bpr using six sigma[1]

8/4/2019 BPR Using Six Sigma[1]

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Business Process

Reengineering Using

SIX SIGMA

Abella, Vanessa

Balanag, Julie Anne Mojal-Amarillo, Mary Leonite

MGT 201



Outline:

• Overview of Business Process Reengineering

(BPR)

• Six Sigma Fundamentals

• The Lean Six Sigma Improvement Process

• Tools for Improvement that are used within

the DMAIC process• Case Study and Other Success Stories

• Conclusion



BPR Using Six Sigma

Overview and Fundamentals

JULIE ANNE BALANAG



BPR Overview

• BPR is a process improvement approach.

• Business Processes

- a set of activities that transform a set of outputs (goods and services) for another

person or process using people and tools.

Supplier Process Customer

INPUTS OUTPUTS



BPR Overview

• Continuous Improvement Model - This model

attempts to understand and measure the

current process, and make performance

improvements accordingly.

DocumentAs-Is

Process

EstablishMeasures

FollowProcess

MeasurePerformance

Identify &ImplementImprovements



BPR Overview

• BPR is a management practice that aims to

improve the efficiency of the business process.

The current process is irrelevant.

It doesn’t work!

It’s broke!

Forget it!

START OVER…



• Breakthrough Reengineering Model

BPR Overview

ScopeProject

Learn fromOthers

Create To-be Process

PlanTransition

Implement



• The key to BPR is for organizations to look at theirbusiness processes from a “clean slate” perspectiveand determine how they can best construct theseprocesses to improve how they conduct business.

• It started in the early 1990s, when Michael Hammerand James Champy authored a best-selling book“Reengineering the Corporation,” in which theypromoted that sometimes radical redesign and

reorganization of a process by wiping the slate cleanwas necessary to lower costs and increase quality of service.

BPR Overview



7 Principles of Reengineering: 1. Organize around outcomes, not tasks.

2. Identify all the processes in an organization and prioritizethem in order of redesign urgency.

3. Integrate information processing work into the real workthat produces the information.

4. Treat geographically dispersed resources as though theywere centralized.

5. Link parallel activities in the workflow instead of just

integrating their results.6. Put the decision point where the work is performed, and

build control into the process.

7. Capture information once and at the source.

BPR Overview



• Business Process Reengineering Cycle

BPR Overview

IdentifyProcesses

Review,Update,Analyze

As-Is

DesignTo-Be

Test &Implement

To-Be



Raising the Standards

• The goal of Lean Six Sigma is to design productsand processes that do what they are supposed to

do with very high reliability.• The term Six Sigma refers to a product or process

that produces only three defects (or errors) out of every million opportunities.

• Why “Sigma?” the word is a statistical term thatmeasures how far a given process deviates fromperfection.

Six Sigma Fundamentals



What is Six Sigma?

(Lean) Six Sigma is a comprehensive and flexiblesystem for achieving, sustaining and maximizingbusiness success. Six Sigma is uniquely driven byclose understanding of customer needs, disciplineduse of facts, data, and statistical analysis, anddiligent attention to managing, improving, andreinventing business process.





Business success may be defined in different

terms, such as:

• Reduced cost

• Increased market share

• Improved customer satisfaction

• Faster time to market• Increased revenue and profits



Input determines Output

• The basic philosophy behind Lean Six Sigma is

the idea that removing variability from

upstream operations that are inputs to a

process will yield defect-free outputs.

• The output that we are concerned about is

called a Critical To Quality Characteristic

(CTQC).





Input determines Output

PROCESS

X

Input

X

Input

X

Input

X

Input

X

Input

X

Input

X

Input

X

Input

Y

Output



The Sigma Level

• The measurement of success in achievingdefect-free output is the Sigma Level. Sigma,

or σ, is actually a Greek term that representsvariability, called the standard deviation.

• Sigma Level refers to the number of Sigma, or

process standard deviations, between themean and the closest specification for aprocess output.





105 110 115 120 125

Degree Fahrenheit

Minimum

Temperature

Specification

110F

Maximum

Temperature

Specification120F




105 110 115 120 125

Degree Fahrenheit

Minimum

Temperature

Specification

110F

Maximum

Temperature

Specification

120F

XX X

X

X X

XXXXX XXXXX

XXXXXXX X

XXXXXXXXXXXXXXXXXXXX

X XX XXX



105 110 115 120 125

Degree Fahrenheit

Minimum

Temperature

Specification

110F

Maximum

Temperature

Specification

120F

XX X

X

X X

XXXXX XXXXX

XXXXXXX X

XXXXXXXXXXXXXXXXXXXX

X XX XXX


Too Cold! Too Hot!




105 110 115 120 125

Degree Fahrenheit

Minimum

Temperature

Specification

110F

Maximum

Temperature

Specification

120F

XX

XXXXXXXX

XXXXX

XXXXXXXXXXX

XXXXXXX

XXXXXXXXXXXXXXXXX

Too Cold! Too Hot!



Cost of Poor Quality

• An organization can incur costs due to poor

quality throughout the value stream.

• In general, the cost of poor quality increases

exponentially as a product or service moves

along the value stream from creation to

consumption.




Cost of Poor Quality


1:10:100 Rule

Base

Operation

End of

Process

Customer

100

10

1



4 Categories of Cost of Poor Quality

1. Prevention Cost – Cost (investment) to do it right thefirst time. Training, error-proofing, pre-productionpilots, design for capability (DFSS – Design for Six

Sigma).2. Appraisal Cost – Cost of testing and inspection to

detect defects internally.

3. Internal Failure Cost – Defects detected internally:Scrap, rework, and “Seconds” sold off -price.

4. External Failure Cost – Defects detected bycustomers, including warranty, replacements,allowances, product liability, customer dissatisfaction,and lost revenue.





Cost of Poor Quality Model


C o s t P

e r G o o d

U n

i t

Prevention &Appraisal Cost

Failure Cost

-Internal &-External Total

QualityCost



History of Lean Six Sigma

• Lean Six Sigma was born at Motorola in thmid-1980s.

• Motorola was spending between 10% and20% of revenues on poor quality – directly andindirectly.

• The true, total cost of quality is rarelymeasured because it shows up in so manyareas.





• By studying the linkage between external

failure experience at customers, and internal

defect experience in its factories, Motorola

began to understand that poor quality had a

significant impact on its bottom line

profitability.





• The first phase of Motorola’s effort to improvequality focused on finding and fixing defects. –

Four Sigma performance• Motorola realized that the only way to be

error free was to remove defects (and

production time and costs) by focusing onhow products were designed and produced – a proactive approach.





• The developing Six Sigma process focused on thewhole system of producing a product or service,not just individual operations.

• Lean Six Sigma took a big step forward withMotorola’s redesign of a pager product line.

• Six sigma concepts were employed from theoutset, borrowing concepts from the ToyotaProduction System and Design forManufacturability and Assembly (DFMA) – Designfor Six Sigma





• Higher customer satisfaction and lower cost

•Motorola reportedly saved over $2B in thefirst 4 years as many operations achieved Six

Sigma performance levels by the early 1990s.




• The ‘belt’ association with six sigma ranks an

employee’s experience with Six Sigma

projects.

• These are people who are trained in Six Sigma

using DMAIC typically using statistical process

control techniques with a control plan to

monitor process management goals.




• Green Belt

Typically an apprentice in training to become a

Black Belt. This level utilizes statistical and

quality control techniques 2% to 5% of time

(about 1-2hrs/week) and does in house

consulting and training. On average

completing a minimum of 2 projects per year.




• Black Belt

A team leader. Accountable for project

improvements to the completion of the

process. He is a mentor for a Green Belt.

Typically operates 5% to 10% of time (about 2-

4hrs/week) and provides consulting and

training. About 4 projects per year on average.




• Master Black belt

A mentor for Green and Black Belts. Typically

accountable for initiating project or process

improvement plans and monitors those plans

to the completion of the process. Will do six

Sigma projects 80% to 100% of the time. Also

will do consulting, mentoring, and trainingwith 2 to 10 projects a year.




BPR Using Six Sigma

Process and Tools

VANESSA ABELLA



2 Six Sigma Sub-Methodologies

1. Six Sigma DMAIC

2.Six Sigma DMADV(also referred to as DFSS )



1. Six Sigma DMAIC

1.

Define

2.

Measure

3.

Analyze

4.

Improve

5.

Control



2. Six Sigma DMADV

1.

Define

2.

Measure

3.

Analyze

4.

Design

5.

Verify



Similarities Between

DMAIC and DMADV

Talks about reduction of DPMO (defects per millionopportunities

Use the same kind of six sigma tools

Customer’s needs are the basic driving parameters forboth six sigma methodologies

Six sigma BB (black belt) and MBB (master black belt) playimportant roles in implementation for both the cases.

U COMPARISON



Usage COMPARISON

Between DMAIC and DMADV

When to Use DMAIC

Used when a product orprocess is in existence butis not meeting customer

specification or is notperforming adequately.

When to Use DMADV

A product or process is notin existence and one needs

to be developed.

Existing product or processexists and has beenoptimized (using eitherDMAIC or not) and stilldoesn't meet the level of customer specification orsix sigma level



Improvement Process COMPARISON

OF DMAIC and DMADV

Define the projectgoals and customer(internal and external)deliverables

Define the projectgoals and customer(internal and external)deliverables



Measure the process

to determine current

performance

Measure and

determine customer

needs and

specifications


OF DMAIC and DMADV




OF DMAIC and DMADV

Analyze and

determine the root

cause(s) of the

defects

Analyze the process

options to meet the

customer needs



Improvement Process COMPARISON OF

DMAIC and DMADV

Improve the processby eliminatingdefects

Design (detailed)the process tomeet the customerneeds




OF DMAIC and DMADV

Control futureprocessperformance

Verify the designperformance andability to meetcustomer needs



THE DMAIC TOOL KIT

TOOLS TOOLS TOOLS

Balanced Score Card QFD Team Start - up Worksheet

Cost Of Qual ity COQ Or COPQ Value Added flow chart Boundaries of Freedom

Pareto - Chart Project Priority Calculations Agenda & M.O.M. Worksheet

In - Out Matrix FMEA Problem - Statement Worksheet

Role Matrix or Responsibility Matrix DMAIC Work Break Down Stuct Enhanced SIPOC

Stakeholder Analysis Estimate EVA What is - What Isn't Analysis

Project Score card Project Schedule Comparitive Analysis

Cross - Tabulation Risk/Return Analysis Defining CTQ Characteristics

Paired Comparison Communications plan Process Mapping

Project Charter

Process Flow Chart

SIPOC Diagram

VOC Gathering

CTQ Definitions(Operational)Cause - and - Effect Matrix

Blank Graph

Base Line Performance

Affinity Diagram

CTQ Tree

Value Stream Map

Project Priority Matrx

DEFINE & PROPOSAL STAGETOOLS TOOLS TOOLS

Balanced Score Card QFD Team Start - up Worksheet

Cost Of Qual ity COQ Or COPQ Value Added flow chart Boundaries of Freedom

Pareto - Chart Project Priority Calculations Agenda & M.O.M. Worksheet

In - Out Matrix FMEA Problem - Statement Worksheet

Role Matrix or Responsibility Matrix DMAIC Work Break Down Stuct Enhanced SIPOC

Stakeholder Analysis Estimate EVA What is - What Isn't Analysis

Project Score card Project Schedule Comparitive Analysis

Cross - Tabulation Risk/Return Analysis Defining CTQ Characteristics

Paired Comparison Communications plan Process Mapping

Project Charter

Process Flow Chart

SIPOC Diagram

VOC Gathering

CTQ Definitions(Operational)Cause - and - Effect Matrix

Blank Graph

Base Line Performance

Affinity Diagram

CTQ Tree

Value Stream Map

Project Priority Matrx

DEFINE & PROPOSAL STAGE



TOOLS TOOLS TOOLSKano Model & CT Tree Trend Charts Check SheetProcess Mapping X - Bar & R - Charts Concentration DiagramEnhanced SIPOC X Bar & s Charts Interviews and ReenactmentsGR&R Customer Definition Matrix(CDM) Cause & Effect DiagramVisual R&R Requirement Definition Matrix(RDM) Five Why'sProcess Capability Affinity Diagram/ Matrix Timeline AnalysisProcess Flow Chart Requirement Tree CT Tree Scatter DiagramData Collection "As Is" Process Map CorrelationBenchmarking Input Definition Matrix(IDM) Regression

Process Sigma Calculation Output Definition Matrix ODM Fault Tree Analysis(FTA)VOC Gathering Updating the Project Chatrter Comparitive AnalysisTrend Charts Work Flow DiagramSPC Multivariate AnalysisDiscriptive Statistics DOESix Sigma Graph Summary ANOVAMising & Out Of Range Data Hypothesis Testing

Box & Whisker Plots Force Field AnalysisPower Analysis SurveysDistribution Fitting Check ListsFrequency TablesTime Series PlotHistogramNarmality Test

MEASUREMENT



TOOLS TOOLS TOOLS

Control Charts Architecture Importance Matrix (AIM) Special Testing

Histograms Fault Tree Analysis(FTA) Interviews

Pareto Charts FMEA Failure AnalysisCross - Tabulation Risk Vs. Importance Plot Finite Element Analysis

Cause & Effect Diagram Input Importance Matrix(IIM) Concentration Diagrams

Paired Comparison Variable Selection Matrix(VSM) Statistical Analysis

Hypothesis Testing Data Collection Plan(DLP) Fault Tree Analysis(FTA)

ANOVA Update The Project Charter Root Cause Analysis

Regression Analysis Multivariate Analysis

DOE Advanced Statistics

Scatter Plot Simulations

Five Why's Computer Modeling

Process Map Review Accelarated Testing

Covariance & Variance Time Line Analysis

Friedman Kruokal Wallis Test Comparitive Analysis

Levene Modified Test Work Flow Diagram

Man Whitney Test Cpk Analysis

Wilcoxon Sign Force Field Analysis

Wilcoxon Signed test Surveys

Normality Test Check Lists

Non Normal Data Analysis

Stratification Analysis

Binomial Chi Squared Test

Analysis Stage



TOOLS TOOLS TOOLSCp; Cpk; Process Sigma Corrective Action Matrix Run ChartsThroughput Yield Check Process Concentration Diagrams

Rolled Throughput Yield Simulations Musts and WantsNormalized Yield Concept Selection Matrix Boundaries Of FreedomMulti - Vari Chart "Should - Be - Process" Map Activity PlanningDOE Output Definition Matrix Work Flow DiagramDFMEA DFMEA Affinity GroupingHypothesis Testing Architecture Importance Matrix (AIM) Nominal Group TechniquePugh's Concept Matrix Risk Vs. Importance Plot Voting and Ranking

Pareto Analysis Input Importance Matrix(IIM) PERT ChartBrainstormig Variable Selection Matrix(VSM) GANTT ChartSPC - Quality Control Charts Data Collection Plan(DLP) Just In Time TheorySix Sigma Summary Update The Project Charter Analysis Of WantsHistograms Update "Should - Be - Process" Map ROI & PaybackStratification AnalysisCause & Effect Diagram

Corrective ActionDFMESSolution Selection MatrixSyatem DynamicesSystem ApproachSyatem DiagramMistake - Proofing

IMPROVEMENT STAGE



TOOLS TOOLSPFMEA Hoshin Planner Mistake - Proofing Tests Of Significance

Control ChartsHistogramsPareto AnalysisCross - TabulationCause & Effect DiagramPRE - ControlProbability Distributions

Contrl PlanAction PlansRisk Mitigation PlanProcess Sigma CalculationsCp;CpkTest Plans

DPMO Yield (All Three Kinds)% Out Of Spec.Cost Saving CalculculationTest PlansCheck ListsProject Management Tools

CONTROL STAGE



FUNDAMENTAL TOOLS FOR

IMPROVEMENT UNDER THE DMAIC

1. Process Maps

2. Value Added Flowcharts3. Pareto Charts

4. Cause and Effect Diagrams

5. Brainstorming

6. Control Plans



PROCESS MAPS

• Visual tool to capture and communicate theelements of a process or system

• Useful tool in developing and communicatingknowledge of a process

• Help identify and focus project activity at thepoint of greatest leverage to improve results

• Employed during the DEFINE Stage of DMAIC

• Examples includes: Value Stream Maps or SIPOCMaps and Flowcharts



TYPES OF PROCESS MAPS

• SIPOC Maps; (Supplier-Input-Process-Output-Customer) - five useful categories for identifying andorganizing process elements.

• Flowcharts or Diagrams-used to augment the processmaps; useful in charting procedures and decisionprocesses

• System Diagrams-useful tool to map the behavior of a system



Process maps is constructed for:

• 1. Identifying waste and prioritize Lean Six

Sigma projects• 2. Understanding relationship between input

(X’s) and output( Y’s)

Two critical aspects of process mapping are:1. Draw the process map exactly as it exists. If

you create the map at your desk, you arelikely to miss key elements of the process,

such as any redundant work or reworkloops.

2. Always walk the process to validate thecorrectness of your process map.



Hierarchy of Processes

New Product

Development

Demand

Generation

Demand

Fulfillment

Customer

Service

Ordering

MaterialsProducing Picking

Shipping

Mixing Filling Sealing Packing

1

2

3 Flowchart

SIPOC MAP or

Flowchart

SIPOC MAP



VALUE ADDED FLOWCHARTS

• Used when Lean Six Sigma Project is focused onreducing cycle time or improving productivity

• Mechanism to improve cycle times and productivityby visually separating value-adding from non-valueadding activities

• Example: 7 Forms of Waste as identified in thedevelopment of Toyota Production System :

Defects; Overproduction, Transportation; Waiting;Unnecessary Inventory; Unnecessary Motion andExcessive Processing



Pareto Charts

• Shows the relative frequency of defects in rank-order

and provides prioritization tool so that process

improvement activities can be organized

• Originated in 1897 thru an Italian Economist namedVilfredo Pareto

• Useful in the DEFINE Stage when you need to sort

data and set priorities and also often used in the

MEASURE and ANALYZE stage of the DMAIC

Pareto Charts can be used



Pareto Charts can be used

to Answer the ff. questions:

• Which defects occur most frequently?

• What is the relative frequency or relative

value of the items or categories?• How should improvement process be

categorized?

Returned Software Reasons



Returned Software Reasons

Problem Count Percent of Total Cumulative Percent

Not compatible 23 30.67 30.67

Does not perform

as expected15 20.00 50.67

Found at acheaper price 11 14.67 65.34

Changed mind 10 13.33 78.67

Too complicated 7 9.33 88.00

Missing manual 5 6.67 94.67

Missing disk 4 5.33 100.00

Totals 75 100.00 100.00



Brainstorming

• commonly used to generate an abundance of

potential s

• Identification of improvement opportunities for

existing products or services, new products orservices, and problem resolution are among the

reasons to use this tool

• Useful in the ANALYZE Stage



Steps in conducting brainstorming:

1. Determine the session facilitator; generally the team leader

facilitates the session

2. Determine prior to the session who will be writing down the

team’s responses.

3. Have flip-chart paper available- use of a dry erase board isn’t

prohibited, but flip-chart paper is permanent. Dry erase boards,yes, can be erased… losing all your important ideas if you can’t

finish the session within the allotted time.

4. Gather your team in a conference room. This is preferred to a

classroom setting. A classroom can be used by arranging the

tables and chairs in a “U-Shape”. This encourages participation.

5. State the issue to be considered.

6. Solicit responses from the team.



Control plan

• Centralized document used to keep track of

the status of all significant characteristics

• Referred to as the Road Map for the

identification of the output

• Generally created under the operational level

rather than on a company wide level (ISO

purposes)



BPR Using Six Sigma

Case Study

MARY LEONITE MOJAL-AMARILLO



KEY CONCEPTS OF SIX SIGMA

Critical toQuality

Defect

Process

Capability

Variation

Stable

Operations

Design forSix Sigma

6σ



KEY CONCEPTS OF SIX SIGMAAttributes most

important to thecustomer

Failing to deliverwhat the

customer wants

What yourprocess candeliver

What thecustomer sees

and feels

Ensuring consistent,

predictable processes toimprove what the customer

sees and feels

Designing to meetcustomer needs and

process capability

6σ



THE IMPACT OFSIX SIGMA

IMPLEMENTATION ATGENERAL ELECTRIC (GE)

GE… We bring good things to life



Quality Management: Six Sigma

GE’s Toughest Stretch Goal:

“We want to be not just better in quality, but a

company 10,000 times better than its competitors.

We want to change the competitive landscape bybeing not just better than our competitors, but by

taking quality to a whole new level. We want to make

our quality to special, so valuable to our customers,

so important to their success that our products

become the only real value choice.”

- Jack WelchGE Chairman



The Biggest Opportunity for Growth

January 1996 - GE’s annual gathering of 500 top managers

Official announcement: Launching the quality

initiative program described as, “the biggestopportunity for growth, increased profitability,and individual employee satisfaction in thehistory of the company”.

GOAL: Becoming a six sigma quality company-producing nearly defect-free products, services,and transactions- by the year 2000.



Making Customers Feel Six Sigma Quality

• What is Six Sigma?Six Sigma (6σ) is a highly disciplined process that

helps us focus on developing and delivering near-perfect

products and services. For GE, it is a vision of quality which

equates with only 3.4 defects/million opportunities for each product or service transaction. Strives for perfection.

Sigma (σ) is a statistical term that measures how far a given

process deviates from perfection.

The central idea is that if you can measure how many

“defects” you have in a process, you can systematically

figure out how to eliminate them and get as close to“zero defects” as possible.



GE’s Evolution Towards Quality

High

Low

I N T E N S I T Y

TIME1990

Work-Out/Town Meetings:

Empowerment, Bureaucracy Busting

Productivity/Best Practices:

Looking Outside GE

Process Improvement:

Continuous Improvement, Reengineering

Change Acceleration Process:

Increase Success and Acceleration Change

Key Strategy Initiatives:

QMI, NPI, OTR, SM, Productivity, Globalization

Six Sigma Quality:The Road to Customer Impact



Key Elements of Quality…

1. TheCustomer

2. TheProcess

3. TheEmployee



THE CUSTOMER

• Delighting Customers

Customers are the center of GE’s universe:

they define quality. They expect performance,

reliability, competitive prices, on-timedelivery, service, clear and correct transaction

processing and more.

Delighting our customers is a necessity…

because if we don’t do it, someone else will!



THE PROCESS

• Outside-In ThinkingQuality requires us to look at our business

from the customer’s perspective, not ours. In

other words, we must look at our processes fromthe outside-in. By understanding the transaction

lifecycle from the customer’s needs and

processes, we can discover what they are seeing

and feeling.With this knowledge, we can identify areas where

we can add significant value or improvement from

their perspective.



THE EMPLOYEE

Leadership Commitment Involving all employees is essential to GE’s quality

approach. It is committed to providingopportunities and incentives for employees to

focus their talents and energies on satisfyingcustomers.

All GE employees are trained in the strategy,statistical tools and techniques of Six Sigma

quality.Quality is the responsibility of every employee.

Every employee must be involved, motivated

and knowledgeable if we are to succeed.

Results achieved over the first two years




(1996-1998) of 6σ implementation at GE





(1996-1998) of 6σ implementation at GE

Revenues have risen to $100 billion, up 11%

Earnings have increased to $9.3 billion, up 13%

Earnings per share have grown to $2.80, up 14%

Operating margin has risen to a record 16.7%

Working capital turns have risen sharply to 9.2%,

up from 1997’s record of 7.4



• In 2006, GE claimed to have saved

more than $1.5 billion beyond its

initial investment in a period of 4years. In addition, its impact is seen

not just in terms of cost savings but

also in rates of customersatisfaction.



TACO BELL

• In 1993, initiated re-engineering

efforts and resulted to 22 %

growth in revenues by ‘rethinkingwho the customer is and by

focusing on enhancing activities

that bring value to the customer’.



THANK YOU!

bpr using six sigma[1]

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