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Six Sigma has been very, very good to me.

I’ve had the pleasure of doing work that interests me for the past 30 years because three guys – Bill Mitchell, Bob Galvin, and Marty Rayl -  gave me freedom to gain practical knowledge about something where I had only academic knowledge.

I’ve met more brilliant and driven people than I could have ever expected in a normal corporate career (but usually not both in a single person – pretty interesting design by whatever you believe to be a higher power).

I’ve had a chance to teach and forever change many people’s way of thinking. It is a very interesting and gratifying process to watch. Not everyone has thanked me for it or been pleased with the outcome although I always have been.

I’ve learned that someone without an elite education can teach and enlighten someone who has an elite education. The reverse is obviously true as well.

I’ve had people with no recognized college degree teach me more about my profession and life than anyone else I’ve met (thank you Jim Blanden and Jim Berryhill).

In other words, I had a heck of a good time, learned, and had several levels of pretense and bias striped away in the process.

I’ve also made a little money along the way, but to quote my hero Billy Bob Thornton – “I don’t have a nickel of it left”.

Life is good.

The Six Sigma “industry” is a fraud.

It is filled with people who have never changed a thing.

Major portions of those that have changed things act petty and therefore tear down other good people in the wake of their pursuits.

It is focused on training, when execution is the only thing that matters. Training has become the focus because it is easier. You also don’t have to take responsibility for the results, you just point to your customer and blame the lack of result on them.

The offering under the label of Six Sigma has expanded as the content has become mediocre. Just look at those calling themselves universities – what a joke.

Self proclaimed gurus are writing books that proclaim the obvious as enlightenment. Lean and Six Sigma is the most obvious, but the “innovation” writings are a joke as well. Revelations such as people are more innovative when given time to think about the topic in advance is the one I’ve been laughing about since January. You want innovation? Hire innovative people and give them their heads, Bob Galvin knew that thirty years ago. So did Jack Welch and Larry Bossidy. You want to know more about how to do that? Learn Predictive Index.

The good news is that the ”industry” is dying. People who are honest about who they are, like Bill Hathaway, are taking over the training space and those with “university” attached to their name are on life support. The institutions that sold obvious things such as innovation are laying off in huge numbers. The only bad news here is there are a lot of really good people who trusted these charlatans who are looking for a job. Kind of like General Motors or war – collateral damage is always painful but a fact of life.

Six Sigma is dead, long live Six Sigma.

The growth in productivity consulting is in companies that just go in and take money off the table. There is phenomenal growth, driven by companies based in Europe and some old head cutters from the US. The problem is they are focused on organization and behavior; they are leaving process efficiency and effectiveness on the table. Any process improvements being obtained are happenstance, usually driven by great Six Sigma folks that are seeking shelter from the fallout mentioned above and just can’t help themselves despite their employer’s “model”. They are also not leaving any knowledge with their clients on how to do these things themselves.

What should be the new model? Simple –

1)  A thorough evaluation of systems based on known best practices and an organization’s strategic direction. The evaluation is company wide, not just Ops and Supply Chain. This usually takes 2 to 4 weeks using 3 to 5 competent business people. This is done business unit by business unit, facility by facility.

2)  A rapid deployment by seasoned change agents to take money off of the table and to demonstrate the possibilities to the client. Takes three to six months. It should have a payback period of 4 -6 months and should self fund the entire endeavor with a tidy profit for the customer. This is done business unit by business unit, facility by facility. This effort should include organization restructuring and address behavior.

3)  Training in efficiency and effectiveness for the customer’s resources. Label it anything you want but it is the training of people to be expert in the flow of value, the reduction of variation, and the hitting of market windows with products and processes that are correct and able to run at rate on day one. This takes about 4 months per cycle and the ratio of mentor to student should be in the 1:4 region. Class sizes should be big enough to guarantee the cross organizational relationship that don’t happen in small classes and the number of instructors should be minimized.

What is different about this? It’s not focused on training; it’s focused on results. It’s not focused on haphazardly chosen projects; it’s focused on systems. And best of all, it can only be done by people who know how to implement and share back their knowledge.

Go learn Predictive Index, there is only a small portion of the population who can do this and only a portion of those want to live this lifestyle.

Long live the pursuit of efficiency and effectiveness. The need was there 100 years ago and it will be there 100 years from now. It has never been needed more than right now, industries are emerging, merging, and acquiring; big organizations have had knee jerk reactions to this bad economy and broken okay processes and ran knowledge out the door. And yes, organization and behavior need to be addressed as well.

Who cares about labels? Let’s go fix systems.

Gary

I just wanted to take a moment to update you on what we are seeing and doing in this tough economy.

1)   We have worked with several folks over the past year just looking for where we could cut costs without sacrificing anything with respect to customers. To that end, I’ve found that the cost of registrations (ISO Quality and Environmental, plus the emerging certifications for carbon credits) vary more than you would suspect. We’ve found up to 20% savings by shopping the registrar. I know some feel strongly about which registrar they use, but at the end of the day the piece of paper hanging on the wall says the same thing. How many of you believe you are a better company because of your continued use of a specific registrar? This is not anything I am doing business on, but if you are interested, tell me who you are using and I’ll tell you if there is an opportunity and make an introduction for you

2)   This is not the time to invest in training the masses in programs that promise a nebulous payout in the future. The next quarter is uncertain and you have processes that are not working right because volumes have diminished, people have been moved around, suppliers are struggling, customers are not paying on time, … You need improvement on some critical process now. To that end, we have done more business in the past year fixing specific problems for customers. Some quick examples of what we’ve worked on – field reliability of a critical valve in a heavy duty truck application, financial and physical forecasting for a Fortune 50’s Latin American operations, inventory and customer delivery from a Chinese supply chain, seamless tubing yield issues throughout an automotive supply chain. The annual value of fixing these issues has ranged from about $75K for the valve to >$2 billion for the Latin American operation. Cost has never been more than one-forth of the annual value of the problem and in most cases was less than 5%.

3)   We have been working a new model with some old friends from Motorola. I believe it is the natural evolution from Lean and Six Sigma implementations that were heavy on training and heavy on the use of your internal resources. We have been going into companies that are successful, but struggling. Most are in high growth industries and have recently acquired, then integrated two or more companies. They have poorly documented processes, too many SKU’s, bad delivery, and are losing customer business and confidence. We go in with a small team of people and completely analyze the existing situation and formulate and execute a plan to correct it for the customer. We still need resources from the customer, but is on the order of one-twentieth what we asked for in the old model. It is tedious work, but we have focused resources not taking away from the customers focus on the day to day, and everyone participating has ten years or more experience in improving these type problems.

I just wanted you to think about these. I believe 1) just makes sense. 2) and 3) make good sense in this economy – engage outsiders on very specific tasks instead of the shotgun efforts like we’ve done in the past.

Regards,

These are fairly simple relationships. With the exception of %Tolerance, all the other metrics are just different manipulations of the same numbers.

s²_Total = s²_parts + s²_{Measurement System} 

s²_{Measurement System} = s²_{Repeatibility} + s²_{Reproducibility}

s²_{Reproducibility} = s²_Operator + s²_{Operator*Part}

P/T = %Tolerance = 6* s_{Measurement System} / (USL-LSL)

P/TV = %Study Variation = s_{Measurement System} / s_Total

%Contribution = s²_{Measurement System} / s²_Total

Distinct Categories = Round-down ((s_{Measurement System} / s_parts) * 1.41)

And for Don Wheeler fans -

Discrimination Ratio = Square Root ((s²_{Measurement System} / s²_parts) * 2 – 1)

Look at the table showing how the numbers change depending on how much variation the measurement system is contributing and the tolerance. Distinct Categories and Discrimination Ratio are basically the same number. %Study Variation is simply the square root of %Contribution.

Most are introduced to the ideas of DPU and RTY as part of Six Sigma training. Where

                           RTY = e^-DPU

Most were not exposed to the assumptions behind this or how to use this as an analytical tool.

This relationship is based on defect densities follow the Poisson distribution and this is simply the equation for the Poisson when defects = 0. RTY is the proportion of units that will come through a process with no defects. 1 – RTY is the proportion that comes through a process with 1 or MORE defects. This assumes that the defect density is predictable.

When this idea was first put out as part of a DFA course sponsored by Bill Smith in 1987, several of us took a lot of data to convince ourselves this was true. We found that on our well-controlled processes it was true. What we found was when it was not true, there were always easy fixes possible that followed an idea put out by Juran several decades earlier. That is the idea of splitting the analysis into streams. 

How to Find the Expected Defect Distribution –

Find out you DPU for the process you are interested in. Either use a Poisson table from a stat book or Excel.

If you are using a stat book, you’ll find the first column labeled np which is your DPU. Go down until you find the closest match. Then read across. These are cumulative tables so if you want to find the probability of a specific number of defects it will be the probability of that number – the probability of (1- that number).

If you are using Excel (preferred), start by creating a column labeled defects and go from 0 to about 4xDPU (Poisson is skewed right with a fairly long tail).  Label the next column expected proportion. Use the f_x function (called Paste Function in a mouse over) and go to Statistical – Poission and click on it. The x it asks for is the defect number (cell A2 if you started in the upper left hand corner of the worksheet). The mean is your DPU and for cumulative put false (you will get back the exact probability of the individual defect counts). Fill in actual proportions from your data and compare. A chi-squared test could be applied, but usually the numbers line up nicely or they are way out of wack.

A Hypothetical Example (based on an actual improvement project) –

A process is run making structural components for the automotive industry. Every component has defects, but components with x or less defects are further processed, components with > x defects are scrapped. The scrape rate is high, but more importantly the components that are further processed have defects detected all the way out to the end user.

The process is to run several components of a given length and when enough components are collected, multiple components are put through a heating process where there are multiple locations. The heating process joins together two metal pieces to give the component its structural integrity. No care is taken to know what pieces pass through which location in the oven. After the heating the components are put through a non-destructive test that is looking for voids in the joining process. The number of voids is collected.

It is found that the DPU detected by this test is 20. What the Poisson would predict for this is -

So a real quick interpretation of this – 

1)   If I were placing +/- 3s limits on this like an SPC chart, they would be at 8 and 34. On my average daily production of 1,000 pieces, we would expect 2 pieces per day to be beyond the limits. This makes sense.

2)   The most likely number of defects in a single piece is 19 or 20 (equal to 8 significant digits), but numbers between 11 and 29 will show up quite often.

3)   Most important, I will never expect numbers like 0 – 3 or anything greater than 41. These numbers should occur less than once in our expected annual volumes.

The next thing to do is compare actual defect counts per unit with the theoretical counts –

Wow, something is wrong!

The team is reconvened to go back through the process maps to specifically brainstorm where there is clearly a consistent input at work and where there may be variation across the input. Things like material batches, the front end of the process where the metal pieces are straightened and fixtured to go to the heating process, and the cooling process prior to the non-destructive test. After discussion it is understood that the data is only one days production and the metal supplier was consistent making the front end of the process consistent (relatively speaking). After much discussion, it is agreed to keep track of the position inside the heating process. Long story short, the team finds that the middle 2/3’s of the oven is running at 12 DPU and the outer 1/6 on each side is running at 36 DPU.

The team decides on a containment action to only run in the center 2/3’s of the oven while further studying consistency of the oven.

There is a lot more to the study as the original containment did not work (the physics of it not working made sense), but the team learned to make the containment work achieving 12 DPU but production capacity was reduced. With about $5K worth of modifications, learned to run full loads again at 5 DPU.

I saw Steve Forbes Friday night and listened to a fairly compelling argument that our current financial crisis is a series of bad decisions. President elect Obama, you should talk to him. The rest of you should find what he has been writing over the past months because his knowledge and depth were wasted on my short-term memory.

Four things that did stick with me –

1)   We need a policy of a strong dollar. This is not negotiable.

2)   We need to help our domestic auto industry in ways that will help their sustainability. Simple question we all need to understand is why are GM and Ford phenomenally successful outside the US? Forbes made the point that if GM and Ford would close down their US operations they would be seen as world-class companies. Wow – something to think about and it has little to do with unions, although the unions need to get their workers to work more often. Ten percent absenteeism is obscene – if the UAW deals with that they will be seen as more relevant. The work needs to be made more interesting as well, which is on the leadership of GM, Ford and Chrysler.

3)   Taxes cannot be raised in a crisis. This means that spending must be cut. This is combination of stopping dumb things like bailouts that don’t address root causes. It also means efficiency in government vs the current placebos. Cut non-entitlement budgets across the board including the Pentagon and hire consultants that know how to implement and advise - instead of the mass training houses. Also buy all managers in government agencies a copy of Kotter’s latest book. Fire all who whine or block instead of seeing the opportunity. Efficiencies will be found and the work will be more interesting.

4)   Health care has to be addressed with efficient system wide solutions. Piece-meal solutions will not cut it which means expansion of existing programs won’t do. Forbes’ example was that of medical tourism – why is a flight to Singapore and surgery to have a knee replacement one-fourth the cost of doing it in the US? How can these hospitals offer first class results with infection rates that are nonexistent? Lasik surgery is another example – success rates are up and costs are substantially reduced from a decade ago. Why? Understand the answer and you will be looking at what efficient reform looks like.

Forbes says it is time for Obama to turn into a pragmatic politician to make sure he is there for 8 years. Steve has some good thoughts, take some time to understand them and encourage your government officials to understand them as well. I personally would like to keep a smart person in the White House and have them surrounded by smart people. I don’t want Steve as my President, but I would be impressed if he became a trusted advisor to Obama. 

Read what Steve is writing at - http://search.forbes.com/search/colArchiveSearch?author=Forbes

Gary

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