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

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

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 you’re not the CEO Some Lean Six Sigma considerations for your upcoming Sunday Design Experience.

3 Agenda Topics Introduction Lean Six Sigma Primer Case Study 1
Pre-thinking for Sunday’s Design Experience Wrap-up

4 1. Introduction

5 Audience inputs to the agenda…

6 Whaddaya Think? At this point it’s 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 we’ll discuss in a learning environment. T F The Toyota Production System -- a formidable competitive weapon by Toyota -- consists of both Lean and Six Sigma principles and tools. Six Sigma tends to get faster business results than Lean. General Electric, well-known for its Six Sigma program, does not do any Lean. The “Just-In-Time” process improvement craze of the 1980s was actually a combination of Lean and Six Sigma. Lean and Six Sigma are used best in a manufacturing environment, not in a service environment. Lean and Six Sigma both share the common goal of improved operational performance, they merely go about it in different ways. Jack Welch of General Electric fame first improved processes with Six Sigma, then modified the corporate culture to make Six Sigma results sustainable. The average weight of a Lean practitioner is 22 pounds less then his Six Sigma counterpart. 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. The learning curve for Lean tends to be greater than the learning curve for Six Sigma. Both go after the same big goal, but in a different way. Great companies doing process improvement don’t distinguish; they do both.

7 2. Lean Six Sigma Primer

8 Advanced tools like FMEA,
Discipline Overview Lean Eliminate waste. Simple tools like VSM, 5s. Quick results. Can be dramatic Lean Six Sigma Benefits of Lean and Six Sigma. Audience participation: how many people ever been on a great team? What were charactersistics of, what feel like? Ever probls protecting from rest of org to do work? Well HPO is about not needing protectoin because all have team values, practices (not just sense of “teamwork” Dilbert cartoon) So, why fix something that isn’t broken by adding a component (in electrical products this is bad!) Success like GE, AlliedSignal, Honeywell (truth is, they DID) and this is the change management portion-often cited as the most problematic! Most leadership tips over next two days apply to LSS and LSS/HPO Six Sigma Reduce variation. Advanced tools like FMEA, DOE, control charts. Dramatic results.

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

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. Phil Define value added and non-value added. Give examples. Decreasing proportion of non-value added activity will improve efficiency. Give examples of waste (i.e. inventory stops, inefficiencies in material and information flow, etc.) Express inventory in common unit throughout. Unit should be meaningful to your customers. Try to maintain “pull” through system. Inefficiencies in information flow can be as critical as material inefficiencies.

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

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

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

14 Who is a better shot? A B

15 Key Six Sigma Tool Control Chart
A Control Chart is a graphic that monitors an important characteristic of a process over time. A Control Chart is useful for: Answering the first of two key questions about your process: Is the process in control? That is, is it predictable and stable over time? (process control) If the process is in control, then, is it capable of meeting your customer’s requirements? (process capability, see Capability Analysis) The ability to distinguish between the two sources of variation as a guide to taking appropriate management action Common Cause Variation: the natural, inherent variability of the process due to people, methods, materials, equipment, machines, and environment that are used. Common cause variation is present in the system or process at all times; the people working in the system can do nothing about it. Therefore, it is the responsibility of management to change the system or process to improve it. Special Cause Variation: the variability which results from a unique, or special circumstance, usually attributed to one individual or piece of equipment. It is not a normal part of the process. It is the responsibility of the individual working at the point of the process where the special cause occurred to improve it. Upper and Lower Control Limits on a Control Chart, help in determining the source of variation and who has the responsibility for eliminating it. A Control Chart is also useful for: Documenting a team’s effort to effectively change a process. That is: Sets the baseline or current operating level. Show’s the change to the improved operating level. Helping the process perform consistently and predictably to allow the process to achieve higher quality, lower unit cost, and a higher effective capacity. Anatomy of a Control Chart

16 Players Player Roles & Responsibilities Typical Training
Six Sigma Dedication Black Belt Works 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 Belt Acts 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 job Green Belt Participates in LSS by collecting data, providing process expertise, completing improvement tasks, and communicating changes to colleagues. 3 sessions of 3-4 days Part-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 days Part-time, as active executive sponsorship needs dictate Executive Sponsor Actively supports and encourages project teams, participates in LSS meetings, demonstrations, and celebrations. 1-2 days as executive support needs dictate Process Owner Ensures 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 week Half-time to full-time, depending on process size

17 Who you gonna call? Black Belt
Master Black Belt Green Belt Champion Executive Sponsor Process owner 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. Data needs to be collected on the number of failures of your company’s new electric razor once it gets into a customer’s hands. The process improvement project will now be delayed 5 months because the engineer on the project has been sent on an overseas assignment. 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%. 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. 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. Draw a line to connect the issue with the person you would most likely call to address it.

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

19 What’s the “Sigma Thing” anyway?
Sigma level Percentage of time customers’ requirements were met Defects per million opportunities 1 68.27 690,000 2 95.45 308,537 3 99.73 66,807 4 6,210 5 233 6 3.4

20 Key terms and concepts The voice of the customer and “CTQ”
Operational definition DMAIC DOE FMEA Value Stream Mapping 5s Tampering The “DMAIC”Improvement Process DMAIC is the Six Sigma problem-solving process teams use. It stands for Define-Measure-Analyze-Improve-Control. (It is pronounced duh-MAY-ick.) By methodically following this simple, but highly effective five step process, teams can make significant process improvements. DMAIC is useful for: Helping teams design solutions that are sustainable once implemented Providing a framework for when tools should be used Providing a sequence of optimal tool usage and linkages among tools. Helping practitioners understand how the tools and improvement phases are related, and how the tools support each other to produce an output that can be acted upon. It is essential that leaders understand the high level steps of the DMAIC improvement process. In project status meetings leaders should require that teams state which DMAIC phase they are in to provide a context for productive discussion. This provides a common ground for discussion, a context for applying lessons learned from previous similar steps, and a useful context for applying step-specific questions to the discussion of process improvements. A Control Chart is a graphic that monitors an important characteristic of a process over time. A Control Chart is useful for: Answering the first of two key questions about your process: Is the process in control? That is, is it predictable and stable over time? (process control) If the process is in control, then, is it capable of meeting your customer’s requirements? (process capability, see Capability Analysis) The ability to distinguish between the two sources of variation as a guide to taking appropriate management action Common Cause Variation: the natural, inherent variability of the process due to people, methods, materials, equipment, machines, and environment that are used. Common cause variation is present in the system or process at all times; the people working in the system can do nothing about it. Therefore, it is the responsibility of management to change the system or process to improve it. Special Cause Variation: the variability which results from a unique, or special circumstance, usually attributed to one individual or piece of equipment. It is not a normal part of the process. It is the responsibility of the individual working at the point of the process where the special cause occurred to improve it. Upper and Lower Control Limits on a Control Chart, help in determining the source of variation and who has the responsibility for eliminating it. A Control Chart is also useful for: Documenting a team’s effort to effectively change a process. That is: Sets the baseline or current operating level. Show’s the change to the improved operating level. Helping the process perform consistently and predictably to allow the process to achieve higher quality, lower unit cost, and a higher effective capacity.

21 What it’s 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 organization’s 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 Case Study 1 Biopharmaceutical division of a global pharma company

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

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 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) Trina. Dashboard – 12 charts SPC many more Cell culture --

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

27 Case Study 2 High-Tech Electronics Assembly

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. Multi-billion dollar manufacturer of data storage equipment Departments involved: four knowledge work groups Manufacturing engineering Information systems Test engineering Total quality group Total quality group had matured from old TQM days – ready to move from a central department to a situation in which quality professionals were members of operating departments

29 Discipline Overview Lean Lean Six Sigma Six Sigma LSS/HPO
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. Audience participation: how many people ever been on a great team? What were charactersistics of, what feel like? Ever probls protecting from rest of org to do work? Well HPO is about not needing protectoin because all have team values, practices (not just sense of “teamwork” Dilbert cartoon) So, why fix something that isn’t broken by adding a component (in electrical products this is bad!) Success like GE, AlliedSignal, Honeywell (truth is, they DID) and this is the change management portion-often cited as the most problematic! Most leadership tips over next two days apply to LSS and LSS/HPO

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

31 Hallmarks of the discipline
Statistical methods Attention to workplace and tool organization Fanatical focus on the external customer Attention to process Pre-screening, and ongoing screening of improvement projects to ensure fit with strategy and financial return People strive for perfection, but noble mistakes are tolerated An analysis-rich and measurement-rich environment A classification and sorting process to determine the type of tools to apply Coordination and control of the work occurs at the lowest level possible Collective accountability There are seven hallmarks of the discipline of LSS: Statistical methods. Methods that collect and analyze data are an important part of reducing variation in processes. Attention to workplace and tool organization. A set of mindsets, practices, and discipline that keeps work areas clean and uncluttered with tools and materials, and instead sorts and neatly arranges these items for easy retrieval and use. Fanatical focus on the external customer. One key element that distinguishes LSS from earlier Total Quality efforts is the high amount of attention paid to meeting external customer requirements and expectations. Senior managers as well as team members alike constantly ask, “How will what we’re doing here affect the external customer?” Attention to process. A process is a set of activities and decisions that collectively produce an output for an internal or an external customer. Often these processes span departmental boundaries, and improving these tend to have the highest likelihood of producing significant financial gain. Processes are the heart of “where the action is” with LSS. Pre-screening, and ongoing screening of improvement projects to ensure fit with strategy and financial return. Another important departure from traditional quality efforts is LSS’s initial, and ongoing requirement that projects must support strategy and yield a targeted financial return. This hallmark is true at the start of, and throughout the project. People strive for perfection, but noble mistakes are tolerated. While 3.4 parts per million is near perfection, along the way people must feel safe to make a mistake. If they don’t, then it is unlikely they will try anything really different that could yield significant gains. Obviously, certain types of mistakes – e.g., repeated mistakes and lack of follow-through -- can not be tolerated, but other types of mistakes should be considered potential learning opportunities. An analysis-rich and measurement-rich environment. LSS environments collect lots of data and project participants perform numerous data analyses – far more than typical organizations without LSS. In addition, in LSS companies, measurement is something that happens everywhere. A classification and sorting process to determine the type of tools to apply. Some problems are simple, while others are complex. Organizations need to develop internal rules that specify when a problem would benefit from simple tools like process maps and the application of streamlining principles, and when a problem would require more extensive data collection and statistical analyses.

32 5. Pre-Thinking for your Sunday Design Experience

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 6. Wrap-up

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 can’t 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. Phil

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. Trina.

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

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, Macy, B.A., and Izumi, H.A. “Organizational Change, Design and Work Innovation: A Meta-Analysis of 131 North American Field Studies – ,” 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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