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The
Six Sigma
Handbook
A Complete Guide for Green Belts,
Black Belts, and Managers at All Levels
Thomas Pyzdek
Paul A. Keller
Third Edition
New York Chicago San Francisco
Lisbon London Madrid Mexico City
Milan New Delhi San Juan
Seoul Singapore Sydney Toronto
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Contents
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Part I
Six Sigma Implementation and Management
1 Building the Responsive Six Sigma Organization . . . . . . . . . . . . . . . 3
What Is Six Sigma? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Why Six Sigma? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Six Sigma Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Change Imperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Implementing Six Sigma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Integrating Six Sigma and Related Initiatives . . . . . . . . . . . . . . 32
Deployment to the Supply Chain . . . . . . . . . . . . . . . . . . . . . . . . 34
Communications and Awareness . . . . . . . . . . . . . . . . . . . . . . . . . 36
. . . . . . . . . . . . . . . . . . . . . . . . 52
Calculating the Value of Customer Retention . . . . . . . . . . . . . . 58
Customer Expectations, Priorities, Needs, and “Voice” . . . . . . . . . . . . 60
Quality Function Deployment . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
The Six Sigma Process Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
The Source of Confl ict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
A Resolution to the Confl ict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Six Sigma and the Process Enterprise . . . . . . . . . . . . . . . . . . . . . 70
Linking Six Sigma Projects to Strategies . . . . . . . . . . . . . . . . . . . . . . . . . 71
The Strategy Deployment Matrix . . . . . . . . . . . . . . . . . . . . . . . . . 71
Deploying Differentiators to Operations . . . . . . . . . . . . . . . . . . 74
Deploying Operations Plans to Projects . . . . . . . . . . . . . . . . . . . 75
Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Linking Customer Demands to Budgets . . . . . . . . . . . . . . . . . . . 77
Structured Decision-Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
iii
2 Recognizing Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Becoming a Customer and Market-Driven Enterprise . . . . . . . . . . . . . 44
Elements of the Transformed Organization . . . . . . . . . . . . . . . . 46
Strategies for Communicating with
Customers and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Survey Development Case Study
iv
Contents
3 Data-Driven Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Attributes of Good Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
The Balanced Scorecard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Measuring Causes and Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Customer Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Internal Process Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Innovation and Learning Perspective . . . . . . . . . . . . . . . . . . . . . 95
Financial Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Cost of Poor Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Cost of Quality Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Strategy Deployment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Dashboard Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Information Systems Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Integrating Six Sigma with Other Information
Systems Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Data Warehousing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
OLAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Data Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
OLAP, Data Mining, and Six Sigma . . . . . . . . . . . . . . . . . . . . . . . 112
Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
The Benchmarking Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Getting Started with Benchmarking . . . . . . . . . . . . . . . . . . . . . . 113
Why Benchmarking Efforts Fail . . . . . . . . . . . . . . . . . . . . . . . . . . 114
The Benefi ts of Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Some Dangers of Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . 116
4 Maximizing Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Choosing the Right Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Types of Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Analyzing Project Candidates . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Using Pareto Analysis to Identify
Six Sigma Project Candidates . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Throughput-Based Project Selection . . . . . . . . . . . . . . . . . . . . . . 127
Ongoing Management Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Internal Roadblocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
External Roadblocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Individual Barriers to Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Ineffective Management Support Strategies . . . . . . . . . . . . . . . 135
Effective Management Support Strategies . . . . . . . . . . . . . . . . . 136
Cross-Functional Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Tracking Six Sigma Project Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Financial Results Validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Team Performance Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Team Recognition and Reward . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Lessons-Learned Capture and Replication . . . . . . . . . . . . . . . . . 143
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