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-- A Deeper Dive --

Tom Devane

Nexus U

2008

Session Objectives

In this session you will learn

How to address organizational performance issues through Lean Six Sigma

The fundamentals of Lean Six Sigma and some key tools

What other organizations have learned through compiled lessons learned analyses

• How to get started, even if you’re not the CEO

Some Lean Six Sigma considerations for your upcoming Sunday Design Experience.

Agenda

Topics

1. Introduction

2. Lean Six Sigma Primer

3. Case Study 1

4. Case Study 2

5. Pre-thinking for Sunday’s Design Experience

6. Wrap-up

1. Introduction

Audience inputs to the agenda…

Whaddaya Think?

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

T

F

1.

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

T

F

2.

Six Sigma tends to get faster business results than Lean.

T

F

3.

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

T

F

4.

The “Just-In-Time” process improvement craze of the 1980s was actually a combination of Lean and Six Sigma.

T

F

5.

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

T

F

6.

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

T

F

7.

Jack Welch of General Electric fame first improved processes with Six Sigma, then modified the corporate culture to make Six Sigma results sustainable.

T

F

8.

The average weight of a Lean practitioner is 22 pounds less then his Six Sigma

 

counterpart.

T

F

9.

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

T

F

10.

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

2. Lean Six Sigma Primer

Discipline Overview

Lean

Eliminate waste.

Simple tools like VSM, 5s. Quick results. Can be dramatic

Simple tools like VSM, 5s. Quick results. Can be dramatic Six Sigma Reduce variation. Advanced tools
Simple tools like VSM, 5s. Quick results. Can be dramatic Six Sigma Reduce variation. Advanced tools

Six Sigma

Reduce variation. Advanced tools like FMEA, DOE, control charts.

Dramatic results.

Lean Six Sigma

Benefits of Lean and Six Sigma.

Which steps are “waste” in a Lean environment?

1.

Move required production materials to the work station.

2.

Insert lenses into sunglasses frame.

3.

Move filled frames to next work station.

4.

Check lenses for proper alignment within frame.

5.

Paint frames.

6.

Scrape excess paint from lenses.

7.

Move sunglasses to warehouse staging area.

8.

When ready to ship, move sunglasses to packing area.

9.

Pack sunglasses in box.

10.

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

11.

Ship sunglasses.

12.

Notify material planning personnel to order more frames and lenses.

Value Stream Maps

Visualize all actions required (both value added and non-value added)

required to produce and distribute a product.

• Identify sources of “waste”.

Entire process defined using a common language.

Manage flow through the process.

Show linkage between material and information flow.

Loan Approval & Setup

Value Stream Map -- Current State

KEY Electronic Communication Manual Communication Inventory Push Supplier or Customer Pull Delivery / Shipment

Electronic

Communication

Manual

Communication

Inventory

Push Supplier or Customer Pull Delivery / Shipment
Push
Supplier or
Customer
Pull
Delivery /
Shipment
HQ LOAN CUSTOMER
HQ
LOAN CUSTOMER
Farmer Branch Manager I I Operators 4Q03 25 Batches Orientation meeting Loan application Title search
Farmer
Branch Manager
I
I
Operators 4Q03
25 Batches
Orientation meeting
Loan application
Title search
Ag econ eval/cons
Account setup
Pyt processing
Company confidential
I
Company confidential
I Company confidential
I Company confidential
I Company confidential
I Company confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company
Company confidential
Company confidential
Company
Company confidential
Company confidential
Company confidential
Company
Company
Company
confidential
confidential
confidential
confidential
confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential

Manual Archiving

(Staggered Receipt of Records) Company confidential Company confidential Company confidential Company confidential
(Staggered Receipt of
Records)
Company confidential
Company confidential
Company confidential
Company confidential
Company confidential

11

Which process is a “better” process in Six Sigma?

Average

Candy bar

Production

costs for

chocolate

bar

$5

$3

is a “better” process in Six Sigma? Average Candy bar Production costs for chocolate bar $5
is a “better” process in Six Sigma? Average Candy bar Production costs for chocolate bar $5

Process A

Process B

Who is a better shot?

Who is a better shot? A B 14

A

Who is a better shot? A B 14

B

Key Six Sigma Tool Control Chart

Key Six Sigma Tool Control Chart Anatomy of a Control Chart 15

Anatomy of a Control Chart

15

Players

Player

Roles & Responsibilities

Typical Training

Six Sigma Dedication

Black Belt

Works with a team usually of Green Belts and people with no LSS training -- assigned to a specific LSS improvement project. Black Belts help with both the technical aspects (e.g., statistical tools) and people issues (e.g., team dynamics and change management). Typically a Black Belt will deliver about $1 million to the bottom line annually.

4 weeks of training spread over 4 months

Full-time

(18 to 24 mo)

Master Black Belt

Acts as instructor, coach and mentor to several Black Belts. Frequently Master Black Belts

Usually on the job

Full-time

(MBBs) become involved in large-scale organizational change efforts and promotion of

LSS within the organization. In many organizations MBBs organize into a learning group in which they challenge, advise, and support each other and Black Belts. They also often formulate business strategies with top management. In addition they may also lead “super- projects” that are high impact staffed with multiple Black Belts.

Green Belt

Participates in LSS by collecting data, providing process expertise, completing improvement tasks, and communicating changes to colleagues.

3 sessions of 3-4 days

Part-time, as project needs dictate

Champion (Executive)

Provides business guidance to teams, assists in selecting projects, acts as an organizational “evangelist” for Six Sigma, allocates resources, questions the team, anticipates and prevents problems with the LSS before they occur, removes roadblocks if they do occur.

5 days

Part-time, as active executive sponsorship needs dictate

Executive

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

1-2 days

Part-time, as executive support needs dictate

Sponsor

Process Owner

Ensures high quality design and peak performance of business processes. Helps triage problems as those addressable by simple process improvement methods or problems requiring use of complex, lesser-known statistical tools.

1 week

Half-time to full-time, depending on process size

16

Who you gonna call?

1. The Purchasing analyst cannot spend as much time on the cross-

Purchasing analyst cannot spend as much time on the cross- Black Belt departmental New Product Launch

Black Belt

departmental New Product Launch process because her functional

manager has put her on a “crunch project” in Purchasing. This will likely cause a 4-week slip in the launch of the next product.

2. Data needs to be collected on the number of failures of your company’s new electric razor once it gets into a customer’s hands.

3. The process improvement project will now be delayed 5 months

because the engineer on the project has been sent on an overseas

assignment.

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

5. Several Black Belts are working on similar problems in different parts

of the company, but they are not benefiting from each others’

experience like they could.

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

Master Black Belt

Green Belt

Champion

Executive Sponsor

Process owner

A peek into the practical world of Black Belts

Team problems Team wants to jump ahead to fixes w/o data Team won’t assume ownership
Team problems
Team wants to jump ahead
to fixes w/o data
Team won’t assume ownership
quickly enough  backsliding,
etc.
Poor team dynamics
hinder progress
Resourcing
issues
BB stretched
too thinly
Team members
stretched
too thinly

Politics

Middle manager wants pet project funded

Powerful execs in other areas block implementation and Champion wimps out

Powerful functional manager attempts to influence solution

Common BB Challenges by Category

Change management Entire targeted population for the improvements not on improvement team, and resist Middle
Change management
Entire targeted population for the
improvements not on improvement
team, and resist
Middle manager seeks to
block project in his/her
area
Motivating team
to perform and
improve
Team interfaces
with others
General poor support
from Champion
Black Belts in
different parts of the
organization make
the same mistakes
Pressure for quick
Post-launch
results from top
management
discoveries
Assigned project will not
support strategy well
Assigned project will
have little return

18

What’s the “Sigma Thing” anyway?

 

Percentage of time customers’ requirements were met

Defects per

Sigma

million

level

opportunities

 

1 68.27

690,000

 

2 95.45

308,537

 

3 99.73

66,807

 

4 99.9937

6,210

 

5 99.999943

233

 

6 99.9999998

3.4

Key terms and concepts

The voice of the customer and “CTQ”

Operational definition

DMAIC

DOE

FMEA

Value Stream Mapping

5s

Tampering

What it’s not

In helping to define what Lean Six Sigma is, it is also helpful to consider what it is not:

It is not just a collection of tools that people can be trained in and shortly thereafter deliver outstanding results. Successful LSS efforts require strong management support, training, and formal ties to the organization’s management system.

It is not just a statistics program. It is a results program.

It is not a recycled Total Quality Management program from the 1970s. While many tools and some methods from the quality movement are present in LSS, it distinguishes itself by having formal links to the compensation system, financial screening of potential projects, and a fanatical emphasis on the needs of the external customer.

It is not a training program, as many Total Quality Management programs became. It is a system of tools, principles, and management practices that are applied to a improve processes.

3. Case Study 1

Biopharmaceutical division of a global pharma company

Performance Framework

Structure &

Relationships

Structure & Relationships

Culture

Strategy Process Energizing Core Want Know to how Pay for Information & Learning HR Practices
Strategy
Process
Energizing Core
Want
Know
to
how
Pay
for
Information
& Learning
HR
Practices

23

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

Hit performance issues on multiple fronts

Lean training for all managers and supervisors

Basic Six Sigma training for all managers and supervisors

Center of Excellence leaders located in all departments -- trained in advanced Six Sigma methods and philosophy

Leadership development occurred simultaneously to address critical change management issues within, and among departments

Operating Results

Representative issues addressed

Batch review cycle time reduced by 60%

Operational metrics track 12 parameters, improvements in 9 so far

Yields improved by 20% in one production area by using statistical

tools

Approach to addressing the issues and results

All work was done via chartered, cross-functional teams

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

The 10 Big “pay attention to” elements for LSS leaders

1.

The use of data and facts not just opinions -- to make decisions.

2.

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

3.

An awareness of, and management of business processes and value streams that cut across functional department boundaries.

4.

Opportunities to pull work through operations rather than push them.

5.

An emphasis on prevention, not reaction.

6.

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

7.

Impacts of activities and solutions on customer requirements.

8.

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

9.

Workplace orderliness and cleanliness.

10.

Links between LSS improvement efforts and the organization’s reward and recognition system.

4. Case Study 2

High-Tech Electronics Assembly

Background

Key challenges

High rate of field failures needed to be addressed in order to compete and be profitable

Lack of consistency within our products as a whole based on different services

Different processes created unnecessary confusion and significant difficulties when it was time to transfer products into large volume production

Absence of motivation for continuous improvement outside the internal total quality group

Goals among different departments were not aligned and people were working on redundant, and in some cases counter-productive projects

Many of the employees had come up through the scientific ranks and were accustomed to working alone, not on teams.

Results

Successfully integrated Lean, Six Sigma, and High Performance Organization disciplines

Operating results:

$400,000 repeating annual savings within 2 months

Productivity increase of 2x within 7 months

Established a culture that drove for execution and continual improvement

Identified key areas for upstream new product development that later saved the company over $1 million annually

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

Executives played a key role in the initial success

Hard/soft integration principles deployed.

Discipline Overview

Lean

Eliminate waste. Simple tools like VSM, 5s. Quick results.

Eliminate waste. Simple tools like VSM, 5s. Quick results. Lean Six Sigma Benefits of Lean and
Eliminate waste. Simple tools like VSM, 5s. Quick results. Lean Six Sigma Benefits of Lean and

Lean Six Sigma

Benefits of Lean

and Six Sigma.

results. Lean Six Sigma Benefits of Lean and Six Sigma. Six Sigma Reduce variation. Advanced tools

Six Sigma

Reduce variation. Advanced tools like FMEA, DOE, control charts. Dramatic results.

tools like FMEA, DOE, control charts. Dramatic results. High-Performance Organizations Culture of execution &

High-Performance

Organizations

Culture of execution & improvement. Restructure into HPTs. Intrinsic motivation for short- and long-

term sustainable gains.

LSS/HPO

Benefits of Lean, Six Sigma, and High-Performance

Organizations.

29

Challenges articulated

Study group convenes

Research results

Develop direction

Journey

Announcements

Team

structuring

workshop

New leadership training

Projects

Customer requirements

Remedial

coaching

Process mapping

Continuous

30

improvement

Hallmarks of the discipline

1.

Statistical methods

2.

Attention to workplace and tool organization

3.

Fanatical focus on the external customer

4.

Attention to process

5.

Pre-screening, and ongoing screening of improvement projects to ensure fit with strategy and financial return

6.

People strive for perfection, but noble mistakes are tolerated

7.

An analysis-rich and measurement-rich environment

8.

A classification and sorting process to determine the type of tools to apply

9.

Coordination and control of the work occurs at the lowest level possible

10.

Collective accountability

5. Pre-Thinking for your Sunday Design Experience

Sunday pre-thought

• What would a Lean Six Sigma “foundation building block” look like?

How would it be described?

What other methods might enhance Lean Six Sigma?

What other methods might Lean Six Sigma enhance?

6. Wrap-up

Lessons Learned

Planning

Being realistic is quite helpful

Ensuring wide participation in the planning processes

Missing the customer perspective early on will kill you

Need to document planning phase well

Assign responsibilities clearly

Integration of hard and soft aspects is key each covers inherent weaknesses of the other

No organization-wide roll-outs of Six Sigma without training senior managers how to support it top management dialogue can’t stop after the approval and initial re-organization into teams.

Resist the temptation to use good -- not great -- performers as driving change agents, such as Black Belts.

Go for lean manufacturing techniques before Six Sigma to demonstrate quick wins unless data for analysis already exists (as it did for a field service warranty process)

• Strive to “over-communicate” and request feedback on the content and quality of communication.

Lessons Learned

Implementation

Maintain flexibility in the planning that other options can be considered as you move forward.

You can generally do more than most people think.

Ensure responsibilities are clearly assigned.

Ensure leaders of change are optimistic and will push project through to completion.

Groom the subsequent leaders

The restructuring into teams -- this can not be a pilot.

Executives need to agree on their individual and collective areas of responsibility for business processes.

Design structures and processes that ensure control.

Training for new leaders needs to mandatory, not optional

Bring Finance and HR into the process soon.

Executive efforts can decrease as the transformation progresses if the soft elements of HPO are successfully anchored.

It is extremely important to provide frequent status reports for the improvement projects.

Sounds great. But how do I

get something going with Lean

Six Sigma if I’m not the CEO?

For Future Reference

Breyfogle, Forrest. Implementing Six Sigma: Smarter Solutions Using Statistical Methods. New York:

Wiley-Interscience, 1999.

Devane, T. Integrating Lean Six Sigma and High Performance Organizations: Leading the Charge

Toward Rapid, Radical, Sustainable Improvement working title, forthcoming in November, 2003).

San Francisco: Jossey-Bass/Pfeiffer, (current

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

Macy, B.A., and Izumi, H.A. “Organizational Change, Design and Work Innovation: A Meta-Analysis of 131 North American Field Studies 1961-1991,” in Research in Organizational Change and

Development. R. Woodman and W. Pasmore (eds). New York: JAI Press Inc, Vol 7.

Nauman, E. & Hoisington S. Customer Centered Six Sigma: Linking Customers, Process Improvement, and Financial Results. Houston: American Society for Quality, 2001.

Pande, Peter, et al. The Six Sigma Way. New York: McGraw-Hill, 2000.

Rother, M., and Shook, J. Learning to See: Value Stream Mapping to Create Value and Eliminate

Muda. Brookline, MA: Lean Enterprise Institute, 1989.

Womack, J. and Jones, T. (1996). Lean thinking: Banish waste and create wealth in your corporation. New York: Simon & Schuster.

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Web resource: www.isixsigma.com