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|Six Sigma and Beyond |
|Thomas Pyzdek |
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|[pic] |[pi|Real-Life Six Sigma |
| |c] |These synopses of actual Six Sigma projects provide useful examples. |
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|For many people, it's easier to learn by reviewing examples than by reading generalized descriptions. So in |
|this column, we'll look atseveral quick overviews of Six Sigma projects to provide you with an idea of what |
|Six Sigma deployment looks like at the project level. Of course, these synopses skip over significant |
|factors, such as the leadership and infrastructure necessary to make the projects succeed. It's not that |
|these factors are unimportant; to the contrary, they're critical. For additionalinformation on the critical |
|success factors, you may wish to review my earlier columns at www.pyzdek.com/pdf.htm and |
|www.qualitydigest.com , or in my book The Six Sigma Handbook (McGraw-Hill, 2001). |
|[pic]  Accounts receivable�The Six Sigma team was tasked with improving the accounts receivable department's |
|collection process. The projectsponsor was the CFO, and the top-level dashboard item that generated the |
|project was improved cash flow. The team decided to use the average age of uncollected accounts on the last |
|business day of the month as their metric. Using X-bar charts because the histogram showed a very non-normal |
|pattern, the team determined that the process was in statistical control with a mean of 57 days.They made a |
|flowchart of the as-is AR collection process and used it to guide an observational study. |
| The team noted and corrected several discrepancies, and several obviously stupid things were changed. For |
|example, a team member from billing asked why the term "Net 30 Days" was used. An experiment was conducted |
|where the term was changed to "Due onReceipt" for a random sample of invoices. The results showed that the |
|average time to collect for the experimental group was 45 days, vs. 57 for the control group. The difference |
|was highly significant, both financially and statistically. |
| Next, the team contacted randomly chosen customers who had paid late and asked why they had been late.Fully|
|70 percent of the reasons for late payment were factors under the company's control (e.g., invoice errors or |
|the bill being sent to wrong address). The team constructed a Pareto diagram and set about correcting the |
|biggest problem areas. Within six months, the average age of uncollected invoices dropped to 37 days. The |
|resulting savings were substantial.|
|[pic]  Printed wiring board components�The Six Sigma team received its project from the material review |
|board. The MRB identified the project as a significant and chronic contributor to the problem of failures at |
|final product test. The assembly was a complicated piece of hardware and final test failures caused shipping |...
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