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The Center for Industrial Effectiveness School of Engineering and Applied Sciences Lean/Six Sigma Overview Al Hammonds for EAS 590, Spring 08.

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Presentation on theme: "The Center for Industrial Effectiveness School of Engineering and Applied Sciences Lean/Six Sigma Overview Al Hammonds for EAS 590, Spring 08."— Presentation transcript:

1 The Center for Industrial Effectiveness School of Engineering and Applied Sciences Lean/Six Sigma Overview Al Hammonds for EAS 590, Spring 08

2 The Center for Industrial Effectiveness 1 Why are we here? Why do Lean?

3 The Center for Industrial Effectiveness 2 Lean Thinking  Lean Production = Toyota Production System (TPS)  Identified in a five year ($5 million) MIT study of the worldwide automotive industry  Found that the production system used by Toyota was fundamentally different than traditional mass production

4 The Center for Industrial Effectiveness 3 Lean Thinking Isn’t New Lean thinking is more than lean production… it is a business philosophy. Has roots back to Henry Ford’s production system.

5 The Center for Industrial Effectiveness 4 Key Definitions Making product flow through production without interruption. FLOW Giving the customer what they want, when they want it, and at the right price. VALUE

6 The Center for Industrial Effectiveness 5 Key Definitions A culture in which everyone is striving to continually improve. STRIVING FOR EXCELLENCE A customer demand based method of controlling flow of products or services by replenishing in short intervals. PULL

7 The Center for Industrial Effectiveness 6 Inputs Outputs MEASURABLES Each independent entity maximizes their efficiency Batch Process – departments compete Inventory Process 3 Process 1 Rework (Hidden?) Customer Process 2 Typical Mass Flow Process Maximize Efficiency and Economies of Scale

8 The Center for Industrial Effectiveness 7 Inputs Outputs MEASURABLES Performance is based on system effectiveness as a whole Single piece or continuous flow Process 3 Process 1 Customer Process 2 Lean Production Flow Process Goal: Elimination of Waste

9 The Center for Industrial Effectiveness 8 How do you provide value to the customer and make a profit?

10 The Center for Industrial Effectiveness 9 Defining Value Value Added Activity An activity that transforms or shapes material or information (for the first time) to meet customer requirements. Non-Value Added Activity Those activities that take time or resources, but do not add to the customer requirements.

11 The Center for Industrial Effectiveness 10 Exercise Identify examples of Value Added Activities and Non-value Added Activities associated with your work.

12 The Center for Industrial Effectiveness 11 8 Types of Waste Waste of Waiting Waste of Correction Waste of Motion Waste of Over- Production Waste of Inventory Waste of Processing Waste of Material Movement FLOW Waste of Intellect

13 The Center for Industrial Effectiveness 12 Traditional Approach Output Waste Output This is not Lean Cost Plus Mentality Cost + Profit = Price Output Waste

14 The Center for Industrial Effectiveness 13 Working Toward Lean Working Smarter… Not Harder Today’s Reality Price – Cost = Profit Waste Output

15 The Center for Industrial Effectiveness 14 Lean Thinking Tools Identify and plot all steps required to do a process. Challenge every step by asking the “5 WHY’s” NOTE!! If there doesn’t seem to be a valid reason for any steps identified in the value stream, consider eliminating the steps from the process. VALUE STREAM MAPPING

16 The Center for Industrial Effectiveness 15 Lean Thinking Tools 5S’s - Practices that create a workplace suited for visual control and lean manufacturing: 1.Sort (Seiri) = Keep only what is needed 2.Straighten (Seiton) = Put everything in order 3.Sweep (Seiso) = Clean everything 4.Standardize (Seiketsu) = Make standards obvious – everybody does it the same way 5.Sustain (Shitsuke) = Institutionalize and continual improvement.

17 The Center for Industrial Effectiveness 16 Lean Thinking Tools STANDARDIZED WORK This tool ensures that the best method of conducting each activity is identified and steps are taken to ensure everyone does it this way.  The right people  The right steps  The right sequence  Every time

18 The Center for Industrial Effectiveness 17 Lean Thinking Tools MISTAKE PROOFING (Poka-Yoke) Tools and techniques used to prevent people from doing things incorrectly. It can be a simple mechanical device or technique.  Get it right the first time  Set people up for success, not failure

19 The Center for Industrial Effectiveness 18 Lean Thinking Tools TOTAL PRODUCTIVE MAINTENANCE (TPM)  A series of methods to ensure that every machine in the production process is always able to perform its required tasks without interruption.  Targets key equipment.

20 The Center for Industrial Effectiveness 19 On Time Delivery – gives the customers what they want when they want it. Flexibility – ability to run different types of products. Increased Capacity – provides more actual production time. Cycle Time - reducing setup time allows lot size to be reduced, which drives reduced cycle times. Costs - reducing Work In Process drives lower operational costs (carrying costs, scrap, rework, space utilization, etc.) SET UP REDUCTION Lean Thinking Tools

21 The Center for Industrial Effectiveness 20 LEVEL SCHEDULING The goal is to produce at the same pace every day minimizing variation in the workload. Lean Thinking Tools

22 The Center for Industrial Effectiveness 21 CELLULAR FLOW Machines or processes are side by side with very little inventory between them. The goal is efficient, continuous flow. Lean Thinking Tools

23 The Center for Industrial Effectiveness 22 OPERATIONS BALANCING Achieving the best arrangement of people, material, and equipment. Lean Thinking Tools

24 The Center for Industrial Effectiveness 23 Lean Thinking Tools TAKT TIME Takt time sets the pace of production to match the rate of customer demand (sales) and is the heartbeat of the lean system. Takt Time = Effective Working Time Customer Requirement

25 The Center for Industrial Effectiveness 24 Who Should Implement Lean Thinking Principles Product Development Areas Order Taking and Scheduling Processes Manufacturing Operations Logistics Administrative Systems Human Resources ************ EVERYONE! ************

26 The Center for Industrial Effectiveness 25 Lean Implementation Process COMMUNICATE & TRAIN WASTE ELIMINATION 5-S/VISUAL CONTROLS PULL/CELL/ STANDARDIZED WORK SET UP REDUCTION LEAN LEVEL SCHEDULING Months Leadership & Develop Strategy VALUE STREAM MAPPING

27 The Center for Industrial Effectiveness 26 Why Do Lean ? Companies implementing Lean Thinking report the following improvements: Productivity increases 15%-70% Rejects (PPM) decrease 50%-250% Inventory turns increase 55% - 70% Space required decreases 35% - 70% Employee involvement increases 70% - 95% Annual savings per employee $1,200 - $3,500

28 The Center for Industrial Effectiveness 27 What Will Lean Mean? You will attack waste in all its forms. You will embrace and celebrate continuous improvement. The only constant is change.

29 The Center for Industrial Effectiveness 28 Lean is a never ending journey. It is a systematic approach to the identification and elimination of waste and non-value added activities through continual improvement in all products and services.

30 The Center for Industrial Effectiveness School of Engineering and Applied Sciences Six Sigma

31 The Center for Industrial Effectiveness 30 The History of Six Sigma 1987: Motorola initiates Six Sigma 1988: Some early successes and failures 1993: AlliedSignal embraces Six Sigma 1995: GE adopts Six Sigma (Jack Welch) 1996: Six Sigma starts to grow 2000: Six Sigma continues its evolution

32 The Center for Industrial Effectiveness 31 What is COPQ ? Quantify the size ($) of the problem in language that will have impact on upper management Why is COPQ Important ? Identify major opportunities for cost reduction Identify opportunities for reducing customer dissatisfaction & associated threats to salability Stimulate improvements through publication Prioritize the opportunities Cost of Poor Quality (COPQ)

33 The Center for Industrial Effectiveness 32 Profit Total Cost to manufacture and deliver products Profit Theoretical Costs Cost of Poor Quality COPQ Price Erosion Theoretical Costs Cost of Poor Quality COPQ Profit Theoretical Costs COPQ Which Feels Better?? Why Focus on COPQ?

34 The Center for Industrial Effectiveness 33 Traditional Quality Costs Lost Opportunity Hidden Factory Additional Costs of Poor Quality (intangible) (tangible) (Difficult or impossible to measure) More Setups Expediting Costs Late Delivery Lost Sales Lost Customer Loyalty Long Cycle Times Engineering Change Orders RejectsAdministration InspectionDisposition WarrantyConcessions Scrap Rework Average COPQ approximately 15% of Sales The Cost of Poor Quality “Iceberg”

35 The Center for Industrial Effectiveness 34 What is Six Sigma? A philosophy? A problem solving methodology? A set of tools? A metric?

36 The Center for Industrial Effectiveness 35 PhilosophyPhilosophy MetricMetric MethodologyMethodology ToolsTools Six Sigma Has Four Dimensions

37 The Center for Industrial Effectiveness 36 Benefits of Six Sigma Cost-of-Quality decreased - from 30.1% before to 7.4% after 1993 Aim for: - 8% Revenue Growth per year - 6% Productivity Improvement per year forever Gross Savings of $1,225M in 1998

38 The Center for Industrial Effectiveness 37 Some Companies Known to be Formally Applying the Six Sigma Methodology Motorola Texas Instruments AlliedSignal General Electric Sony DuPont Ford Motor Company Polaroid Dow Chemical Lockheed Martin Toshiba Bombardier Noranda/Falconbridge CitiGroup BMW Xerox Raytheon Coca-Cola ICI Explosives Dell Computers Seton Medical Centers American Express Maytag Pioneer Hi-Bred International Seagate Technology Millard Refrigerated Services Canadian Marconi Avery Dennison BBA Group PLC Crane Korean Heavy Industries Nokia Pechiney Siebe Thermo King GenCorp IBM Maple Leaf Foods

39 The Center for Industrial Effectiveness 38 Is 99% Good Enough? % Good (6 Sigma) 20k lost articles of mail per hour Unsafe drinking water for almost 15 minutes each day 5,000 incorrect surgical operations per week Two short or long landings at most major airports each day 200,000 wrong drug prescriptions each year No electricity for almost seven hours each month Seven articles lost per hour One unsafe minute every seven months 1.7 incorrect surgical operations per week One short or long landing every five years 68 wrong prescriptions per year One hour without electricity every 34 years 99% Good (3.8 Sigma)

40 The Center for Industrial Effectiveness 39 The Goals of Six Sigma Defect Reduction Yield Improvement Customer Satisfactio n $

41 The Center for Industrial Effectiveness 40 Technical SkillsChange Leadership Six Sigma is About Leadership 20% 80%

42 The Center for Industrial Effectiveness 41 Performance Time Incremental improvement Quantum improvement Six Sigma Projects Continual Improvement... Ongoing efforts

43 The Center for Industrial Effectiveness 42 Performance Umbrella A Performance Organization Change management Continuous improvement tools Kaizen ISO and QS-9000 practices Safety practices Statistical process control Preventive maintenance Six Sigma Lean manufacturing TQM

44 The Center for Industrial Effectiveness Sweet Fruit Design for Manufacturability Process Entitlement Bulk of Fruit Process Characterization and Optimization Low Hanging Fruit Simple Tools Ground Fruit Logic and Intuition We don't know what we don't know We can't act on what we don't know We won't know until we search We won't search for what we don't question We don't question what we don't measure Hence, We just don't know DFSS Black Belts Lean Green Belts White Belts “Nike” Six Sigma Levels

45 The Center for Industrial Effectiveness 44 The Infrastructure

46 The Center for Industrial Effectiveness 45 Roles Executive Champion Process Owner Master Black Belt Black Belt Green Belt

47 The Center for Industrial Effectiveness 46 Exercise: You are the GM of a very successful cinema with many employees. You will be out of the country for three months and have asked your staff to fax you a weekly report each Monday morning. What information (measures) would you like to see in that fax? Hollywood Inc. Weekly Report

48 The Center for Industrial Effectiveness 47 Exercise: You are heading to the cinema with some friends... The movie you would like to see is playing in several cinemas in your area. All are about the same travel time from your home, charge the same amount, have the same stadium seating, and are showing movies at the same time. What criteria do you use to choose?

49 The Center for Industrial Effectiveness 48 Critical to Who’s Satisfaction? Supplier Perspective (Theatre) Management)  Good Popcorn  No Sticky Floors  Clean Restrooms  Short Lines  Good, funny, entertaining movies Customer Perspective (Movie Goers)... So why do such differences in perspective exist ?  Ticket Sales  Concession Sales  Labor/Work Force Costs  Profit Reports  Other...

50 The Center for Industrial Effectiveness 49 Being Customer Driven Voice of the Customer Critical to Quality Characteristics Process Capability

51 The Center for Industrial Effectiveness 50 Delighters (Increases consumer loyalty) Performance (Competitive differentiation) Must Have’s (Minimum requirements) (based on Kano principles) Satisfying Customers

52 The Center for Industrial Effectiveness 51 Maximizing Customer Alignment Delivery Price Quality Need Do Cycle Time Cost Defects

53 The Center for Industrial Effectiveness 52 Culture Change - Achieving Critical Mass Number of People Implementation Time Team Members Green Belts Black Belts Master Black Belts Convert 30% and you’ve got a new organization!!

54 The Center for Industrial Effectiveness 53 Team Work The Strength of the Wolf is in the Pack.

55 The Center for Industrial Effectiveness 54 Advantages of Teams Greater knowledge & experience base Different perspectives More total person power Social bond, affiliation, identification Willing to take more risks Synergy – whole is greater than the sum of its parts

56 The Center for Industrial Effectiveness 55 Cross-functional Six Sigma Project Teams Knowledge sharing triggered by sigma process benchmarks Intranet-enabled best practices; real-time process metrics Knowledge Sharing

57 The Center for Industrial Effectiveness 56 DMAIC Overview

58 The Center for Industrial Effectiveness 57 DMAIC Overview - Define Define the Customer, they’re Critical to Quality (CTQ) issues, and the Core Business Process involved. Define who customers are, what their requirements are for products and services, and what their expectations are Define project boundaries ­ the stop and start of the process Define the process to be improved by mapping the process flow

59 The Center for Industrial Effectiveness 58 What is a 6 Sigma Project Hard $$ Fact based Control plan Systematic approach (apply DMAIC)

60 The Center for Industrial Effectiveness 59 Problem Solving Comparison Nike (Just Do It Projects) WorkoutLeanSix Sigma Goal / issue / outcome Most likely nagging issues, could be cost or cycle timeCost or cycle time Improve cycle times, improve VA/NVA ratio, reduce waste Cost reduction / defect reduction Cost savings* Less than $25,000Less than $50,000Less than $100,000 Greater than $100,000 Time from problem identification to solution Immediate1-3 days1 week1 to 5 months Time to implement Immediate Days to less than 4 weeks Weeks to months Project initiated by Anyone Upper management Approvals Within department Within or cross departmentsCross departments Cross departments / Executive staff Departments affected One One or more Training NoneLowLow / mediumHigh Tools utilized Common tools* Common tools*, VSM, Flow, Pull, TaktStatistical This matrix represents a very broad approximation to the differences between these problem solving tools. * Common tools: Pareto, Brainstorming, Team Dynamics, C&E diagrams, Flow Diagrams

61 The Center for Industrial Effectiveness 60 A Project’s Evolution 30,000 feet 20,000 feet 10,000 feet Landing Black Belt Project Team Potential Improvement Topics, Subjects, Ideas Project Definition and Selection Sessions Refinement w/ Stakeholders and diagnosis; enters project in database Launch/”start” of project Team Kick-Off Meeting Management Project Champions Pre-ProjectDefine Phase

62 The Center for Industrial Effectiveness 61 Product focus 4 Types of Project Focus Example: F Critical manufacturing processes F Critical transactional processes F Critical engineering processes F Improving these will save/make $$ Example: F Product 1 F Product 2 F Product 3 Example: F Biggest fire to address Example: F Complete x projects to save $z Process quality focus Problem focus  Project cost savings focus

63 The Center for Industrial Effectiveness 62 Defining Project MetricsPrimaryMetric BusinessMetric(s) FinancialMetric(s) ConsequentialMetric(s) SecondaryMetric(s)

64 The Center for Industrial Effectiveness 63 Y=f(x)

65 The Center for Industrial Effectiveness 64 DMAIC Overview - Measure Measure the performance of the Core Business Process involved. Develop a data collection plan for the process. Collect data from many sources to determine types of defects and metrics. Compare to customer survey results to determine shortfall.

66 The Center for Industrial Effectiveness 65 Optimized Process Prioritized X’s (Step 6) (Step 6) Vital X’s 3-6 Key Leverage X’s Output Variables (y) some X’s listed. Process Map Brainstorming, FMEA, C&E, Process Map Screening DOE’s DOE’s, RSM C&E Matrix and FMEA Gage R&R, Capability 4 Block Tools Quality Systems SPC, Control Plans Measure Analyze Improve Control Unknown Input Variables to be Investigated

67 The Center for Industrial Effectiveness 66 Variability is the ENEMY “Right the First Time” is the most cost effective way to achieve Customer Satisfaction Variability is the Enemy

68 The Center for Industrial Effectiveness 67 The Hidden Factory

69 The Center for Industrial Effectiveness 68 Normal Distribution µ Point of Inflection 11 +  -  68.26% 95.44% 99.74%

70 The Center for Industrial Effectiveness 69 What is 6 Sigma? Z = 6 sigmas   = 1.0 USL = upper spec. limit

71 The Center for Industrial Effectiveness 70 Practical Interpretation of Sigma Scale 2 Sigma 3 Sigma 31% 6.6% 4 Sigma 0.62% 5 Sigma 6 Sigma 0.023% % % GoodProb. of Defect 4.5 hours/month 2 days/month 9 days/month 10 mins/month 9 sec/month 3.8 Sigma1.0%7 hours/month 69% 93.4% 99.4% 99.98% % 99.0% Being without electricity for...

72 The Center for Industrial Effectiveness 71 Benchmarking Implications Sigma Scale of Measure PPM Restaurant Bills Doctor Prescription Writing Payroll Processing Order Write-up Journal Vouchers Wire Transfers Airline Baggage Handling Purchased Material Lot Reject Rate Domestic Airline Flight (0.43 PPM) IRS - Tax Advice (phone-in) (140,000 PPM) Fatality Rate Best-in-Class Average Company Average Company 1

73 The Center for Industrial Effectiveness 72 DMAIC Overview - Analyze Analyze the data collected and process map to determine root causes of defects and opportunities for improvement. Identify gaps between current performance and goal performance Prioritize opportunities to improve Identify sources of variation

74 The Center for Industrial Effectiveness 73 DMAIC Overview - Improve Improve the target process by designing creative solutions to fix and prevent problems. Create innovate solutions using technology and discipline. Develop and deploy implementation plan.

75 The Center for Industrial Effectiveness 74 Design of Experiments

76 The Center for Industrial Effectiveness 75 DMAIC Overview - Control Control the improvements to keep the process on the new course. Prevent reverting back to the "old way" Require the development, documentation and implementation of an ongoing monitoring plan Institutionalize the improvements through the modification of systems and structures (staffing, training, incentives)

77 The Center for Industrial Effectiveness 76 Six Sigma is a Tool Box DefineMeasureAnalyzeImproveControl Adult Learning Model Process Mapping Multi VariVariable DOEEVOP Project Management Cause & Effect Matrix CorrelationFractional DOE Response Surface DOE Computer Tools Fishbone Diagram Regression Full and 2 k Factorial DOE Multiple Regression Descriptive Statistics Statistical Analysis Hypothesis Testing Advanced DOE Transition Plans Lean ToolsANOVA Logistic Regression Control Plans MSAFMEASPC Capability Control Methods

78 The Center for Industrial Effectiveness 77 The Highest Quality Producer is the Lowest Cost Producer…How is this possible? The Bottom Line


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