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Sherman Consulting Inc. Driving End-to-End Process Improvement SM Six Sigma for the CPA or CFO November 30, 2007 Peter J. Sherman ASQ Certified Quality.

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Presentation on theme: "Sherman Consulting Inc. Driving End-to-End Process Improvement SM Six Sigma for the CPA or CFO November 30, 2007 Peter J. Sherman ASQ Certified Quality."— Presentation transcript:

1 Sherman Consulting Inc. Driving End-to-End Process Improvement SM Six Sigma for the CPA or CFO November 30, 2007 Peter J. Sherman ASQ Certified Quality Engineer Certified Six Sigma Black Belt

2 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 2 Agenda σ Objectives σ Your Business σ Six Sigma Overview σ The Basics σ DMAIIC Process (Case Study Approach) Define Analyze MeasureImproveImplement Control σ Six Sigma Action Plan σ Wrap Up

3 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 3 Biography Peter J. Sherman is an ASQ Certified Quality Engineer and a Certified Six Sigma Black Belt. He has 20 years experience, including serving as Sr. Black Belt for AT&T’s Product Development Group. Mr. Sherman has led Six Sigma initiatives across Product Development, Sales, Fulfillment, Installation, Customer Support, and Billing. He began his career in quality management working in Japan as a visiting M.I.T. Scholar in There he worked with Dr. Edwards Deming, the noted American Quality expert and learned firsthand Japanese quality practices including the Toyota Production System, Quality Circles and Kaizen. Mr. Sherman is lead Instructor at Emory University's Six Sigma Certification Program in Atlanta, Georgia and has been published in various journals including iSixSigma, Hospitals & Health Networks, Solutions (Supplement to Journal of Financial Planning). Mr. Sherman received his Master's in Engineering from M.I.T. and has an MBA from Georgia State University. Mr. Sherman is a member of the ASQ and ISSSP.

4 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 4 Objectives 1.Discover the role and value of Six Sigma 2.Learn how to conduct the Six Sigma process and interpret the results through a case study 3.Develop and implement a 6σ Action Plan for your business

5 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 5 Your Business

6 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 6 Customers “Profit in business comes from repeat customers, customers that boast about your product or service, and that brings friends with them.” W. Edwards Deming

7 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 7 Your Business Product / Service Development Fulfillment Delivery Sales & Mktg Support Billing ProductionInventory

8 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 8 Your Business Goals As a business owner you want to optimize: – Accelerate new product / service launches – Increase sales effectiveness – Reduce inventory to free up cash flow – Streamline operations and improve profitability – Improve accuracy of orders / on-time delivery – Prevent customer service calls – Reduce costs of billing mistakes / lower A/R to free-up cash – Increase customer loyalty / reduce churn

9 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 9 Your Comparative Advantage σ Capital? σ Low-Cost Labor? σ Market share σ Technology? It’s how you manage your business processes!

10 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 10 Why Should You Care? σ Poor quality costs money! σ 30% for service companies σ 15% for manufacturing companies σ Customers have lots of options σ Global competition σ Your company’s reputation Philip Crosby, “Quality is Free”

11 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 11 Six Sigma Overview

12 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 12 Evolution of Quality 1920s1930s1940s1950s1960s1970s1980s1990s2000s Control Charts Six Sigma Customer Value TQM Just-in-Time (JIT) Kaizen Statistical Process Control Walter Shewhart, Western Electric W. Edwards Deming Lean Six Sigma Taiichi Ohno PDCA Toyota Production System ISO 9000 BPR Lean Quality Circles Kaoru Ishikawa Ishikawa Diagram Michael Hammer Joseph Juran “Juran Trilogy” Deming’s 14 points Philip Crosby “4 Absolutes of Quality Management”

13 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 13 What is Six Sigma Level Quality? The reliability of getting a dial tone every time you pick up a telephone!

14 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 14 What is Six Sigma Level Quality? Knowing your package will be delivered by 10am the next day, guaranteed!

15 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 15 What is Six Sigma Level Quality? Whether you are in Athens, GA or Athens Greece, a Big Mac tastes the same!

16 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 16 Six Sigma Defined σIt’s an approach to managing a business σFocus on customers, data and measurement σIt’s a process improvement methodology σImprove existing processes σBuild new processes σIt’s ROI oriented Six Sigma (σ) is a customer focused, well defined problem solving methodology supported by powerful analytical tools.

17 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 17 Six Sigma Defined “Today's competitive environment leaves no room for error. This is why Six Sigma Quality has become a part of our culture. At its heart, Six Sigma is about understanding what your customers want and developing a game plan to deliver it.” Jack Welch Retired Chairman, CEO General Electric 6 Sigma translates into 3.4 Defects per Million Opportunities…or % accuracy! Requirements are Six Standard Deviations on each side of the mean Upper Customer Requirement Six Sigma Quality Lower Customer Requirement 6 6

18 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 18 Six Sigma Defined σ Six Sigma is a measure of quality. σ Sigma is a Greek letter used by statisticians to show the variation in a process. σ The higher the Sigma, the better.

19 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 19 Sigma Level Comparisons 3 σ6 σ 93.3% Error Free % Error Free Unsafe drinking water for 10 minutes each dayOne unsafe minute every seven months! No electricity for 5 hours each monthOne hour with no electricity every 34 years! 2.2M incorrect surgeries per year in the U.S.111 incorrect surgeries per year! 137,000 pieces of mail lost per hour in the U.S.7 pieces of mail lost per hour! 150M wrong drug prescriptions a year in the U.S.10,200 wrong drug prescriptions a year! Expect cold showers 2 days a monthCold showers are less than 2 min. a year!

20 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 20 Calculating DPMO and Sigma Example: An Accounting firm completes 150 tax returns a year. Each tax return entails 500 specific activities / steps (1040 forms, Schedule A, Schedule B, Schedule D). Historically, your firm averages.5% defects (missing signature, transposed numbers, wrong tax rate, late filing, etc.). It costs $250 for each mistake including calls, faxes, meetings, new forms, mailings, etc. Calculate the DPMO, Sigma Level and cost of quality

21 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 21 Calculating DPMO and Sigma Step 1) 375 defects = ,000 opportunities (150 tax returns x 500 steps) Step 2).005 x 1,000,000 = 5,000 DPMO Step 3) Look up value in Sigma Table (see next page) Solution: 5000 DPMO (4.15 Sigma) Cost: 375 x $250 = $93,750

22 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 22 Sigma Table

23 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 23 DMAIIC Methodology Courtesy IIE and Aft Systems © 2007 A rational decision making process for improving existing processes.

24 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 24 DMAIIC Methodology Courtesy of IIE and Aft Systems © 2007

25 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 25 DMAIIC Methodology

26 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 26 Keys to Successful Six Sigma Implementation σ Top Management Support and Participation: Senior management must drive the process through the organization. Elements of this include careful selection of projects, allocation of resources, and decisions based on the measurements. σ Clearly Defined Projects: Well-defined scope with specific quantitative and measurable improvements. σ Strong Project Leadership: By Black Belts and Green Belts alike.

27 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 27 Six Sigma Organization Structure Steering Committee

28 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 28 Six Sigma Organization Roles σ Steering Committee: Identifies projects / black belts; allocates resources; monitors progress; manages project portfolio; establishes implementation strategy and policies σ Champions: Provide support, resources and remove road-blocks. Champions have more in- depth understanding of the methods – measurements and interpretation of process measurements.

29 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 29 Six Sigma Organization Roles σ Master Black Belt: Master Black Belts are Six Sigma Quality experts that are responsible for the strategic implementations within an organization. Master Black Belt main responsibilities include training and mentoring of Black Belts and Green Belts; helping to prioritize, select and charter high- impact projects. Black BeltsGreen Belts σ Black Belt: Are thoroughly trained individuals with expertise in all the analysis tools. Black Belts are expected to lead Six Sigma projects, identify opportunities, and coach / train Green Belts. σ Green Belt: Green Belts play a key role in the support / execution of Six Sigma projects. Green Belts are also expected to lead smaller projects. Green belts understand concepts of problem solving, data collection, data interpretation, variation, process capability, and cost analysis.

30 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 30 The Basics

31 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 31 The Basics σ QA vs QC σ Understanding Variation σ Statistics 101

32 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 32 Count the F’s Exercise THE NECESSITY OF TRAINING FARM HANDS FOR FIRST CLASS FARMS IN THE FATHERLY HANDLING OF FARM LIVESTOCK IS FOREMOST IN THE MINDS OF FARM OWNERS. SINCE THE FOREFATHERS OF THE FARM OWNERS TRAINED THE FARM HANDS FOR FIRST CLASS FARMS IN THE FATHERLY HANDLING OF FARM LIVESTOCK, THE FARM OWNERS FEEL THEY SHOULD CARRY ON WITH THE FAMILY TRADITION OF TRAINING FARM HANDS OF FIRST CLASS FARMS IN THE FATHERLY HANDLING OF FARM LIVESTOCK BECAUSE THEY BELIEVE IT FORMS THE BASIS OF GOOD FUNDAMENTAL FARM MANAGEMENT.

33 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 33 What’s the Point? “You can’t inspect quality into your product or service…….you have to build / design quality into the process.” W. Edwards Deming

34 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 34 QA / QC Both forms of quality are needed for success! Process Building in quality throughout the process: σ Methods & Procedures σ Roles & Responsibilities σ Training σ Redundancy (i.e., power backup, auto-save on your PC) Quality Assurance Ensuring output conforms to specifications: σ Inspection σ Sampling σ Customer Complaints InputOutput Quality Control Process

35 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 35 Variation

36 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 36 Understanding Variation σ No two things are exactly alike σ Variation is the way things normally occur σ The amount of variation in a process tells us what that process is actually capable of achieving. Shrinking variation reduces costs and creates a more predicable outcome (product or service)

37 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 37 Variation Exercise On this page sign your name as you normally would. ___________________

38 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 38 Types of Variation σ Common Cause variation is always present to some degree in the process (i.e., random, chance) σ Take action on the system or process. σ Special Cause variation means something different happened at a certain time or place (ie., non-random) σ Identify Special Causes and address them first. Stable processes are predictable and in control. Deming felt 94% of all problems are due to common cause variation and 6% attributed to special causes.

39 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 39 Statistics Refresher

40 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 40 Statistics Refresher σ Mean: The sum of all the values in the sample divided by the number of values in the sample. σ Median: The mid-point of the data when the data is arranged from the largest to the smallest value. σ Mode: The value of the observation that appears most frequently. σ Range: The distance between the largest and smallest value. Mean = Median = Mode Normal Distribution (Symmetrical)

41 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 41 Statistics Refresher Example: A bank generally takes a week to open and process a new account. A random sample of 9 new accounts indicates the following cycle times in days: 5, 8, 6, 5, 10, 4, 7, 5, 12 Find the mean, median, mode and range.

42 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 42 Statistics Refresher Standard Deviation σCommon Usage: A measure of volatility or dispersion. “I love the returns of the stock market, but hate the volatility.” σTechnical Description: Defined as the positive square root of the variance*. * Variance is a measure of dispersion. Defined as the mean of the squared deviations from the mean. The problem with using variance is interpreting it. it is in terms of units squared. How do you interpret square percents or square dollars? The answer is to take the square root….hence standard deviation. St. Dev sample = ∑ (X n – X) 2 n - 1 X n = Value in sample X = Mean n = Number of observations

43 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 43 Statistics Refresher Example: Over the past 6 months, a CPA firm has averaged 40 hours to complete a business tax return, with a standard deviation of 2 hours. The CPA firm pledges it can complete returns within hours. What exactly does this mean? What Standard Deviation (Sigma Level) is the firm performing? How would you interpret this? Show your answer in a graphical form.

44 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 44 Statistics Refresher 38 hrs Normal Distribution (Symmetrical) hrs hrs hrs 0 40 hrs hrs hrs 68% 95.5% 99.73% - 68% of the time (1 std. dev), average returns fall within 38 and 42 hours % of the time (2 std. dev), average returns fall within 36 and 44 hours % of the time (3 std. dev), average returns fall within 34 and 46 hours. 44 hours - Upper Specification Limit

45 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 45 DMAIIC Process Case Study

46 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 46 Six Sigma Case Study 1.Form teams of four or five 2.Review the case study 3.Select roles within your teams

47 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 47 Courtesy IIE and Aft Systems © 2007 Define

48 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 48 Define σ The most critical step in the DMAIIC journey. σ Define the scope. Identify the problem and how much you want to improve it. σ Projects that are not well defined and scoped generally lead to a waste of resources (time, management, capital). DefineMeasure Analyze ImproveAnalyzeImplement An Iterative Process

49 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 49 σ Charter – the key document used to identify and define the problem statement, project scope, team members & roles, and deliverables. The Charter is the contract between your team and senior management. σ Voice of the Customer (VOC): A tool used to describe customers’ needs, leading to specific Critical-to-Quality (CTQ) requirements. σ SIPOC – A high-level process map that includes Suppliers, Inputs, Process, Outputs, and Customers. σ Process Flow – A more detailed process map that documents key resources, activities, cycle times, and decision points in a process. It is used to identify dependencies, redundancies, gaps, and bottlenecks. Define Analyze MeasureImproveImplement Control

50 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 50 Project Charter

51 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 51 VOC Example – Rotary Club Employees What are their needs? Who are your customers? Identify the drivers Define Critical-to- Quality requirements Business Professionals Community Service Schools Dept. of Welfare Public Parks 20 hours community service per year for each member Professional Networking Forum to gatherRegular weekly meetings Means to communicate Member Handbook 24x7 web access

52 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 52 SIPOC / Process Flow Example – Rotary Club S uppliers I nputs P rocesses O utput C ustomers Prospective Rotarian Application Becoming a Rotary Club Member Approval document New Rotarian Member ReferencesRejection Document Rotarian Club Sponsor Marketing / Promotion Gather Biography / References Apply for Membership Evaluate Candidate Accept / Reject Pay Dues

53 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 53 Detailed Process Flow Example - Rotary Club

54 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 54 Team Activities 1.State your objective (what are you improving and by how much?) 2.Develop a VOC (identify 1 critical-to- quality requirement) 3.Complete a SIPOC Analysis and High- Level Process Flow

55 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 55 Pizza Express Charter

56 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 56 Pizza Express Charter

57 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 57 Pizza Express VOC CustomerNeed / DriversCTQs Primarily middle- income families with children Good tasting, quality Pizza  100% guarantee for freshness  Only source suppliers with proven track record and Quality Management System in-place Fast Service  30 minute delivery from order  Regular 3 month vehicle maintenance  All drivers given maps Convenience  Open 7 days a week  Flexible Hours of Operation o Mon – Thurs (11am – 10pm) o Fri and Sat (11am – 2am) o Sun (Noon – 11pm) Good Customer Service  Answer telephone by 2 nd ring  Customer greeted by name  Customer not interrupted  Always repeat order / address / phone number back to customer Competitively PricedPrices will not exceed average of competition

58 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 58 Pizza Express SIPOC / Flow SUPPLIERSINPUTSPROCESSESOUTPUTSCUSTOMERS Food Wholesalers Ingredients (dough, tomato sauce, cheese, spices, etc.) Order-to-Cash Cycle PizzaEnd-User Food Equipment Vendors Ovens, stoves, refrigerator, etc. Bill LandlordBuilding space AutomobilesCars and fuel Utility CompaniesElectric, gas, telephone Misc. SuppliersPizza boxes, pots, pans, kitchen tools, etc. Take Order Prepare Pizza Cook Pizza Deliver Pizza Collect Payment 12345

59 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 59 Pizza Express Detailed Process Flow

60 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 60 Courtesy IIE and Aft Systems © 2007 Measure

61 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 61 Define Analyze MeasureImproveImplement Control Measure your current performance: σ % or # defects σ Process “in-control” or “out-of-control” σ Sigma Level (capability of process) σ % Yield σ Cost of Poor Quality

62 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 62 σ Data Collection Plan – Identify the type data (variable vs. discrete), source, the format. Collect as much as you can! Data σ Variable: Data that is continuous and can be measured (i.e., length, time). Typical types include cycle time, Average Handling Time. σ Attribute: Data that is discrete (i.e., yes or no response, pass or fail, go or no-go). Typical types include % Defective, # Defective, # Defects, Defects per Unit.

63 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 63 Data Collect as much data as you can!

64 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 64 σ Histogram – a graphical representation of data in a bar chart format. Used to observe the “shape” of data (i.e., normal, bell-shaped vs. skewed). σ Control Charts – The fundamental statistical tool used in Six Sigma. It shows the amount and type of variation present in the process. Stable processes are predictable and in (statistical) control. σ Process Capability – the capability of a process to consistently make a product / service that meets a customer specification range (tolerance). Used to predict the performance of a process by comparing the width of process variation to the width of the specified tolerance. Define Analyze MeasureImproveImplement Control Upper Specification Limit Lower Specification Limit X Design Width Process Width A Capable Process

65 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 65 Histogram 1.Collect data 2.Arrange data attribute in ascending classes across the horizontal axis 3.Populate the specific data in the appropriate class

66 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 66 Control Chart σ Considered the foundation of Six Sigma statistical analysis σ Shows the amount and type (special or common causes) of variation in a process σ Indicates if a process is σ “In-Control”  stable, predictable σ “Out-of Control”  not stable, special causes exist

67 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 67 Control Chart Interpretation UCL LCL In-Control – All data points are within the upper and lower control limits. CL

68 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 68 Control Chart Interpretation UCL LCL Out-of-Control (Special Causes) – any point touching or beyond the control limits CL

69 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 69 Control Chart Interpretation Trend – 6 successive points in an upward or downward direction UCL LCL CL

70 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 70 Control Chart Interpretation UCL LCL Cycle – variation caused by regular changes in the process inputs or methods (i.e., time of day, seasonal) CL

71 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 71 Control Chart Interpretation UCL LCL Jumps – distinct changes from low to high values attributed to a change (i.e., operator shifts, material) CL

72 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 72 Control Chart Interpretation UCL LCL Repeats – a pattern where every n th item is different (i.e., one station out of alignment) CL

73 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 73 Key Process Metrics σDPMO – Defects Per Million Opportunities σSigma Level σ% Yield σCost of Poor Quality Upper Specification Limit Lower Specification Limit X Design Width Process Width A Capable Process

74 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 74 Team Activities 1.Construct a Histogram - use the data above σInterpret results (normal or skewed) 2.Develop a Control Chart (Xbar and R) – use the data above σInterpret results (in control or out-of-control) 3.Calculate the key Process Metrics σInterpret results (capable or not capable) You decided to take a random sampling of pizza delivery times:

75 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 75 Pizza Express Histogram

76 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 76 Pizza Express Control Charts

77 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 77 Pizza Express Control Charts

78 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 78 Pizza Express Key Process Metrics

79 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 79 Courtesy IIE and Aft Systems © 2007 Analyze

80 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 80 The primary purpose of the Analyze stage is to: σ Make sense out of the data σ Identify root causes of the problem. Define Analyze MeasureImproveImplement Control

81 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 81 σPareto Chart – focuses efforts on the problems that offer the greatest potential for improvement by showing their relative frequency in a descending bar graph. σ Cause-and-Effect Diagram – graphically displays potential causes of a problem. Define Analyze MeasureImproveImplement Control

82 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 82 Pareto Chart Example – Rotary Club “Relocations” and “No time” account for 68% of the Rotary Club Drop-Out Rate

83 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 83 Cause-and-Effect Diagram

84 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 84 Root Cause Exercise σ What do you think caused the Titanic to sink?

85 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 85 Team Activities 1.Develop a Pareto Chart σInterpret the results 2.Develop a Cause-and-Effect diagram σInterpret the results

86 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 86 Pizza Express Pareto Chart

87 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 87 Pizza Express Cause & Effect Diagram

88 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 88 Courtesy IIE and Aft Systems © 2007 Improve

89 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 89 In order to improve, possible improvements are developed and evaluated in a logical and planned fashion Define Analyze MeasureImproveImplement Control σ Brainstorm ideas σ Rank, evaluate, prioritize ideas based on key criteria

90 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 90 Solution Prioritization Matrix 2x2 Cost / Benefit Grid Improvement Tools

91 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 91 Team Activities 1.Brainstorm ideas for improvement 2.Rank and evaluate σSolution Prioritization Matrix (modify criteria / adjust weights) 3.Select your improvement idea and present rationale

92 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 92 Pizza Express Solution Prioritization Matrix

93 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 93 Courtesy IIE and Aft Systems © 2007 Implement

94 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 94 Implementation can be accomplished by a Design of Experiment (DOE)…..aka pilot. Define Analyze MeasureImproveImplement Control DOE is a methodology of varying a number of input factors simultaneously in a carefully planned manner, such that their individual and combined effects on the output can be identified. Technical Definition: Business Definition: DOE helps identify and validate those factors that have the most significant impact on a process, from which you will form your conclusions and recommendations to senior management.

95 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 95 DOE - Advantages σ Allows you to identify the critical factor(s) σ Allows many factors to be evaluated simultaneously σ Economical and less disruptive to normal operations σ Provides a fact-based approach to making conclusions in confidence

96 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 96 Courtesy IIE and Aft Systems © 2007 Control

97 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 97 σ Form a dedicated team to monitor the process σ Perform continuous improvement σ “Lock-in” the gains Define Analyze MeasureImproveImplement Control

98 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 98 Team Activity σDevelop a control plan for your project

99 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 99 Pizza Express Control Plan

100 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 100 Six Sigma Action Plan

101 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 101 Six Sigma Action Plan Layout and understand your end-to-end business process σ Identify gaps, bottlenecks, redundancies Marketing Fulfill & Deliver Sales SupportBilling 1 Talk to your customers to understand their needs!

102 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 102 Six Sigma Action Plan 2 CategoryDescription Highly CustomizedPoor candidates for 6 Sigma campaigns (low ROI), i.e., Complex IT systems Mass-CustomizedGood candidates for 6 Sigma campaigns if the volume of activity is high enough, i.e., Web-based marketing / customer accounts / fulfillment, customer support StandardizedGreat candidates for 6 Sigma campaigns (high ROI); i.e., Account Processing / Maintenance, Billing, Accounts Payable, Payroll Determine which parts of your service processes are the best candidates:

103 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 103 Six Sigma Action Plan Key ActivitiesApplication of Six Sigma Marketing Increase pipeline of prospective customers Reduce time-to-market for product and service launches Sales Improve sales close rates Reduce sales cycle times Fulfillment and Delivery Improve on-time delivery of products Improve accuracy of orders (i.e., reduce returns) Reduce inventory levels to better manage cash flow Support Improve first-contact resolution Lower handling time for contacts Improve customer satisfaction Billing Improve accuracy of invoice Shorten accounts receivable days outstanding

104 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 104 Six Sigma Action Plan Measure your key activities over time and determine your Sigma Level: σ New sales cycle times / sales close rate σ Account processing cycle times / defect rate σ Other 3 W. Edwards Deming “If you don’t measure it, you can’t manage it.”

105 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 105 Preliminary Project Screener Focus on specific, achievable process improvements!

106 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 106 Six Sigma Action Plan

107 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 107 Wrap Up σ Q & A σ Tools: σ Resources (next page)

108 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 108 Six Sigma Resources Professional Organizations: σ American Society for Quality (http://www.asq.org)http://www.asq.org σ Int’l Society for Six Sigma Professionals (http://www.isssp.com)http://www.isssp.com Key Books / Trade Journals / Websites: σ The Six Sigma Revolution, G. Eckes (2001) σ The Six Sigma Way, P. Pande, R. Neuman, R Cavanaugh (2000) σ The Six Sigma Handbook, T. Pyzdek (2000) σ iSixSigma Magazine ( σ Six Sigma Forum Magazine (http://www.asq.org/sixsigma)http://www.asq.org/sixsigma σ General Electric (www.ge.com/sixsigma)www.ge.com/sixsigma

109 Sherman Consulting Inc. Driving End-to-End Process Improvement SM 109


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