Define

Define Measure Analyze Improve Control

Lean Six Sigma History

The Roots of Lean Six Sigma

LEAN SIX SIGMA

Learning Objectives

Define

Understand the market and workplace forces driving the need for Lean Six Sigma Understand the background and primary focus of Lean Understand the background and primary focus of Six Sigma Learn the tremendous benefits to be reaped by combining Lean and Six Sigma together

A History of Manufacturing
Craft
Made to customer specifications Each product unique Pride in workmanship Little inventory Relatively high cost

Define

History shows customers value quality and variety, manufacturers desire efficiencies, and workers desire satisfaction from their jobs.

Mass Production

Whitneys interchangeable parts Taylors division of labor Fords assembly line Fords limited variety Worker/management Mass Customization division High variety Small volume per product Near perfect quality Engaged workforce 1875 1900 1925
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1950

1975

2000

Traditional Performance Paradigm

Define

In the past, companies believed a gain in one performance area required a trade off in one or more of the other dimensions. For example, to decrease delivery time firms hired more expeditors, which drove up costs, while product quality suffered in the rush to get product out the door.

Shorter Delivery Times

Improved Product Quality

Lower Product Costs

New Performance Paradigm

Define

The new paradigm says a performance gain in one area requires or will result in performance gains in the other dimensions. For example, achieving a sustainable decrease in delivery time requires that rework, scrap, and other inefficiencies be eliminated in the production process, resulting in higher product quality and lower production costs.

Shorter Delivery Times

Improved Product Quality

Lower Product Costs

The Lean Six Sigma Strategy

Define

To implement the new paradigm, companies turned to two major process improvement strategies Lean and Six Sigma. Lean focuses on reduced lead time and reduced costs. Six Sigma focuses on improved quality and reduced costs. Lean Six Sigma combines the benefits and power of both strategies.

Lean Six Sigma Shorter Delivery Times Improved Product Quality

Lower Product Costs

Why Is Every Firm Driven to Both Quality and Lead Time Reductions?

Define

Customer loyalty and retention Shorter customer lead time demands Increased customer demands for small lots sizes and flexibility Increased demand for capacity Need for lower invested capital; higher financial returns Downward price pressure; need to lower costs

Why Do These Goals Require Both Lean and Six Sigma?

Define

Inconsistent product delivery and quality reduces sales In a value stream, material spends 90% of its time waiting Poor quality increases manufacturing lead time

10% scrap can increase lead time by 40% and reduces available capacity

Slow lead times reduce the rate of quality improvement Capacity problems are masked by slow lead times Lean tools accelerate lead time reduction and Six Sigma brings a process under control
Lean Six Sigma optimizes capacity, reduces lead time, and eliminates variability in all processes
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Lean Production History

Define

Concept pioneered by Toyota Adopted by other Japanese manufacturers Discovered much later by Western manufacturers Known by many names:
Toyota Production System Just-In-Time Lean production

Originally focused on reducing waste in manufacturing Now huge gains are being achieved by applying Lean to transactional and service environments

The Five Principles Of Lean Thinking

Define

Lean Thinking can be summarized in five principles*: Principle 1 Specify and Focus on value Principle 2 Identify the value stream Principle 3 Allow value to flow without interruptions Principle 4 Let the customer pull value Principle 5 Continuously pursue perfection
* Womack, J. P. and D. T. Jones, 1996, Lean Thinking, Simon & Schuster

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Definition Of Value

Define

Any activity or task that transforms the deliverables of a process in such a way that the customer is both aware of it and willing to pay for it, is value added Based on this (strict) definition of value, we can divide the tasks and activities of any process into three categories:

Value added (essential) or VA Business value added (BVA) Non-value added (NVA)

Our goal is to eliminate NVA activities wherever possible and minimize the BVAs through the use of Lean Methods.
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Definitions Activity Types

Value added
Any

Define

activity or task that transforms the deliverables of a process in such a way that the client is aware of it and is willing to pay for it Any activity that, when left out, would impact product performance and/or customer satisfaction to support value added steps in the current process Includes those activities that do not add value but are currently required by regulation or law When left out, may not directly impact the customer or incur dissatisfaction

Business Value added

Necessary

Non-Value added
Any

activity that, when left out, does not directly impact the customer or the business
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Value Added Quiz

Activity 1) Attending a weekly team coordination meeting 2) Filtering through your daily e-mail list 3) Reporting status to upper management 4) Gaining multiple approvals on documents 5) Gaining management approval for routine actions 6) Expediting a document through the approval list 7) Writing formal policies and procedures 8) Writing brief work-method instructions 9) Gaining agency approvals Not legally binding 10) Creating ISO 9000 documentation 11) Hunting for needed information to do your job 12) Building a best practices database 13) Holding a lessons learned meeting 14) Assigning a tracking number to a shipment
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Define

In which category should the following activities be placed?

VA BVA NVA

Lean Focuses on Eliminating the Eight Deadly Wastes (TIMWOODU)

Define

Waste in Transportation Waste of Inventory (Excess Stock on Hand) Waste of Movement (Excess Worker Motion) Waste of Waiting (Idle Time) Waste of Overproduction (Currently Unneeded Stock) Waste of Over Processing (Misused Capacity) Waste of Defective Products Waste of Unused Human Intellect The Eight Deadly Wastes are inherent in EVERY process Lean provides the methodology, tools, and techniques to reduce and eliminate them!
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Lean Tools and Terminology

Define

Value Stream Mapping Time Trap Analysis Generic Pull Systems Replenishment Pull Analytical Batch Sizing Stocking Strategy 5S

Setup Time Reduction Total Productive Maintenance Process Balancing Process Flow Improvement Mistake Proofing Visual Control Tools Sales & Operations Planning

Goals: Highest Quality, Lowest Cost, Shortest Lead Time

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Lean Terminology Takt Time

Define

Takt German for meter; refers to the tempo set by the conductor of an orchestra Used in Just-In-Time processes to set the rate of production equal to the average customer demand Takt Time = Available Work Time/Period* Customer Demand/Period*

Producing slower then takt time = we dont meet customer demand Producing faster then takt time = we overproduce, create inventory

*Period must be consistent (i.e.., Shift,Day,Week)

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Takt Time Example

Takt Time = Available Work Time/Day Customer Demand/Day 480 -30 -5 445 4500 20 (4500/20) = 225 Work Time/Day 1 Day = 1 Shift = 480 minutes Breaks: 2 @ 15 minutes Clean-ups: 1 @ 5 minute Work Time minutes/Day Customer Demand/Day Monthly Demand (units) Number of working days/month Customer Demand/day

Define

Takt Time = (445 mins/day)/(225 units/day) = 1.98 mins/unit

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Concept Of Takt Time For Business Processes

Define

For Business Processes, Takt time could represent the time available to perform a given process step, based on the total number of steps that must be completed in a work day
Available Work Time per Work Period Number of Process Steps Required per Work Period (To Meet Demand of Process Customer)

Takt Time

Ensures all required work is completed every day

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Six Sigma History

Define

Motorola was the first advocate in the 80s; gathered momentum in late 80s/early 90s Six Sigma involves use of statistical tools and structured problemsolving approach to attack high payback projects Project implementers called Black Belts, Top Guns, Change Agents, and Trailblazers Implementers expected to deliver annual financial benefits through 3-6 projects per year Companies embracing Six Sigma include GE, Allied Signal, Sony, ITT, Caterpillar, and Bombardier

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Six Sigma Terminology

Sigma

Define

() = Standard Deviation

Key measure of Variability Emphasizes need to control both the average and variability of a process

Six

Sigma Quality

Sigma Quality Level (SQL) measure used to indicate how often defects are likely to occur Realization that 99% Yield is not good enough Six Sigma Quality = 3.4 Defects per Million Opportunities (DPMOs)

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Goals Of Six Sigma

Define

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Variation Kills

Define

Customers are extremely sensitive to variation Variation reduces overall confidence level in the process How do you feel if security screening is just a little different in every airport?

Customers feel the variation NOT the average

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Is 99% Good Enough?

99% Good (3.8 Sigma) 20,000 lost articles of mail per hour (based on 2,000,000/hr) Unsafe drinking water for almost 15 minutes each day 5,000 incorrect surgical operations per week Two short or long landings daily at an airport with 200 flights/day 2,000,000 wrong drug prescriptions each year No electricity for almost seven hours each month
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Define

99.99966% Good (6 Sigma) Seven articles lost per hour One unsafe minute every seven months 1.7 incorrect operations per week One short or long landing every five years 680 wrong prescriptions per year One hour without electricity every 34 years

Can We Inspect Our Way To 6 Sigma?

Define

st

DPMOlt
308,537 66,807 6,210 233 3.4
Defects per Million Opportunities

2 3 4 5 6
Process Capability

Inspection can only get us so far.

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The Inspection Exercise

Define

Count the number of times the 6th letter of the alphabet appears in the following text:

The necessity of training farm hands for first class farms in the fatherly handling of farm livestock is foremost in the eyes of farm owners. Since the forefathers of the farm owners trained the farm hands for first class farms in the fatherly handling of farm livestock, the farm owners feel they should carry on with the family tradition of training farm hands of first class farmers in the fatherly handling of farm livestock because they believe it is the basis of good fundamental farm management.
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Why Six Sigma Is the Goal

Define

Rolled Throughput Yield (RTY) is the probability that a product will pass
through the entire process without rework and without any defects.
Impact of Complexity on Rolled Throughput Yield
100% 90%

Rolled Throughput Yield

For complex products and systems requiring 1,000s of process steps, 6 is necessary to produce or perform defect-free more than 90% of the time

80% 70% 60% 50%

40% 30% 20% 10% 0% 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

Number of Parts/Process Steps

RTY= Y1 x Y2 . . . Yn
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(n = number of process steps)

Six Sigma Results

Define

GE annual reports state that Six Sigma delivered:

$300 million to its operating income in 1997 $750 million to the bottom line in 1998

Additional annual report examples:

10-fold increase in life of CT scanner x-ray tubes Improved yields of super-abrasives worth a full decade of increased capacity despite growing demands 62% reduction in turn-around time of railcar leasing repairs Plastics business added 300 million pounds of new capacity equivalent to one free plant

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Six Sigma 1.0 Improving Process Performance

Define

Six Sigma defined as a method to eliminate variation to customer requirements

4-Step Measure Analyze Improve Control (MAIC) methodology Concept of Y = f(x1, x2, ) introduced to drive focus on improving critical process inputs rather than just outputs (sales, profits, etc.)

Supported by a suite of quality/statistical analysis tools

Execution

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Six Sigma 2.0 Management Infrastructure

Define

Six Sigma effectiveness enhanced by strengthening the management infrastructure needed to execute business strategy: Define-Measure-Analyze-Improve-Control (DMAIC)

Business Leaders trained and actively engaged in the process Projects selected specifically to support business objectives Defined organization and set of roles (Black Belts, Champions, Sponsors, Green Belts, etc.) creates accountability Critical mass of resources deployed (Set % of employee population)
Execution

Building Infrastructure

Commitment

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Six Sigma 3.0 Value Based Lean Six Sigma

Define

Six Sigma strategic focus sharpened and Lean added to specifically focus on ROC and to enable process speed

Define phase added to enhance project selection and team launch processes resulting in DMAIC Value Based Project Selection process and rigorous system of projects-in-process management Integration of Lean tools with Six Sigma to remove waste from nonvalue added processes and drive speed
Focus

Strategy Integration

Execution

Quality of Thinking

Building Infrastructure

Commitment

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The Lean Six Sigma Concept

Define

Combine the strategy and solution sets inherent in Lean with the cultural, organizational process and analytical tools of Six Sigm a . With the result that we
respond to our custom ers better, faster w ith less w aste

Six Sigma

Lean

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Six Sigma and Lean Contributions

Define

Six Sigma is the Unifying Framework

Six Sigma provides the over-riding methodology (DMAIC and DMEDI/DFSS) Six Sigma provides the improvement infrastructure Six Sigma provides the burning platform for improvement

Lean provides:
Key measure and analyze tools to visualize problems and pin-point where to improve Powerful improvement tools to turbo-charge improvement efforts by reducing waste and increasing process speed

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Lean and Six Sigma Are Essential for the Success of Your Company
Speed + Waste + Implicit Infrastructure

Define

Lean

Quality, Cost + Explicit Infrastructure

Six Sigma

Goal Reduce waste and increase process speed Focus Bias for action/ Implementing Toyota tools Method Kaizen events, Value Stream Mapping

Goal Improve performance on Customer CTQs Focus Use DMAIC with TQM tools to eliminate variation Method Management engagement, 1% dedicated as Champions and Black Belts

Lean Speed Enables Six Sigma Quality

(Faster Cycles of Experimentation/learning)

Six Sigma Quality Enables Lean Speed

(Fewer Defects Means Less Time Spent on Rework)

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Six Sigma Improves Quality, Lean Eliminates Non-Value-Add Steps Both Are Required!
Lean Reduces Non-Valued Add Steps
# of Parts or Steps 1 2 3 4 5 10 30 50 100 300 500 1,000 3,000 5,000 10,000 3 93.32% 87.08% 81.27% 75.84% 70.77% 50.09% 12.56% 3.15% 0.10% 4 99.38% 98.76% 98.15% 97.54% 96.93% 93.96% 82.96% 73.24% 53.64% 15.43% 4.44% 0.20% 5 99.98% 99.95% 99.93% 99.91% 99.88% 99.77% 99.30% 98.84% 97.70% 93.26% 89.02% 79.24% 49.75% 31.24% 9.76% 6 99.9997% 99.9993% 99.9990% 99.9986% 99.9983% 99.9966% 99.9898% 99.9830% 99.9660% 99.8980% 99.8301% 99.6605% 98.9849% 98.3140% 96.6564%

Define

Six Sigma Improves Quality of Value Add Steps

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Lean Six Sigma

DMAIC Improvement Process Road Map

Define
Activities
and Goals
Review Project Charter Validate Problem Statement Validate Voice of the Customer Validate Financial Benefits Validate High-Level Value

Define

Measure
Value Stream Map for Deeper

Analyze
Identify Potential Root

Improve
Develop Potential Solutions Evaluate, Select, and Optimize Develop To-Be Value Stream Develop and Implement Pilot Confirm Attainment of Project Develop Full Scale

Control
Implement Mistake Proofing Develop SOPs, Training Plan Implement Solution and

& Voice of the Business

Stream Map and Scope Create Communication Plan Select and Launch Team Develop Project Schedule Complete Define Gate

Understanding and Focus Identify Key Input, Process and Output Metrics Develop Operational Definitions Develop Data Collection Plan Validate Measurement System Collect Baseline Data Determine Process Capability Complete Measure Gate

Causes Reduce List of Potential Root Causes Confirm Root Cause to Output Relationship Estimate Impact of Root Causes on Key Outputs Prioritize Root Causes Complete Analyze Gate

Best Solutions Map(s)

& Process Controls

Solution Goals

Complete Improve Gate

Implementation Plan

Ongoing Process Measurements Identify Project Replication Opportunities Complete Control Gate Transition Project to Process Owner

Tools

Identify and Implement Quick Improvements with Kaizen

Value Stream Mapping Value of Speed (Process Cycle

Project Charter Voice of the Customer and

Kano Analysis SIPOC Map Project Valuation / ROIC Analysis Tools RACI and Quad Charts Stakeholder Analysis Communication Plan Effective Meeting Tools Inquiry and Advocacy Skills Time Lines, Milestones, and Gantt Charting Pareto Analysis Belbin Analysis

Efficiency / Littles Law) Operational Definitions Data Collection Plan Statistical Sampling Measurement System Analysis (MSA) Gage R&R Kappa Studies Control Charts Histograms Normality Test Process Capability Analysis

Process Constraint ID and Takt Time Analysis Cause & Effect Analysis FMEA Hypothesis Tests/Conf. Intervals Simple & Multiple Regression ANOVA Components of Variation Conquering Product and Process Complexity Queuing Theory

Kaizen, 5S, NVA Analysis, Generic Pull Systems, Four Step Rapid Setup Method
Replenishment Pull/Kanban Stocking Strategy Process Flow Improvement Process Balancing Analytical Batch Sizing Total Productive Maintenance Design of Experiments (DOE) Solution Selection Matrix Piloting and Simulation

Mistake-Proofing/ Standard Operating

Zero Defects

Process Control Plans Visual Process Control Tools Statistical Process Controls Solution Replication Project Transition Model Team Feedback Session

Procedures (SOPs)

(SPC)

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Six Sigma and Lean

Define

Are not mutually exclusive Not only are they not mutually exclusive, they Are compatible Not only are they compatible, they Are complementary Not only are they complementary, they Are enablers of each other Not only are they enablers of each other, they Are in many cases necessary conditions of each other

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Lean Six Sigma Must Be Applied to All Processes, Not Just Manufacturing

Define

Customer Facing Processes Pricing/Quotations Order Management Customer Service Accounts Receivable Internal Business Processes Engineering Change Notice Cycle Production Scheduling Cycle All Can and Should Be Attacked Using Lean Six Sigma Quality and Time Tools

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Lean AND Six Sigma

Define

Its not Six Sigma or Lean, its not Six Sigma then Lean, its Six Sigma and Lean
Mike Joyce, VP LM 21 Lockheed-Martin

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Lean Six Sigma Employs the Evolved Deployment Model for Success
Train Business Leaders to use a rigorous Value Based Project Selection process Analyze each business to understand relative opportunity of process improvement vs. offering complexity reduction

Define

Train Black Belts and Green Belts in Lean Six Sigma DMAIC and Team Leadership

Focus
Strategy Integration Execution

Implement a Projects in Process management system and stage gating Train Project Sponsors to ensure accountability and long-term results Leverage experts to support reduction of offering complexity

Quality of Thinking

Building Infrastructure

Commitment

Rapidly deploy the best people as Black Belts in a critical mass Create an effective organization of improvement resources in line organizations Implement a rigorous process for measurement and tracking of project financial results Integrate Lean Six Sigma into the daily management practices of the business
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Six Sigma 4.0 Conquering Complexity

Define

Lean Six Sigma currently being extended to quantify and attack the cost driven by complexity of the product/service offering
Our latest research indicates that Product/Service Complexity is often the greatest creator of Non Value Add waste and quality problems. Product/Service Complexity comes in three forms:

Offerings which earn adequate ROC Offerings which do not earn adequate ROC:
Improvement Rationalization

Offerings may have complexity that is transparent to the customer

Often

due to historical design evolution is required

Standardization

Conquering Complexity The Next Lean Six Sigma Frontier

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Exercise Elevator Speech

Define

An elevator speech refers to what a leader would say should he or she get on a elevator with a peer or subordinate who asks about Lean Six Sigma Within 90 seconds an executive would have to be able to comment briefly on What Lean Six Sigma is Why Grace is embracing Lean Six Sigma as a management philosophy What are the benefits of Lean Six Sigma What is expected from the peer or subordinate relative to Lean Six Sigma As a group or in different teams you will now create an elevator speech that you would be able to use at Grace (15 max) It must be high energy, motivating without any hype It must allow the subordinate to feel good about the initiative and/or take his fears away You can find an example of an elevator speech on the next slide in case you need some inspiration to get started

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Exercise Elevator Speech Example

Define

Lean Six Sigma is the management philosophy we have adopted to become a more effective, efficient organization. It is an approach for us to identify the customers throughout our business, find out their needs and requirements, measure our current performance, and empower our employees to find ways to improve performance. Successful Lean Six Sigma performance will result in greater customer satisfaction, which will result in keeping current customers and finding new ones. It empowers employees to improve processes they work in which will result in greater satisfaction. Your role in Lean Six Sigma is crucial. You will be expected to learn how to measure key variables that drive performance in processes you work in and find out about ways to improve process. When you do, you will find greater work performance, greater work life balance, and less stress in your job.
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Takeaways

Define

A quick history of Lean Six Sigma

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