Six Sigma Tools :

Application Examples

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Define Measure Analyze Improve Control

 Process Map • Data collection  Pareto diagram  Brain storming  Control plan
plan  Brain storming  Selection matrix
 Brain storming  Documentation
• Histogram  Nominal group  Design of  Control charts
 Dashboard
• Distribution technique experiments
 CTQ Drill Down  Benchmarking  On the job
• Measurement  Scatter plot training
 Cause & effect System  Force field
 Box plot analysis  Story board
analysis Analysis
 Stratification  Risks
 Pareto Diagram • Descriptive assessments
statistics  FMEA
 SelectionMatrix  Stakeholder
• Run charts  Process C&E
 Project Charter analysis
matrix
• Control Charts  Process
 Hypothesis test Capability
• Process
Capability  Process map
and analysis

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Application Examples 1: Invoicing Process Define

Problem Statement :
About 30% of payments are received later than 60 days
after invoices were issued.

Goal Statement :
To reduce the percentage of late payments to less than 5%.

Financial Benefit :
Successful completion of this project will result in an
estimated financial benefit of US$ 50,000.

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Data Collection Plan Define

• Critical To Quality : Payment received on time

• Measure : Cycle time from date of invoice issued to
date of payment received (days)
• Specification : Not more than 60 days
• Process output unit : An invoice
• Data source : Account department
• Data collection method : Pre-exist data
• Sample frame : Three months period from Jan to Mar.
• Sampling method : Random sampling
• Number of samples : 61
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Measure Process Output Variability Measure

From a sample of 61
invoices:
1. The histogram describes
the central tendency and
variability of data.
2. The mean time taken to
pay the invoice is 57
days and the median is
56 days.
3. In term of variability, the
standard deviation is
about 7 days and the
range is 30 days.

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Assess Process Capability Measure

The Ppk is 0.14

indicating poor
capability of the
process in
meeting the
requirement of
not more than 60
days.

The defect per million

is 33,5452 The
process sigma is
about 1.9

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Analyze
Apply cause and effect diagram to brainstorm the various possible causes.

Customer Related Invoice Related

Customer Money Amount
Payment Policy In Invoice
Customer Location
Errors In Invoice
Customer Financial Don’t Match P.O.
Position
Wrong Address
Customer Acct
Payable Process
Wrong Amount Why Are Customers
Late In Paying
Need for Currency Product Quality Problem Invoices?
Exchange No Follow Up On
Past Dues
Payment Method
Relationship With
Frequency of Customers
Invoicing Customer Type

Invoicing Method Others

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Use collective experience to shortlist key suspects Analyze

Customer Related Invoice Related

Customer Money Amount
Payment Policy In Invoice
Customer Location
Errors In Invoice
Customer Financial Don’t Match P.O.
Position
Wrong Address
Customer Acct
Payable Process
Wrong Amount Why Are Customers
Late In Paying
Need for Currency Product Quality Problem Invoices?
Exchange No Follow Up On
Past Dues
Payment Method
Relationship With
Frequency of Customers
Invoicing Customer Type

Invoicing Method Others

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Collect the necessary data to verify key suspects Analyze

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Regresstion With Discrete

Calc > MakeIndikatorVariable

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Graph / Dotplot

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Analyze
Use dot plot to check if presence of errors will cause
longer payment days

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Graph / Box Plot

Boxplot of Day

75

70

65

Day
60

55

50

45

1 2 3 4
Location

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Stat > ANOVA > One-Way...

One-way ANOVA: Day versus Location
Source DF SS MS F P
Location 3 41.3 13.8 0.27 0.846
Error 57 2884.7 50.6
Total 60 2925.9

S = 7.114 R-Sq = 1.41% R-Sq(adj) = 0.00%

Individual 95% CIs For Mean Based on

Pooled StDev
Level N Mean StDev ----+---------+---------+---------+-----
1 13 55.462 7.378 (---------------*---------------)
2 20 57.550 7.200 (------------*------------)
3 13 57.308 6.382 (---------------*---------------)
4 15 57.467 7.357 (--------------*--------------)
----+---------+---------+---------+-----
52.5 55.0 57.5 60.0
Graph  choice BoxPlot Pooled StDev = 7.114
Boxplot of Day

75 Boxplot of Day
70

65
Day

60

55

50

45

1 2 3 4
Location

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Analyze
Stratify the data according to locations and use box plot
to check if there is difference between locations.

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Analyze
Analysis of variance shows that there is no significant
difference in the means of the four locations.

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Stat > ANOVA > One-Way...

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Analyze
Stratify the data according to payment methods and use box
plot to check if there is difference between payment methods.

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Analyze
Analysis of variance shows that there is a significant
difference in the means of three types of payment methods.

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Grap > Scatter Plot...

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Analyze
Use scatter diagram to check if there is a correlation
between money amount and day.

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Grap > Scater Plot...

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Analyze
No correlation observed when invoices with errors
are excluded from correlation analysis

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Grap > Scater Plot...

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Analyze
Presence of correlation between money amount and day is
observed when data is stratified according to payment methods.

error

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Regression Analysis: Day versus Dollar, Location_1, ...

* Location_4 is highly correlated with other X variables

* Location_4 has been removed from the equation.

* Payment Mtd_TT is highly correlated with other X variables

* Payment Mtd_TT has been removed from the equation.

* Errors_Yes is highly correlated with other X variables

* Errors_Yes has been removed from the equation.

The regression equation is

Day = 50.5 + 0.000606 Dollar - 0.26 Location_1 + 0.23 Location_2
+ 0.20 Location_3 + 6.70 Payment Mtd_Cheque - 5.91 Payment Mtd_EDI
- 12.0 Errors_No

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Analyze
Regression analysis indicates that money amount,
payment methods and errors are significant in affecting
payment days. Location is not.

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Analysis of Variance

Source DF SS MS F P
Regression 7 2470.06 352.87 41.02 0.000
Residual Error 53 455.88 8.60
Total 60 2925.93

Source DF Seq SS
Dollar 1 173.50
Location_1 1 9.57
Location_2 1 0.07
Location_3 1 9.41
Payment Mtd_Cheque 1 1143.63
Payment Mtd_EDI 1 433.33
Errors_No 1 700.54

Unusual Observations

Obs Dollar Day Fit SE Fit Residual St Resid

13 21000 52.000 58.168 0.985 -6.168 -2.23R
61 30000 61.000 51.006 1.001 9.994 3.63R

R denotes an observation with a large standardized residual.

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Proposed Improvement Solutions Improve & Control

1. Errors
Error proof the invoicing process.

2. Payment Methods
Make arrangements with customers to use payment methods other than cheques.

3. Dollar Amount
For invoices with high dollar amount, give incentive (such as rebate) if customers
pay on time.

(Force field analysis, risks assessment and stakeholder analysis need to be applied on
the above improvement solutions.)

Proposed Control Action

 Continue Monitoring payment with graphical tools
 Revise the procedure
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Define
Application Examples 2: Delivery Process

Problem Statement :
The total time taken from the moment the production is
completed to delivery is 2 days. Some urgent orders require
products to be delivered in 1 day.

Goal Statement :
To reduce the turn-around-time time to 1 day.

Financial Benefit :
Successful completion of this project will result in an
estimated financial benefit of US$120,000 from additional
sales.
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Measure
Measure Current Process

 Make the process visible by creating the process maps.

 Common process mapping methods:

 Linear flowchart
 Cross functional map
 Relationship map

 Validate the maps created by walking-through the

process and collect the necessary data.

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Delivery Process Cross Functional Map (As-Is) Measure

Day 1
8 9 10 11 12 1 2 3 4 5 6

QA Technician
Prepare Perform Key In Test
Samples Lab Test Results

Visual Inspector
Visual
Inspection

Packers
Packing

Store Supervisor
Update
F/G Stock

(continue)
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Day 2 Measure
8 9 10 11 12 1 2 3 4 5 6

Sales Officer
Issue Prepare D.O.
D.I. and Gate Pass
Sales Manager
Approve D.O.
and Gate Pass

Store Supervisor
Pick Lots Updates F/G Prepare
Stocks Shipments

QA Clerk
Prepare Test
Certificates

QA Manager Approve
Test Cert Deliver
Shipment

Delivery Driver
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Delivery Process Relationship Map (As-Is) Measure

Test Certificates QA Manager

D.O. & Gate Pass
Lot
Numbers
Store Office Sales Office
D. I.
Lot Numbers
Pallet Number
Passed Lot Numbers Quantity Accepted

QA Lab Visual
Packing
D.O., Gate Pass & Inspection
Test Certs

Quantity Accepted
Driver
Test Certificates

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Analyze

Analyze Current Process

 Discover flaws in the current process.

 Examples of process flaws:

 Waiting
 Duplication
 Non-value added activity
 Unnecessary check / approval
 Error
 Re-do

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Analysis Summary Analyze

A] Waiting
- Visual inspection will not start before laboratory tests have been
completed.
- Store supervisor has to wait for the test certificates before he can
prepare the shipments.

B] Duplications
- Packers record product names, lot numbers and quantities and
send these information to store. Store supervisor key in the same
information into the finished goods inventory system.

C] Non-value Added Activities

- Unnecessary movements involved in sending information or
documents around.
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Analyze
7 Principles of Process Redesign

 Organize work around results, not tasks.

 Work parallel instead of sequentially.
 Capture data only one time – when it is first created.
 Allow decision points where the work is performed.
 Incorporate controls into information processing.
 Make people who use a process do the work.
 Treat geographical dispersed resources as one.

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Analyze
Technology Enablers

 Computerized workflow system.

 Document imaging and management.
 Groupware.
 Electronic Commerce.
 Automated input.
 Mobile and remote computing.
 Wireless communication.

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Improve
Identify Improvement Solutions

A] Reduce waiting.
 Laboratory tests and visual inspections to be performed
concurrently.
 Store supervisor prints test certificates from computerized
workflow system.

B] Reduce non-value added activities & duplications.

 Packers key in product information into finished goods
inventory system.
 Reduce document movements by installing IS systems.
 Empower QA technicians to decide lots acceptance based on
specification.
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Delivery Process Cross Functional Map (Should-Be) Improve

8 9 10 11 12 1 2 3 4 5 6

QA Technician
Prepare Test Key In Test
Samples Samples Results

Visual Inspector
Visual
Inspection Prev : by Store Spv

Packer Update
Packing
F/G Stock Prev : by sls Off & QA Clerk
Prepare
Store Supervisor Shipment
Pick Lots, Prepare
D.O. and Test Cert.
Sales Officer
Issue
D.I.
Approve D.O.
Sales Manager

Driver Deliver Shipment

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Tutor Slide Improve

Sales Order Delivery Cross Process
Relationship Map (Should-Be)
QA Manager

D.I.
Store Office Sales Office
D.O.

Approved D.O.
D.O. & Test Certs

QA Lab Packing Visual

Inspection

Lot Number and

Driver Accepted Quantity

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