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Lean Six Sigma Tom Devane Nexus U 2008 -- A Deeper Dive --

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1 Lean Six Sigma Tom Devane Nexus U 2008 -- A Deeper Dive --

2 2 Session Objectives In this session you will learn How to address organizational performance issues through Lean Six Sigma The fundamentals of Lean Six Sigma and some key tools What other organizations have learned through compiled lessons learned analyses How to get started, even if youre not the CEO Some Lean Six Sigma considerations for your upcoming Sunday Design Experience.

3 3 Agenda Topics 1.Introduction 2.Lean Six Sigma Primer 3.Case Study 1 4.Case Study 2 5.Pre-thinking for Sundays Design Experience 6.Wrap-up

4 4 1. Introduction

5 5 Audience inputs to the agenda…

6 6 Whaddaya Think? 1.The Toyota Production System -- a formidable competitive weapon by Toyota -- consists of both Lean and Six Sigma principles and tools. 2.Six Sigma tends to get faster business results than Lean. 3.General Electric, well-known for its Six Sigma program, does not do any Lean. 4.The Just-In-Time process improvement craze of the 1980s was actually a combination of Lean and Six Sigma. 5.Lean and Six Sigma are used best in a manufacturing environment, not in a service environment. 6.Lean and Six Sigma both share the common goal of improved operational performance, they merely go about it in different ways. 7.Jack Welch of General Electric fame first improved processes with Six Sigma, then modified the corporate culture to make Six Sigma results sustainable. 8.The average weight of a Lean practitioner is 22 pounds less then his Six Sigma counterpart. 9.Purist Lean and purist Six Sigma practitioners are often at odds with each other in companies that have been doing serious process improvement for 10 years or so. 10.The learning curve for Lean tends to be greater than the learning curve for Six Sigma. At this point its not expected that you know anything about disciplines of Lean, Six Sigma, or their combined method. But you must have heard something, so get with a partner and take a shot at the T/F questions below, and then well discuss in a learning environment. T F

7 7 2. Lean Six Sigma Primer

8 8 Discipline Overview Lean Lean Six Sigma Six Sigma Eliminate waste. Simple tools like VSM, 5s. Quick results. Can be dramatic Reduce variation. Advanced tools like FMEA, DOE, control charts. Dramatic results. Benefits of Lean and Six Sigma.

9 9 Which steps are waste in a Lean environment? 1.Move required production materials to the work station. 2.Insert lenses into sunglasses frame. 3.Move filled frames to next work station. 4.Check lenses for proper alignment within frame. 5.Paint frames. 6.Scrape excess paint from lenses. 7.Move sunglasses to warehouse staging area. 8.When ready to ship, move sunglasses to packing area. 9.Pack sunglasses in box. 10.Perform final inspection on 1 of every 40 pairs of sunglasses. 11.Ship sunglasses. 12.Notify material planning personnel to order more frames and lenses.

10 10 Value Stream Maps Visualize all actions required (both value added and non-value added) required to produce and distribute a product. Identify sources of waste. Entire process defined using a common language. Manage flow through the process. Show linkage between material and information flow.

11 11 Company confidential Orientation meeting Loan applicationTitle searchAg econ eval/cons Account setup HQ Farmer Loan Approval & Setup Value Stream Map -- Current State I I IIII Pyt processing I (Staggered Receipt of Records) Manual Archiving LOAN CUSTOMER Branch Manager KEY Electronic Communication Manual Communication Supplier or Customer Delivery / Shipment I Inventory Push Pull 25 Batches Company confidential Operators 4Q03 Company confidential Company confidential Company confidential Company confidential Company confidential Company confidential Company confidential Company confidential

12 C/T = 7 days C/O = 21 hours L/T = 1 day (per lot) AWT = 20 hours # Op = 2 people 3 Sterile Batches Step D 3 Sterile Batches hold time = 1.5 hrs (20 hrs max) I C/T = 7 days C/O = 6 hours L/T = 3 day (per lot) AWT = 2 hours # Op = 2 people 3 Sterile Batches Step E

13 13 Which process is a better process in Six Sigma? Average Candy bar Production costs for chocolate bar $5 $3 Process A Process B

14 14 Who is a better shot? A B

15 15 Key Six Sigma Tool Control Chart Anatomy of a Control Chart

16 16 Players PlayerRoles & ResponsibilitiesTypical TrainingSix Sigma Dedication Black BeltWorks with a team – usually of Green Belts and people with no LSS training -- assigned to a specific LSS improvement project. Black Belts help with both the technical aspects (e.g., statistical tools) and people issues (e.g., team dynamics and change management). Typically a Black Belt will deliver about $1 million to the bottom line annually. 4 weeks of training spread over 4 months Full-time (18 to 24 mo) Master Black BeltActs as instructor, coach and mentor to several Black Belts. Frequently Master Black Belts (MBBs) become involved in large-scale organizational change efforts and promotion of LSS within the organization. In many organizations MBBs organize into a learning group in which they challenge, advise, and support each other and Black Belts. They also often formulate business strategies with top management. In addition they may also lead super- projects that are high impact staffed with multiple Black Belts. Usually on the jobFull-time Green BeltParticipates in LSS by collecting data, providing process expertise, completing improvement tasks, and communicating changes to colleagues. 3 sessions of 3-4 daysPart-time, as project needs dictate Champion (Executive)Provides business guidance to teams, assists in selecting projects, acts as an organizational evangelist for Six Sigma, allocates resources, questions the team, anticipates and prevents problems with the LSS before they occur, removes roadblocks if they do occur. 5 daysPart-time, as active executive sponsorship needs dictate Executive Sponsor Actively supports and encourages project teams, participates in LSS meetings, demonstrations, and celebrations. 1-2 daysPart-time, as executive support needs dictate Process OwnerEnsures high quality design and peak performance of business processes. Helps triage problems as those addressable by simple process improvement methods or problems requiring use of complex, lesser-known statistical tools. 1 weekHalf-time to full-time, depending on process size

17 17 Who you gonna call? 1.The Purchasing analyst cannot spend as much time on the cross- departmental New Product Launch process because her functional manager has put her on a crunch project in Purchasing. This will likely cause a 4-week slip in the launch of the next product. 2.Data needs to be collected on the number of failures of your companys new electric razor once it gets into a customers hands. 3.The process improvement project will now be delayed 5 months because the engineer on the project has been sent on an overseas assignment. 4.Some heavy statistical analysis and design of experiments need to be done for the new bioreactor in the South building because its yields are erratic, and averaging only 35%. 5.Several Black Belts are working on similar problems in different parts of the company, but they are not benefiting from each others experience like they could. 6.Decide that it would be great if the CEO could mention Lean Six Sigma in each of her company-wide addresses over the next two months. Black Belt Master Black Belt Green Belt Champion Executive Sponsor Process owner Draw a line to connect the issue with the person you would most likely call to address it.

18 18 A peek into the practical world of Black Belts Common BB Challenges by Category BB stretched too thinly Team members stretched too thinly Assigned project will not support strategy well Assigned project will have little return Entire targeted population for the improvements not on improvement team, and resist Motivating team to perform and improve Middle manager seeks to block project in his/her area General poor support from Champion Pressure for quick results from top management Black Belts in different parts of the organization make the same mistakes Team wants to jump ahead to fixes w/o data Team wont assume ownership quickly enough backsliding, etc. Poor team dynamics hinder progress Powerful execs in other areas block implementation and Champion wimps out Powerful functional manager attempts to influence solution Middle manager wants pet project funded Change management Post-launch discoveries Politics Team problems Team interfaces with others Resourcing issues

19 19 Sigma level Percentage of time customers requirements were met Defects per million opportunities 1 68.27690,000 2 95.45308,537 3 99.7366,807 4 99.99376,210 5 99.999943233 6 99.9999998 3.4 Whats the Sigma Thing anyway?

20 20 The voice of the customer and CTQ Operational definition DMAIC DOE FMEA Value Stream Mapping 5s Tampering Key terms and concepts

21 21 What its not In helping to define what Lean Six Sigma is, it is also helpful to consider what it is not: It is not just a collection of tools that people can be trained in and shortly thereafter deliver outstanding results. Successful LSS efforts require strong management support, training, and formal ties to the organizations management system. It is not just a statistics program. It is a results program. It is not a recycled Total Quality Management program from the 1970s. While many tools and some methods from the quality movement are present in LSS, it distinguishes itself by having formal links to the compensation system, financial screening of potential projects, and a fanatical emphasis on the needs of the external customer. It is not a training program, as many Total Quality Management programs became. It is a system of tools, principles, and management practices that are applied to a improve processes.

22 22 3.Case Study 1 Biopharmaceutical division of a global pharma company

23 23 Strategy Process Information & Learning Culture Structure & Relationships Energizing Core Want Know to how Pay for HR Practices Performance Framework © 2003. Jossey-Bass and Tom Devane from Integrating Lean Six Sigma and High-Performance Organizations. All rights reserved.

24 24 Hit performance issues on multiple fronts Lean training for all managers and supervisors Basic Six Sigma training for all managers and supervisors Center of Excellence leaders – located in all departments -- trained in advanced Six Sigma methods and philosophy Leadership development occurred simultaneously to address critical change management issues within, and among departments

25 25 Operating Results Representative issues addressed –Batch review cycle time reduced by 60% –Operational metrics track 12 parameters, improvements in 9 so far –Yields improved by 20% in one production area by using statistical tools Approach to addressing the issues and results –All work was done via chartered, cross-functional teams –DMAIC (Define, Measure, Analyze, Improve, Control)

26 26 The 10 Big pay attention to elements for LSS leaders 1.The use of data and facts – not just opinions -- to make decisions. 2.Managing variation in processes, instead of just managing reject levels for a product. 3.An awareness of, and management of business processes and value streams that cut across functional department boundaries. 4.Opportunities to pull work through operations rather than push them. 5.An emphasis on prevention, not reaction. 6.Processes and culture that foster the continual search for ways to streamline and eliminate waste. 7.Impacts of activities and solutions on customer requirements. 8.Checks and balances to ensure that LSS experts do not become overloaded and leave. 9.Workplace orderliness and cleanliness. 10.Links between LSS improvement efforts and the organizations reward and recognition system.

27 27 4.Case Study 2 High-Tech Electronics Assembly

28 28 Background Key challenges –High rate of field failures needed to be addressed in order to compete and be profitable –Lack of consistency within our products as a whole based on different services –Different processes created unnecessary confusion and significant difficulties when it was time to transfer products into large volume production –Absence of motivation for continuous improvement outside the internal total quality group –Goals among different departments were not aligned and people were working on redundant, and in some cases counter-productive projects –Many of the employees had come up through the scientific ranks and were accustomed to working alone, not on teams. Results –Successfully integrated Lean, Six Sigma, and High Performance Organization disciplines –Operating results: $400,000 repeating annual savings within 2 months Productivity increase of 2x within 7 months Established a culture that drove for execution and continual improvement Identified key areas for upstream new product development that later saved the company over $1 million annually Value-Added Process Time/Total Process Time went from 8% to 60% for two key processes within the first 2 months –Executives played a key role in the initial success –Hard/soft integration principles deployed.

29 29 Discipline Overview Lean Lean Six Sigma Six Sigma Eliminate waste. Simple tools like VSM, 5s. Quick results. Reduce variation. Advanced tools like FMEA, DOE, control charts. Dramatic results. Benefits of Lean and Six Sigma. High-Performance Organizations LSS/HPO Culture of execution & improvement. Restructure into HPTs. Intrinsic motivation for short- and long- term sustainable gains. Benefits of Lean, Six Sigma, and High-Performance Organizations.

30 30 Journey Challenges articulated Study group convenes Develop direction Research results New leadership training Announcements Customer requirements Process mapping Team structuring workshop ProjectsRemedial coaching Continuous improvement

31 31 Hallmarks of the discipline 1.Statistical methods 2.Attention to workplace and tool organization 3.Fanatical focus on the external customer 4.Attention to process 5.Pre-screening, and ongoing screening of improvement projects to ensure fit with strategy and financial return 6.People strive for perfection, but noble mistakes are tolerated 7.An analysis-rich and measurement-rich environment 8. A classification and sorting process to determine the type of tools to apply 9.Coordination and control of the work occurs at the lowest level possible 10.Collective accountability

32 32 5. Pre-Thinking for your Sunday Design Experience

33 33 Sunday pre-thought What would a Lean Six Sigma foundation building block look like? How would it be described? What other methods might enhance Lean Six Sigma? What other methods might Lean Six Sigma enhance?

34 34 6. Wrap-up

35 35 Lessons Learned Planning Being realistic is quite helpful Ensuring wide participation in the planning processes Missing the customer perspective early on will kill you Need to document planning phase well Assign responsibilities clearly Integration of hard and soft aspects is key – each covers inherent weaknesses of the other No organization-wide roll-outs of Six Sigma without training senior managers how to support it – top management dialogue cant stop after the approval and initial re-organization into teams. Resist the temptation to use good -- not great -- performers as driving change agents, such as Black Belts. Go for lean manufacturing techniques before Six Sigma to demonstrate quick wins unless data for analysis already exists (as it did for a field service warranty process) Strive to over-communicate and request feedback on the content and quality of communication.

36 36 Lessons Learned Implementation Maintain flexibility in the planning that other options can be considered as you move forward. You can generally do more than most people think. Ensure responsibilities are clearly assigned. Ensure leaders of change are optimistic and will push project through to completion. Groom the subsequent leaders The restructuring into teams -- this can not be a pilot. Executives need to agree on their individual and collective areas of responsibility for business processes. Design structures and processes that ensure control. Training for new leaders needs to mandatory, not optional Bring Finance and HR into the process soon. Executive efforts can decrease as the transformation progresses if the soft elements of HPO are successfully anchored. It is extremely important to provide frequent status reports for the improvement projects.

37 37 Sounds great. But how do I get something going with Lean Six Sigma if Im not the CEO?

38 38 For Future Reference Breyfogle, Forrest. Implementing Six Sigma: Smarter Solutions Using Statistical Methods. New York: Wiley-Interscience, 1999. Devane, T. Integrating Lean Six Sigma and High Performance Organizations: Leading the Charge Toward Rapid, Radical, Sustainable Improvement.. San Francisco: Jossey-Bass/Pfeiffer, (current working title, forthcoming in November, 2003). Holman, P., Devane, T., & Cady, S., The Change Handbook. San Francisco: Berrett-Koehler, 2007. Macy, B.A., and Izumi, H.A. Organizational Change, Design and Work Innovation: A Meta-Analysis of 131 North American Field Studies – 1961-1991, in Research in Organizational Change and Development. R. Woodman and W. Pasmore (eds). New York: JAI Press Inc, Vol 7. Nauman, E. & Hoisington S. Customer Centered Six Sigma: Linking Customers, Process Improvement, and Financial Results. Houston: American Society for Quality, 2001. Pande, Peter, et al. The Six Sigma Way. New York: McGraw-Hill, 2000. Rother, M., and Shook, J. Learning to See: Value Stream Mapping to Create Value and Eliminate Muda. Brookline, MA: Lean Enterprise Institute, 1989. Womack, J. and Jones, T. (1996). Lean thinking: Banish waste and create wealth in your corporation. New York: Simon & Schuster. ----- Web resource:

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