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PROJECT REPORT
SIX SIGMA
ON
APPLICATIONS
Submitted By

NAME:
REG NO.:
SUBMITTED TO SCDL

In partial fulfillment of the requirements for the

award of degree of

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POST GRADUATE
DIPLOMA IN
BUSINESS
ADMINISTRATION
TABLE OF CONTENTS
Contents

Particulars

Page No.

Declaration

Supervisory Certificate

Introduction

a.

Process Improvement

12

b.

Six Sigma

13

Objective and Scope of Project

16

Limitations of Project

18

Theoretical Perspective

20

7
8
9
10
11

Analysis of Data
Methodology and Procedure of Work
Findings, Inferences and Recommendations
Conclusion
Summary

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26
54
70
72

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12

Annexure

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DECLARATION
This is to declare that I ________________________ have carried out this project work
myself in part fulfillment of the POST GRADUATE DIPLOMA IN BUSINESS
ADMINISTRATION (SPECIALIZATION OPERATIONS MANAGEMENT) Program
of SCDL.
The work is original, has not been copied from anywhere else and has not been submitted to
any other University/Institute for an award of any degree/diploma.

Date:

NAME:

Signature:

REG NO:

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CERTIFICATE OF SUPERVISOR
Certified that the work incorporated in this Project Report on SIX SIGMA submitted by
______________________ is his/her original work and completed under my supervision.
Material obtained from other sources has been duly acknowledged in the Project Report

Date:

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Signature of Guide

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INTRODUCTION

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INTRODUCTION
In recent decades, the companies and organizations around the world are showing great
interests in quality. Especially in 1970s and 1980s, the success of Japanese industry stimulates
the whole world to focus on quality issues. The experience from them proved that the
requirements and expectations of customers are the key factors which decide the quality.
The roots of Six Sigma as a measurement standard can be traced back to Carl Frederick Gauss
(1777-1855) who introduced the concept of the normal curve. Six Sigma as a measurement
standard in product variation can be traced back to the 1920's when Walter Shewhart showed
that three sigma from the mean is the point where a process requires correction. Many
measurement standards (Cpk, Zero Defects, etc.) later came on the scene but credit for coining
the term "Six Sigma" goes to a Motorola engineer named Bill Smith. (Incidentally, "Six
Sigma" is a federally registered trademark of Motorola).
In the early and mid-1980s with Chairman Bob Galvin at the helm, Motorola engineers
decided that the traditional quality levels -- measuring defects in thousands of opportunities -didn't provide enough granularity. Instead, they wanted to measure the defects per million
opportunities. Motorola developed this new standard and created the methodology and needed
cultural change associated with it. Six Sigma helped Motorola realize powerful bottom-line
results in their organization - in fact, they documented more than $16 Billion in savings as a
result of our Six Sigma efforts.
Since then, hundreds of companies around the world have adopted Six Sigma as a way of
doing business. This is a direct result of many of America's leaders openly praising the
benefits of Six Sigma. Leaders such as Larry Bossidy of Allied Signal (now Honeywell), and
Jack Welch of General Electric Company. Rumor has it that Larry and Jack were playing golf
one day and Jack bet Larry that he could implement Six Sigma faster and with greater results
at GE than Larry did at Allied Signal. The results speak for themselves.

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Six Sigma has evolved over time. It's more than just a quality system like TQM or ISO. It's a
way of doing business. As GE off Tennant describes in his book Six Sigma: SPC and TQM in
Manufacturing and Services: "Six Sigma is many things, and it would perhaps be easier to list
all the things that Six Sigma quality is not. Six Sigma can be seen as: a vision; a philosophy; a
symbol; a metric; a goal; a methodology." We couldn't agree more.
The roots of six sigma as a measurement standard can be traced back to Carl Frederick Gauss
(1777-1855) who introduced the concept of the normal curve. Six sigma as a measurement
standard in product variation can be traced back to the 1920's when Walter Shewhart showed
that three sigma from the mean is the point where a process requires correction. Many
measurement standards (Cpk, Zero Defects, and so on) later came on the scene but credit for
coining the term "six sigma" goes to a Motorola engineer named Bill Smith (six sigma is a
federally registered trademark of Motorola).
In the late 1970's, Dr. Mikel Harry, a senior staff engineer at Motorola's Government
Electronics Group (GEG), began to experiment with problem solving through statistical
analysis. Using his methodology, GE began to show dramatic results GEG's products were
being designed and produced faster and more cheaply. Subsequently, Dr. Harry began to
formulate a method for applying six sigma throughout Motorola. His work culminated in a
paper titled "The Strategic Vision for Accelerating Six Sigma Within Motorola." He was later
appointed head of the Motorola Six Sigma Research Institute and became the driving force
behind six sigma.
Dr. Mikel Harry and Richard Schroeder, an ex-Motorola executive, were responsible for
creating the unique combination of change management and data-driven methodologies that
transformed six sigma from a simple quality measurement tool to the breakthrough business
excellence philosophy it is today. They had the charisma and the ability to educate and engage
business leaders such as Bob Galvin of Motorola, Larry Bossidy of AlliedSignal (now
Honeywell), and Jack Welch of GE. Together, Harry and Schroeder elevated six sigma from
the shop floor to the boardroom with their drive and innovative ideas regarding entitlement,
breakthrough strategy, sigma levels, and the roles for deployment of Black Belts, Master
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Black Belts, and Champions. In effect, they created a business revolution that continues to
challenge the thinking of executives, managers and employees alike. Their strategies and tools
have been perfected through the years by Six Sigma Academy. In brief, we believe our
contribution was the unique combination of business leadership plus quality and process
improvement tools and techniques which made it possible for leaders to recognize the value of
six sigma, not just as a tool for operational efficiency, but as an enterprise wide business
strategy with direct bottom line impact.
Having said all that, I believe every six-sigma practitioner, consulting firm, and black belt has
contributed to the evolution of six sigma. We should therefore focus our time and resources,
not on diatribes about who can claim credit for six sigma, but rather on continuously
improving upon the strategies and tactics to achieve breakthrough results in business
excellence. For example, six sigma has been indisputably successful in eliminating waste,
reducing variance and increasing productivity and profits. But its potential to create new
business models for growth and innovation is barely tapped. I urge all of us to take six sigma
to the next level by being thought leaders inspiring creativity and originality in our successors,
instead of simply regurgitating what others have said before us. Doing so will ensure six
sigma will become the global standard for conducting business, not just another management
trend doomed to fall by the wayside.
Six Sigma is a breakthrough management tool, which enables companies to increase profits
dramatically by streamlining operations, improving quality, and eliminating defects and
mistakes in everything a company does. The darling of Wall Street, it has become the mantra
of Fortune 500 boardrooms around the

world because of its proven and measurable

capabilities.
Six Sigma reduces the variables involved in a process in order to improve and achieve the
goal of 3.4 defects per million. The methodology is based on 5 steps
Define: Identifies a project suitable for Six Sigma efforts based on business objectives
as well as customer needs.

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 Measure: It measures the variables of the process and counts the defects.
Analyze: Defects are identified and the key variables reduced.
Improve: It confirms the key variables and quantifies their effects on the process.
Control: Tools are put in place to ensure that under the modified process the key
variables remain within the maximum acceptable ranges over time.
Six Sigma Quality is an advanced technique of improving processes and profitability that has
revolutionized industries across America and around the world. The facts are plain: by
improving quality with Six Sigma techniques, businesses have been able to save billions while
gaining a competitive edge.
Six Sigma means something different to every company. For some, Six Sigma is a total
management philosophy, for others it is simply a process improvement effort designed to
increase productivity and reduce costs. Regardless of the way it is used within your
organization, Six Sigma means data driven decision making!
In its most simple sense, Six Sigma is a highly disciplined approach to decision making that
helps people focus on improving processes to make them as near perfect as possible.
Done properly, Six Sigma ensures that internal processes are running at optimum efficiency.
Competition, costs, and customer demands are driving suppliers to improve product quality
and transactional processes. Six Sigma is a methodology that allows companies to formalize
this improvement process, speak a common language, streamline processes, expose
performance bottlenecks and drive continuous and controlled improvement.
Six Sigma at many organizations simply means a measure of quality that strives for near
perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating
defects (driving towards six standard deviations between the mean and the nearest
specification limit) in any process -- from manufacturing to transactional and from product to
service.

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The statistical representation of Six Sigma describes quantitatively how a process is

performing. To achieve Six Sigma, a process must not produce more than 3.4 defects per
million opportunities. A Six Sigma defect is defined as anything outside of customer
specifications. A Six Sigma opportunity is then the total quantity of chances for a defect.
Process sigma can easily be calculated using a Six Sigma calculator.
The fundamental objective of the Six Sigma methodology is the implementation of a
measurement-based strategy that focuses on process improvement and variation reduction
through the application of Six Sigma improvement projects. This is accomplished through the
use of two Six Sigma sub-methodologies: DMAIC and DMADV. The Six Sigma DMAIC
process (define, measure, analyze, improve, control) is an improvement system for existing
processes falling below specification and looking for incremental improvement. The Six
Sigma DMADV process (define, measure, analyze, design, verify) is an improvement system
used to develop new processes or products at Six Sigma quality levels. It can also be
employed if a current process requires more than just incremental improvement. Both Six
Sigma processes are executed by Six Sigma Green Belts and Six Sigma Black Belts, and are
overseen by Six Sigma Master Black Belts.
According to the Six Sigma Academy, Black Belts save companies approximately $230,000
per project and can complete four to 6 projects per year. General Electric, one of the most
successful companies implementing Six Sigma, has estimated benefits on the order of $10
billion during the first five years of implementation. GE first began Six Sigma in 1995 after
Motorola and Allied Signal blazed the Six Sigma trail. Since them, thousands of companies
around the world have discovered the far reaching benefits of Six Sigma.
Many frameworks exist for implementing the Six Sigma methodology. Six Sigma Consultants
all over the world have developed proprietary methodologies for implementing Six Sigma
quality, based on the similar change management philosophies and applications of tools.

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Definition
Six Sigma is a rigorous and disciplined methodology that uses data and statistical analysis to
measure and improve a company's operational performance by identifying and eliminating
"defects" in manufacturing and service-related processes. Commonly defined as 3.4 defects
per million opportunities, Six Sigma can be defined and understood at three distinct levels:
metric, methodology and philosophy"
Six Sigma is a term used to describe a measure of quality control that is higher than "normal".
Six Sigma is a methodology that is intended to reduce process variation to within a limit that
will result in 3.4 defects per million samples or less.
The word quality comes from the Latin qualitas, and Cicero (a roman orator and
politician, 106-43 B.C.) is believed to be the first person who used the word. Until the a few
decades before, the concept of quality has been significantly extended as we know it today.
Firstly, almost all factors are conducted around customers. In another word, it can be said as
customers decide the quality (e.g. Juran in 1951, Deming in 1985, and Tribus in 1990).
Secondly, according to customer, two things are commonly considered as which shall be
fulfilled customer requirements and customer expectations. The requirements are what
customers request and demand. These are the basics of the quality. The expectations are what
the customers expect and look forward to. Sometimes, the customers do not know what they
really need. So that demands developers to have a good understanding about the customers
minds.
Quality is free. It is not a gift, but it is free. What costs money are in-quality things - all the
actions that involve not doing jobs right the first time. Philip Crosby Many companies pay
process improvement aims to have a better control in software development. Managers or
organizations generally divide the whole project into smaller phases, such as requirement
analysis, planning, coding, testing, releasing, etc.

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Many companies pay a lot in correction, i.e. 80% of the cost in a Software Engineering (SE)
project is commonly related to after-delivery corrections. And we also found:
Unsatisfied customers tell in average 10 persons about their bad experiences. 12% tells
up to 20 other persons.
Satisfied customers tell in average 5 persons about their positive experiences.
It costs 5 times as much to gain new customers than keeping existing ones.
Up to 90% of the unsatisfied customers will not make business with you again, and
they will not tell you.
95% of the unsatisfied customers will remain loyal if their complaints are handled fast
and well.
All above motivate us to improve quality. Improved quality can affect the success in many
different ways:
More satisfied and loyal customers
Lower employee turnover and sick leave rates
A stronger market position
Shorter lead times
Opportunities for capital release
Reduced costs due to waster and rework
Higher productivity
Process Improvement
Process improvement aims to have a better control in software development. Managers or
organizations generally divide the whole project into smaller phases, such as requirement
analysis, planning, coding, testing, releasing, etc.
Process is a sequence of steps performed for a given purpose. It provides project members a
regular method of using the same way to do the same work. Process improvement focuses on
defining and continually improving process. Defects found in previous efforts are fixed in the

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next efforts. There are many models and techniques for process improvement, such as CMMI,
ISO9000 series, SPICE, Six Sigma, etc.

Six Sigma
Six Sigma approach is a structured quantitative method which is invented by Motorola in
1986 for improving the product quality. Its aim is to enhance organizations performance by
using statistical analytic techniques. After two decades of successful implementation in
manufacturing, Six Sigma is approved as an effective methodology for improving quality.
Nowadays, some researchers believe that Six Sigma can bring large benefits for software
companies
Six Sigma equates to 3.4 Defects Per Million Opportunities (DPMO). Therefore, as a
metrics, Six Sigma focuses on reducing defects.
If we achieve 99.9997% of aims, then we are at the 6 level which equates to 3.4 DPMO.
From this point of view, Sigma level is to show how well the product is performing. It seems
this level can never be achieved. However, the Sigma level is not our purpose, the real
purpose is to improve quality continually. The higher Sigma level we have reach, the higher
quality we get.
The calculation of Sigma level is based on the number of defects per million opportunities
(DPMO). The formula is
DPMO = 106* D/ (N*O)
Where D means the number of defects, N means number of units produced, and O is the
number of opportunities per unit.
What does it mean to be "Six Sigma"? Six Sigma at many organizations simply means a
measure of quality that strives for near perfection. But the statistical implications of a Six
Sigma program go well beyond the qualitative eradication of customer-perceptible defects. It's
a methodology that is well rooted in mathematics and statistics.
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The objective of Six Sigma Quality is to reduce process output variation so that on a long term
basis, which is the customer's aggregate experience with our process over time, this will result
in no more than 3.4 defect Parts Per Million (PPM) opportunities (or 3.4 Defects Per Million
Opportunities DPMO). For a process with only one specification limit (Upper or Lower),
this results in six process standard deviations between the mean of the process and the
customer's specification limit (hence, 6 Sigma). For a process with two specification limits
(Upper and Lower), this translates to slightly more than six process standard deviations
between the mean and each specification limit such that the total defect rate corresponds to
equivalent of six process standard deviations.
Many processes are prone to being influenced by special and/or assignable causes that impact
the overall performance of the process relative to the customer's specification. That is, the
overall performance of our process as the customer views it might be 3.4 DPMO
(corresponding to Long Term performance of 4.5 Sigma). However, our process could indeed
be capable of producing a near perfect output (Short Term capability also known as process
entitlement of 6 Sigma). The difference between the "best" a process can be, measured by
Short Term process capability, and the customer's aggregate experience (Long Term
capability) is known as Shift depicted as Zshift or shift. For a "typical" process, the value of
shift is 1.5; therefore, when one hears about "6 Sigma," inherent in that statement is that the
short term capability of the process is 6, the long term capability is 4.5 (3.4 DPMO what the
customer sees) with an assumed shift of 1.5. Typically, when reference is given using DPMO,
it denotes the Long Term capability of the process, which is the customer's experience. The
role of the Six Sigma professional is to quantify the process performance (Short Term and
Long Term capability) and based on the true process entitlement and process shift, establish
the right strategy to reach the established performance objective
As the process sigma value increases from zero to six, the variation of the process around the
mean value decreases. With a high enough value of process sigma, the process approaches
zero variation and is known as 'zero defects.'

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Statistical Take Away

Decrease your process variation (remember variance is the square of your process standard
deviation) in order to increase your process sigma. The end result is greater customer
satisfaction and lower costs.

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