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The Six Sigma Handbook A Complete Guide for Green Belts, Black Belts, and Managers at All Levels Third Edition

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The Six Sigma Handbook A Complete Guide for Green Belts, Black Belts, and Managers at All Levels Third Edition
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   The Six Sigma Handbook A Complete Guide for Green Belts, Black Belts, and Managers at All Levels Thomas PyzdekPaul A. Keller Third Edition  New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto  Copyright © 2010, 2003, 2001 by The McGraw-Hill Companies, Inc.. All rights reserved. Except as permitted under theUnited States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by anymeans, or stored in a database or retrieval system, without the prior written permission of the publisher.ISBN: 978-0-07-162337-7MHID: 0-07-162337-XThe material in this eBook also appears in the print version of this title: ISBN: 978-0-07-162338-4, MHID: 0-07-162338-8.All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of atrademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intentionof infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps.McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in cor- porate training programs. To contact a representative please e-mail us at bulksales@mcgraw-hill.com.nformation contained in this work has been obtained by The McGraw-Hill Companies, Inc. (“McGraw-Hill”) from sources believed to be reliable. However, neither McGraw-Hill nor its authors guarantee the accuracy or completeness of any infor-mation published herein, and neither McGraw-Hill nor its authors shall be responsible for any errors, omissions, or dam-ages arising out of use of this information. This work is published with the understanding that McGraw-Hill and its authorsare supplying information but are not attempting to render engineering or other professional services. If such servicesare required, the assistance of an appropriate professional should be sought. TERMS OF USEThis is a copyrighted work and The McGraw-Hill Companies, Inc. (“McGraw-Hill”) and its licensors reserve all rights inand to the work. Use of this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and theright to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify,create derivative works based upon, transmit, distribute, disseminate, sell, publish or sublicense the work or any part of itwithout McGraw-Hill’s prior consent. You may use the work for your own noncommercial and personal use; any other useof the work is strictly prohibited. Your right to use the work may be terminated if you fail to comply with these terms.THE WORK IS PROVIDED “AS IS.” McGRAW-HILL AND ITS LICENSORS MAKE NO GUARANTEES OR WAR-RANTIES AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF OR RESULTS TO BE OBTAINED FROMUSING THE WORK, INCLUDING ANY INFORMATION THAT CAN BE ACCESSED THROUGH THE WORK VIAHYPERLINK OR OTHERWISE, AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED,INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PAR-TICULAR PURPOSE. McGraw-Hill and its licensors do not warrant or guarantee that the functions contained in the work will meet your requirements or that its operation will be uninterrupted or error free. Neither McGraw-Hill nor its licensorsshall be liable to you or anyone else for any inaccuracy, error or omission, regardless of cause, in the work or for any dam-ages resulting therefrom. McGraw-Hill has no responsibility for the content of any information accessed through the work.Under no circumstances shall McGraw-Hill and/or its licensors be liable for any indirect, incidental, special, punitive, con-sequential or similar damages that result from the use of or inability to use the work, even if any of them has been advised of the possibility of such damages. This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise.  Contents Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi  Part I Six Sigma Implementation and Management  1 Building the Responsive Six Sigma Organization . . . . . . . . . . . . . . . 3 What Is Six Sigma? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Why Six Sigma? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4The Six Sigma Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5The Change Imperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Implementing Six Sigma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Integrating Six Sigma and Related Initiatives . . . . . . . . . . . . . . 32Deployment to the Supply Chain . . . . . . . . . . . . . . . . . . . . . . . . 34Communications and Awareness . . . . . . . . . . . . . . . . . . . . . . . . . 36  2 Recognizing Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Becoming a Customer and Market-Driven Enterprise . . . . . . . . . . . . . 44Elements of the Transformed Organization . . . . . . . . . . . . . . . . 46Strategies for Communicating with Customers and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Survey Development Case Study   . . . . . . . . . . . . . . . . . . . . . . . . 52Calculating the Value of Customer Retention . . . . . . . . . . . . . . 58Customer Expectations, Priorities, Needs, and “Voice” . . . . . . . . . . . . 60Quality Function Deployment . . . . . . . . . . . . . . . . . . . . . . . . . . . 61The Six Sigma Process Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65The Source of Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67A Resolution to the Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67Six Sigma and the Process Enterprise . . . . . . . . . . . . . . . . . . . . . 70Linking Six Sigma Projects to Strategies . . . . . . . . . . . . . . . . . . . . . . . . . 71The Strategy Deployment Matrix . . . . . . . . . . . . . . . . . . . . . . . . . 71Deploying Differentiators to Operations . . . . . . . . . . . . . . . . . . 74Deploying Operations Plans to Projects . . . . . . . . . . . . . . . . . . . 75Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76Linking Customer Demands to Budgets . . . . . . . . . . . . . . . . . . . 77Structured Decision-Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 iii   3 Data-Driven Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Attributes of Good Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87The Balanced Scorecard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89Measuring Causes and Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . 90Customer Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92Internal Process Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94Innovation and Learning Perspective . . . . . . . . . . . . . . . . . . . . . 95Financial Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95Cost of Poor Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97Cost of Quality Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99Strategy Deployment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102Dashboard Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105Information Systems Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107Integrating Six Sigma with Other Information Systems Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108Data Warehousing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108OLAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110Data Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110OLAP, Data Mining, and Six Sigma . . . . . . . . . . . . . . . . . . . . . . . 112Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112The Benchmarking Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112Getting Started with Benchmarking . . . . . . . . . . . . . . . . . . . . . . 113Why Benchmarking Efforts Fail . . . . . . . . . . . . . . . . . . . . . . . . . . 114The Benefits of Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . 116Some Dangers of Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . 116  4 Maximizing Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Choosing the Right Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117Types of Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117Analyzing Project Candidates . . . . . . . . . . . . . . . . . . . . . . . . . . . 118Using Pareto Analysis to Identify Six Sigma Project Candidates . . . . . . . . . . . . . . . . . . . . . . . . . . 125Throughput-Based Project Selection . . . . . . . . . . . . . . . . . . . . . . 127Ongoing Management Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133Internal Roadblocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133External Roadblocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134Individual Barriers to Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 134Ineffective Management Support Strategies . . . . . . . . . . . . . . . 135Effective Management Support Strategies . . . . . . . . . . . . . . . . . 136Cross-Functional Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . 136Tracking Six Sigma Project Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137Financial Results Validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138Team Performance Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . 139Team Recognition and Reward . . . . . . . . . . . . . . . . . . . . . . . . . . . 141Lessons-Learned Capture and Replication . . . . . . . . . . . . . . . . . 143 iv  Contents
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