6 Sigma Lean

6-Sigma & Lean 101 A Lean-SS Overview
6-Sigma Other Process Improvement Tools
Introduction of 6-Sigma Tools

DMAIC process & tools discussion
Introduction of Lean Concepts

Lean
Identification of Waste Workplace Lean Improvements Sustainability Business Score Card
A Business Case Example

please contact mrdrking@gmail.com for an animated PowerPoint presentation 1
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Copyright - ISandR Services and Accelper
6-Sigma & Lean 101

ISandR Services Presents -
A Lean-SS overview, not detailed presentation Introduction of Six-Sigma Tools without stats
DMAIC process & tools associated with each phase
Introduction of Lean Concepts

Identification of Waste Lean Improvements in Gemba (Workplace)
Sustainability
Business Score Card
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6-Sigma & Lean 101

Process Improvement Describe & Measure
When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind.
William Thompson (Lord Kelvin), 1824-1907
If you can't describe what you are doing as a process, you don't know what you're doing.
W. Edwards Deming, 1900-1993
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6-Sigma & Lean 101

The Average and the Standard Deviation are Most Important
X
S
xi ) / n
( xi X ) n 1
2
AVERAGE
STANDARD DEVIATION
These metrics are important, but we will keep this simple
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6-Sigma & Lean 101

Process Improvement The Family Vacation Example
Start with the end in mind THE GOAL Analogy of the family vacation
Would you start with how to pack better? Where, What, Who - Destination, Activities, You & Route - how far/long, transport vehicle MEASURE Cost of alternatives ANALYZE What to take - backpacks or suitcase ANALYZE What can be done better from last time IMPROVE Stick to budget & plan CONTROL
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DEFINE
Activities, Accommodations, Alt Options, Where is Start
6-Sigma & Lean 101

What is 6-Sigma? A Short History
Improvement tools known for a LONG time Popularized by GE, Motorola, et al Collection of tools with standardize usage! About BEST in class About dramatic improvement not stats ASQ 80% of tools are not statistical Process based on D M A I C
- Define - Measure - Analyze - Improve - Control
Presentation parallels book Stat Free Six Sigma P. Gupta (Accelper)
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6-Sigma & Lean 101

What is the Significance of the Words 6-Sigma?
What does 6-Sigma imply?

Process of 3 defective parts per million (3ppm) Depends on
Customers specified limits (Upper & Lower Bound) Average in the process (Average or Mean) Variability in the process (Standard Deviation)
Not all processes need to be 6-Sigma Capable

A process that meets customer specifications by providing consistent accurate results with no variation - near zero defects
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6-Sigma & Lean 101

What is 6-Sigma? Statistics Concepts, Without Statistics
Customer specifies LL and UL Distribution:
Gaussian Random Normal
Low Limit
Mean = X
Examples
Hi Limit
Production size & location of hole in a part Service preparation of tabloid content & distribution, early vs late
Variation = 2
Error
1 sigma ( )
width at height
Characterizing The Process The Process
6 Good Mean Good Variability Good Capability
Process Capability
CpK = [ Closest Limit X ] 3 Higher sigma is better to avoid quality escapes!

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6-Sigma & Lean 101

What Process Capability?
mean LL HL
variation This is previous slide
Good Mean Good Variability Good Capability

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Poor Mean Good Variability Poor Capability

Poor Mean Poor Variability Poor Capability

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6-Sigma & Lean 101

What Makes 6-Sigma Work?
When everyone understands the Cost of Poor Quality
In / ext failures, inspection, testing, rework (calc $$s)
Align VOC and biz needs for big improvements S M A R T goals

Specific why, what, when, who, where, finally how Measurable which metrics: how much / many, B4 & after Attainable have resources: attitudes, abilities, finances Realistic challenging believable & achievable Timely* reasonable duration to complete with urgency
Visible with Executive Management Support Employees encouraged to take risks (Deming, Drive out fear)
* Could be Tangible can experience with senses makes it more realistic and measurable
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6-Sigma & Lean 101

What makes 6-Sigma Work? Culture Change Response Curve
The energy to overcome an existing culture, make improvements and sustain change takes effort, time and money The paths are different for each organization.
Effort/Cost/Resistance
A M D
I C
Organization B
Organization A
Present
Time
Future
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6-Sigma & Lean 101

Customer Surveys Voice Of the Customer (VOC)
Research on customer satisfaction:
Determine what is quality [Q is what the customer says it is] Find out what competitors are doing [better] Define quality performance measures to identify defects [Pareto] Identify factors to give a competitive edge [SWOT] Identify urgent problems [low hanging fruit 1st with best ROI]
Use multiple instruments to ID customer satisfaction. The opportunity to collect misleading or useless information is possible with just one instrument.
Surveys, Focus Group, Face-to-face, (Dis)satisfaction cards, Competitive Shopping
- to gain information on Stated Needs, Real Needs, Perceived Needs, Cultural/Unstated Needs, Unintended Needs (Distinguish: Wants, Needs, Dissatisfiers)
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6-Sigma & Lean 101

Customer Surveys - VOC
Customer Response to Survey
HI MUST Improve
Feature Importance
Opportunity Being Lost
Maintain Good Work & Performance
Maintain Current Status
Over-effort for little value
LO
Feature/Process Satisfaction
HI
What was expected and experienced, what was the level of satisfaction and importance
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6-Sigma & Lean 101

How to look for and improve the PROBLEMS
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6-Sigma & Lean 101

What is DMAIC?
Define the charter: why do this (ROI / VOC), which process (Pareto), achieve what, measure what (errors, FTT), which resources, whos involved, how to accomplish (brainstorm / fishbone), what is goal, when complete, whats not included, Measure specify info sources to measure, precision, frequency of measurement, instruments used to measure, Analyze examine patterns, correlate dependent & independent variables (SIPOC / histograms / scatter-plots), root-cause, failure influence (FMEA-SOD), Improve development of alternatives to reduce cost, variation, & waste or for faster delivery, Control sustaining gains from project and maintaining process control
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6-Sigma & Lean 101

What are Tools Used with DMAIC?
Define Measure
Phase D Tools Project Priority Index Brief Description PPI = (Benefit/Cost) X (Probability of Success/Time to complete in years) Time < .5 Estimated Savings/Cost > 2.0 Recommended PPI > 4.0 A graphical tool to prioritize various defects to identify the most important one A graphical description of activities and decision points A graphical tool to identify customer critical requirements, including customers' `love to have' requirements An excellent tabular capture of most of the process constraints Operational critical-to-quality characteristics related to the customer expectation Project plan with clearly-defined goals and milestones Breakdown of product or service cost related to appraisal, failures and prevention A product measurement, which is a ratio of the number of defects observed per unit verified The percent of process output with no error or defect. A process measurement, which is the DPU normalized to the product or process complexity A business measurement, estimated from DPMO, commonly used for benchmarking Typical performance Range of performance (maximum minimum)
Analyze Improve
D D D D D D M M M A A A I
Pareto Process Map Kano's Analysis SIPOC CTQ Project Charter Cost of Quality DPU Yield DPMO Sigma Level Average Range
Stat Free Six Sigma, Gupta
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6-Sigma & Lean 101

What are Tools Used with DMAIC?
Improve Control
Phase I I I I I I I I I I C C C C Tools Standard Deviation Statistical Thinking Root Cause Analysis FMEA Scatter Plot Visual Regression Analysis Component Search Comparative Tests - Improving Means Comparative Tests - Improving Variance Full Factorial Experiment Process Thinking (4P Model) Management Review Control Chart Scorecard Brief Description More accurate estimate of performance range Ability to distinguish assignable causes from random causes of variation Fishbone diagram consisting causes that produce effects - materials, machines, methods, man, nature, measurements Failure Mode and Effects Analysis for anticipating problems Graphical display of relationship between output (dependent) and input (independent) variables Estimate of relationship between input and output variables To identify the defective part in an assembly by exchanging the questionable part between 'good' and 'bad' units Evaluating significance of shift or change in the process means Ratio of variances between the current and reduced variances Evaluating various combinations of multiple variables to determine the right combination for best performance. Total combinations = level to the power variables (Lv, e.g., 23 = 8) A logical building block of the process management for achieving excellence. 4P => Prepare 4Ms, Perform Well, Perfect on target, Progress by reducing inconsistencies A review meeting led by the leader to ensure targeted performance is achieved and to identify necessary actions to sustain improved performance Graphical tool to sustain normal (without known problems) behavior of the process Measure of business performance for identifying new opportunities
Stat Free Six Sigma, Gupta
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6-Sigma & Lean 101

Good Charter Components?
Business need - cost reduction, margin increase, government compliance or increased customer satisfaction. Business advantage ROI? - case should show the business need as dollars ($$s) to substantiate which projects selection. High-level project scope sponsors vision of the project. Critical to success factors ID project, team, deliverables, schedule, what is needed for project success: scope, schedule, Constitution cost, or quality. Project constraints, risks and assumptions document these conjectures; revisit during project to see if these remain true. Bill of Rights Authority of the project manager what is the responsibility of Plans Change the project manager, to clarify their role assists with future decisions (controversial?) dealing with the stakeholders and organization. Signatures demonstrates management importance & support
Example of form to assist in addressing items to consider
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6-Sigma & Lean 101

DMAIC Tools PARETO Ranking of Issues
Customer's Order Complaints Late Defective Rude CS No call back Wrong Item Incomplete Refund late Wrong Price No Gift Card Missing item Not New - Used Never Received * 192 44 37 23 72 101 17 15 3 2 12 7
Minitab
Figure out cost/benefit
Excel
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6-Sigma & Lean 101

Process Map (This is the as is also need the proposed)
ORDER FULFILLMENT SWIM LANE FLOWCHART

CUSTOMER SERVICE ACCOUNTING WAREHOUSE
Possibilities for improvement?
ENGINEERING & RECEIVING

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Loops and Many Crossings SHIPPING

Created with Visio
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6-Sigma & Lean 101

What is SIPOC?
Look for relationships so Input improves stability in Output
Suppliers individuals providing resources Inputs info, materials & Services Process value added transformation steps Outputs final product or service Customers entity finding value in output
Suppliers
Paper Graphics Electronics Binders Authors
Inputs
Figs & Photos Electronic Docs
Process
Outputs
Cliffnotes DVDs & CDs Abstracts Album of Related work
Customers
Bookclubs Audio books Web Whit Papers Libraries Consultants Educators & Trainers Magazines
Original Written Manuscript Scholarly References Suggested Adds & Deletes Reference Docs
Exercises Training Instructional Info
Researchers
Editors Library
Process for Publishing and Distribution of Scholarly Research an d Textbook Materials

Authors submit content Graphics submits figures and photos Editor checks content Publisher Approval & Printing Schedule First Printing Promotio n Process Distributo r Orders Shipment of Orders
>
>
>
>
>
>
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6-Sigma & Lean 101

What is SWOT?
Internal Characteristics to Business

STRENGTH list and find how to improve these WEAKNESSES list and find how to minimize these
External Characteristics to Business (in Industry or with the Competition)

OPPORTUNITIES what can you take advantage of THREATS what should you avoid
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6-Sigma & Lean 101

Cost of Quality
The cost of quality isnt the price of creating a quality product or service. Its the cost of NOT creating a quality product or service.
Prevention Costs - New product review, Quality planning, Supplier capability
surveys, Process capability evaluations, Quality improvement team meetings, Quality improvement projects, Quality education and training, Appraisal Costs
Inspection Costs - measuring, evaluating or auditing products or services to
assure conformance to quality standards and performance requirements; Incoming and source inspection/test of purchased material; In-process and final inspection/test; Product, process or service audits; Calibration of measuring and test equipment; Associated supplies and materials; Failure Costs
Internal Failure Costs - Failure costs occurring prior to delivery or shipment of the
product, or the furnishing of a service, to the customer. Scrap, Rework, Reinspection, Re-testing, Material review, Downgrading
External Failure Costs - Failure costs occurring after delivery or shipment of the
product -- and during or after furnishing of a service -- to the customer. Processing customer complaints, Customer returns, Warranty claims, Product recalls
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6-Sigma & Lean 101

Brainstorming Fishbone / Cause-Effect / Ishikawa
This is a way of analyzing problem and get to the root cause The effect is usually negative - a problem The problem should be specific and clearly stated The ideas are generated by using brainstorming (vocal or silent) Keep the group to asking themselves what would cause the problem? Keep attention on the effect of the problem not criticism or how to fix The goal is to find as many sources for variation as possible that cause the problem
Measurements Machine Man PM vs AM Shift Temp Effect RMAs Season Methods Mother Nature Storage Preparation Materials
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6-Sigma & Lean 101

FMEA Failure Mode Effects Analysis
Determine what can go wrong, the severity, and how to avoid it FMEA Number: This Risk Assessment should be a log controlled number for tracking the document The part number, name, or other description Probabilitydesign responsibility: Which department or group is responsible for The of Effect of Failure Occurrence this design? for FMEA preparation The person responsible was prepared Severity The date the FMEAcomponent partand any necessary revision level Part Number & Function The subsystem or number getting detailed analysis Ability toThe component function Detect mode The potential failure Potential Failure The potential effect of failure Risk Priority Number The potential cause of failure Cause of Failure What are the current controls in place to prevent the cause from Actions & Re-evaluation Control for Failure OCorrectivefailure mode will occur. This index is from 1 to 10 occurring? is the probability this
with 1 being virtually no chance and 10 being near certainty of occurrence. S is the severity of the effect of the failure on the rest of the system if the failure occurs. Values are from 1 to 10. A value of 1 means the user will be unlikely to notice with a 10 meaning that the safety of the user is in jeopardy. D is a measure of the effectiveness of the current controls to identify the potential weakness or failure prior to release to production. This index ranges from 1 to 10. A value of 1 means this will certainly be caught whereas a value of 10 indicates the design weakness would most certainly make it to final production without detection. RPN The Risk Priority Number is the product of the indices from the previous three columns. RPN = OSD The actions then are based upon what items either have the highest RPN and/or where the major safety issues are. There is a column for actions to be taken to reduce the risk, a column for the responsibility and finally a column for the revised RPN once corrective action is implemented. FMECA provides a disciplined approach for the engineering team to evaluate designs to ensure that all the possible failure modes have been taken into consideration.
QCI Indiana Quality Council
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6-Sigma & Lean 101

Average, Standard Deviation, Max Value, Min Value in Data Sets
Average
Standard Deviation
Active Cell
Maximum
Minimum
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6-Sigma & Lean 101

Evaluating Data
Quantify what you want to improve and make decisions based on the data.
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6-Sigma & Lean 101

Comparative Tests - Improving Means & Variance - Visualization
T-test to Visualize the Data to difference in Means Use Methodsfor determining significant Make decisions Easier
Middle F-test for determining significant difference in Variance 50% of Mean Data Range Data
6 Samples - Comparison of Means and Variation
2. 0 2. 0
6 Samples - Comparison of Means and Variation
1. 8
1. 8
1.68022
1.78123
Dat a
Dat a
1. 6
1. 6
1.52912 1.45738 1.47119 1.47366
1. 4
1. 4
1. 2
1. 2
1. 0 sample1 sample2 sample3 sample4 sample5 sample6
1. 0 sample1 sample2 sample3 sample4 sample5 sample6
Same Mean Diff Mean Same Mean Same Vari(1) Same Vari(2) Diff Vari(3)
Same Mean Same Vari
Diff Mean Same Mean Diff Vari Same Vari
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6-Sigma & Lean 101

Yield - Efficiency of the Process
%Yield
%Yield
%Yield
most familiar for defect eval
TheseTotalDefecformulas are tsObserved DPU Units Pr oduced with examples from 53 DPU .106 500 this table. Please Defect per Million Opportunities (DPMO) - the number of ways a defect can occur. If each item could at theseto fail (label, scratch, color, wrong info, performance, ) then look have 8 ways offline.
DPU
DefectsPerUnit
Units Pr oduced DefectiveUnits *100 Units Pr oduced 500 26 *100 94.8% 500
DPMO
DPU *1,000,000 # ofWayUnitCanBeDefective
0.106 * 1,000,000 8
106,000 8
13,250
Rolled Throughput Yield (RTY) What is overall Y1 x Y2 chainx Y4 yield in x Y3 of processes?

Yield Y1=0.90 Process 1 = .9 Yield Y2=0.90 Process 2 = .9 Yield Y3=0.90 Process 3 = .9 Yield Y4=0.90 Process 4 = .9
(.90)x(.90)x(.90)x(.90)= .656 Guess
65.6%
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6-Sigma & Lean 101

Scatter Plot Visualize Process Data & Look for Trends
Y has equivalent response to X and similar variation along response curve
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Y has varying response to X and different variation along response curve
20
Dependent Variable Y
15
y=f(x) x
0 5 10 15 20 25
10
Independent Variable X
What is different about processes?

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6-Sigma & Lean 101

Control/Run Chart - Variable & Attribute - Track/React to Trends
Average & Range SPC Chart
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UCL (3 )
29 27
Continuous
Variable
Median & Range
Average
25 23 21 19 17
6 4 2 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
Diameter of Hole Average & Range

Average & Std Deviation
You would look into why these extremes happened
Short Run Charts
LCL (3 )
Discrete
Attribute
Fraction Defective
UCL
Ra nge
Number Defective P.O. with Errors Number of Defects Percent Defective
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6-Sigma & Lean 101

Objectives of Design of Experiments (DOE)
DOE is a systematic approach to determine & optimize the response between process inputs & outputs (independent and dependent variables). S & H and Part Size Delivery Time
PROCESS
The objective - optimize S&H of different part sizes for best delivery time. DOE experiments do not change only one variable - variables can interact Consider the interaction of temperature and wind velocity in the wind chill factor; more wind makes it feel colder and an engine requires the right amount of both gasoline and air to get the maximum performance. The experiment that changes variables one-at-a-time (OAAT) requires more experiments and cannot evaluate interactions; it is inefficient at best.
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6-Sigma & Lean 101

Two Factor DOE Variable Influence
If you want to know the affects from two factors (i.e. temperature and pressure), then vary both T and P then record the results of the dependent variable (i.e. yield).
P P1 P1 P2 P2 INPUT T T1 T2 T1 T2 RESULT Yield Y1 Y2 Y3 Y4
Dont just change one factor at a time.

Introduce terms, select levels, run experiment. Change the pressure between 50 and 100 psi and the temperature between 25 and 75 degrees F; record the yield results. Calculate the mean yield for each factor level Y@P1 = 93 Y@P2 = 92 Y@T1 = 95 Y@T2 = 90
P 50 50 100 100
INPUT T 25 75 25 75
RESULT Yield 94 92 96 88
This experiment is with 2 levels of P & T with a yield result It could be Internal vs External S&H with big vs small parts and delivery time result
Plot the response. From the main effects pressure has lower influence on the yield, while temperature has a larger effect on the yield (more slope, more effect).
96 94 92 90 88 86
P1
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P2
T1
T2 33
6-Sigma & Lean 101

Two Factor DOE Hi vs Lo Importance
OK. Some of you are saying Wait a second! When P is changing so is T!? WHAT??????? EXAMPLE - Calculate the effect of P change. Yield at P1 = (Result Y1) + (Result Y2) Yield at P2 = (Result Y3) + (Result Y4)
SUBSTITUTING VARIABLES PRODUCING THOSE YIELDS
INPUT P P1 P1 P2 P2 T T1 T2 T1 T2
RESULT Yield Y1 Y2 Y3 Y4
INPUT P 50 50 100 100 T 25 75 25 75
Yield at P1 = (P1 + T1) + (P1 + T2) Yield at P2 = (P2 + T1) + (P2 + T2)
REARRANGING & REASSOCIATING
Yield at P1 = (P1 + P1 ) + (T1 + T2) Yield at P2 = (P2 + P2 ) + (T2 + T2)

SIMPLIFYING
RESULT Yield 94 92 96 88
Yield at P1 = 2P1 + (T1 + T2) Yield at P2 = 2P2 + (T1 + T2)

GRAPHICAL DEPICTION
T1 & T2 contribute the This is what is important!!!! same amount to P1 or P2 2P1

2P2 T1+T2 Y@P1 T1+T2 Y@P2
or consider, the difference removes T effect (Yield at P1) - (Yield at P2) = 2P1 - 2P2
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6-Sigma & Lean 101

More Factorial Experiment Designs 3 & 4 Variables
INPUT A A1 A1 A1 A1 A1 A1 A1 A1 A2 A2 A2 A2 A2 A2 A2 A2
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OUTPUT D D1 D2 D1 D2 D1 D2 D1 D2 D1 D2 D1 D2 D1 D2 D1 D2 Result1 R1 R1 R1 R1 R1 R1 R1 R1 R1 R1 R1 R1 R1 R1 R1 R1 Result2 R2 R2 R2 R2 R2 R2 R2 R2 R2 R2 R2 R2 R2 R2 R2 R2 A A1 A1 A1 A1 A2 A2 A2 A2
INPUT B B1 B1 B2 B2 B1 B1 B2 B2 C C1 C2 C1 C2 C1 C2 C1 C2
OUTPUT Result1 R1 R1 R1 R1 R1 R1 R1 R1 Result2 R2 R2 R2 R2 R2 R2 R2 R2
B B1 B1 B1 B1 B2 B2 B2 B2 B1 B1 B1 B1 B2 B2 B2 B2
C C1 C1 C2 C2 C1 C1 C2 C2 C1 C1 C2 C2 C1 C1 C2 C2
Exercise for later these are balanced experiments equal number of each variable (A1, A2, B1, B2, C1, C2), within all experiments that are also unique with respect to the arrangement of these variables note: check out the colors.
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6-Sigma & Lean 101

Lean
Document the process Find the waste Make a plan to eliminate the waste
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6-Sigma & Lean 101

What Are Key Concepts of Lean?
Give customers
what they want, when they want it, for what they want to pay, and without more inve$tment by your company
Get the big picture of the process to

Improve Quality Eliminate Waste - ID Value Added vs. Non-Value Added Activities Reduce Lead Time Reduce Total Costs
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6-Sigma & Lean 101

Create a Value Stream Map Present (Need Future State) This is the value stream Description ID Customer, Supplier, entire process for theand Production Customer Requirements per Time plant. You can also Interval Production & Containment Requirements make a value stream Shipping mapDelivery a sub-process. for Sequence of you EventuallyProcesses need to lookData specific toentire at the each Sequence Communication Methods processAttributes: times, Efficiency 6 to make sure Process Operator did number changesSymbol - not shift 7 Inventory Work in Process (WIP) waste or &problems to "Push" vs "Pull" Operations another process and Other Info onlyWorking Hours Availability created a local Cycle & Lead optimum.Times
item 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 ISandR@usa.com
14 8 1 1 15 4 2 5 3 1
11 12 10 14 15
You will probably do this with pencil & paper

Example from - www.strategosinc.com
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6-Sigma & Lean 101

How to Identify Waste TIMWOOD or DOWNTIME Look for these forms of waste in the Value Stream Map
TIMWOOD
Transportation Inventory Motion Waiting Over-processing Over-production Defects
DOWNTIME
Defects Over-production Waiting Not Utilizing Employees* Transportation Inventory Motion Excess processing
*skills, ideas, creativity
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6-Sigma & Lean 101

How does 5S Help Eliminate Waste? Makes Waste Visible.
5 S - seiri, seiton, seiso, seiketsu and shitsuke

Sort, separate needed from unneeded items & remove the latter Set-in-Order*/Straighten, arrange items for ease of use Shine/Scrub, means to cleanup Standardize/Systemize, disciplined structured routines Sustain/Self-Discipline, create a new habit
* 6 S adds Safety (part of Set-in-Order) make safety equipment easy to use
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6-Sigma & Lean 101

Relation of What We Learned wrt Process Improvement
6-Sigma
Other PI Tools
There is more Lean
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6-Sigma & Lean 101

Other Process Improvement Concepts/Tools
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6-Sigma & Lean 101

What is 6-Sigma? Components of Sustained Profitable Growth
Good Management Systems
Innovation
Business Scorecard
6-Sigma Lean
Creating a culture to sustain & create new improvements
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6-Sigma & Lean 101

How to Sustain Progress with Lean & 6-Sigma
Keep employees motivated, customers happy, processes running smoothly, and the company making money
LEAN is NOT MEAN

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6-Sigma & Lean 101

What are Components of Sustained Profitable Growth
Business Scorecard
Customer
Financials
Vision & Strategy
Employees
Processes
Management Provides Vision & Strategy so the Business Can: #1 Take Care of Customers (VOC), #2 Take Care of Employees (Training, Resources, Rewards) Employees Take Care of Processes (Process Control & Improvement) Processes Take Care of Finances (Efficient Value Added Processes = $$s) Finances Take Care of Stakeholders and Provide $$s for Growth and Improvements that add value for the customer
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6-Sigma & Lean 101

Six Sigma: Objective Quality Measures All Matter But Some Measurements Tend to Matter More than Others
Sturdy averages seem impressive from inside the organization (the inside-out perspective)
But it is variability that the customer feels and fears (the outside-in perspective)
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6-Sigma & Lean 101

Challenges with Six Sigma for Transactional Functions like Purchasing/Procurement, SRM
Projects tend to lack objective data. What data there is tends to be attribute (pass fail/ no. of shortcomings) and categorical
Solution: work with continuous data when possible to mimic previously shown production charts. There are more options for stat. tool use; yield more guidance information. ROThumb: consider converting if at least 10 different values occur and no more than 20% of the data set are repeat values
You may have a defined process and goal, but no tangible spec limits. Arbitrary metric or soft target setting can mislead, distort. Example: 1-5 supplier rating.
*SRM = Supplier Relationship Mgmt
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6-Sigma & Lean 101

Challenges with Six Sigma for Transactional Functions like Purchasing/Procurement, SRM
-Data integrity problems of attribute data. MSA may be needed -Meaningful metrics may take more doing and trial and error early on -Regression, DOE and ANOVA can be applied to multivariable situations with lots of moving and interacting parts DCs, office locations, site specific paperwork procedures, carrier selection, suppliers with different lead time averages and extremes, etc.
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6-Sigma & Lean 101

Lean Ramifications for SRM and Logistics Some procurement and purchasing metrics tied to traditional financials may be detrimental:
PPV - Keeps the raw expenditures down, but at the expense of excess inventory, idle assets and not harvesting cash from inventory. Variance reporting in general more conducive to traditional mass production, not lean. Leads to a wait time-order size spiral. True lean operations are real time, rapid response, small run oriented. Some of the blame goes to standard costing a discussion for another time!! PO reconciliations/matchups with receivers, invoices, etc. Instead expand use of blanket POs, invoiceless daily or frequent deliveries Bucketed point-of-use deliveries; backflush usage on low value components
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6-Sigma & Lean 101

Lean Ramifications for SRM and Logistics
Some procurement and purchasing metrics tied to traditional financials may be detrimental:
On Time Delivery May encourage storing JIC inventory, padding lead times: a supply chains lump under the carpet. Instead redirect efforts to lead time reduction at many points Other old EOQ policies (assumes steady and independent demand for all skus, not custom or responsive), batching and queuing of orders and paperwork, etc.
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6-Sigma & Lean 101

Pareto Diagram: Example
PO Cycle Time - Unapproved Vendors
Days Delayed
Total Count = 895 900 810 720 630 540
COUNT
100 (80%) (65%) (36%) 324 255 135 92 89 (90%) 90 80 70 60 50 40 30 20 10 0
450 360 270 180 90 0
PERCENT
Raw Material
Equipment
Engr. Matl.
OTHER
Admin
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6-Sigma & Lean 101

Poor Customer Response Time
Cause and Effect Diagram Man
Disorganized Untrained Too few No established methods No step by step documentation Improper use of e-mail
Materials
Always running out of materials Materials outdated Proper materials never ordered System errors in reporting Wait time not comprehensive
Poor Customer Response Time
Methods
Measurement
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6-Sigma & Lean 101

Box Plots of Supplier Bids
70 60
50
40
Hi for Mo Q3 for Mo Q1 for Mo Lo for Mo
30
20
10
0 Suppl 1 Bids Suppl 2 Bids Suppl 3 Bids Suppl 4 Bids Suppl 5 Bids
Similar Items Over Course of 1 Month (These patterns may be congruent with other Supplier Behaviors such as RFQ Cycle Times, etc.)
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6-Sigma & Lean 101

Supply Chain Basic Flow Chart for Component Assembly Value Stream
New/ECO Product Devlpt ! Supplier In House Plant Conveyance, Freight Carrier ! Customer Customer Service Dept Sales Personnel
Marketing
Supplier Issue Resolution
Waste, Rework Unused Inv.
Customer Issue Resolution
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6-Sigma & Lean 101

Variation in RFQ Cycle Times for Critical Part
Days
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6-Sigma & Lean 101

Component RFQ Process Time-Value Diagram
Collect Information From Customer 3 hours 1 day Collect Cost Info From Outsourced Mfg 0.25 hours 5 days Generate Quote 0.5 hours 2 hours
Start
Province of Lean Sigma SRM
Negotiate Price 1 day 3 days
Enter Order 0.25 hours 1 day
Assemble & Delivery d 1 week 10 weeks
End E
Province of Lean Sigma Manufacturing
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6-Sigma & Lean 101

As Is Process Lane Map For Component RFQ
Component Company
Start
Compile, Send RFQ
Assemble Quote
Submit
Outsourced Supplier
Send to Support Office
Compile Information
Outsourced Supplier Support Office
Process request
Return to Own Plant
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6-Sigma & Lean 101

Future State Process Map For Component RFQ
Apply Costing Table
Component Company
Start SSt
Compile Request
Assemble Quote
Send SE
Outsourced Supplier
Maintain Costing Tables
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6-Sigma & Lean 101

Variation in RFQ Cycle Times for Key Part
AFTER CHANGES
Process Shift, New Avg, New CLs
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6-Sigma & Lean 101

Supplier Quote Time, Before and After Change
Before Changes After Changes
Cycle Time, Days
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6-Sigma & Lean 101

Normal Probability Plot for RFQ Time
New Quote Time, Days

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6-Sigma & Lean 101 A Lean-SS Overview

6-Sigma Other Process Improvement Tools

Introduction of 6-Sigma Tools

Introduction of Lean Concepts

Identification of Waste Workplace Lean Improvements Sustainability Business Score Card

A Business Case Example

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6-Sigma & Lean 101

Introduction of Lean Concepts

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6-Sigma & Lean 101

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6-Sigma & Lean 101

These metrics are important, but we will keep this simple

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6-Sigma & Lean 101

Activities, Accommodations, Alt Options, Where is Start

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6-Sigma & Lean 101

6-Sigma & Lean 101

What does 6-Sigma imply?

Not all processes need to be 6-Sigma Capable

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6-Sigma & Lean 101

Characterizing The Process The Process

6 Good Mean Good Variability Good Capability

CpK = [ Closest Limit X ] 3 Higher sigma is better to avoid quality escapes!

6-Sigma & Lean 101

variation This is previous slide

Good Mean Good Variability Good Capability

Poor Mean Good Variability Poor Capability

Poor Mean Poor Variability Poor Capability

6-Sigma & Lean 101

Align VOC and biz needs for big improvements S M A R T goals

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6-Sigma & Lean 101

6-Sigma & Lean 101

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6-Sigma & Lean 101

Opportunity Being Lost

Maintain Good Work & Performance

Maintain Current Status

Over-effort for little value

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6-Sigma & Lean 101

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6-Sigma & Lean 101

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6-Sigma & Lean 101

Stat Free Six Sigma, Gupta

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6-Sigma & Lean 101

Stat Free Six Sigma, Gupta

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6-Sigma & Lean 101

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6-Sigma & Lean 101

Figure out cost/benefit

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6-Sigma & Lean 101

ORDER FULFILLMENT SWIM LANE FLOWCHART

ENGINEERING & RECEIVING

Loops and Many Crossings SHIPPING