TOPIC
SIX SIGMA Quality management. By M. Ali Hassan
[email protected]
AGENDA
What is Six Sigma? Six Sigma Methodology. Why adopt Six Sigma? Different Six Sigma Belts. Why Six Sigma and not TQM?
WHAT IS SIX SIGMA ? Six Sigma is a rigorous and a systematic methodology that utilizes information (management by facts) and statistical analysis to measure and improve a company’s operational performance ,practices and systems by identifying and preventing ‘DEFECTS’ in manufacturing and service processes .
Six Sigma scale of Defects. Sigma 3 4 5 6
Defects (per million) 66,807 621 233 3.4
Product Optima (%) 93.32 99.379 99.9767 99.999966
Defects values in the above tables suggests that as sigma level goes up defect rate reduces which means product quality improves.
Six Sigma Methodology
Six Sigma has two key methodologies. 1) DMAIC – Define , Measure ,Analyze , Improve ,Control. 2)DMADV – Define , Measure , Analyze, Design, Verify.
Why companies Implement Six Sigma?
Quality Improvement.
Improved Process Flow.
Employee Skills.
Improve Market Shares.
Earnings and Profitability.
Customer Satisfaction.
Different Six Sigma Belts
Can Six Sigma Fail ? YES
Leaders Involvement.
Clearly Defined Strategy.
No Accountability.
Resource Allocation.
Does Organization adopt or adapt.
Example: Dabbawalas.
“IF THE LOCAL TRAINS ARE THE LIFELINE OF THE CITY,DABBAWALAS ARE THE FOOD LINE.”
Why Six Sigma and not TQM? Total Quality Management Customer Driven
Six Sigma Driven internally
Focuses on processes
Focuses on outcomes
Prevents defects
Fixes defects
Improves overall efficiency Improves bottom line
Conclusion
Six Sigma means data driven decision making
TOPIC
ALTMAN Z-Score Developed by M. Ali Hassan.
What is Altman Z –Score?
A Guide to failure prediction.
Z-Score for predicting Bankruptcy /Insolvency.
Measurement of financial health of a company.
Who will use it ?
Investor’s ,broker’s.
Bankers.
Anyone related with company.
Data Required.
Earnings before taxes. Total assets. Net sales. Market value of equity. Total liabilities. Working capital. Retained earnings.
Five Ratios.
Return On Total Assets. (EBIT/total assets) * 3.3 Sales To Total Assets. (Net sales /assets) * 0.999 Equity To Debt. (Mkt value of equity/Book value of liabilities) * 0.6 Working Capital To Total Assets. (working capital/ total assets) * 1.2 Retained Earnings To Total Assets. (Retained earning /total assets) * 1.4
Ratio
Formula
Return On EBIT/Assets Total Asset Sales To Total Sales/Assets Assets
Weight Factor 3.3
Weighted Ratio. -4 to 8
0.999 = 1 -4 to 8
Equity To Debt Ratio
M.V Equity /Liabilities
0.6
-4 to 8
Working Capital To Total Assets.
Working capital 1.2 /Assets
-4 to 8
R. Earnings To Assets
R Earnings / Assets
-4 to 8
1.4
Example – XYZ public co. LTD.
EBIT : Total Assets : Net Sales : Market value of Equity : Total liabilities : Current Assets : Current liabilities: Retained Earnings:
1600 23350 4000 3900 15000 19000 9600 2350
FORMULA
Calculation
EBIT/Assets
Weight Factor 1600/23350 0.068 *3.3
Sales /Assets
4000/23350 0.171* 0.99 0.1711
M.V of Equity/Liabilities W. capital/Assets
3900/15000 0.26*0.6
0.156
9400/23350 0.402*1.2
0.483
Retained Earnings/Assets
2350/23350 0.1006*1.4 0.140
Z-score = 0.2261+0.1711+0.156+0.429+0.140 =
0.2261
1.1762
Interpretation of Z-Score.
Above 3.0 = The company is safe based on their financial figure.
Between 2.7 and 2.99 = On alert. Insolvency is possible ,but not likely in near future.
Between 1.8 and 2.7 = Good chances of the company going bankrupt within 2 years.
Below 1.80 = Probability of Financial Bankruptcy is very high. XYZ Co Ltd - Z-Score = 1.1762.
Z Score of Indian companies
Tata Motors Limited
-- 3.48
Dr.Reddy’s
-- 8.25
Honeywell International -- 2.25
Points To Remember
A score greater than 3.0, or an increasing Altman's Z-Score is usually a positive sign.
The higher the score, the better the company's chances of avoiding bankruptcy, but this score should be checked against other companies and industry standards.
Large economic events, like an entire industry slowdown, would render this scoring method less accurate.
The individual components of this formula should be monitored, as they are the key to understanding how the score was calculated.
TOPIC VIRTUOUS & VICIOUS BUSINESS CYCLE.
What Does it mean?
VIRTUOUS : Excellent.
VICIOUS:
Harmful.
Example of Virtuous Business Cycle.
Example Of Vicious Business Cycle
BIBLIOGRAPHY
Total Quality Management Book
Motorola site
www.12manage.com
Managing Radical Change
