competitive edge - practical guide to implement continuous improvement - 2nd edition

Practical Guide to Implement Practical Guide to Implement Continuous Improvement and Continuous Improvement and

Lean Six Sigma TechniquesLean Six Sigma Techniques

Jose Villanueva Alcedo, Jose Villanueva Alcedo, M.B.A./T.M.M.B.A./T.M.

Worldwide-Published AuthorWorldwide-Published AuthorCEO, YouKaizen, LLCCEO, YouKaizen, LLC

Practical Guide to Implement Practical Guide to Implement Continuous Improvement and Continuous Improvement and

Lean Six Sigma TechniquesLean Six Sigma TechniquesPART ONE – Modules 1,2,3PART ONE – Modules 1,2,3

Presented byPresented by

Jose Villanueva Alcedo, M.B.A./T.M.Jose Villanueva Alcedo, M.B.A./T.M.Worldwide-Published AuthorWorldwide-Published Author

CEO, YouKaizen,LLCCEO, YouKaizen,LLC

Module One

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Deming’s Philosophy - Third Wave of the Deming’s Philosophy - Third Wave of the Industrial RevolutionIndustrial Revolution

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CONTINUOUS IMPROVEMENTCONTINUOUS IMPROVEMENT

Solid Foundation of 3 Ts

Never-ending improvement

System of Profound KnowledgeSystem of Profound Knowledge Deming 14-Point MethodologyDeming 14-Point Methodology

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Revolutionized the WesternRevolutionized the WesternManagement Methods Management Methods

& Practices& Practices

Appreciation for a System

Theory of Knowledge Knowledge of

Variation Knowledge of

Psychology

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The success of the whole organization is dependent on the leaders’ capability to orchestrate the delicate balance of each component for the optimization of the entire system

Whole and complex Clearly defined and shared

goals Everyone must share a distinct

commitment to aim the common goal

Team-based environment Optimize the whole system Win-win result for all, as one

team

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All parts of the system are related

Being part of the whole Large number of participants and

interactions Collaboration Interconnecting components Interdependence Optimizing the whole, not one

part

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Interdependent parts

Interdependence of all system components

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All system components must operate interdependently in order to be efficient

in business operation.

MANUFACTURING PACKAGING DISTRIBUTION

ConsumersConsumers

Consumerresearch

Design & redesign

Suppliers of MaterialsABC

Receipts & test of materials

Test of processes, machines, methods, costs

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ProductDevelopment

Interdependent processes

Common GoalCommon Goal

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Module One

How we learn things How we use data-based

knowledge Translate knowledge to action

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Variety is goodVariation is bad

Variety vs. Variation

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•No two things are exactly alike, •not people•not processes

•Processes vary because of its variation•Variation is a natural occurrence•Variation is inherent in life

The Goal of Continuous Improvement is to reduce the range of variation.

Signal of process behaviorSignal of process behavior Process vary due to its variationProcess vary due to its variation Variation is a natural occurrenceVariation is a natural occurrence Identify causes of variationIdentify causes of variation Reduce the range of variation over Reduce the range of variation over

timetime 85% of variation due to chance 85% of variation due to chance 15% of variation due to assignable 15% of variation due to assignable

causescauses

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People’s needsPeople’s needs Intrinsic motivationIntrinsic motivation Hierarchy of needs (Maslow)Hierarchy of needs (Maslow)

Physiological, Safety, Love, Physiological, Safety, Love, Esteem, Self-actualizationEsteem, Self-actualization

Leader’s guidance to see level of Leader’s guidance to see level of needneed

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The hierarchy of needsThe hierarchy of needs

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Physiological

SafetyLove

Esteem

Self-actualization

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Maslow’s Need TheoryMaslow’s Need Theory

1. Create a constancy of purpose toward improvement of product and service

2. Adopt a new philosophy 3. Cease dependence on inspection

to achieve quality 4. End the practice of awarding

business on the basis of price tag. Instead minimize total cost

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and teamwork within the organization.

5. Improve constantly and forever, every process for planning, production, and service

6. Institute training on the job 7. Adopt and institute leadership 8. Drive out fears so that

everyone may work effectively for the company

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Strategy of constant unending improvement for everyone

9. Break down barriers between departments

10. Eliminate slogans, exhortations, and targets for the work force

11. Eliminate work standards (quotas) on the factory floor and numerical goals for management


Remove the barriers

All in one team, focus on processes, then improve processes, and the

results should follow.

12. Remove barriers that rob people of pride of workmanship

13. Institute a vigorous program of education and self-improvement for everyone

14. Put everybody in the company to work to accomplish the transformation


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Module Two

• Kaizen is a Japanese name

- kai = change, zen = good

• Continuous Improvement Philosophy

Initially taught in U.S.A.

• Deming and Juran -Taught in Japan after World War II

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Module Two

• Way of thinking applied in all work

• Focuses on continually improving the processes and systems first

• Produce products and services that meet or exceed customer’s satisfaction

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Time

Imp

rov e

men

t

$

Jose V. Alcedo, P.E. ,M.B.A./TM

Ideal Pattern from Innovation

$

$

Innovation I

Innovation II

Innovation III

(Std)

(Std)

(Std)

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Module Two

Time

Imp

rov e

men

t

$


Actual Pattern from Innovation

$

$

Innovation II

Innovation III

A

B

C

A,B,C =What should be Std

Innovation I

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Innovation can declineInnovation can decline in performance in performance

with timewith time

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Time

Imp

rove

men

t

$


Innovation plus Kaizen

Innovation I

Innovation II

Kaizen

$

Kaizen

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Fostering Innovation with

Continuous Improvement

Module Two

Time

Imp

rov e

men

t


Kaizen alone

Kaizen

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IMPROVEMENT

Ongoing Improvement

Module Two


SCIENCE TECHNOLOGY DESIGN PRODUCTION DISTRIBUTION

INNOVATION KAIZEN

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Module Two

Kaizen Innovation


Gradualist approach Great-leap approach

Small improvement Innovation

Uses seven tools of Quality

No tools

Concerned more with processes

Concerned more with results

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Module Two

Kaizen Innovation


Improvement is slow, measures process activities

Measures profit

Close connection between Development, Design and Production

No collaboration among departments

KAIZEN speaks with Data Speaks with intuition, gut feel

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Module Two

Kaizen Innovation


People - oriented Innovation – technology, money oriented

Uses structured problem solving PDCA process

No problem solving tools

Covers Design, Production and Distribution

Covers Science, Technology and Design

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Module Two


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• SWOT Analysis • Integrate Continuous Improvement into Business Plan• Have short term and long term goals• Core competencies• Identify key processes and resources• Project management time line• Focus on improving Input, Process, Output• Cash Flow projection• Cost Benefit Analysis• Strategic Plan for Sustainability

Strategic Advantage

If your business does not If your business does not have a Business Plan, it can have a Business Plan, it can go somewhere else. go somewhere else.

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Masaahi Imai (1986) in his book, Kaizen, explained:Key to Japan’s competitive success is Kaizen – Continual Improvement-gradual, unending improvement broken down into:

• Management-oriented Kaizen• Group –oriented Kaizen• Individual-oriented Kaizen

Module Two

TimeJose V. Alcedo, P.E.,M.B.A./TM

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Goal: College &NFL

Football Runningback Zae ALCEDO #44 - 2nd Year High School Scholar at Campbell Hall, North Hollywood, Calif.

Fostering hisGod-givenTalents withContinuousImprovementTechniquesBy Team Effort with his dad

Milestones

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TBM Consulting Group Inc. (Quality Progress-April 1997)

Survey of Kaizen programs based on four continents, Kuantan, Malaysia, to Sao Paulo, Brazil, to Raunheim, Germany, to Hot Springs, AR.

Survey respondents that practice lean:

• 64% reported lead times on product production• 63% were able to hold down or decrease product pricing• 61% experienced increased market share• 39% reduced the time required to launch new products• 24% were able to increase diversity of their product lines

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Basic Statistics, Mark J. Kiemele, Stephen R. Schmidt, 1993, Air Academy Press

Huge savings:

Ford Motor Co. • Increased market share and profit• 65% reduction in customer reported defects• 35% increase in customer satisfaction

Xerox • Manufacturing costs down 20% (1982 – 1986)• Cycle Time reduced by 60%• Revenue produced per employee up 20%

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Huge savings:

Westinghouse Electric Corp/Commercial Nuclear FuelDivision• Increased increased manufacturing by over 37%• Reduced scraps, rework, and manufacturing cycle time

Hewlett Packard (Yokohama)• Profit up 244% from 1977-1984• Hardware failure rates down 79%• Manufacturing costs down 42%• Productivity up 120%• Market share up 19%

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Huge savings:

Boeing Aerospace Co.For the Initial Upper Stage Program:• Billing errors reduced 0%• Cycle time reduced from 20 days to 3• Technical order processing streamlined – saving $875 and 3.75 man-hours per O.T.• For the AWACS contract, billing delinquencies reduced by 50% • Overall Savings: $1.5 million per year

Pittron Steel Foundry• Sales increased by 400%• Profits up by 30%• Productivity up 64%

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Huge savings:

U.S. NavyF-14 Overhaul Program:• Cut average cost from$1.6 million per aircraft in 1986 to $1.2 million in 1989Cherry Point:• Aircraft failure rates reduced by 90% (1987-1988)Overhaul of USS Saratoga:• Expected to save $10 million and 22,000 man-daysNorfolk Naval Shipyard:• Reduced rejection rate in electronic connectors from 55% to 6%

Internal Revenue Service• Processing errors reduced from 30,000 (1986) to 3,000 (1987)

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Huge savings:

Social Security Administration• Claim processing reduced to 73.9 days in 1987 from 81 days in 1986

Department of Housing and Urban Development• Average time to process a loan for property improvement and purchase of manufactured housing was 85 days (1985), 29 days (1986), and 22 days (1987)

Massachusetts General Hospital• Improved the billing process by reducing monthly defects by 52%, resulting in projected $189,000 savings per year

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Huge savings:

9/11/12: “ I was fortunate enough to work with Joe for twenty years. He hasExcellent work ethics and a great set of values. Joe introduced and trainedPharmavite and me on Statistical Process Control, Continuous Improvement,Lean Best Practices and led the charge throughout the company.As an example, on one project, we reduced our lead time by 83%.”William D. Cottrell, CEO/Principal, Cottrell ConsultingSupply Chain and APICS Professional__________________________________________________________________Pharmavite, LLC, California:•Continuous Flow Process reduced manufacturing cycle time by 50%•Reduced inventory count from 7 to 2 days•Statistical Process Control, contract manufacturing from P&G


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Huge savings:Pharmavite, LLC:

• Soft Gelatin Polishing Cycle Time reduction by 60%• Six Sigma tablet weight vitamin savings and excellent product quality• Reduced errors in Batch Reports – resulting to reducing product release time by 40%.• Company-wide Team-based organizational transformation – strategic advantage through High Performance Teams throughout the enterprise, leveraged global market share


Module Two

Jose V. Alcedo, P.E. , M.B.A./TM

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Module Three


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The key strategyThe key strategy Systems approach to changeSystems approach to change Process thinkingProcess thinking Success factorsSuccess factors Focus on the ProcessFocus on the Process Process modelProcess model SIPOC, COPISSIPOC, COPIS Variation in a ProcessVariation in a Process Group paper, oral presentationGroup paper, oral presentation

Deming - based philosophy for maintaining the competitive advantage


Processes

SystemsPeople

Strategy which focuses on continuous improvement of all

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Present state

The Change Process

Transition state

Future state

Allies

Allies

Allies

Allies Allies

Allies

Allies

Why change ?

Sustainability

Considerations:•Visions, Missions, End state•Organizational behavior•Human factors •External influence


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Goal:A. Integrate Continuous Improvement

Technology Course into CPU Packaging Engineering and Business Administration Curriculum

B. Implement Continuous Improvement in CPU Business Processes


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Align with goals and reason for being:

Where are we going

What work should we do

How do we get there

Always keep our mission in mind


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Continuous Improvement (CI) focuses on improving processes involving 4Ms:

•Men (People)

•Machines

•Materials

•Methods


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Have a strategy:•Manage the direction: Focus on consistent direction. •Obtain the buy-in of the process managers and collaborate with them and the people in the whole system with a holistic vision to improve the Process.


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Managing The Change

Like steering a sailboat in turbulent water and stormy winds. If the wind is blowing at gale force dead broadside, you have to make a number of critical choices. The true sailor, knowing these choices works with the wind.


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Leadership•Committed to satisfying customers

•Increase ability to respond to change

•Develop strategy

•Define roles

•Define goals

•Provide resources

•Lead by example

•Provide training


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Corporate culture:•Be obsessed with adding value for the customer

•Support incremental improvement (individual own work, groups, teams)

•Team-based culture transition


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Attitudes:•Fully accept and internalize the need for CI

•Involvement and pride in CI activities


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Training:•Establish a training program

•Awareness of employees’ role in CI

•Raise capabilities and empowerment

•Seven basic tools (Flowcharts, Pareto Diagrams, Cause & Effect Diagram, etc.)

•Maximize effectiveness

•Begin at the top and cascade down

Jose V. Alcedo, P.E.,M.B.A./TM

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Planning and Execution:•Select significant improvement opportunities

•Phased step-by-step approach

•Evaluate fine tuning vs. fundamental redesign

•All in one team involvement

•Cross functional

•Multilevel

•Involve the entire system (suppliers and customers)


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Planning and Execution:•Coordinate activities

•Project timeline

•Ensure stable processes after each planned change

•Evaluate change benefits

•Make the change permanent


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Continuous Improvement is to take a hard look at processes and reduce the variation in key business performance, f irst, before achieving the bottom-line.


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Improve your process first, by reducing variation, then the results will follow.Competitive Edge –Practical Guide to Implement Continuous Improvementwww.YouKaizen.com

- A blending of inputs to achieve thedesired outputs


PROCESS

INPUTS OUTPUTS

People

Material

Equipment

Procedures

Service

Product

Task

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• SIPOC • COPIS

SSupplier

IInput

PProcess

OOutput

CCustomer

CCustomer

OOutput

PProcess

IInput

SSupplier

- Deming: 94% of the variation is due to chance causes/process

which management has control, 6% is due to special causes.


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Module 3