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Diminishing Returns ?

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  • #36100

    newbie
    Participant

    Good Morning;I apologize in advance for this very basic question.   One of the processes we measure is currently performing at a 3.56 sigma ( 15,328 opportunities / 301 defects ) clearly we need to improve but are struggling because these 301 defects are not being identified at any one step of the process.  While there are steps that have trended higher than others we find ourselves in a situation where even if we completely eliminated the steps and thus the opportunity for defect of the poorest performing steps we would be at about a 3.90 sigma.  My question to the board is, while obviously we all strive to achieve a 6 sigma status is there a generally accepted sigma rating that is deemed acceptable by most organizations other than 6 or do most quality groups consider themselves failure short of achieving 6 ?  It almost feels as if we are fast approaching a point of deminishing returns where any improvements short of wholesale automation (ideal but not viable) cost a ton and yield little in the way of improvement.  Your help in advance is apprecaited. 

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    #103110

    Sheri
    Member

    While achieving a six sigma level of performance is ideal, you also have to look at it from a business perspective.  It sounds as if you have already conducted a cost-benefit analysis.  If the cost is significantly higher than the benefit and senior management has decided that the current level of performance is acceptable, it is probably best to move on to other areas in your organization that need improvement.

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    #103113

    newbie
    Participant

    Thanks Sheri, I agree with you completely.  The only problem we encounter is that from a pure ” how many customers did you impact” that 3.56 rating equates to 4% of our customers being impacted by the defects.  Not sure where it comes from but what I continue to be pushed for is not a sigma level but a raw quality number of 98%.  In essence the business says if we process 100 items there should not be more than 2 defects.  I think that is great and I what to strive for that, the problem is each of these items have roughly 30 places for some type of error to occur.  So my 100 items consist of 3000 opportunities for an error to occur. So the reality is not 2 errors out of 100 but 2 errors out of 3000…… uggggh, that’s tough.  We are a data input environement using multiple systems to capture data, no one is willing to seek out good charachter recognition software because of cost and in their mind charcahter recognition still does not work well for alpha recognition.  Opportunities exist for errors to occur during input of the customer information ( name, address, e-mail etc.) beneficiary info ( percentages, relationship, SS#, etc ) and so on, it is pretty extensive the amount of info we need to capture and the different systems used.  We are not in a position to eliminate steps as each piece of info we capture is required by legislation or regulators. Most steps are deemed critical to quality or at the very least having a impact in some form or fashion to the customer, at times that customer is our compliance group.  I’m against a wall, surely I can drive some improvements but if my sucess is dependent on what they see as 2 errors per 100 items without regard to the number of places for errors to infiltrate the process or a desire to comitt significant dollars I think I am stuck.  Thanks again,  R

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    #104299

    Vedu Mitter
    Member

    Dear Newbie,
    Please consider what it would cost if you lose 4% of your customers and if they tell nine other customers or would-be customers each and its cost to your business and compare it with the needed investment to pursue 6sigma and decide.
    Six Sigma is not a must if the business can live with 4 sigma without loss of customers.
    Prof.Vedu Mitter, MBB
    [email protected]
     

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    #104315

    SSS
    Member

    Hi newbie,
    I thought I would try my hand at answering a couple of your questions. 
    My MBB told me that a process running at 4 sigma or above is ‘acceptable’. This is only a real general rule-of-thumb, as it is going to depend on the product or market.  I’m sure for many situations, improving beyond 4 sigma may not calculate out positively as far as Retrun On Investment.
    One other thing to note, is that it looks like you may be confusing Parts Per Million defects (PPM) and Defects Per Million Opportunities (DPMO)  From what you said it sounds like your company is aiming at 2 defective units per 100, or 20,000 PPM – not DPMO. What is the difference? In  your situation , with 30 opportunities for defects per unit, you could theoretically find 60 defects, but only have 2 defective units.   Does that make sense?
    I hope i’ve helped in some way :)
    SSS
     

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    #104318

    KBailey
    Participant

    Hi Newbie,
    Sheri’s advice was good, but before deciding to put this project aside I’d like to explore something. This may be getting into the costly solutions you’re trying to avoid, but humor me. From your description of the problem and process, it seems that one thing we’d want to do is push the quality control and error detection closer to your customers. In other words, have the customer key the information themselves or have your agent/rep key it with the customer there to verify spelling. (I refer to keying, recognizing that there are also other ways to capture the info electronically.)
    One thing you didn’t tell us is the cost per defect or cost per defective. Use that as you look at possible solutions. Before you do give up on this to follow Sheri’s advice, let people know the general problem you’ve got so they can watch for solutions. Technology is changing fairly quickly, and a solution that isn’t cost-effective now may be in a year. Also, there’s so much technology out there that it’s tough even for the techies to keep up on everything available.

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    #104319

    Cone
    Participant

    SSS,
    With all due respect, your MBB is incorrect. Have you renamed your 6 sigma program 4 sigma?
    Did not think so.
    You may want to inquire of the MBB what the source of their “wisdom” is. It smacks of a personal opinion not based on experience.
    Tne question of deminishing returns is usually asked by people who really have not done much work on improvement. The experienced will tell you the more we improve the more we see the opportunity to improve. Go ask people inside of TPS if there is a stopping point.
    Gary

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    #104333

    PB
    Participant

    Newbie,
    If you have someone with experience in use of the QFD tool, my advice would be to look at the 4% of the customers that the defects would impact (that you mention) and do a VOC deal with them and see what they  think. You may find that these can be acceptable by them and you may increase your (business) sigma afterall.
    PB

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    #108480

    barbie
    Participant

    bulas kamo

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    #111647

    Rafael
    Participant

    I believe that the key point to address is not how to convert returns into Sigma value but how to eliminate them. The first thing to do in this type of big project is focus the scope, I mean to concentrate on a particular type of return that happens more often than others, using the Pareto principle you could concentrate on the vital few, like for instance returns due to bad pakaging quality, delivery not in time, because the client warehouse is full, because the client is in bankrupcy, because your product quality is unnaceptable… You need to focus on those vital few clients that originate most of your returns, it always happens. 20% of clients get 80% of returns. Once you focus in type of returns and Type of client you can focus on the specific process that generates those returns and apply techniques like FMEA to focus o the biggest causes. From there you can start having fun with data and all the analysis tools. So remember focus first. I will be delighted to share info with all of you. Ciao 

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