SIX SIGMA

OVERVIEW
 Six Sigma

Six Sigma refers to tools, processes and

cultures made famous by Motorola and
General Electric in the 1980s and are aimed
at reducing variability and defects.
 Six Sigma Origins

Motorola deployed Six Sigma Methodology

in 80s
In1981, Motorola set out to improve the
quality of their products and services tenfold.
In 1988, accepted Malcolm Baldrige National
Quality Award, and began the Six Sigma
Quality movement.
 Motorola Experience

Between 1983-87: spent $70 Million on quality

related education.
Productivity increased average of 12.3%/yr.
Cost of Quality reduced by more than 84%.
99.7% of in-process defects eliminated.
$11 Billion in manufacturing costs saved.
Average annual compounded growth rate of
17% in earnings, revenues and stock prices.
 Six Sigma Applications

Manufacturing , Service, Chemical, Financial..

High or low volume.
Thousands, Millions or Billions in Revenue.
Even Non-Profit Organizations.
GE Experience

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Solutions 6
 GE Experience

Capacity improvements of 12-18%.

Rise in operating margin to 16.7%.
$750 millions in savings.
 GE plastics
Reduced color variation in plastic products.
Raised quality from 2 sigma to 4.9 sigma
over 4 months.
Saved $400,000 a year for one plant. (ref
GE Way).
In 1996, first year of Six Sigma deployment,
GE Plastics achieved benefits of $20 million
 GE Medical Systems

Developed a new Ultrasound technology

which allows medical personnel to more
Cleary diagnose risk factors contributing to
stroke.
Technology became available two years earlier
than otherwise possible, due to GE's Design
for Six Sigma deployment.
 Other Six Sigma Industry
Leaders
Boeing, IBM, Bombardier, Asea Brown
Boveri, DuPont, Kodak, Compaq and Texas
Instruments.
GMAC Mortgage, Citibank, JP Morgan and
Cendant Mortgage.
 Integral MQS
Achievements
Sample of Six Sigma Projects
Implemented

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Solutions 11
 Project 1:
Optimization of Calcium
Addition

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Solutions 12
 Project 1:
Optimization of Calcium Addition
Opportunity Statement: (Problem Definition)
EFS loss of 1,481,544 L.E per year due to the uses of the heated
Calcium-wire after Calcium optimization.
The process current sigma level is 2.15

Goal Statement:
Reduce defects percentage from 25% to 11% by July 2006.
Reduce revenue losses by 740,772 L.E.
Improve process Sigma level to 3.69 sigma.
 Project 2:
Reduce Casting Time

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Solutions 14
 Project 2:
Reduce Casting Time
Opportunity Statement: (Problem
Definition)
Currently the Variable operation process current sigma level is
2.49, if it increased to 3; So there will be 0.51 increase in sigma
level.
Goal Statement
Achieve the average process time
Save annual revenue loss of LE 20,000,000.
Increase productivity.
Improve On-Time Delivery.
Improve Employee Morale.
Improve Flexibility & Reduce Production Interruption.
Project 3: Width Drop
Defect
(Project Charter)

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Solutions 16
 Project 3: (Project Charter)
Width Drop Defect
Business Case: Opportunity Statement:
The Width Drop defect beside causing an annual Currently, in EFS, there are 0.62% defective
revenue loss of 6,704,422.50 L.E., it causes rework Coils due to width drop after the hot strip
and production disturbance and it might cause a Mill process. This represents a revenue loss
delay in finished product delivery. By reducing this of 6,704,422.50 L.E. per year. The process
defect, the company will improve its financial current sigma level is 3.76
performance, increase productivity and deliver
finished product on time.
Project Goal : Project Scope:
Reduce the cost of width drop defect by 6,033,979 LE HSM Operation Process:
Improve process Sigma level from 3.76 to 4.54 sigma. 1. HSM: Start with slabs and ends with Hot
Improve Delivery on time. Rolled Coils (HRC).
Reduce production interruption. 2. The Project scope is to control the width
Improve employee morale.
drop which occurred in the Hot Strip Mill.
Increase Customer satisfaction.

Time Schedule & Project Plan: Team Selection:

Activity From To Dr.Gamal Megahed Sponsor TD Manager
Define Phase 15/01/2006 15/02/2006 Nabil Douban Black Belt
Ahmed Nabil Adhoc Financial Manager
Measure Phase 15/02/2006 30/04/2006 Usama Ahmed Member HSM Process Engineer
Analyze Phase 01/05/2006 15/05/2006 Mohammed Awad Member HSM Production Eng.
Improve Phase 15/05/2006 30/06/2006 Mohammed Ibrahim Member Quality Control Eng.
Ahmed Attala Member Automation Engineer
Control Phase 01/07/2006 10/07/2006
Niraj Singh Member SKP in Charge
Improve Sales Order cycle and
Scrap Products Due To Expiry

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Solutions 18
 1- Definition of key terms
Return Goods: The Returned Products which is stayed on the customer shelf until
expiration or any kind of defect.
Returns Invoices: The invoices which are totally returned, the customer did not accept any
of its contents.
Partial R. Invoices: The invoices which are partially returned, the customer accepted some
of its contents and returned the others.
Contract : Local or exportation tenders.

Sales : The Net sales (Total Sales Returns)

Sale order cycle: From Salesman visits schedule, physical visit, order taking,
order follow-up, order delivery to on shelf products follow-up
Scrap : The Executed Finished Products
Scrape due to expiry date: The scraped products due to exceeding the
expiration date at the customer place.
Rework: The needed work on returned products to reuse them
Customers: Pharmacies, Distributors, and others like hospitals, Health
insurance, Etc.
 2- Project Selection
Work Break Down Structure

Sales

Net Sales Returns

Other Distributors Pharmacies Distributors Other

Pharmacies
Customer customers

Invoice Returns Return Goods

Scrape Rework

Due to Expiration
Others
At Pharmacy At Company
 Returned Products

Returned products

Contract R. partially Contract R. Invoice Contract Returns

Invoice R. partially Invoice Returns Returned Goods

Why is this so important?
Sales Transaction % 2006
Category
6.0%
2.0% Net Sales
Samples
Returns

92.0%

The Total returns represent 6 % from The Total Sales

while the samples represent 2 %
 Returned Goods (A Closer Look)
92%

Sales
Samples
Returns

6% 2%

100% 18%
80%
60% 41%
40% 21%
7% 11%
20% 0.00%

0%
Contract R. Contract R. Contract R Invoice R. Invoice R. Return
partially Invoice Partially Goods
 Facts
Pareto Chart of Customer Type ( Returned Goods Units 2004 - 2006)

100
2000000

80
1500000
60

Percent
Count

1000000
40

500000
20

0 0
Customer Type Pharmacies Distributers Other
Count 1221801 910889 16881
Percent 56.8 42.4 0.8
Cum % 56.8 99.2 100.0

Almost 57% of Returned goods are from the

pharmacies
 Business Case

The defect of returned products based on

expiry date cause loss of about 3,000,000 LE
per year.
The current sale order form not adequate for
sales man requirements.
 Opportunity Statement

Currently ,the returned products

represent 18% from all returned Products.
But 82 % from them goes to scrap This
represent loss of about
2.5 - 3 Million - L.E. per year.
 Facts

The Company gives about 2 % form sales value

as
A Samples , so there is an opportunity to reuse
the
Returned products if we have control on the
products in the market
 Project Scope

The Sales Cycle From Getting the

Customer Order until The
Expired product Execution
 Project Objectives

1- Reduce the Expired products by

1,000,000 L.E. per year.
2- Improve process sigma level from
0.6 to 1.6 Sigma.
3- Improve the return cycle.
4- Improve Sales order cycle
5- Increase the customer satisfaction.
 Project Charter
Business Case Opportunity Statement
The defect of returned products Currently ,the returned products
Based on expiry date cause loss of about due to expiry date represent 18% defect from all
returned Products The Company Scrape about 82%
3,000,000 LE per year.
from them. This represent loss of about
3 M L.E. per year. The current sigma level 0.6
Project Goal Project Scope
1- Reduce the cost of returned products by The Sales From Getting the Customer Order until The
1,000,000 L.E. per year. Expired product Execution.
2- Improve process sigma level from
0.6 to 1.6 Sigma.
3- Improve the return cycle.
4- Increase the customer satisfaction.
Time Schedule

Define 2 Weeks
Measure 2 Weeks
Analyze 2 Weeks
Improve 1 Month
Control 1 Month
Thank You

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Solutions 31