Lean Six Sigma Green Belt Training

Lean Six Sigma Green Belt Training

This Workshop will help you learn to:
Workshop Goals This Workshop will help you learn to: Implement a systematic approach to identify, map and control existing processes. Develop upstream and outcome metrics and targets that track process performance in satisfying critical customer requirements. Utilize methodologies for collecting, displaying, and interpreting data. Apply proven approaches for continuously improving processes, including DMAIC problem solving, and Tollgate reviews. Ref Intro-1a

Agenda Day 1 Day 2 Day 3 Day 4 09:00-10:45
Introductions / LSS Overview 10:45-11:00 Break 11:00-12:30 LSS Overview / Define Phase 12:30-13:30 Lunch 13:30-15:30 Define Phase 15:30-15:45 15:45-17:30 Define / Measure Phase 17:30 Close Day 1 and Homework assignment Measure Phase Analyse Phase Close Day 2 and Improve Phase Control Phase Close Day 3 and Project Presentations 15:30-16:30 Wrap-Up & Evaluation 16:00 Close Programme 19:00 Dinner

Administrative Information
Safety (room, building) Breaks and lunch Facilities (bathrooms, services) Courtesy (mobile phones, blackberries etc) ? Ref Intro-2

Introductions Activity
Introduce a colleague covering the following information: Name Work location Job responsibilities Experience prior to working at ING Experience with Lean Six Sigma Expectations of this workshop Something interesting about you Ref Intro-3

Listen constructively Defer items to Parking Lot Ask Questions
Ground Rules Be on time Follow an agenda Listen constructively Defer items to Parking Lot Ask Questions Have fun!

Have you completed the Pre-work?
Ref Intro-1b

Overview of Lean Six Sigma

ING Strategy and Lean Six Sigma
Customer Centric Economic Value Lean Six Sigma Improve Persistency Reduce Operational Costs Increase Sales Improve Mix of Business Reduce Risk and Economic Capital Identify Critical Customer Requirements Define Gaps to Customer Requirements Establish Baseline Metrics Execute Improvements to Close Gaps RESULTS Lean Six Sigma Is “How” to Achieve Strategic Objectives Ref Overview-1

ING Strategy and Lean Six Sigma
Mission Positioning Statement Delivers on Promises Is Easy to Deal with Treats Me Fairly Customer- Centric ING is dedicated to deliver financial services solutions valued by the customer Brand Attributes Set the standard in helping our customers manage their financial future

Executing Strategy with Lean Six Sigma
Strategy Deployment Voice of Customer Voice of Process Voice of Business Market Factors Competition/ Benchmarks SWOT Business Strategic Objectives Business Line Strategies Business Line Tactics Six Sigma is a vehicle for strategic change…helps to accelerate the achievement of business goals. Three core drivers: 1. Customers and markets drive requirements 2. Metrics and objectives are aligned across the organization 3. Process improvement & design methodology drive the improvements METRICS METRICS METRICS PROJECTS Review Process METRICS Ref Overview-2

Sources of Lean Six Sigma Projects
Lean Six Sigma projects may be generated from a number of sources, examples include… VOC – Improve timeliness, accuracy, satisfaction, control compliance risks, reduce fines VOP – Reduce the gap between current performance and customer specifications VOB – Increase sales, reduce expenses, improve productivity, includes VOE (Voice of the Employee) Increase employee retention, improve employee satisfaction Six Sigma is a vehicle for strategic change…helps to accelerate the achievement of business goals. Three core drivers: 1. Customers and markets drive requirements 2. Metrics and objectives are aligned across the organization 3. Process improvement & design methodology drive the improvements METRICS Ref Overview-3a

Lean Six Sigma Project Selection
Inputs Voice of the customer Voice of the business Voice of process Prioritize Projects Known solution with supporting data? YES Translate into project opportunities Strategic Fit Economic Value Time/Effort NO Point out that participants will learn more about choosing between DMAIC and DFSS methodology later in this section. Process Not Capable – use DFSS methodology Process Capable – use DMAIC methodology Implement solution, follow lean six sigma principles Ref Overview-3b

Project Prioritization Matrix
More detailed approach than Pre-work Ref Overview-4

Lean Six Sigma Success Factors
Business Process Framework Customer & Market Network Strategy Integration Quantifiable Measures & Results Incentives & Accountability Full Time Six Sigma Leaders Committed Leadership Establishing these factors provides the seeds of success. They need to be integrated uniquely to fit each business. They are all necessary for the best result. The most powerful success factor is “committed leadership” Ref Overview-5

Lean Six Sigma Failure Factors
Leaping to the fix – faulty assumptions; not data based Serving the wrong customer – not focusing on the voice of the “next” customer Selecting the wrong projects – not linked to strategy Solution-caused problems – poor sequencing; stakeholder under-involvement; ineffective resource planning; absence of change management; no project closure Adapted from Six Sigma’s Seven Deadly Sins by James P. Zimmerman and Dr. Jamie Weiss of Kepner Tregoe Ref Overview-6

The Evolution of Lean Six Sigma
Today: American Express, JP Morgan, Merrill Lynch, Wells Fargo, B of A , Caterpillar Financial ….. The foundation for Lean Six Sigma has been effectively applied in a wide variety of companies worldwide over many decades Design for Six Sigma: GE Six Sigma: AlliedSignal, GE Six Sigma: Motorola Reengineering: Michael Hammer Quality Circles 1970: Zero Defects: Philip Crosby Japanese Quality methods: Ishikawa, Taguchi Applied Lean Concepts: Toyota Production System Statistical methods for business: Juran, Figenbaum Late 1940s; Statistical methods in Japan; W. Edwards Deming Statistical Sampling; Walter A. Shewhart 1920 Time and motion studies; Frederick Taylor Ref Overview-7

What is Sigma? The Greek letter σ (sigma) is used in statistics to describe variation. Sigma (σ) represents the standard deviation in a population. Standard deviation is derived from calculating the average difference between all data points of a population and the average of that population. Greater predictability has numerous beneficial side effects, such as making forecasts more reliable, increasing ability to meet schedules, etc. Ref Overview-9a

Lean and Six Sigma Thinking
Lean Thinking: Customer focused Identify waste Improve process speed/cycle time Specific speed tools – Value-add analysis; Kaizen events Six Sigma Thinking: Critical Customer Requirement (CCR) focused Culture and infrastructure to sustain results Focus on variation Methodology driven – DMAIC, DFSS Lean Six Sigma - Blended to Optimize Results Ref Overview-8

What is Lean Six Sigma? (cont’d.) Measurement
Measures the variation and defect level in a process or product Allows different processes to be compared 3.4 defects per million opportunities Greater predictability has numerous beneficial side effects, such as making forecasts more reliable, increasing ability to meet schedules, etc. Ref Overview-9b

What is Lean Six Sigma? (cont’d.) Measurement Improvement Methodology
Measures the variation and defect level in a process or product Allows different processes to be compared 3.4 defects per million opportunities Improvement Methodology Customer-focused Data and measurement-driven Focused on reducing defect levels Results-oriented Greater predictability has numerous beneficial side effects, such as making forecasts more reliable, increasing ability to meet schedules, etc. Ref Overview-9c

What is Lean Six Sigma? (cont’d.) Measurement Improvement Methodology
Measures the variation and defect level in a process or product Allows different processes to be compared 3.4 defects per million opportunities Improvement Methodology Customer-focused Data and measurement-driven Focused on reducing defect levels Results-oriented Catalyst for Organizational Change Large-scale fundamental change in culture Move to a data-driven, customer-centric mindset Greater predictability has numerous beneficial side effects, such as making forecasts more reliable, increasing ability to meet schedules, etc. Ref Overview-9d

Who is the Customer? External Purchasers of products and services
Distributors Regulatory entities Greater predictability has numerous beneficial side effects, such as making forecasts more reliable, increasing ability to meet schedules, etc. Ref Overview-10a

Who is the Customer? (cont’d.) External Internal
Purchasers of products and services Distributors Regulatory entities Internal Other departments Management / Shareholders Greater predictability has numerous beneficial side effects, such as making forecasts more reliable, increasing ability to meet schedules, etc. Ref Overview-10b

Who is the Customer? External Internal Voice of Customer(VOC)
Purchasers of products and services Distributors Regulatory entities Internal Other departments Management / Shareholders Voice of Customer(VOC) Information that can be collected from external/internal customers Greater predictability has numerous beneficial side effects, such as making forecasts more reliable, increasing ability to meet schedules, etc. Ref Overview-10

What is Variation? Process Average Customer Requirement Variation is the normal, measured difference in process outputs Many process measurements focus on averages… averages don’t tell the whole story Same Process Average Greater predictability has numerous beneficial side effects, such as making forecasts more reliable, increasing ability to meet schedules, etc. 1 5 10 15 20 25 30 Days to close loan Ref Overview-11a

What is Variation? (cont’d.)
Process Average Customer Requirement Knowledge of process variation and defect levels provides more insight into process performance Less variation reduces costs, increases reliability, and customer satisfaction Same Process Average Much Different Customer Defects Greater predictability has numerous beneficial side effects, such as making forecasts more reliable, increasing ability to meet schedules, etc. 1 5 10 15 20 25 30 Days to close loan Ref Overview-11b

Critical Customer Requirements
Sources of Variation Market Process Outputs Critical Customer Requirements Suppliers Inputs Process Activities Defects In-process variation may lead to defects in process output Variation occurs in both process inputs and process activities – people, methods, materials, equipment, and environment The output (Y) is determined by performance of inputs and processes (x)…. Y=f(x) Ref Overview-12

Goal of Lean Six Sigma Using Lean Six Sigma, we work to reduce variation and permanently move product or service outputs inside customer requirements. (Curve A to B) Critical Customer Requirement (CCR) B A Defects: Process output that does not meet Customer Requirements Product or Service Output Ref Overview-13

Produce or Service Output
Improve Process Yield We use Lean Six Sigma to improve process yield. Process Yield is the proportion of process output that meets customer requirements. Critical Customer Requirement (CCR) Proportion of process output (B) that meets customer requirements = 100% B A Proportion of process output (A) that meets customer requirements ≈ 70% Produce or Service Output Ref Overview-14

The ‘Hidden’ Factory (Lean Thinking)
. The hidden factory corresponds to the resources that today are directed at creating waste, while they could be focused on generating high quality products and services. For the typical organization, about 25% to 40% of all work activities consists of hunting for mistakes, unnecessary audits, rework, duplication of efforts and the performance of unneeded tasks. Poor quality is more expensive due to inefficiency, non-value adding activities, rework, as well as less ‘tangible’ costs such as lost customers & low employee morale Hidden Factories Re-work of defects in processes or products Excessive phone calls, s, faxes and other correspondence as a result of poor performance Multiple approval steps Lost Sales and Market Share Fines and Other Penalties

Rolled Throughput Yield
Rolled Throughput Yield (RTY) represents a combined yield for each step or sub-process. Obtain RTY by multiplying the yield for each step or sub-process. STEP 1 STEP 1 STEP 1 STEP 2 STEP 2 STEP 2 STEP 3 STEP 3 STEP 3 STEP 4 STEP 4 Ref Overview-15a

Rolled Throughput Yield (cont’d.)
Loan Documentation Yield = 95% Loan Application Yield = 91% Loan Processing Yield = 96% Loan Review Yield = 96% Rolled throughput Yield = 0.95 x 0.91 x 0.96 x 0.96 x 0.97 = 77.2% Loan Servicing Yield = 97%

Rolled Throughput Yield (cont’d.)
RTY can be calculated on either the number of items that make it through defect-free the “first time right” or on the final number of items that are defect-free once errors are corrected In most situations, it makes sense to base sigma calculations on First Time Right Process Step 1 Correct? No Errors Reworked First Time Right = Number of items that make it through error-free without corrections Final Yield = Number of items that are defect-free AFTER errors are corrected Ref Overview-16

Rolled-Throughput-Yield - Activity
Appoint a facilitator in your project team to manage the time and the discussion. Map your selected improvement process high-level (e.g process steps) on a flip chart Make an estimate of the yield rate at each individual process step You may have to first consider the criteria for defects and what the definition is for a defect free step! This may include establishing a target level for a step (e.g. this step must be finished in 2 hours) Calculate the RTY % of the overall process What is your conclusion? Be ready to share your results in a short presentation.

Process Sigma is a Great Metric
Focus is on defects, even one is a failure for a customer Universal measure that can be applied to any product or service Difficult to motivate people to improve quality from 99% to % σ DPMO Yield 3.0 66,807 93% 3.5 22,750 98% 4.0 6,210 99% 4.5 1,350 99.87% 5.0 233 99.977% 6.0 3.4 % The preferred, standard method of determining DPMO (Defects per Million Opportunities) is to use actual process data and count how many defect opportunities are outside the specification limits—then scale that number up to the equivalent of a million opportunities. We do this at the end of the Measure step. Answer to the question. It appears that Claims is doing better by comparison of the numbers shown. However, we don’t know for certain how these numbers compare to actual DPMO, a calculation that would require knowledge of customer specifications. Distribution shifted +/- 1.5 sigma DPMO = Defects per million opportunities Sigma Improvement Requires Enormous Defect Reduction Ref Overview-17

Is Six Sigma Performance Necessary?
flight arrivals (all carriers) IRS answers 21% of calls Correct legal advice from IRS Overnight delivery of 1st Class Mail Soft drink quality in N. America On-time Mishandled baggage (all carriers) Restaurant bills Payroll processing 100000 Wire transfers 10000 1000 100 DPMO 10 Domestic airline fatality rate 1 (0.43ppm) 1 2 3 4 5 6 7 Process Sigma Is the Airline Industry Focused on the Right Processes? Ref Overview-18a

(cont’d.) At 3σ, or 93% Yield, there would be: >90% of computers would not function 10.8 million mishandled healthcare claims annually 54,000 checks lost each night by a single large bank 270 million erroneous credit card transactions each year in the US Source: The Six Sigma Handbook 2003, page 61, T. Pyzdek Ref Overview-18c

(cont’d.) At 4.5 σ, or 99.9% Yield, there would be: At least 20,000 wrong drug prescriptions per year Unsafe drinking water almost 1 hour each month No telephone service for nearly 10 minutes each week Two short or long landings at O’Hare airport each day 25,000 lost or incorrectly delivered articles of mail per hour Over 9,000 wrong felony convictions per year 50 Newborn babies dropped at birth by doctors each day Ref Overview-18b

Setting Sigma Performance Targets
If the current Process Sigma is greater than 3.0, a two times defect improvement goal is set, e.g., improve from 1,000 DPMO to 500. If the current Process Sigma is 2.9 or less, a ten times defect improvement goal is established, e.g., 300,000 DPMO to 30,000. Indicate that these improvement guidelines reflect the amount of defect reduction opportunity available – more is defect reduction is possible for lower sigma levels as compared with higher sigma levels Ref Overview-19

Brainstorm some costs that you incur as a result of defects.
The Cost of Defects Activity: Brainstorm some costs that you incur as a result of defects. Ref Overview-20

Cost of Defects - Examples
Hidden Factories Re-work of defects in processes or products Complex workarounds Excessive phone calls, s, faxes and other correspondence as a result of poor performance Inspections and Audits Back-end audits and approvals Multiple approval steps Lost Sales and Market Share Market product requirements not met Service or delivery requirements not met Fines and Other Penalties Ref Overview-21

Lean Six Sigma Business System
MTP Planning – the steering mechanism of the Business System Process Management – documenting and measuring process performance Problem Solving – using lean, DMAIC, DFSS, and other methodologies to close process performance gaps People – recognizing and harnessing the exceptional potential of employees, suppliers, customers, and experts There are three basic 6 Sigma processes: - Improvement Process (DMAIC) - Creation Process (DMEDI) - Process Management. Our initial focus will be on training and developing Black Belts to lead DMAIC projects. Ref Overview-22

DMAIC vs. DFSS Lean Six Sigma DMAIC Lean Six Sigma DFSS
Define Business Improvement Opportunity Does Process Currently Exist? Measure Current Performance Analyze Root Cause of Current Performance Is Current Process Capable of Meeting Customer Reqts? Improve Performance Measure Market Requirements Analyze Design Alternatives Develop New Process Control Performance Yes No Ref Overview-23

DMAIC vs. DFSS (cont’d.) D M A I C D F S S
Define customer requirements and project goals Measure the process to determine current performance Analyze to identify and validate root causes of defects Improve process by eliminating causes of defects Control and monitor on-going process performance Define customer requirements and project goals Measure customer needs and specifications Analyze design options to meet customer requirements Design a detailed process that meets customer requirements Verify that current and future process meets customer requirements Define Measure Analyze Improve Design Six Sigma is a vehicle for strategic change…helps to accelerate the achievement of business goals. Three core drivers: 1. Customers and markets drive requirements 2. Metrics and objectives are aligned across the organization 3. Process improvement & design methodology drive the improvements Control Verify Ref Overview-24a

Funneling the Focus of Process Work
Variables DEFINE 20+ Many variables MEASURE 5-8 Important ANALYZE 3-5 Confirmed problematic variables IMPROVE Focus of improvement activities CONTROL 1-3 Focus of ongoing control Ref Overview-24b

Project Components: DEFINE
Overall objective: Clarify the Improvement Opportunity Identify Business Opportunity/Problem Identify Outcome Metric(s) and Target Valid CCR Critical Customer Requirement Service Attribute Outcome Metric Target Establish Roles & Stakeholder Expectations Clarify Project Boundaries, Financial Benefit, and Preliminary Problem Statement Charter & Schedule Project, Select Resources Identify Critical Customer Requirements (CCRs) To Measure Step Ref Overview-25a

Project Components: MEASURE
Overall objective: Narrow the improvement opportunity to a specific problem statement. Plot Outcome Defect Data Stratify Data Revise Problem Statement From Define Step Create Detailed Process Map Frequency Plots Run Chart F 1 3 4 2 Calculate Performance Pareto Chart DPMO_____ Yield _____ Sigma _____ Goal _____ Collect Upstream Data Check Sheet Develop Data Collection Plan A Mary John Sally Jim B C E Understand Variation Assess Financial Impact (COPQ) UCL LCL Data Collection Plan Project ________________________ What questions do you want to answer? Data Operational Definition and Procedures What Measure type/ Data type How Measured 1 Related conditions to record 2 Sampling notes How/where recorded (attach form) Control Chart To Analyze Step Ref Overview-25b

Project Components: ANALYZE
Overall objective: Identify and confirm the root causes of the problem statement. From Measure Step Confirm Root Causes with Data Scatter Plots Y X Contingency Table Sub Cause Yes No Present Not Defect 5 Made the Sale Did Not Make the Sale Time With Customer (in minutes) 10 15 20 25 30 3 40 45 50 55 60 >60 Did Not Make the Sale Stratified Frequency Plots Identify Value Added & Non-Value Added Steps Continuous Data Customer Brainstorm and Organize Potential Causes Mixed Data Root Cause 1 2 Level 1 Cause Level 2 Cause Cause and Effect Diagram Revised Problem Statement Level 3 Cause To Improve Step Attribute Data Ref Overview-25c

Project Components: IMPROVE
Overall objective: To identify/implement countermeasures that will eliminate or reduce the confirmed root causes. From Analyze Step Cost/Benefit Analysis Develop Action Plan Quantify Pilot Results Identify Breakthrough Ideas Solution (s) / Specific Task (s) ____________________________ Problem Statement ________________________________________ : Task / Project Who Due Date Status Updated Pareto Chart Cost/Benefit Analysis Approval from Finance Cost Benefit Before After 1.3 s A1 A2 A3 A4 } Improvement 3.1 s 50% 25% 75% 100% Lean Thinking Select Countermeasures Point out that the need for a Pilot depends on the scope of the project. Risk Analysis Develop Pilot Plan Update Metrics Cost Action Problem Root Causes Solutions Effectiveness Ease to Implement Total Score Specific Tasks Selection Matrix FMEA Gantt Chart Item or Process Step Potential Failure Mode Effect (s) of Failure Cause(s) Current Controls RPN Recommended Action Responsibility and Target Date Action Taken Severity Occurrence Detection “After” Total Risk Priority Number = Risk Priority Number = Before After Good Time IMPROVE changes implemented } Improvement 3.2 Process Sigma 3.6 Process Sigma To Control Step Ref Overview-25d

Project Components: CONTROL
Overall objective: To maintain the gains. From Improve Step Communicate Results Close Project Standardize the Process “X” Upstream Metrics UCL LCL “Y” Outcome Metrics Good Cost/Benefit Analysis Approval from Finance Standard Practices Train Celebrate! Process Control Plan Emphasize that project results must be sustainable. We expect that after a project closes that the process owner will track process performance for at least one year. Ref Overview-25e

Lean Six Sigma Involves Cultural Shift
Owns vision, Leads change Provide project-specific support SMEs (subject matter experts) provide support as needed Directs, integrates project w/in business Creates business deployment plan Executive Champion Project Team Members / SME Project Sponsor Understand vision Apply concepts to their job and work area All Employees Green Belts Process Owner Help Black Belts as team member Experienced Green Belts lead some projects Six Sigma Project Team Members Six Sigma-skilled employees will eventually be referred to as Green Belts. Any ING employee can become a Green Belt–over time, all ING employees should be Green Belts. Problem solving, statistics, and quality tools are a few of the skills required of a Green Belt. Supports Black Belts and Local Champion Sustains and leverage gains Black Belts Master Black Belts Full-time Facilitate problem solving Train and coach Project Teams Full-time Train and coach Black Belts and Six Sigma Green Belts Ref Overview-26

Lean Six Sigma Roles/Responsibilities
Executive Champion Creates the vision and aligns Lean Six Sigma with business strategy Defines strategic goals and measures Establishes business targets Promotes Lean Six Sigma tools and methodology Helps to remove barriers to success Reviews project and team progress Attends tollgates during initial roll-out Ref Overview-27a

(cont’d.) Project Sponsor Positions project within business environment Identifies process owner of improvement projects Develops preliminary project charter Defines improvement areas, goals and financial targets Identifies key SME resources for project team Positions and kicks off improvement project Reviews project and team progress Helps gain organizational support and removes barriers Helps gain organizational support for solution Recognizes team and contributing members Ensures access to data from existing databases Establishes and certifies savings Emphasize that the sponsors and champions must be drivers of the projects and share in the ownership of the results. Ref Overview-27b

(cont’d.) Process Owner Participates in tollgates Identifies resources and team members for project team Ensures sufficient implementation resources Ensures organization support of solution deployment Evaluates sufficiency of project “controls” designed to hold gains upon solution implementation Owns process, Responsible for sustaining project gains Removes barriers for the team Ref Overview-28a

(cont’d.) Master Black Belt Expert on Six Sigma tools and concepts Trains Black Belts and ensures they are properly applying the methodology and tools Coaches and mentors Black Belts and Green Belts Works high-level projects, many of which are across divisions or business units Assists Champions and Process Owners with project selection, project management and Lean Six Sigma deployment and administration Removes barriers for the team Ref Overview-28b

(cont’d.) Black Belt Responsible for leading, executing, and completing Lean Six Sigma projects Teaches team members the Lean Six Sigma methodology and tools Assists in identifying project opportunities and refining project details and scope Reports progress to MBB, Process Owners and Champions Mentors Green Belts and team members Ref Overview-29a

(cont’d.) Green Belt Assists Black Belt as team member Can lead smaller scope projects Reports progress to MBB or BB, Process Owners and Sponsors Project Team Members/Subject Matter Experts (SMEs) Provide process knowledge and understanding Participate in identifying and gathering data Identify gaps Help analyze data and identify solutions Ref Overview-29b

What is a Tollgate Review?
A milestone that the project must pass through at each step (D-M-A-I-C) Formal presentation(s) followed by questions and discussion Assess status of project – project control Review activities and accomplishments prior to proceeding to the next phase – alignment with plan Revisit Project Charter assumptions A tollgate review ends with a Go/No-Go decision Tollgate reviews ensure projects deliver desired results. Ref Overview-30a

Who Attends Tollgate Reviews?
Black Belt/Green Belt Project Sponsor Process Owner Project Team (Key Members) Quality Champion Senior Mgmt. Stakeholders Other Stakeholders Master Black Belt Required Recommended As Appropriate These are recommendations. Local structures/guidelines apply. Ref Overview-30b

Why Are Tollgate Reviews Critical?
Brainstorm reasons why Tollgate Reviews are important. 2. At what intervals should Tollgate Reviews be scheduled? Why? Reasons why tollgates are critical: Project takes too long – harder to gain insight into project plan and provide guidance Quality of solution not as good – limited opportunities to provide input and feedback No acceptance of solution throughout organization – need to involve key stakeholders throughout the project Projects that should be “killed” are not (until its too late) Benefits/results are at risk – team may not be focused on right things Black Belts don’t receive valuable feedback on performance Team doesn’t receive recognition for efforts Appropriate intervals between reviews: Usually every 30 days, but may be shorter Depends on overall schedule and level of urgency Typical DMAIC project 3-6 months Typical DFSS project 3-12 months Team could be delayed in a step and need a review as motivator Discuss ideas Ref Overview-31

Who is Using Lean Six Sigma?
Manufacturing: Financial Services: Services: Companies across all regions and industries

UNIT 1 Define

Define – Learning Objectives
At the conclusion of this unit, you will be able to: Describe actions for launching a Lean Six Sigma project. Identify project stakeholders and expectations. Clarify project scope. Define Critical Customer Requirements (CCRs) to measure a process performance metric and establish a target for improvement. Develop a project charter and schedule. Ref Unit 1-1

Define – Major Activities
MEASURE ANALYZE IMPROVE CONTROL Develop Project Charter and Schedule Launch the Project Identify Stakeholder Expectations Clarify Project Scope Measure Customer CCRs Overall objective: Clarify the Improvement Opportunity Ref Unit 1-2a

Define – Key Deliverables/Commonly Used Tools
Stakeholder Analysis Preliminary Financial Benefit Preliminary Problem Statement Project CCR’s Process Outcome Metric/Target Team Charter Risk Analysis Project Schedule Surveys Focus Groups Interviews Stakeholder Analysis SIPOC In and Out of Scope Analysis Risk Analysis Pert Chart Ref Unit 1-2b

MEASURE ANALYZE IMPROVE CONTROL Develop Project Charter and Schedule Launch the Project Identify Stakeholder Expectations Clarify Project Scope Measure Customer CCRs Ref Unit 1-3a

Lead Team Identifies Lean Six Sigma Projects
Analyze current operations, competitive environment, customer input, employee surveys, benchmark information. PLAN Identify priorities that align with MTP, and that address local priorities. Establish metrics with targets for improvement to measure performance. Launch projects that focus on priorities. DEPLOY Coordinate activities in an action plan that defines who will be doing what by when. Monitor progress during Tollgates. Offer Feedback, both positive and constructive, to keep REVI EW people informed. Share Thoughts, Feelings and Rationale so others can learn from a leader’s knowledge and experience. Inform Senior Management of progress. REPORT Recommend improvements. Continuously improve both results and the approach GROW taken to achieve them. Ref Unit 1-3b

Lead Team Identifies Lean Six Sigma Projects
(cont’d.) Approach Options Methodology Options Management Action Individual Assignment Form a Project Team Process Management DMAIC DFSS Ref Unit 1-4a

DMAIC for Existing Process Improvement
Control the process “maintain the gains & transition to full implementation” Define the project’s purpose, scope and major milestones “clarify the opportunity” 5 1 CONTROL DEFINE Improve the process “develop & pilot solutions” IMPROVE Measure the current process performance “narrow the problem area” MEASURE 4 2 ANALYZE 3 Analyze potential root causes “confirm with data” Ref Unit1-4b

Lead Team Fills Lean Six Sigma Roles
(cont’d.) Project Roles Executive Champion Project Sponsor Process Owner Master BlackBelt BlackBelt GreenBelt SMEs Ref Unit1-5

Develop Project Charter and Schedule Launch the Project Identify Stakeholder Expectations Clarify Project Scope Measure Customer CCRs A stakeholder is someone with an interest in, and/or who may be effected by outcomes of the project. Ref Unit 1-6a

Stakeholder Expectations
The Project Sponsor communicates: The need for change Desired outcomes Where performance is now and targets How performance will be measured Level of urgency Related issues to be addressed Ref Unit 1-6b

(cont’d.) Project Sponsor Process Lead Owner Team Your team's expections of others - Other's expectations of your team - Other Project Team Internal/External Project Customers Teams Internal/External SMEs Suppliers Other Employees Ref Unit 1-7

(cont’d.) What stakeholders typically expect: On-time delivery Resource management Accurate cost forecast and control Risk Management / Security Measurable results / ROI Easy to understand /implement Ref Unit1-8a

(cont’d.) What Project Teams typically expect : Clear goals and deliverables Resource availability Time to work on the project Clear idea as to how performance will be evaluated Positive and constructive feedback Support, as needed Ref Unit1-8b

Activity Expectations Ref Unit 1-9

Develop Project Charter and Schedule Launch the Project Identify Stakeholder Expectations Clarify Project Scope Measure Customer CCRs Ref Unit 1-10a

Clarify Project Scope The scope of a project is the sum of activities that a team is committed to complete in a given scheduled timeframe. Begin thinking about scope using the high-level process map you developed in the PreWork… Sell Policy Review Application Underwrite Policy Issue Policy Ref Unit 1-10b

In and Out of Scope Analysis
Clarify Project Scope (cont’d.) In and Out of Scope Analysis Ref Unit 1-11

Preliminary Problem Statement
Clarify Project Scope (cont’d.) Preliminary Problem Statement What is Wrong – state the effect, not why it is wrong, and not the solutions Measurable – how often, how much, and when Specific – avoid broad categories, e.g., poor morale; low customer satisfaction How Customers Are Effected – areas of dissatisfaction Objective – does not imply blame or cause What Is and What Should Be – gap between customer expectations and performance Ref Unit 1-12

Calculate Financial Benefit
Clarify Project Scope (cont’d.) Calculate Financial Benefit An initial financial benefit of the project is developed based on the project scope and preliminary problem statement. When determining Financial Impact, calculate annualized benefits. Look for benefits that may accrue from reducing or eliminating defects in the process. Ref Unit 1-13

Activity Clarify Project Scope Ref Unit 1-14

Develop Project Charter and Schedule Launch the Project Identify Stakeholder Expectations Measure Customer CCRs Clarify Project Scope Ref Unit 1-15a

Customer Requirements
Do you remember from the PreWork… What are typical customer requirements? What are customer requirements categories? Requirement Categories: Category Explanation Quality Free of errors, defects, and mistakes Cost Value exceeds or equals price Delivery Output received when needed Integrity Accountable to shareholders and communities served Ref Unit 1-15b

Must Haves vs. Like to Have
Separate Must Haves from Like to Haves… Ask questions of internal customers Negotiate for win/win reasonable requirements Agree on specific, measurable, attainable and trackable performance levels Ref Unit 1-16

Who Caught The Fish? A B C D E

SIPOC Analysis Worksheet - Example
Process Name: New Business Process Date: 1/04 By: Li Chan Process Suppliers Inputs PROCESS Process Outputs Customers Agent Completed insurance applications Underwriting approval Legible insurance applications Timely response Policy issued Agent/Policy Holder Inputs Outputs Products Services Products Services Suppliers Process Customers Ref Unit1-17

80/20 Rule Use the 80/20 rule to identify the 20% of customer requirements that are most critical. Review your SIPOC Analysis while considering the following questions: Who is the “next customer” – the direct recipient of our process output? Who are the most critical customers of our process (it may only be one customer)? Who would be most impacted if our process stopped producing an output? Ref Unit 1-18

Activity SIPOC Analysis Ref Unit 1-19

Critical Customer Requirements (CCR)
A CCR is a description of a product/ service attribute or characteristic that influences a customer’s requirement. To identify CCRs for your process… What attribute of my product/service does the next customer (my key customer) most care about? What attribute of my product/service does the business most care about? Work with your Project Sponsor to rectify any conflicts. Ref Unit 1-20

Measure CCRs with Outcome Metrics
Outcome metrics are “after the fact” “past tense” measures They always focus on defects They represent the proportion of total process output that is not satisfying the customer requirement over a period of time A typical process has 1-3 outcome metrics Critical Customer Requirement Service Attribute Outcome Metric “I want new insurance policies issued quickly.” Turn Around Time % of Policies not issued on time Ref Unit 1-21

Tips for Defining Outcome Metrics
Customer Oriented Cost Effective Controllable Calculable Consistent Ref Unit 1-22

System of Metrics Process B Process A Process D Process C Process F Process E Business Line Region 1 Region 2 Region 3 An outcome metric for one process should link to the next higher-level process – see example on next slide Ref Unit 1-23

Setting Outcome Metric Targets
Sources of Targets Critical customer requirement data Specifications Past performance trends Analysis of potential for process improvement (Process Sigma) Benchmark levels of performance attained by competitors, or best in class in your organization Ref Unit 1-24a

Setting Outcome Metric Targets
(cont’d.) Tips for Setting Targets Use numbers to clarify desired level of performance Be prepared to change target Establish a time frame for achieving target with intermediate targets With multiple process outputs, set targets for each to realize the overall product or service target Ref Unit 1-24b

Critical Customer Requirement
Valid CCRs Valid CCR Critical Customer Requirement Service Attribute Outcome Metric Target “I want my new policy issued quickly.” Turn Around Time % of policies not issued on time <2% not on time Note: “On time” means within 5 working days beginning the day after the policy is received from agent. Ref Unit 1-25

Valid target for 2006, through 2nd Quarter
Valid CCRs Promise what you can deliver. Valid target for 2005 Valid target for 2006, through 2nd Quarter Valid target for 2006, end of year Policy issued within 5 working days of receipt Policy issued within 4 working days of receipt Policy issued within 3 working days of receipt Ref Unit 1-26

Activity Define Valid CCRs Ref Unit1-27

Develop Project Charter and Schedule Launch the Project Identify Stakeholder Expectations Clarify Project Scope Measure Customer CCRs Ref Unit 1-28a

Project Charter Example
Business Opportunity Business Benefits/Customer Benefits Over 15% of department resources spent on answering agent’s inquiry. Improving the process will enable resource allocation. Better support to agency will improve business and increase customer satisfaction. Business Benefits: More efficient handling of agent’s enquiry reduce resources, which can be allocated to improve other daily operations Customer Benefits: Timely service to agent, hence more satisfied customers. Key Deliverables Process Scope Review and improve agency inquiry process by Nov 2005. Answer all agent’s inquiry in less than 5 minutes Turn-Around-Time (KPI/Target). Process Control Plan Training plan for revised process Starts when an agent makes an inquiry (by or by phone). Ends when reply received and no more follow-up. Services limited to agents only (internal inquiry not included). The communication channels include , phone, internal memo, and agent’s intranet. Ref Unit 1-28b

Elements of a Project Charter
Business Opportunity Business Benefits/Customer Benefits Key Deliverables Metric /Target Process Scope Project Schedule and Resources Ref Unit 1-29

Identify and Mitigate Risks
People Technology Resources Cost Schedule Environment Can you think of others? Ref Unit 1-30

Identify and Mitigate Risks
(cont’d.) Risk Assessment Table Project Risk Items Potential Impact (1-5) Probability of Occurrence Overall Risk (impact x probability) Action Plan Example: Severe storm 5 1 n/a Ref Unit 1-31

Project Schedule & Resources
Serves as a record of team participation Tracks the number and duration of meetings Clarifies a schedule for completing each of the DMAIC steps Facilitates comparison of the planned schedule with actual time required Includes actions to reduce/mitigate identified risks Ref Unit 1-32

(cont’d.) Project Schedule Worksheet Project Theme Team Name Sponsor Team Information Team Members/ % Dedicated Date Attd. Hours Date Attd. Hours Date Attd. Hours Date Attd. Hours Meeting Record Ref Unit 1-33a

(cont’d.) Schedule: Planned Actual Week/Month Define Measure Analyze Improve Control Project Close 1 2 3 4 1 2 3 4 1 2 3 4 1 2 10 10 10 10 11 11 11 11 12 12 12 12 1 1 Ref Unit 1-33b

Develop Project Charter, Schedule and Resource Requirements
Activity Develop Project Charter, Schedule and Resource Requirements Ref Unit 1-35

Project Tollgates A tollgate occurs at the end of each step in the DMAIC methodology with the purpose of... Monitor team progress Identify additional resource needs Maintain focus Assist in dealing with sensitive issues Ensure coordination among all teams Share best practices Remove organizational barriers “See” the business Check for consistency Reward and recognize The use of tollgates is not mandatory in all locations within ING. Ref Unit 1-34a

Define Project Tollgate
Prepare to answer the following questions during a tollgate review at the end of the Define Step: What is the problem or opportunity? Why is this project important to the business? Who is the project Sponsor Does the Project Charter address key stakeholder expectations? When does the Project Schedule call for the project to be completed? What identified risks most threaten the project? Who is working on this project? Why? How does the outcome metric measure performance against CCRs? How were targets established for each metric? Ref Unit 1-34b

Unit Summary Having completed this unit, here are some questions you should be able to answer: What actions are involved in launching a Lean Six Sigma project? Who are typical project stakeholders? What do they typically expect from a project? What is a CCR? What metric is used to measure overall process performance in satisfying CCRs? How are the Project Charter and Schedule helpful? Ref Unit 1-38a

Project Components: DEFINE
Overall objective: Clarify the Improvement Opportunity Identify Business Opportunity/Problem Identify Outcome Metric(s) and Target Valid CCR Critical Customer Requirement Service Attribute Outcome Metric Target Establish Roles & Stakeholder Expectations Clarify Project Boundaries, Financial Benefit, and Preliminary Problem Statement Charter & Schedule Project, Select Resources Identify Critical Customer Requirements (CCRs) To Measure Step Ref Unit 1-38b

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