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    Lean Six Sigma

    Tom Devane

    Nexus U

    2008

    -- A Deeper Dive --

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    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 youre not the CEO

    Some Lean Six Sigma considerations for your upcoming

    Sunday Design Experience.

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    Agenda

    Topics

    1. Introduction2. Lean Six Sigma Primer

    3. Case Study 1

    4. Case Study 2

    5. Pre-thinking for Sundays Design

    Experience

    6. Wrap-up

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    1. Introduction

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    Audience inputs to the agenda

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    Whaddaya Think?

    1. The Toyota Production System -- a formidable competitive weapon by Toyota --consists of both Lean and Six Sigma principles and tools.

    2. Six Sigma tends to get faster business results than Lean.

    3. General Electric, well-known for its Six Sigma program, does not do any Lean.

    4. The Just-In-Time process improvement craze of the 1980s was actually acombination of Lean and Six Sigma.

    5. Lean and Six Sigma are used best in a manufacturing environment, not in a serviceenvironment.

    6. Lean and Six Sigma both share the common goal of improved operationalperformance, they merely go about it in different ways.

    7. Jack Welch of General Electric fame first improved processes with Six Sigma, then

    modified the corporate culture to make Six Sigma results sustainable.

    8. The average weight of a Lean practitioner is 22 pounds less then his Six Sigmacounterpart.

    9. Purist Lean and purist Six Sigma practitioners are often at odds with each other incompanies that have been doing serious process improvement for 10 years or so.

    10. The learning curve for Lean tends to be greater than the learning curve for Six Sigma.

    At this point its not expected that you know anything about disciplines of Lean, Six Sigma, or their combined method. But you musthave heard something, so get with a partner and take a shot at the T/F questions below, and then well discuss in a learning environment.

    T F

    T F

    T F

    T F

    T F

    T F

    T F

    T F

    T F

    T F

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    2. Lean Six Sigma Primer

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    Discipline Overview

    Lean

    Lean Six Sigma

    Six Sigma

    Eliminate waste.Simple tools like VSM, 5s.

    Quick results.Can be dramatic

    Reduce variation.Advanced tools like FMEA,

    DOE, control charts.Dramatic results.

    Benefits of Leanand Six Sigma.

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    Which steps are waste in a Lean

    environment?1. Move required production materials to the work station.

    2. Insert lenses into sunglasses frame.

    3. Move filled frames to next work station.

    4. Check lenses for proper alignment within frame.5. Paint frames.

    6. Scrape excess paint from lenses.

    7. Move sunglasses to warehouse staging area.

    8. When ready to ship, move sunglasses to packing area.

    9. Pack sunglasses in box.

    10. Perform final inspection on 1 of every 40 pairs of sunglasses.

    11. Ship sunglasses.

    12. Notify material planning personnel to order more frames and lenses.

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    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.

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    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Orientation meeting Loan application Title search Ag econ eval/cons Account setup

    HQ

    Farmer

    Loan Approval & Setup

    Value Stream Map -- Current State

    I

    I I I I I

    Pyt processing

    I

    (Staggered Receipt ofRecords)

    Manual Archiving

    LOAN CUSTOMER

    Branch Manager

    KEYElectronic

    Communication

    ManualCommunication

    Supplier orCustomer

    Delivery/Shipment

    I Inventory

    Push

    Pull

    25 Batches

    Companyconfidential

    Operators4Q03

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

    Companyconfidential

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    C/T = 7 days

    C/O = 21 hours

    L/T = 1 day (per lot)

    AWT = 20 hours

    # Op = 2 people

    3 Sterile Batches

    Step D

    3 Sterile Batches

    hold time = 1.5hrs (20 hrs max)

    I C/T = 7 daysC/O = 6 hours

    L/T = 3 day (per lot)

    AWT = 2 hours

    # Op = 2 people

    3 Sterile Batches

    Step E

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    Which process is a better

    process in Six Sigma?

    AverageCandy barProductioncosts forchocolatebar

    $5

    $3

    Process A

    Process B

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    Who is a better shot?

    A B

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    Key Six Sigma Tool

    Control Chart

    Anatomy of a Control Chart

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    Players

    Player Roles & Responsibilities Typical Training Six Sigma Dedication

    Black Belt Works with a teamusually 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 24mo)

    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 Full-time

    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

    ExecutiveSponsor

    Actively supports and encourages project teams, participates in LSS meetings,demonstrations, and celebrations.

    1-2 days Part-time,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

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    Who you gonna call?

    1. The Purchasing analyst cannot spend as much time on the cross-departmental New Product Launch process because her functionalmanager has put her on a crunch project in Purchasing. This willlikely cause a 4-week slip in the launch of the next product.

    2. Data needs to be collected on the number of failures of yourcompanys new electric razor once it gets into a customers hands.

    3. The process improvement project will now be delayed 5 monthsbecause the engineer on the project has been sent on an overseasassignment.

    4. Some heavy statistical analysis and design of experiments need to bedone for the new bioreactor in the South building because its yields areerratic, and averaging only 35%.

    5. Several Black Belts are working on similar problems in different partsof the company, but they are not benefiting from each othersexperience like they could.

    6. Decide that it would be great if the CEO could mention Lean SixSigma in each of her company-wide addresses over the next twomonths.

    Black Belt

    Master Black Belt

    Green Belt

    Champion

    Executive Sponsor

    Process owner

    Draw a line to connect the issue with the person you would most likely call to address it.

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    A peek into the practical world of Black BeltsCommon BB Challenges by Category

    BB stretchedtoo thinly

    Team membersstretchedtoo thinly

    Assigned project will notsupport strategy well

    Assigned project willhave little return

    Entire targeted population for the

    improvements not on improvementteam, and resist

    Motivating teamto perform and

    improve

    Middle manager seeks toblock project in his/her

    area

    General poor supportfrom Champion

    Pressure for quickresults from topmanagement

    Black Belts indifferent parts of theorganization make

    the same mistakes

    Team wants to jump aheadto fixes w/o dataTeam wont assume ownership

    quickly enough backsliding,etc.

    Poor team dynamicshinder progress

    Powerful execs in other areasblock implementation and

    Champion wimps out

    Powerful functionalmanager attempts to

    influence solution

    Middle manager wants petproject funded

    Change management

    Post-launchdiscoveries

    Politics

    Team problems

    Team interfaceswith others

    Resourcingissues

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    Sigmalevel

    Percentage of time

    customersrequirements were

    met

    Defects per

    millionopportunities

    1 68.27 690,000

    2 95.45 308,537

    3 99.73 66,807

    4 99.9937 6,210

    5 99.999943 233

    6 99.9999998 3.4

    Whats the Sigma Thing anyway?

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    The voice of the customer and CTQ

    Operational definition

    DMAIC

    DOE

    FMEA

    Value Stream Mapping

    5s

    Tampering

    Key terms and concepts

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    What its 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 organizations 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.

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    3. Case Study 1

    Biopharmaceutical division

    of a global pharma company

    P f F k

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    Strategy

    Process

    Information

    & LearningCulture

    Structure &

    Relationships

    Energizing Core

    Want Know

    to how

    Pay

    for

    HR

    Practices

    Performance Framework

    2003. Jossey-Bass and Tom Devane fromIntegrating Lean Six Sigma and High-Performance Organizations. All rights reserved.

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    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 leaderslocated 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

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    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 statisticaltools

    Approach to addressing the issues and results

    All work was done via chartered, cross-functional teams

    DMAIC (Define, Measure, Analyze, Improve, Control)

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    The 10 Big pay attention to elements

    for LSS leaders

    1. The use of data and factsnot just opinions -- to make decisions.

    2. Managing variation in processes, instead of just managing reject levels for a product.

    3. An awareness of, and management of business processes and value streams that cut acrossfunctional department boundaries.

    4. Opportunities to pull work through operations rather than push them.

    5. An emphasis on prevention, not reaction.

    6. Processes and culture that foster the continual search for ways to streamline and eliminate waste.

    7. Impacts of activities and solutions on customer requirements.

    8. Checks and balances to ensure that LSS experts do not become overloaded and leave.

    9. Workplace orderliness and cleanliness.

    10. Links between LSS improvement efforts and the organizations reward and recognition system.

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    4. Case Study 2

    High-Tech Electronics Assembly

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    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 casescounter-productive projects

    Many of the employees had come up through the scientific ranks and were accustomed to working alone, noton 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 millionannually

    Value-Added Process Time/Total Process Time went from 8% to 60% for two key processes within thefirst 2 months

    Executives played a key role in the initial success

    Hard/soft integration principles deployed.

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    Discipline Overview

    Lean

    Lean Six Sigma

    Six Sigma

    Eliminate waste.Simple tools like VSM, 5s.

    Quick results.

    Reduce variation.Advanced tools like FMEA,

    DOE, control charts.Dramatic results.

    Benefits of Leanand 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-PerformanceOrganizations.

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    Journey

    Challenges articulated

    Study group convenes

    Develop direction

    Research results

    New leadershiptraining

    Announcements

    Customer requirements

    Process mapping

    Teamstructuringworkshop

    Projects Remedial

    coaching

    Continuous

    improvement

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    Hallmarks of the discipline

    1. Statistical methods

    2. Attention to workplace and tool organization

    3. Fanatical focus on the external customer

    4. Attention to process5. Pre-screening, and ongoing screening of improvement projects to ensure fit with strategy and

    financial return

    6. People strive for perfection, but noble mistakes are tolerated

    7. An analysis-rich and measurement-rich environment

    8. A classification and sorting process to determine the type of tools to apply9. Coordination and control of the work occurs at the lowest level possible

    10. Collective accountability

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    5. Pre-Thinking for your Sunday

    Design Experience

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    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?

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    6. Wrap-up

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    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 keyeach covers inherent weaknesses of the other

    No organization-wide roll-outs of Six Sigma without training senior managers how to support ittopmanagement dialogue cant stop after the approval and initial re-organization into teams.

    Resist the temptation to use good -- notgreat-- performers as driving change agents, such as BlackBelts.

    Go for lean manufacturing techniques before Six Sigma to demonstrate quick wins unless data foranalysis 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.

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    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 notbe 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.

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    Sounds great. But how do I

    get something going with Lean

    Six Sigma if Im not the CEO?

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    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 ChargeToward Rapid, Radical, Sustainable Improvement.. San Francisco: Jossey-Bass/Pfeiffer, (currentworking title, forthcoming in November, 2003).

    Holman, P., Devane, T., & Cady, S., The Change Handbook. San Francisco: Berrett-Koehler, 2007.

    Macy, B.A., and Izumi, H.A. Organizational Change, Design and Work Innovation: A Meta-Analysisof 131 North American Field Studies1961-1991, inResearch in Organizational Change andDevelopment. 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 EliminateMuda. 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: www.isixsigma.com

    http://www.isixsigma.com/http://www.isixsigma.com/