six sigma
DESCRIPTION
TRANSCRIPT
Define
Measure
Analyze
Improve
Control
OperationalExcellence
By Lee Olson
Presentation to INFORMS
Six Sigma
Six Sigma: DMAIC; Y=f(x)Is it a Goal, a Measure, a Process,
a Tool or an expletive deleted?
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Objectives
Understand the Basics of the Six Sigma Program Understand How Six Sigma Relates to Lean, TOC, TQM
(Theory Of Constraints; Total Quality Management) Ability to Define a Strategy and Roadmap for Success
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Define
Is it a Goal, a Measure, a Process, a Tool or an expletive deleted?
Yes
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Define
Six Sigma Is a management methodology
• Customer focused• Data driven decisions• Breakthrough performance gains• Validated bottom line results
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Customer Focused
Our Performance Compared to Competitors
Imp
ort
an
ce t
o C
usto
mers
We’re Better They’re Better
High
Moderate-to-’Low’
• Price• Complaints
• OTD• Quality
• Training
• Complete
• Shared Goals
Top 5 Action Items
Driver Action Description Status Status Description OwnerOriginal Due
DateCurrent Due Date
Late Supplier Deliveries Monthly reporting to suppliers on delivery & quality metrics.
On track
Report Cards Implemented. Adam 5/21 5/21
Late Supplier Deliveries Arrange face to face meetings with top offenders.
On track
Meetings Complete with top 10 Suppliers.
Beth 6/15 6/15
Late Supplier Deliveries Review and approve supplier's corrective action plan.
Caution Corrective Action Plan in Place for 2 major Suppliers
Carlos 7/15 9/15
xyz Cell Always Late Kaizen Event to focus on improving throughput by 40% and improve labor efficiency by 35%
On track
Event held 5/1. 25% throughput improvement in May. Labor Efficiency Increase of 30%
Doreen 5/21 5/21
Unrealistic Promise Date Focus on custom products to provide realistic ATP based on inventory and leadtime of components.
Problem Continued lack of progress. Re-structured and focused team. Developing detailed plan.
Earnest 6/15 8/15
ON TIME DELIVERY (sample)The percentage of sales order line items that ship complete on or before the original customer promise date, for
all line items shipped in the month.
On-Time Delivery
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Target
Pareto of Drivers
0%
25%
50%
75%
100%
Late
Sup
plie
rD
eliv
erie
s
xyz
Cel
lA
lway
sLa
te
Unr
ealis
ticP
rom
ise
Dat
e
Ord
ers
onC
redi
t H
old
Low
Yie
ldon
par
t ab
c
Eng
inee
ring
Cha
nge
Ord
ers
Reason
% Im
pac
t
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Data Driven Decisions
Why should we test or inspect Y, if we know this relationship?
• Y• Dependent• Output• Effect• Symptom• Monitor• Response
• X1 . . . XN• Independent• Input-Process• Cause• Problem• Control• Factor
To get results, should we focus our behavior on the Y or X ?
f (X)f (X)Y=Y=
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
2 308,5373 66,8074 6,2105 2336 3.4
2 308,5373 66,8074 6,2105 2336 3.4
PPMPPM
Breakthrough performance gains
Sigma is a statistical unit of measure which reflects process capability. The sigma scale of measure is perfectly correlated to such characteristics as defects-per-unit, parts-per million defective, and the probability of a failure/error.
(Distribution Shifted ± 1.5)
ProcessCapability
ProcessCapability
Defects per Million Opportunities
Defects per Million Opportunities
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Validated bottom line results
Price In
crease
Mate
rial C
osts
Volum
e Inc.
with
Leve
rage
Manufa
cturin
g
SG&A
Volum
e Inc.
No L
evera
ge
Taxes
Labor
Work
ing C
apital
General-5
% Pric
e Reduct
ion
Imp
act
on
Bo
tto
m L
ine
Assuming a 10% change in the factor
Factors
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Define
Methodology Define Measure Analyze Improve Control
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Roadmap Example
Next ProjectDefine
Customers, Value, Problem Statement
Scope, Timeline, Team
Primary/Secondary & OpEx Metrics
Current Value Stream Map
Voice Of Customer (QFD)Measure
Assess specification / Demand
Measurement Capability (Gage R&R)
Correct the measurement system
Process map, Spaghetti, Time obs.
Measure OVs & IVs / Queues
Analyze (and fix the obvious)Root Cause (Pareto, C&E, brainstorm)
Find all KPOVs & KPIVs
FMEA, DOE, critical Xs, VA/NVA
Graphical Analysis, ANOVA
Future Value Stream Map
ImproveOptimize KPOVs & test the KPIVs
Redesign process, set pacemaker
5S, Cell design, MRS
Visual controls
Value Stream Plan
ControlDocument process (WIs, Std Work)
Mistake proof, TT sheet, CI List
Analyze change in metrics
Value Stream Review
Prepare final report
Validate Project $
Validate Project $
Validate Project $
Validate Project $
Celebrate Project $
• Develop a focused Problem Statement and Objective• Develop a Process Map and/or FMEA• Develop a Current State Map• Identify the response variable(s) and how to measure them• Analyze measurement system capability• Assess the specification (Is one in place? Is it the right one?)
Practical Problem
ProblemDefinition
• Characterize the response, look at the raw data• Abnormal? Other Clues? Mean or Variance problem?
• Time Observation • Spaghetti Diagram • Takt Time• Future State Maps • Percent Loading • Standard Work Combination• Use Graphical Analysis, Multi-Vari, ANOVA and basic
statistical tools to identify the likely families of variability
ProblemSolution
• Identify the likely X’s• 5S • Set Up Time Reduction (SMED)• Material Replenishment Systems• Level Loading / Line Leveling• Cell Design • Visual Controls• Use Design of Experiments to find the critical few X’s• Move the distribution; Shrink the spread; Confirm the results
Problem Control
• Mistake Proof the process (Poka-Yoke)
• Tolerance the process• Measure the final capability• Place appropriate process controls on
the critical X’s• Document the effort and results• Standard Work • TPM
IdentifyProblem
• Strategic Link to Business Plan defined in Project Selection Process• Defined Business Impact with Op Ex Champion support• Structured Brainstorming at all organizational levels• Cause and Effect Diagrams identifying critical factors• Primary and Secondary Metrics defined and charted• Multi-Level Pareto Charts to confirm project focus
What do you want to know? How do you want to see what it is that you need
to know? What type of tool will generate what it is that you
need to see? What type of data is required of the selected tool? Where can you get the required type of data?
Problem Solving
Plan Execute
Execute PlanCrane Co. Op. Ex. Methodology Originated by MBBs; D. Braasch, J. Davis, R. Duggins, J. O’Callaghan, R. Underwood, I. Wilson
Op
era
tion
al Excellen
ce
Meth
od
olo
gy
Based in part on Six Sigma Methodology developed by GE Medical Systems and Six Sigma Academy, Inc.
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
DefineKey Items
Customers, Value, Problem Statement Scope, Timeline, Team Primary/Secondary & OpEx Metrics Current Value Stream Map Voice Of Customer (QFD)
(Quality Function Deployment)
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Project SelectionImpact
Business Impact• Revenue Growth• Cost Reduction• Capital Reduction• Key Business Objectives• On Time Delivery• Lead Time• Quality• Customer Satisfaction
Impact on Operational Excellence Metrics
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Evaluate and Rank SuggestionsEffort and Risk
Effort required• People Resources• Capital Resources• Duration of Project
Probability of success• Technical Risk
• Data available• Knowledge of process
• Management Risk• Aligned with objectives• Support by value stream manager
Impact vs. Risk vs. Effort• Assess ROI (Return On Investment)• Assign priorities to projects
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Evaluate and Rank Suggestions
Example tool to rank projects0106-01 Project Rating.xls
Project Ranking
1
2
3
4
5
6
7
8
9
0
1
2
3
4
5
1 2 3 4 5
Effort
Imp
act
ProjectNumber
Risk =Ball Size n
Example chart to rank projects 0106-01 Project Rating.xls
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Measure
Establish measurement capability• Validate the database (transactional)• Gage R&R (Repeatability & Reproducibility)• Calibration is not enough• Many (or most) measurement systems are not capable• How good is the data you are using to make decisions?
Fix the measurement system• Enables calculation of process capability• Enables calculation of alpha & beta risks
• This step is often skipped
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Analyze(and fix the obvious)
Find all KPOVs & KPIVs(Key Process Output Variables; Key Process Input Variables)
FMEA, DOE, critical Xs, VA/NVA(Failure Modes Effects Analysis; Design Of Experiment)
Graphical Analysis, ANOVA(Analysis Of Variance)
Future Value Stream Map
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Improve
Optimize KPOVs & test the KPIVs(Key Process Output Variables; Key Process Input Variables)
Redesign process, set pacemaker 5S, Cell design, MRS
(Material Replenishment System) Visual controls Value Stream Plan
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Control
Management of Change• Owned by project champion and value stream manager• Critical to long term success of project• Physical and cultural changes
Measurement controls• On-going metrics
Visual Controls• Enable workers to self-manage the process
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Basic ImplementationRoadmap
Understand and DefineEntire Value Streams
Deploy Key Business Objectives- Measure and target (metrics)
- Align and involve all employees- Develop and motivate
Define, Measure, Analyze, ImproveIdentify root causes, prioritize, eliminate waste,
make things flow and pulled by customers
Control-Sustain Improvement
-Drive Towards Perfection
Identify Customer Requirements
Vision (Strategic Business Plan)
Continuous Improvement (DMAIC)
Identify Customer Requirements
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Hoshin
Key: I mpact Owner SupportType in --> 4 l m
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ate
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t E
very
on
e In
volv
ed
Imp
rove
th
e M
etr
ics
Trai
ning
Establish tracking of OTD in every cell
Improve On Time Delivery to 98%
Train workers in how our products are used by our major customers
Co
mp
lete
1 L
ea
de
rsh
ip L
GB
tra
inin
g c
ou
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Tra
ine
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lan
t to
urs
100%
Com
plet
ion
of L
GB
Pro
ject
s
Conduct interviews with top 10 customers
Train functional leaders as LGBs
Train leadership team as Lean Green Belts (LGB)
Your Annual Breakthrough
Objectives
You
r M
anag
er's
1-Y
ear
Bre
akth
roug
h
Obj
ecti
ves
Indic
ator
's a
nd G
oals
Benefi ts
Top 5 Action Items
Driver Action Description Status Status Description OwnerOriginal Due
DateCurrent Due Date
Late Supplier Deliveries Monthly reporting to suppliers on delivery & quality metrics.
On track
Report Cards Implemented. Adam 5/21 5/21
Late Supplier Deliveries Arrange face to face meetings with top offenders.
On track
Meetings Complete with top 10 Suppliers.
Beth 6/15 6/15
Late Supplier Deliveries Review and approve supplier's corrective action plan.
Caution Corrective Action Plan in Place for 2 major Suppliers
Carlos 7/15 9/15
xyz Cell Always Late Kaizen Event to focus on improving throughput by 40% and improve labor efficiency by 35%
On track
Event held 5/1. 25% throughput improvement in May. Labor Efficiency Increase of 30%
Doreen 5/21 5/21
Unrealistic Promise Date Focus on custom products to provide realistic ATP based on inventory and leadtime of components.
Problem Continued lack of progress. Re-structured and focused team. Developing detailed plan.
Earnest 6/15 8/15
ON TIME DELIVERY (sample)The percentage of sales order line items that ship complete on or before the original customer promise date, for
all line items shipped in the month.
On-Time Delivery
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Target
Pareto of Drivers
0%
25%
50%
75%
100%
Late
Sup
plie
rD
eliv
erie
s
xyz
Cel
lA
lway
sLa
te
Unr
ealis
ticP
rom
ise
Dat
e
Ord
ers
onC
redi
t H
old
Low
Yie
ldon
par
t ab
c
Eng
inee
ring
Cha
nge
Ord
ers
Reason
% Im
pac
t
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Does it work?.
Source: American Customer Satisfaction Index, U Michigan, HBR, 2001
199973
companies
Ralston Purina
Quaker OatsHilton Hotels
Coca-ColaUnilever
etc.
The top companies in Customer Satisfaction grow MVA atnearly twice the rate of their poor-performing counterparts.
$23
$42
0
10
20
30
40
50
Low High
Customer Satisfaction Index Score
Mar
ket V
alue
Ad
de
d
In Billions $
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
What about Lean, TOC, TQM
Six Sigma• Remove defects, minimize variance
Lean• Remove waste, shorten the flow
TOC• Remove and manage constraints
TQM• Continuous Improvement
Value Stream Map - Current State
Customer
Demand = 45 per day2 shifts
Stamping
342
CT=1sec
Co=1 hr.
Uptime=85%
S. Weld # 1
CT=3 min
Co=10 min.
Uptime=70%
I
I
II
Coils5 days
CT= 15 min
Co=0 min.
Uptime=100%
2 shifts
CT= 67 min Co= 23 min
FTY = 67%2 shifts
ShippingI
I81
202122
Assembly Test
90
1XDaily
90/60/30 dayForecasts
Order Entry
ProductionControl
MRP
6 WEEKForecast
Suppliers Weekly
Fax
WEEKLY SCHEDULELead Time - 34 Days
5 days
1 sec
7.6 days
3 min
1.8 days
15 min
2.7 days
67 min
4.5 days
4 min
2 days
Lead Time =23.6 days
1 shift1 shift
CT= 4 min Co=0
Uptime=100%2 shifts
Competitive Lead Time = 3 Days
Takt Time= 18.2 Minutes
Orders/day= 36
Queue = 1.5 Days
Touch Time = 89 min
Customer
Demand = 45 per day2 shifts
Stamping
342
CT=1sec
Co=1 hr.
Uptime=85%
S. Weld # 1
CT=3 min
Co=10 min.
Uptime=70%
I
I
II
Coils5 days
CT= 15 min
Co=0 min.
Uptime=100%
2 shifts
CT= 67 min Co= 23 min
FTY = 67%2 shifts
ShippingI
I81
202122
Assembly Test
90
1XDaily
90/60/30 dayForecasts
Order Entry
ProductionControl
MRP
6 WEEKForecast
Suppliers Weekly
Fax
WEEKLY SCHEDULELead Time - 34 Days
5 days
1 sec
7.6 days
3 min
1.8 days
15 min
2.7 days
67 min
4.5 days
4 min
2 days
Lead Time =23.6 days
1 shift1 shift
CT= 4 min Co=0
Uptime=100%2 shifts
Competitive Lead Time = 3 Days
Takt Time= 18.2 Minutes
Orders/day= 36
Queue = 1.5 Days
Touch Time = 89 min
Competitive LT = 3 days
Takt Time = 18.2 min
Customer DataOn-Time Delivery Demand = 45/day
Customer
Demand = 45 per day2 shifts
Stamping
342
CT=1sec
Co=1 hr.
Uptime=85%
S. Weld # 1
CT=3 min
Co=10 min.
Uptime=70%
I
I
II
Coils5 days
CT= 15 min
Co=0 min.
Uptime=100%
2 shifts
CT= 67 min Co= 23 min
FTY = 67%2 shifts
ShippingI
I81
202122
Assembly Test
90
1XDaily
90/60/30 dayForecasts
Order Entry
ProductionControl
MRP
6 WEEKForecast
Suppliers Weekly
Fax
WEEKLY SCHEDULELead Time - 34 Days
5 days
1 sec
7.6 days
3 min
1.8 days
15 min
2.7 days
67 min
4.5 days
4 min
2 days
Lead Time =23.6 days
1 shift1 shift
CT= 4 min Co=0
Uptime=100%2 shifts
Competitive Lead Time = 3 Days
Takt Time= 18.2 Minutes
Orders/day= 36
Queue = 1.5 Days
Touch Time = 89 min
Raw = 5 days
WIP = 12.1 days
FG = 6.5 days
Inventory
Customer
Demand = 45 per day2 shifts
Stamping
342
CT=1sec
Co=1 hr.
Uptime=85%
S. Weld # 1
CT=3 min
Co=10 min.
Uptime=70%
I
I
II
Coils5 days
CT= 15 min
Co=0 min.
Uptime=100%
2 shifts
CT= 67 min Co= 23 min
FTY = 67%2 shifts
ShippingI
I81
202122
Assembly Test
90
1XDaily
90/60/30 dayForecasts
Order Entry
ProductionControl
MRP
6 WEEKForecast
Suppliers Weekly
Fax
WEEKLY SCHEDULELead Time - 34 Days
5 days
1 sec
7.6 days
3 min
1.8 days
15 min
2.7 days
67 min
4.5 days
4 min
2 days
Lead Time =23.6 days
1 shift1 shift
CT= 4 min Co=0
Uptime=100%2 shifts
Competitive Lead Time = 3 Days
Takt Time= 18.2 Minutes
Orders/day= 36
Queue = 1.5 Days
Touch Time = 89 min
Touch Time = 89 min
Flow of ValueLead TimeLead Time = 23.6 days
Customer
Demand = 45 per day2 shifts
Stamping
342
CT=1sec
Co=1 hr.
Uptime=85%
S. Weld # 1
CT=3 min
Co=10 min.
Uptime=70%
I
I
II
Coils5 days
CT= 15 min
Co=0 min.
Uptime=100%
2 shifts
CT= 67 min Co= 23 min
FTY = 67%2 shifts
ShippingI
I81
202122
Assembly Test
90
1XDaily
90/60/30 dayForecasts
Order Entry
ProductionControl
MRP
6 WEEKForecast
Suppliers Weekly
Fax
WEEKLY SCHEDULELead Time - 34 Days
5 days
1 sec
7.6 days
3 min
1.8 days
15 min
2.7 days
67 min
4.5 days
4 min
2 days
Lead Time =23.6 days
1 shift1 shift
CT= 4 min Co=0
Uptime=100%2 shifts
Competitive Lead Time = 3 Days
Takt Time= 18.2 Minutes
Orders/day= 36
Queue = 1.5 Days
Touch Time = 89 min
CT (67) > Takt Time (18)
ConstraintsOTD, Lead TimeMax Wip = 7.6 days
Customer
Demand = 45 per day2 shifts
Stamping
342
CT=1sec
Co=1 hr.
Uptime=85%
S. Weld # 1
CT=3 min
Co=10 min.
Uptime=70%
I
I
II
Coils5 days
CT= 15 min
Co=0 min.
Uptime=100%
2 shifts
CT= 67 min Co= 23 min
FTY = 67%2 shifts
ShippingI
I81
202122
Assembly Test
90
1XDaily
90/60/30 dayForecasts
Order Entry
ProductionControl
MRP
6 WEEKForecast
Suppliers Weekly
Fax
WEEKLY SCHEDULELead Time - 34 Days
5 days
1 sec
7.6 days
3 min
1.8 days
15 min
2.7 days
67 min
4.5 days
4 min
2 days
Lead Time =23.6 days
1 shift1 shift
CT= 4 min Co=0
Uptime=100%2 shifts
Competitive Lead Time = 3 Days
Takt Time= 18.2 Minutes
Orders/day= 36
Queue = 1.5 Days
Touch Time = 89 min
CO = 23 min
CO = Changeover
Setup TimesOP Margin, Lead TimeCO = 1 hour
Customer
Demand = 45 per day2 shifts
Stamping
342
CT=1sec
Co=1 hr.
Uptime=85%
S. Weld # 1
CT=3 min
Co=10 min.
Uptime=70%
I
I
II
Coils5 days
CT= 15 min
Co=0 min.
Uptime=100%
2 shifts
CT= 67 min Co= 23 min
FTY = 67%2 shifts
ShippingI
I81
202122
Assembly Test
90
1XDaily
90/60/30 dayForecasts
Order Entry
ProductionControl
MRP
6 WEEKForecast
Suppliers Weekly
Fax
WEEKLY SCHEDULELead Time - 34 Days
5 days
1 sec
7.6 days
3 min
1.8 days
15 min
2.7 days
67 min
4.5 days
4 min
2 days
Lead Time =23.6 days
1 shift1 shift
CT= 4 min Co=0
Uptime=100%2 shifts
Competitive Lead Time = 3 Days
Takt Time= 18.2 Minutes
Orders/day= 36
Queue = 1.5 Days
Touch Time = 89 min
MaintenanceOTD, Lead TimeUptime = 70%
Customer
Demand = 45 per day2 shifts
Stamping
342
CT=1sec
Co=1 hr.
Uptime=85%
S. Weld # 1
CT=3 min
Co=10 min.
Uptime=70%
I
I
II
Coils5 days
CT= 15 min
Co=0 min.
Uptime=100%
2 shifts
CT= 67 min Co= 23 min
FTY = 67%2 shifts
ShippingI
I81
202122
Assembly Test
90
1XDaily
90/60/30 dayForecasts
Order Entry
ProductionControl
MRP
6 WEEKForecast
Suppliers Weekly
Fax
WEEKLY SCHEDULELead Time - 34 Days
5 days
1 sec
7.6 days
3 min
1.8 days
15 min
2.7 days
67 min
4.5 days
4 min
2 days
Lead Time =23.6 days
1 shift1 shift
CT= 4 min Co=0
Uptime=100%2 shifts
Competitive Lead Time = 3 Days
Takt Time= 18.2 Minutes
Orders/day= 36
Queue = 1.5 Days
Touch Time = 89 min
QualityFTY = 67%
Customer
Demand = 45 per day2 shifts
Stamping
342
CT=1sec
Co=1 hr.
Uptime=85%
S. Weld # 1
CT=3 min
Co=10 min.
Uptime=70%
I
I
II
Coils5 days
CT= 15 min
Co=0 min.
Uptime=100%
2 shifts
CT= 67 min Co= 23 min
FTY = 67%2 shifts
ShippingI
I81
202122
Assembly Test
90
1XDaily
90/60/30 dayForecasts
Order Entry
ProductionControl
MRP
6 WEEKForecast
Suppliers Weekly
Fax
WEEKLY SCHEDULELead Time - 34 Days
5 days
1 sec
7.6 days
3 min
1.8 days
15 min
2.7 days
67 min
4.5 days
4 min
2 days
Lead Time =23.6 days
1 shift1 shift
CT= 4 min Co=0
Uptime=100%2 shifts
Competitive Lead Time = 3 Days
Takt Time= 18.2 Minutes
Orders/day= 36
Queue = 1.5 Days
Touch Time = 89 min
What is the pitch time?
Flow of ValueOTD, Lead TimeWho is setting the pace?
Operational Excellence Training
Define
Measure
Analyze
Improve
Control
Making it happen
Three major roles Implementer
• Learns the tools• Works the process• Solves day to day problems
Manager• Learns the methodology• Manages a value stream• Reviews project teams
Leader• Establishes the vision for the future• Sets priorities• Encourages
Where do you need to focus?