REPORT OF QUALITY MANAGEMENT SIX SIGMA IN ORGANIZATION

MINISTRY OF FINANCE UNIVERSITY OF FINANCE AND MARKETING FACULTY OF BUSINESS ADMINISTRATION REPORT OF QUALITY MANAGEMENT SIX SIGMA IN ORGANIZATION INSTRUCTOR: Ph.D TO ANH THO CLASS: CLC –

MINISTRY OF FINANCE UNIVERSITY OF FINANCE AND MARKETING FACULTY OF BUSINESS ADMINISTRATION

REPORT OF QUALITY MANAGEMENT

SIX SIGMA IN ORGANIZATION

INSTRUCTOR: Ph.D TO ANH THO

CLASS: CLC – 18DQT03 PERFORMER: GROUP 5

MINISTRY OF FINANCE UNIVERSITY OF FINANCE AND MARKETING FACULTY OF BUSINESS ADMINISTRATION

REPORT OF QUALITY MANAGEMENT

SIX SIGMA IN ORGANIZATION

INSTRUCTOR: Ph.D TO ANH THO

CLASS: CLC – 18DQT03 PERFORMER: GROUP 5

MEMBERS OF GROUP

Number

TABLE OF CONTENTS

1 What is Six Sigma? 1

2 Six Sigma Background 1

3 Methodology of Six Sigma 2

3.1 DMAIC 2

3.2 DMADV 3

4 Case Study of Amazon.com 6

1 WHAT IS SIX SIGMA

Six Sigma is a set of statistical data-based process improvement methods designed

to improve and eliminate the causes of product failures

The meaning of Six Sigma is to measure how far the business goes from accuracy and find out the errors that arise during the operation

→ After measuring a process’s current performance, the goal is to continuously improve Sigma levels and strive towards Six Sigma

2 SIX SIGMA BACKGROUND

The origin of 6 Sigma started from a concept of metrology by the German

mathematician Carl Friedrich Gauss (1777 - 1855) when he introduced the normal distribution model

In 1986, 6 Sigma was launched and implemented at Motorola Corporation

After 10 years of application, in 1997, the results 6 Sigma achieved:

− Consumption of products increases 5 times with profits of approximately 20% per year

− Cumulative savings resulting from the 6 Sigma efforts are stable at 14 billion Dollars

3 METHODOLOGY OF SIX SIGMA

3.1 DMAIC

The set of six sigma methodologies that is most applicable to the manufacturing side of a product or service, DMAIC includes these project stages

CONTROL DEFINE

ANALYZE

+ Develop definitions of disability as accurately as possible

+ Analyze the measurement system capability and set up a benchmark for the process capacity comparison

+ Identify the area where errors in the measurement system could occur + Conduct measurement and data collection of inputs, processes and outputs

− Analyze:

+ Making hypotheses about the potential origin causing fluctuations and essential inputs

+ Identify some of the main factors and factors that have the most

significant impact

+ Determine ways to eliminate the source of the oscillation

+ Set up the tolerances for the process, also known as the upper and lower limits of the specifications or customer requirements for a process

3.2 DMADV

VERIFY DEFINE

ANALYZE

− Define:

+ Develop definitions of disability as accurately as possible

+ Analyze the measurement system capability and set up a benchmark for the process capacity comparison

+ Identify the area where errors in the measurement system could occur + Conduct measurement and data collection of inputs, processes and outputs

+ Making hypotheses about the potential origin causing fluctuations and essential inputs

+ Identify some of the main factors and factors that have the most

significant impact

+ Utilizes data from previous phases, making a suitable product for the customer with all the additional adjustments that may be required

+ Consider the production of high-quality prototypes generated from this stage to develop a manufacturing process that not only produces good products, but also efficient manufacturing processes

+ Carry out the necessary adjustments to continuously improve products and better meet customers needs

• COMPARISION BETWEEN DMAIC AND DMADV

Both methods are used in the Six Sigma project management process and are

similar in many respects Both are designed to make business processes more

efficient

However, the models are not interchangeable and they are used for different

business processes, and there are some important differences: The first three letters of these 2 acronyms are the same The biggest difference is the way in which the last two steps of both models come into play

DMAIC

About improving and controlling business processes

Defines the business process and its applicability

Evaluates a process's current processes

Help with auditing to improve business processes and to reduce or even eliminate defects

DMADV

Identifies customer needs as it relates

to the service or product

Assesses the needs of customers

About developing a tailor-made business model that meets customer requirements

4 CASE STUDY OF AMAZON.COM

DMAIC

REDUCING VARIATON BY

6 SIGMA’S METHOD ANALYSIS

DMAIC ALSO REDUCE WASTE BY

Cutting

Cultivating spending

a kaizen -based company culture Eliminating

none-value-adding process

Ever since beginning life as an online bookstore, Amazon.com has drastically

expanded its product range They have even implemented innovative practices like

same-day delivery, set to reach new heights for efficiency with automated drone

delivery But have you ever wondered how Amazon became one of the largest online retailers in the world?

The answer is Six Sigma Six sigma methodology is in the culture of company Six Sigma is part of the operational excellence program that began in 1999 when Jeff

Wilke joined Amazon as VP of operations He came from Allied signal and his

background in 6 Sigma made him the perfect choice to drive efficiencies in operations

“Operational excellence: To us, operational excellence implies two things: delivery

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efficiency, and asset velocity across all over businesses.” 1999 Annual Report of Amazon.com

How Amazon have Incorporated Six Sigma into their Work?

The concept of six sigma was developed as a way to cut costs in business

manufacturing processes However, its use is not exclusive to the sphere of goods

manufacturing, as the online retailer and distribution company Amazon.com, one of the world’s largest online retailers has also implemented the 6 Sigma way of business into its strategy

Amazon’s company culture With around 2000 items ordered every sixty seconds, Amazon can’t afford to let standards slip As far back as

1999, the company began a program of Operational Excellence aimed at improving company processes

Amazon defines Operational Excellence in two ways: Firstly, to deliver continuous improvement for customer experience Secondly, to drive productivity, margin, efficiency, and asset velocity across the entire corporation

hiring the best and brightest – A COMMON SIX SIGMA TACTIC They took things one step further by training their employees as Six Sigma Black Belts

reduce variation by actively seeking it out using DMAIC, Root Cause Analysis, and similar tools They reduced waste by cutting spending, eliminating non-value- adding process stages, and

cultivating a Kaizen-based company culture

with greater inventory management, increased efficiency, and stronger value stream control

7

OPERATIONAL EXCELLENCE

BRIGHTEST"

SIX SIGMA METHOD

IMPACT OF SIX SIGMA ON AMAZON.COM

Amazon is devoted to excellent customer service and experience Before they

revamped their business operations at the start of the millennium, they were

indistinguishable from any other online bookstore

Using Six Sigma they have made rapid progress in becoming a global online

retailer With a culture focused on continuous improvement and greatest efficiency

possible, Amazon has taken over the world In doing so, they have emerged as a

technology giant to stand alongside the likes of Apple or Microsoft

The impact of Six Sigma on Amazon.com can be seen through the statistical

representation Amazon Revenues– 1995 to 2014 Amazon.com revenues have

increased manifold after implementing six sigma in1999 and that can be seen through

the data given below:

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