEGINS
ANSWER?
DETERMINE WHO
IS INQUIRING
ANSWER?
ENTER APPROPRIATE
SSAN (#,9s,0s)
CREATE A CASE
INCL CASE TYPE
DATE/TIME, &
NEEDED BY
AUTO
ROUTE
ROUTE
Y
CASE
CLOSED
OFF HOLD AND

ARRANGE CALL
BACK PHONE DATA
ENDS
ADD TO
RESEARCH
LIST
UPDATE ENTRIES
INCL OPEN DATE/TIME
N
CASE TOOL
RECORD?
ACCESS CASE TOOL
OLD
CASE
QUERY INTERNAL
HRSC SME(S)
DETERMINE NATURE
OF CALL & CONFIRM
UNDERSTANDING
IF EMP DATA NOT

POPULATED, ENTER
ACCESS CASE TOOL
EXAMINE NEXT NOTE

OR RESEARCH ITEM
IMMEDIATE
RESPONSE
AVAILABLE?
SCHEDULED
PHONE TIME?
CALL or
WALK-IN?
LOGON
TO PHONE
PHONE
TIME
LOGOFF PHONE, CHECK

MAIL,E-MAIL,VOICE MAIL
N
TAKE ACTION
or
DO RESEARCH
CLOSE CASE
W/
DATE/TIME
GO TO
F or E
DEPENDING ON
CASE
E
NEXT
Cross Functional Process Map

When multiple departments or functional groups are involved in a
complex process it is often useful to use Cross Functional Process
Maps.
Start
Request
transfer
Attach ACH
form to
Invoice
Produce an
Invoice
ACH Automated
Clearing House.
No
Vendor
info in
FRS?
Receive
payment
End
Match against
bank batch
and daily cash
batch
Maintain database
to balance ACH
transfers
Accepts transactions,
transfer money and
provide batch total
General
Accounting
Fill out ACH

enrollment
form
Yes Input info into

web interface
Bank
Financial
Accounting
Vendor
Department
Draw in either vertical or horizontal Swim Lanes and label the

functional groups then draw the Process Map
Sending Wire Transfers
Review and
Process
transfer in
FRS
3.0
Journey Entry
21.0
Bank
Reconciliation
Process Map Exercise
Exercise objective: Using your favorite

Process Mapping tool create a Process Map
of your project or functional area.
1. Create a high level Process Map, use
enough detail to make it useful.
It is helpful to use rectangular post-its for
process steps and square ones turned to a
diamond for decision points.
2. Color code the value added (green) and

non-value added (red) steps.
3. Be prepared to discuss this with your
mentor.
10
Do you know your Customer?
Knowing your customer is more than just a

handshake. It is necessary to clearly understand
their needs. In Six Sigma we call this understanding
the CTQs or Critical to Customer Characteristics.
Critical to Customer
Characteristics
Voice Of the Customer
11
Voice of the Customer
Voice of the Customer or VOC seems obvious;

after all, we all know what the customer wants. Or
do we??
The customers perspective has to be foremost in the mind of
the Six Sigma Belt throughout the project cycle.
1. Features
2.
3.
4.
Does the process provide what the customers expect and need?
How do you know?
Integrity
Is the relationship with the customer centered on trust?

How do you know?
Delivery
Does the process meet the customers time frame?

How do you know?
Expense
Does the customer perceive value for cost?

How do you know?
12
What is a Customer?
Different types of customers dictate how we interact

with them in the process. In order to identify customer
and supplier requirements we must first define who the
customers are:
External
Direct: those who receive the output of your services, they
generally are the source of your revenue
Indirect: those who do not receive or pay for the output of
your services but have a vested interest in what you do
(government agencies)
Internal
- those within your organization
who receive the output of your
work
13
Value Chain
The relationship from one process to the next in an organization
creates a Value Chain of suppliers and receivers of process outputs.
Each process has a contribution and accountability to the next to
satisfy the external customer.
External customers needs and requirements are best met when all
process owners work cooperatively in the Value Chain.
Careful
each move
has many
impacts!
14
What is a CTQ?
Critical to Quality (CTQs) are measures we use to capture

VOC properly. (also referred to in some literature as CTCs
Critical to Customer)
CTQs can be vague and difficult to define.
The customer may identify a requirement that is difficult to
measure directly so it will be necessary to break down what is
meant by the customer into identifiable and measurable
terms
Service:
Product:
Performance
Features
Conformance
Timeliness
Reliability
Serviceability
Durability
Aesthetics
Reputation
Completeness
15
Competence
Reliability
Accuracy
Timeliness
Responsiveness
Access
Courtesy
Communication
Credibility
Security
Understanding
Developing CTQs
Step
1
Identify Customers
Listing
Segmentation
Prioritization
Step
2
Capture VOC
Review existing performance
Determine gaps in what you need to
know
Select tools that provide data on gaps
Collect data on the gaps
Step
3
Validate CTQs
Translate VOC to CTQs
Prioritize the CTQs
Set Specified Requirements
Confirm CTQs with customer
16
Cost of Poor Quality (COPQ)
COPQ stands for Cost of Poor Quality

As a Six Sigma Belt one of your tasks will be to estimate
COPQ for your process
Through your process exploration and project definition
work you will develop a refined estimate of the COPQ in
your project
This project COPQ represents the financial opportunity of
your teams improvement efort (VOB)
Calculating COPQ is iterative and will change as you learn
more about the process
No, not that kind
of cop queue!
17
The Essence of COPQ
The concepts of traditional Quality Cost are the foundation

for COPQ.
External, Internal, Prevention, Appraisal
A significant portion of COPQ from any defect comes from

efects that are difficult to quantify and must be estimated.
COPQ helps us understand the financial impact of problems
created by defects.
COPQ is a symptom, not a defect
Projects fix defects with the intent of improving symptoms.
18
COPQ - Categories
Internal COPQ
Quality Control Department
Inspection
Quarantined Inventory
Etc
Detection
Supplier Audits
Sorting Incoming
Parts
Repaired Material
Etc
External COPQ
Warranty
Customer Complaint
Related Travel
Customer Charge Back
Costs
Etc
Prevention
Error Proofing
Devices
Supplier
Certification
Design for Six Sigma
Etc
19
COPQ - Iceberg
Warranty
Inspection
Recode
Rejects
Rework
Visible Costs
(Hard Costs)
Lost sales
Engineering change orders

Time value of money
(less obvious)
More set-ups
(Soft Costs)
Expediting costs
Excess inventory
Working Capital
allocations
Hidden Costs
Late delivery
Long cycle times

Excessive Material
Orders/Planning
Lost Customer Loyalty
20
COPQ and Lean
Waste does not add, subtract or otherwise modify the

throughput in a way that is perceived by the customer
to add value.
In some cases, waste may be

necessary but should be
recognized and explored:
Inspection, Correction,
Waiting in suspense
Decision diamonds, by
definition, are non-value
added
Often waste can provide

opportunities for additional
defects to occur.
We will discuss Lean in more
detail later in the course.
21
Lean Enterprise
Seven Elements of Waste *
u
Correction
u
Processing
u
Conveyance
u
Motion
u
Waiting
u
Overproduction
u
Inventory
*Womack, J. P., & Jones, D. T. (1996). Lean
Thinking. New York, NY: Simon & Schuster
COPQ Hard and Soft Savings
While Hard Savings are always more

desirable because they are easier to
quantify it is also necessary to think about
Soft Savings.
COPQ Hard Savings
COPQ Soft Savings
Labor Savings
Cycle Time Improvements
Scrap Reductions
Hidden Factory Costs
Inventory Carrying Cost
22
Gaining Lost Sales

Missed Opportunities
Customer Loyalty
Strategic Savings
Preventing Regulatory
Fines
COPQ Exercise
Exercise objective: Identify current

COPQ opportunities in your direct area.
1. Brainstorm a list of COPQ opportunities.
2. Categorize the top 3 sources of COPQ
for the four classifications:
Internal
External
Prevention
Detection
23
The Basic Six Sigma Metrics
In any process improvement endeavor the

ultimate objective is to make the process:
Better: DPU, DPMO, RTY (there are others, but they derive
from these basic three)
Faster: Cycle Time
Cheaper: COPQ
IfIfyou
youmake
makethe
theprocess
processbetter
betterby
byeliminating
eliminatingdefects
defectsyou
youwill
willmake
make
ititfaster.
faster.
IfIfyou
youchoose
chooseto
tomake
makethe
theprocess
processfaster
fasteryou
youwill
willhave
haveto
toeliminate
eliminate
defects
defectsto
tobe
beas
asfast
fastas
asyou
youcan
canbe.
be.
IfIfyou
youmake
makethe
theprocess
processbetter
betteror
orfaster
fasteryou
youwill
willnecessarily
necessarilymake
makeitit
cheaper.
cheaper.
The
The metrics
metrics for
for all
all Six
Six Sigma
Sigma projects
projects fall
fall into
into
one
one of
of these
these three
three categories.
categories.
24
Cycle Time Defined
Think of Cycle Time in terms of your product or

transaction in the eyes of the customer of the
process:
It is the time required for the product or transaction to go through the entire
process from beginning to end
It is not simply the touch time of the value-added portion of the process
What is the cycle time of the process you mapped?

Is there any variation in the cycle time?
Why?
25
Defects Per Unit (DPU)

Six Sigma methods quantify individual defects and not just
defectives ~
Defects account for all errors on a unit
A unit may have multiple defects
An incorrect invoice may have the wrong amount due and the
wrong due date
Defectives simply classifies the unit bad
Does not matter how many defects there are
The invoice is wrong, causes are unknown
A unit:
Is the measure of volume of output from your area.
Is observable and countable. It has a discrete start and stop
point.
It is an individual measurement and not an average of
measurements.
Two Defects
One Defective
26
First Time Yield
FTY is the traditional quality metric for yield

Unfortunately it does not account for any necessary rework
FTY =
Units in = 100
Units Out = 100
Process A (Grips)
Defects Repaired
40
Total Units Passed

Total Units Tested
Units in = 100
Units Out = 100
Process B (Shafts)
Defects Repaired
30
Units in = 100
Units Out = 100
Process C (Club Heads)
Defects Repaired
20
Units Tested = 100

Units Passed = 100
Final Product (Set of Irons)
FTY = 100 %
*None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the
concept.
27
Rolled Throughput Yield
RTY is a more appropriate metric for problem solving

It accounts for losses due to rework steps
RTY = X1 * X2 * X3
Units in = 100
Units in = 100
Units in = 100
Units W/O Rework = 60 Units W/O Rework = 70Units W/O Rework = 80
RTY = 0.7
RTY = 0.8
RTY = 0.6
Process A (Grips)
Defects Repaired
40
Process B (Shafts)
Defects Repaired
30
Process C (Club Heads)
Defects Repaired
20
Units Passed = 34
Units Tested = 100
Final Product (Set of Irons
RTY = 33.6 %
*None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept.
28
RTY Estimate
In many organizations the long term data

required to calculate RTY is not available. We can
however estimate RTY using a known DPU as long
as certain conditions are met.
The Poisson distribution generally holds true for
the random distribution of defects in a unit of
product and is the basis for the estimation.
The best estimate of the proportion of units
containing no defects, or RTY, is:
-dpu
RTY = e-dpu
The mathematical constant e is the base of the natural logarithm.

e 2.71828 18284 59045 23536 02874 7135
29
Deriving RTY from DPU

The Binomial distribution is the true model for defect data but the
Poisson is the convenient model for defect data. The Poisson does a
good job of predicting when the defect rates are low.
Poisson
Poisson VS
VS Binomial
Binomial (r=0,n=1)
(r=0,n=1)
120%
120%
100%
100%
Yield(RTY)
(RTY)
Yield
Yield
Yield (Binomial)
(Binomial)
Yield
(Poisson)
Yield (Poisson)
80%
80%
60%
60%
40%
40%
20%
20%
0%
0%
0.0
0.0
0.1
0.1
0.2
0.2
0.3
0.3
0.4
0.4
0.5
0.5
0.6
0.6
Probability
Probabilityof
ofaadefect
defect
0.7
0.7
0.8
0.8
0.9
0.9
1.0
1.0
Binomial
Poisson
n
r
p
q
= number of units
= number of predicted defects
= probability of a defect occurrence
=1-p
For low defect rates (p < 0.1) the Poisson approximates the Binomial fairly well.
30
Deriving RTY from DPU - Modeling

Unit
Opportunity
For the unit shown the following

data was gathered:
60 defects observed
60 units processed
What is the DPU?
RTY for DPU = 1
0.368
0.364
Yield
Basic Question: What is the likelihood

of producing a unit with zero defects?
0.36
0.356
0.352
What is probability that any given

opportunity will be a defect?
What is the probability that any

given opportunity will NOT be a
defect is:
The probability that all 10

opportunities on single unit will be
defect-free is:
0.348
10
10
100
100
1000
1000
10000
10000
100000
100000
1000000
1000000
Chances Per Unit
If we extend the concept to an infinite

number of opportunities, all at a DPU of
1.0, we will approach the value of 0.368.
31
RTY Prediction Poisson Model
Use the binomial to estimate the probability of a discrete

event (good/bad) when sampling from a relatively large
population,
n > 16, & p < 0.1.
When r = 0 we compute the probability of finding zero

defects per unit (called rolled throughput yield).
r dpu
e
(dpu)
The table to the right shows the proportion of product Y =
which will have
r r! p[r]
0 defects (r = 0)
1 defect (r = 1)
2 defects (r = 2), etc
When DPU = 1
When on average we have a process with 1 defect per

unit then we say there is a 36.79% chance of finding a
unit with zero defects. There is only a 1.53% chance of
finding a unit with 4 defects.
When r = 1 this equation simplifies to: (dpu)*edpu
To predict the % of units with zero defect (i.e., RTY):
count the number of defects found
count the number of units produced
compute the dpu and enter it in the dpu equation
32
0
1
2
3
4
5
6
7
8
0.3679
0.3679
0.1839
0.0613
0.0153
0.0031
0.0005
0.0001
0.0000
Six Sigma Metrics Calculating DPU

The DPU for a given operation can be calculated by dividing the
number of defects found in the operation by the number of units
entering the operational step.
100 parts built
2 defects identified and corrected
dpu = 0.02
So RTY for this step would be e-.02 (.980199) or 98.02%.
RTY1=0.98
dpu = .02
RTY2=0.98
dpu = .02
RTY3=0.98
dpu = .02
RTY4=0.98
dpu = .02
RTY5=0.98
dpu = .02
RTY
=0.90
RTYTOT
TOT=0.90
4
4
dpu
= .1
dpuTOT
TOT = .1
If the process had only 5 process steps with the same yield the process.
RTY would be: 0.98 * 0.98 * 0.98 * 0.98 * 0.98 = 0.903921 or 90.39%. Since
our metric of primary concern is the COPQ of this process we can say less than
9% of the time we will be spending dollars in excess of the pre-determined
standard or value added amount to which this process is entitled.
Note: RTYs must be multiplied across a

process, DPUs are added across a
process.
33
Focusing our Effort FTY vs. RTY
Assume we are creating two products in our

organization that use similar processes.
Product A
FTY = 80%
Product B
FTY = 80%
How do you know what to work on?

34
Focusing our Effort FTY vs. RTY
Lets look at the DPU of each product assuming equal

opportunities and margin
Product A
Product B
dpu 100 / 100 = 1 dpu
dpu 200 / 100 = 2 dpu
Now, can you tell which to work on?

the product with the highest DPU? think again!
How
How
How
How
How
much more time and/or raw material are required?

much extra floor space do we need?
much extra staf or hours are required to perform the rework?
many extra shipments are we paying for from our suppliers?
much testing have we built in to capture our defects?
35
Summary
At this point you should be able to:

Describe what is meant by Process Focus
Generate a High Level Process Map
Describe the importance of VOC, VOB and VOE, and CTQs
Explain COPQ
Describe the Basic Six Sigma metrics
Explain the diference between FTY and RTY
Explain how to calculate Defects per Unit DPU
36
IASSC Certified Lean Six Sigma Black Belt (ICBB)

The International Association for Six Sigma Certification (IASSC) is a Professional
Association dedicated to growing and enhancing the standards within the Lean Six Sigma
Community. IASSC is the only independent third-party certification body within the Lean Six
Sigma Industry that does not provide training, mentoring and coaching or consulting
services. IASSC exclusively facilitates and delivers centralized universal Lean Six Sigma
Certification Standards testing and organizational Accreditations.
The IASSC Certified Lean Six Sigma Black
Belt (ICBB) is an internationally recognized
professional who is well versed in the Lean
Six Sigma Methodology. The Certified Black
Belt Exam, is a 4 hour 150 question
proctored exam.
Learn about IASSC Certifications and Exam options at

http://www.iassc.org/six-sigma-certification/

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Define Phase

Six Sigma Fundamentals

Six Sigma Fundamentals

Understanding Six Sigma

LSS Black Belt v11.1 MT - Define Phase

Open Source Six Sigma, LLC

Why have a process focus?

process (proses) n. A repetitive and

Open Source Six Sigma, LLC

We go through processes every day. Below are some

LSS Black Belt v11.1 MT - Define Phase

Open Source Six Sigma, LLC

The purpose of a Process Map is to:

Process Maps are living documents and must be

LSS Black Belt v11.1 MT - Define Phase

Open Source Six Sigma, LLC

Process Map Symbols

Standard symbols for Process Mapping:

A DIAMOND signifies a decision

LSS Black Belt v11.1 MT - Define Phase

An ELLIPSE shows the

A CIRCLE WITH A LETTER

Open Source Six Sigma, LLC

High Level Process Map

One of the deliverables from the Define Phase is a high

Start and stop points

LSS Black Belt v11.1 MT - Define Phase

Open Source Six Sigma, LLC

Process Map Example

Process Map for a Call Center B

OFF HOLD AND

LSS Black Belt v11.1 MT - Define Phase

ACCESS CASE TOOL

IF EMP DATA NOT

ACCESS CASE TOOL

EXAMINE NEXT NOTE

LOGOFF PHONE, CHECK

Open Source Six Sigma, LLC

Cross Functional Process Map

Fill out ACH

Yes Input info into

Draw in either vertical or horizontal Swim Lanes and label the

Open Source Six Sigma, LLC

Process Map Exercise

Exercise objective: Using your favorite

2. Color code the value added (green) and

LSS Black Belt v11.1 MT - Define Phase

Open Source Six Sigma, LLC

Do you know your Customer?

Knowing your customer is more than just a

Voice Of the Customer

LSS Black Belt v11.1 MT - Define Phase

Open Source Six Sigma, LLC

Voice of the Customer

Voice of the Customer or VOC seems obvious;

Is the relationship with the customer centered on trust?

Does the process meet the customers time frame?

Does the customer perceive value for cost?

LSS Black Belt v11.1 MT - Define Phase