Sherman Consulting Inc. Driving End-to-End Process Improvement SM Applying Six Sigma in Your Operations November 2, 2007 Peter J. Sherman ASQ Certified Quality Engineer Certified Six Sigma Black Belt Module 8 – Managing Operations and Growth

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 2 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 and is currently lead Instructor at Emory University's Six Sigma Certification Program in Atlanta, Georgia. Mr. Sherman has been published in various journals including iSixSigma, Quality Progress, Solutions (part of Journal of Financial Planning), and Hospitals & Health Networks. Mr. Sherman was the recipient of the 2007 Quality Excellence for Suppliers of Telecommunications (QuEST) 8 th Annual Best Practices in the Six Sigma category. 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.

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 3 Agenda σ Your Operations σ Six Sigma Overview Define Analyze MeasureImproveImplement Control σ 6 σ Operations Plan σ Wrap Up

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 4 Objectives 1.Discover the role and value of Six Sigma 2.Understand the Six Sigma process 3.Develop and implement a 6σ Operations Plan for your business

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

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 6 Your Operational Business Goals As a business owner you want to optimize: σ Accelerate new product / service launches σ Increase sales effectiveness σ Reduce inventory to free up cash flow σ Streamline production σ Improve accuracy of orders / on-time delivery σ Prevent customer service calls σ Reduce costs of billing mistakes / lower A/R to free-up cash σ Increase customer loyalty / reduce churn Six Sigma can help you achieve these goals! Product / Service Development Fulfillment Delivery Sales Support Billing ProductionInventory

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 7 Your Comparative Advantage σ Capital? σ No σ Low-Cost Labor? σ No σ Market share σ Maybe σ Technology? σ Maybe It’s how you manage your operations and processes!

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 8 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

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 9 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.

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 10 Six Sigma Overview

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 11 Evolution of Six Sigma 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”

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 12 What is Six Sigma Level Quality? The reliability of getting a dial tone every time you pick up a telephone!

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 13 What is Six Sigma Level Quality? Knowing your package will be delivered by 10am the next day, guaranteed!

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 14 What is Six Sigma Level Quality? Whether you are in Athens, GA or Athens Greece, a Big Mac tastes the same!

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 15 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 management methodology supported by powerful analytical tools.

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 16 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 -6σ +6σ

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 17 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!

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 18 DMAIIC Methodology Courtesy IIE and Aft Systems © 2007 A rational decision making process for improving existing processes.

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 19 DMAIIC Methodology Courtesy of IIE and Aft Systems © 2007

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 20 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.

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 21 6σ Operations Plan

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 22 6σ Operations 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!

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 23 6σ Operations 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:

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 24 6σ Operations 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

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 25 6σ Operations Plan Measure your key activities over time: σ New sales cycle times / success rate σ Account processing cycle times / defect rate σ Delivery times / delays σ Defect rates / customer complaints 3 W. Edwards Deming “If you don’t measure it, you can’t manage it.”

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 26 Six Sigma Plan

Sherman Consulting Inc. Driving End-to-End Process Improvement SM 27 Wrap Up σ Q & A σ Tools: Call or me anytime! (678)