1. An Introduction to Lean and Six Sigma for AHQ by ASQ
Kelly Roggenkamp April 22, 2010

2. Objectives Understand what Six Sigma and LEAN mean
Understand why both are important to an organization
Introduce the Six Sigma DMAIC and LEAN methodologies
Introduce you to tools you can apply today
Our objectives for today are: Read through each of the objectives quickly
If class is for leaders only, tell them we want you to know what your people are hearing when they come back from Yellow-belt classes and how you can support them in getting involved in Six Sigma.
Transition: So why did you sign up for this class? What have you heard about Six Sigma prior to this class? What does Six Sigma mean to you?
Process answers, noting when they say things you will share on next page.
Then next slide – WHAT IS SIX SIGMA?)

3. People Process Technology Improved Outcomes What is Six Sigma?
The most distinguishing feature of 6 Sigma – is that it is a Data Driven. Data drives every phase of the methodology. So if you have a problem and have no data and know the solution, don’t turn to Six Sigma because it is for solving problems where solutions are not known and where data can be accessed or collected.
It is a Business philosophy – putting customer’s first. How does that relate to Humana’s business philosophy (Perfect Service)?
Who has ever been to a foreign country where you did not know the native language very well? How easy was it to communicate and get things done? Talk about how Six Sigma is an cross-industry and actually an international improvement methodology. When we have Black Belts and Green Belts who join Humana, we can immediately talk to them in the same language around improvement methods and about tools used to understand and improve processes. Share an example where you have encountered this.
Lastly, six sigma is a universal measurement of performance based on defects per million opportunities. This allows us to take any process and convert it to a standard measure (million opportunities) so that we can compare any process and understand the defect rate.
Let’s try an example: If we have an error rate of 5% for one process, we can take .05 x one million and we know that our DPMO is ? (50,000). So for every million claims we process, 50,000 are defective. And if we have an error rate of 10% on another process, our DPMO would be?(100,000)
Questions on the description of Six Sigma so far?
Source: Leading Six Sigma, Snee and Hoerl 2003
Most companies now view it as a business strategy and a methodology for improving process performance in such a way that customer satisfaction is increased and the bottom line is improved.
It is a managerial initiative AND a set of methods and tools
Initiative:
Improvement
Breakthrough
Systematic, Focused Approach
Right Projects linked to business goals
Right People selected and trained
Project Management and Reviews
Sustain the Gain with New Projects
Results – Process and Financial
Methods and Tools:
Process Thinking
Process Variation
Facts, Figures, Data
DMAIC
DFSS (DMADV)
Statistical Tools
Statistical Software
Critical Few Variables
Improved Outcomes

4. Improve Performance Service
Goals of Six Sigma
Improve Performance Service
Reduce Costs
The primary goals for Six Sigma are to improve performance AND reduced costs
How can stable processes improve service for our customers? (ex. Get same answer from anyone they talk to every time they call)
Do you think we have waste and inefficiencies at Humana? (where?)
Does anyone know one of our customer satisfaction categories? (with ID cards, with billing, with calls – ECHO) Do you think there is opportunity to improve Customer satisfaction with Humana?
What kind of processes do we have that are costly to Humana? Rework – Hey let’s grow CRU, G&A, let’s do more of that? These are very costly areas for Humana
How are improved performance and reduced costs related? (Reduced defects leads to reduce costs) The goals of Six Sigma are to improve performance and service and reduce costs.
Questions on the goals of 6 sigma?
Transition: Let’s look at some Six Sigma company facts (next slide – SIX SIGMA FACTS)
reduce defects
stabilize processes
customer satisfaction
improve efficiency
eliminate waste
reduce cost of poor quality

5. Six Sigma Applications
Motorola
Saved $17 Billion from 1986 to 2004 GE
Saved $750 million by the end of 1998
Allied Signal/Honeywell
Initiated in 1992, saved more then $600 million a year by 1999
Ford
Added $300 million to the bottom line in 2001
American Standard
Saved $35 million in 2001 through increased quality and efficiency

6. Six Sigma DMAIC Methodology
Define
Control
Measure
Improve
Analyze
Define: Who is the Customer and what is important to them?
What process needs improvement?
What is the problem and goal?
Measure: How is process performance measured?
Do you have good data to measure the process?
Analyze: What factors could be causing the problem?
What is the root cause?
Improve: What solutions will address/eliminate the root cause?
Have the solutions been tested?
Control: Does the new process ensure controlled and measured results and ongoing improvement?

7. Why is a structured methodology needed ?
The Six Sigma, data-driven approach
is designed to help prevent ...
…jumping to conclusions!
Examples:
Ready…Fire….Aim
Who is to blame?
Treating the Symptoms (the Whack-a-Mole Game)
Without a structured methodology we can jump to the wrong conclusions and solutions.
Have any of you ever experience Ready…Fire… Aim mentality? What happens when this occurs? (poor implementation leading to rework, problems found by customers, associate frustration)
We can also jump to conclusions by pointing the finger at someone else or another area? Do you ever hear people are the reason for poor performance? What is really the problem? (the process that is causing issues) So getting a bigger whip and convincing people to work harder will not help at all. You know if this is occurring if the first question you ask or hear from someone else is : “Who did that?”
What is the Whack-a-mole game? (The Chucky Cheese game where you have a soft mallet and have to hit the moles coming up out of the various holes.) What is the objective? ( prevent the moles from sticking out of the holes too long, as things start going faster and faster it is harder to do, so you try to go faster and swing harder. Or you get more people to try and help you “Whack the Moles”) If you wanted to fix the real root cause and solve your frustration, what would you need to do? (just unplug the machine or use the people to disable the mechanism in the bottom of the machine – attack the actual root causes, not the symptoms)
The Six Sigma, data-driven approach is designed to prevent jumping to conclusions as these examples show. The focus is on getting to the root cause before implementing a solution, on the process not the person, and making sure the improvement won’t negatively impact another area of the company.
Transition: Now we are ready to move into the Define Phase of DMAIC. Do you have any questions about what six sigma is that we have not yet addressed? …. Let’s move to Define.
Next slide – Who are your customers?

8. CTQs must be related to the customer’s voice and be measurable
Define Concept: CTQs
Critical to Quality or a CTQ
Customer’s Voice
CTQ
“I want an efficient process”
cycle time (hours)
“I want it to be easy to use”
Number of clicks, Time, others
In order to jump the wall from the real problem to the data problem, need to take the real customer voice and transform it into a measurable characteristic.
The green box is REQUIRED for all CTQs and projects ! If we don’t have this, we can never solve a problem using data.
In order to use data to make decisions, the customer’s needs, wants, and desires must be translated to a metric.
This metric translated from the customer’s voice is called Critical to Quality or a CTQ
CTQs must be related to the customer’s voice and be measurable

9. Define Concept: Process and Y= f(x)
Definition of Process : a series of actions or operations conducing to an end
The INTPUT(s): Xs
Independent
Causes
Explanation
THE PROCESS:
The Series of Actions
The OUTPUT(s): Ys
CTQs
Dependent
Effects
Response
The Outputs are what the customers see, the inputs and process is what the business owns and has control over. Normally the customer does not care about the specific process and inputs. They only care about the Outputs.
If there is an output, there is a process. A lot of times this process is not written down, but if the customer is getting something there is a process. Also, there may be many processes to get the output to the customer. We will identify some processes on the next couple of slides.
Need to spend some time to make sure everyone understands the concepts of Xs and Ys, since this terminology is used a lot in 6 sigma.
The equation Y = f(X) is an actual mathematical equation. This is what we are trying to determine in the Analyze and Improve phases. We not only want to find out which Xs affect the Ys, but by how much they affect the Ys.
Processes are Everywhere !

10. Measure Concept: Gathering Process Knowledge
Gather Subjective Knowledge of the Team
Proved some wrong +
PROCESS KNOWLEDGE
Gather Objective Knowledge of the Process
Proved some correct
Knowledge gathering has to start with the subjective knowledge of the team, sometimes known as “Tribal” Knowledge (this knowledge is gathered through Process Maps, Cause and Effect Matrix, and FMEAs)
Subjective knowledge is then proved wrong or correct through objective testing (measuring, process perf., hypothesis testing, DOEs)
The process repeats until enough knowledge is known to make a decision or solution
This concept is not discussed a lot in most 6 sigma training, but it is the activity that is taking place. This is what needs to happen and if Mentors and Leaders understand this, they can guide the team back to this concept if they get stuck. The errors that occur sometimes:
Teams skip the Subjective Knowledge gathering and attempt to gather information on everything when they do not have time to do so
Teams only do one interaction and find out they did not discover any vital X’s and give up, when they should have gone back to the team and summarized what they found out, updated the subjective knowledge, and asked what factors are next on the list to try.
Teams only rely on the subjective knowledge and make decisions based on that, this leads back to jumping to conclusions and solutions
TIME
Initial Subjective Knowledge

11. Measure Concept: Measurement Systems
What happens when we try to measure something ?
Actual Process
Measurement Process
OUTPUTS
INPUTS
OUTPUTS
INPUTS
This is what we DO see
This is what we WANT to see
What are the consequences?
The measurement system could always add or subtract from the actual value (ACCURACY or BIAS)
The measurement system may not be capable of getting the same answer every time (PRECISION or VARIATION)
A couple of stories can be told here …
The Wizard of Oz when they go to the Emerald City and have to where the Green Colored glasses. They are told because the city is so bright they will go blind without them. The lion trips and his glasses fall off and he discovers the buildings are just plain rock. The glasses were causing them to be shiny and green.
Playing catch with middle school children with “drunk” glasses on. You thought you were throwing straight, but the glasses caused you to throw to the side.
If you want to find out how many MPG you car got this week, you can not just go out to the driveway and ask it “How many miles per gallon did you get this week?” It will not speak back to you. You have to go through another process to figure it out.

12. Measure Concept: Measurement Systems
Do we measure the process the same way as our customers ?
Examples :
Airline Arrival and Departure
Full cup of coffee
Examples:
Airlines : Departure : Airlines measure when the door is shut or they push back; Customers measure as when it took off the runway.
Arrival : Airlines measure when the plan touches down; Customers measure as when they reach the gate.
Hold Times : The call center may measure the hold time as when the call is transferred to an operator to when the operator actual picks up the call. The customer may measure the hold time as the time they start to dial, going through the IVR menus, on hold waiting for the actual person, then the actual person answering the call.
Coffee Cups : need to have the many different size foam cups I have. Can break up into 2 teams, where each team can not see the others cups. Hand one team 3 of the very small cups (they are the customers), hand the other team 3 of the very large cups (they are the coffee companies corporate team). Ask both groups the same questions :
Is the smallest size small enough ?
Is the largest size large enough ?
If time permits, can ask the group if they have seen any other examples of not measuring the same way as the customer.
Does the measurement
consider the customer?

13. Measure Concept: Measurement Systems
Variation is real!
Will you always get the same answer measuring the same output a 2nd, 3rd, 4th time ?
Examples :
Timing a recorded 100 meter dash with a hand held stop watch
3 different individuals interviewing a candidate
Let’s try a test to demonstrate this concept of measurement variation
Ask everyone in the room to check their wrist-watch and when I say ‘go’ write down the time. Then capture their answers on a histogram (use white board or flip chart to make it large enough for all to see. Next ask what time is it? Where is the measurement error/variation?
Second time test, ask everyone with a cell phone to repeat the exercise using the time on their phone. Capture their time estimates on the same histogram with a new color. Ask why there is a difference in the amount of variation. How do phone companies do it? How could you ‘calibrate’ the measurement system in this room?
Where might we have variation in our measurements at Humana?
- UW decisions – would an UW make the same decision today as they would make tomorrow or next week on the same case?
- Would a processor use the same CRD code today as tomorrow for the same type of code?
Transition: Let’s do an exercise to practice what we’ve learned about measurement. (next slide- Practice Exercise 3 – Measurement )
Is the measurement consistent?

14. Analyze Concept: Using Data to Make Decisions
Processing Times
Center Avg. Time (hrs)
North
South
East
West
This will be some practice in using data to make decisions and should be very familiar to most.
Give to the individual participants and give them 15 seconds without conversation to pick the best and worst actually circle and identify on the page
Give instructions not to flip the pages (look ahead)
We will cover this again in future slides
In 15 seconds : Identify and mark the best and worst

15. Analyze Concept: Averages Only – A Re-Look
North shows NO defects out of 1000 data points
THE BEST !
Know look back at the claims processing example.
Need to go through and example what a histogram is at a high level (just a bar chart of counts)
Also, we are also told the USL is 24 hours here.
There is a little bit different story here, now that we get all of the information from the data. All of the information includes all of the data points so we can see the average AND the variation.
What we see here and on the next page is :
even though the North had the highest average time, it also had the smallest variation so it produced the least amount of defects.
even though the South had the highest average time, it also had the largest variation so it produced the most amount of defects.
We will discuss this some more after talking about the financial report.
South shows MANY defects out of 1000 data points
(Approx. 10 %) THE WORST !

16. Analyze Concept: Averages Only – A Re-Look
East shows a FEW defects out of 1000 data points
(Approx. 1%)
West shows a FEW defects out of 1000 data points
(Approx. 2%)

17. Analyze Concept: Ask Why 5+ Times!
Complaints about Room Service
WHY ?
Cold Food delivered by Room Service
Delivery Process was taking too long
WHY ?
Long Delays Waiting for Service Elevator
Heavier elevator use by housekeeping
WHY ?
Housekeeping was frequently restocking towels
Laundry’s washing process was not completed on time
WHY ?
Necessary supplies not available
Facilitator Note: In the slide presentation, there are no blue boxes when you first come to this slide. When you click once, the first blue box appears, click again, the second, and so on.
Who in the room has children? What is a 3 or 4 year olds favorite question? (Why?)
Well, in 6 Sigma, we want you to think like a 3 year old and ask why, why, why, why, why until you get to the root cause of the problem.
Let’s use this example to think about the value of asking Why 5 or more times.
This example is from a hotel where customer complaint tracking showed the highest number of complaints around room service. (first click) The largest bar on the pareto told the team that the reason room service was problem is because of cold food delivered by room service. (click)
The team asked Why is that happening and they learned that the delivery process was taking too long. (click) The team asked Why, because of long delays waiting for the service elevator.
If your team stopped here, thinking they had found the root cause, what kind of solutions might you think to implement? (have fun with this)
Continue through the Whys to the end. If the Vendor late shipment was indeed the root cause, How many whys did it take to get there? (it shows 5 “Whys” but really 8 if you go box to box)
Key point is that we have to dig really deep to get to the root cause or we will may never see any measurable improvement for our Y. Consider relating this to pulling weeds in the garden and what happens if you don’t get the whole root.
Transition: Let’s consider this concept of cause and effect a little more (Next slide – Relationship does not mean Causation)
Vendor shipment was late again
WHY ?
… etc.

18. Improve Concept: Testing Solutions
England, Late 1800s
Frequent stork sightings on roofs of homes with newborn children
Do storks deliver babies?
No, homes with newborns were significantly warmer attracting the storks to the roofs
Research consistently shows as hospital size increases, patient death rate dramatically increases.
Should we avoid large hospitals ?
Might we have missed a large factor (X) … the more severe cases are taken to the large hospitals.
Even if your scatter plot shows a strong relationship between an X factor and your Y, it does not necessarily mean that X causes the Y to occur.
Consider the examples shown here (talk through stork and hospital examples)
If you believe you have found the root cause but only have evidence of strong relationship, talk to Subject Matter Experts to learn more and alter your theory, or move on to develop a solution and then test it to see if your theory is accurate based on test data.
Transition: This concludes the Analyze phase where we need to answer the questions, What Xs matter most to our Y and what is the true root cause of those Xs. Let’s move on to consider some aspects for the Improve Phase of DMAIC (Next Slide – 7 Aspects of a good solution)

19. Improve Concept: What Makes a Good Solution?
Consider the 7 Aspects of Good Solutions
Takes the root cause out of the process
Cost effective
Minimum negative impact on any part of the system
Innovative “Upstream” fix
Employs “Poka-yoke”*
Involves the Customer/Next in Process Recipient
Allows you to meet your performance target
In the Improve Phase, we want to answer the question “What solutions will address/eliminate the root cause? And then Have solutions been tested to prove they made a difference?”
Here we have 7 Aspects of Good Solutions. This is a guide we can use to determine whether the solutions we’ve come up with are truly good solutions.
Can anyone think of a solution recently implemented at Humana or in your department that we can consider as we talk through this list? (have one in mind that all can relate to in case no one shares one)
Talk through the list assessing the solution chosen and incorporate these talking points:
- What do you think was the root cause for this solution? Did the solution get the full root out of the ground?
- By cost effective, we mean, the cost of the solutions is going to less than the cost of the problem.
- Minimum negative impact – “Whack a mole”. Decrease talk time, but increase Correspondence or call transfers.
- What does Upstream refer to? (early steps in process or suppliers of your process) Who might that be for you?
- Explain Poka Yoke? A Japanese term around “fail-safing” or fail-proofing” your process – so it cannot fail. Toyota became a master, studying their processes so that they could only be done the right way. They designed car parts that could only fit one way. There was no chance for error – it was fail proof.
- Who was the customer for this solution and were they considered? Involved?
- Did it meet the performance target? Was there a performance target?
This is a great list for assessing solutions in your daily work.
Transition: There are several tools to help teams come up with good solutions. One is called Anti-Solutioning. (Next slide – Anti-solutions for the root cause)
*Poka-yoke – The concept of designing a process so it cannot fail. An example would be “required screens” when entering data in a system. If the fields are not completed, the system will not accept the “enter” command.

20. Control Concept : Ensure ongoing success
What measurements are in place to monitor ongoing performance?
Part of any good improvement effort is ensuring that the change ‘sticks’. We do that through Control and Measurement of the process.
Using process controls helps identify where in the process we will measure/monitor/control the process, how the control works and who is responsible to monitor and act on the process when action is called for by the measurement/control system.
This example was originally from the Medicare Auto-Generated Letter Team who needed controls in place so they could stop sending out defective letters to our members. A key control was to develop a peer review process to ensure defects were detected and corrected before the letter was moved to production. Walk through example shown.
Six Sigma projects need to consider the controls needed to make sure their process changes will continue to work on an ongoing basis.
What are other controls you can think of that we practice to ensure defects do not slip through to the customer? (pre-pay audits, tests of new products, Pre production audits of new cases)
The other critical piece of the Control Phase is Measurement: This is done to ensure with data that improved process performance is sustained over time.
Measurement must also be owned so that it continues over time.
Does this chart suggest sustained improved performance for the solution (yes)
Transition: After a project is through the 5 DMAIC phases, we then set a time to validate results. This is the final step in Control. This is usually 3-6 months after the improvements and controls have been implements. Let’s take a look at one validation. (Next slide - Sample Project Validation)

21. Making the process flow, waste, and results visible
What is LEAN?
Making the process flow, waste, and results visible
What It Actually Is…
So they can be improved easily

22. Improve Efficiency Reduce Waste and Costs
Goals of LEAN
Improve Efficiency
Reduce Waste and Costs
The primary goals for Six Sigma are to improve performance AND reduced costs
How can stable processes improve service for our customers? (ex. Get same answer from anyone they talk to every time they call)
Do you think we have waste and inefficiencies at Humana? (where?)
Does anyone know one of our customer satisfaction categories? (with ID cards, with billing, with calls – ECHO) Do you think there is opportunity to improve Customer satisfaction with Humana?
What kind of processes do we have that are costly to Humana? Rework – Hey let’s grow CRU, G&A, let’s do more of that? These are very costly areas for Humana
How are improved performance and reduced costs related? (Reduced defects leads to reduce costs) The goals of Six Sigma are to improve performance and service and reduce costs.
Questions on the goals of 6 sigma?
Transition: Let’s look at some Six Sigma company facts (next slide – SIX SIGMA FACTS)

23. LEAN Concept: Value vs. Waste
Let’s start to determine what’s valuable to the customer to help identify waste in the system.
Non-Value Added Activity
Value Added Activity
Non-Value Added but Required Activity
An activity that directly achieves customer requirements.
Something the customer is willing to pay for or perceives as value
Those activities that take time or resources, but do not directly achieve customer requirements

24. LEAN Concept: Waste Categories

25. LEAN Concept: Value Stream Maps1.
Why do we it this way?
Use 5 Why’s. 2.
Why do we it this way?
Use 5 Why’s. 3.
Why do we it this way?
Use 5 Why’s.

26. LEAN Concept: 5S

27. What you can do right now …
Learn more about the Six Sigma and LEAN
Apply concepts to your daily encounters
- Identify measurable improvements
- Collect “good” data for yourself, and your department
- Analyze more deeply
- Identify / implement “good” solutions
- Develop stronger controls and measures
Right now, you can learn more about Six Sigma on your own (talk about books and web-sites or getting on a Green Belt team as a member or ad-hoc member)
You can also apply DMAIC concepts to problems you encounter daily (talk through list adding other ideas ie. you hopefully learned how to think about what the customer is saying and how you can track that in terms of a CTQ, how to define a good problem or SMART goal, analyze problems more deeply by asking what question 5 or more times (why?), using the good solutions, thinking about where your processes need better controls and measurements.
Ask who thinks they might apply some of these concepts and what in particular they are thinking about?
Transition: Another option is to nominate a project from your area to get Quality Engineering support. (Next slide - Nominate a project)