Lean Six Sigma Overview

Transcription

1 Lean Six Sigma Overview Presented By: Mike Sibley, CPA, CFE, LSS Black Belt Katie V. Davis, CPA, Certified LSS April 2, 2015 Agenda Introduction to Lean Six Sigma Simulation 5 Principles of Lean 9 Categories of Waste Lean Practices in Action Success Stories 1

2 What is the Goal? Benefits of Implementation Increased throughput and capacity Better quality from the start Less management time in the mud Allows time for high level activities and identifying value-adding solutions Increased customer service and satisfaction! Decreased costs Reduced turnaround time Improved employee morale Decreased overtime Better inventory management Improved communication Better utilization of people s talents 2

3 Benefits of Implementation Caterpillar: In 2000, Caterpillar had 4 years of stagnant revenue growth. Caterpillar manufacturing facilities cut lead times by more than 50%. Revenues grew by 80% from 2001 to It is always about control. 6 Sigma forces you to have the processes and the people accountable to make sure the results are enduring. Dave Burritt, VP, CFO, Caterpillar Numina Warehouse Technologies: The Company s Lean Distribution Process provides faster shipping Productivity increased by 30%-50% Operating expenses reduced while customer satisfaction and retention increased Reduced shipping errors (greater than 99.9% accuracy) What is Lean? Velocity! Efficiency Capacity Value Moving fast is not the same as going somewhere. 3

4 What is Six Sigma? Quality! Consistency Capacity Value There s never time to do a job right, but always time to do it over. What is Lean Six Sigma? 4

5 What Lean Six Sigma Is What Lean Six Sigma Is Not 5

6 Powerful Model for Process Improvement Define Measure Analyze Improve Control Begin with the End in Mind Organize project scope and develop project charter. Determine the Current State process Opinion of the experts Put the process under the microscope and beat it up! Collect data to confirm/deny opinions Manipulate process to improve Create desired Future State Develop procedures and controls Sustain the gains Cross-Functional Team TOPS Model Lean Companies Use: Team-Oriented Problem Solving Champion No one knows the work like the people doing the work. Henry Ford Team Leader Facilitators Cross-Functional Subject Experts 6

7 Securing Buy-In Management understanding & commitment is essential! Any fool can criticize, condemn and complain and most fools do. - Dale Carnegie Lean Simulation 7

8 5 Principles of Lean 1. Customers define value 2. Identify the value stream what is value added and what is waste? 3. Make the process flow 4. Implement pull to the process 5. Continuous Improvement The Voice of the Customer Internal Customer: The next step and/or person in the process Any downstream process External Customer: The end customer who is paying for the service Outside compliance agencies and readers of data 8

9 9 Categories of Waste in Processes D efects O verproduction W aiting N ot utilizing people s talent T ransporting I nventory M otion E xcess Processing + A ttitude Defects Examples Creates Tools/Solutions Errors Not following procedures and quality guidelines Re-work Lost opportunity Poor Service Non-compliance Bottlenecks Creates frustration/ stress Pareto Charts Proper Feedback Develop Consistency Quick Checks Poke Yoke Training 9

10 Overproduction Examples Creates Tools/Solutions Significant time on tasks that do not take precedence Prioritizing the wrong projects WIP Lost capacity Bottlenecks Strained employees Triage Managing the front Door Waiting Examples Creates Tools/Solutions Non-value added time Productive output is not being performed Increased costs Lost capacity Bottlenecks Learning Curve Analyze process steps Level-loading work responsibilities Cross-training 10

11 Not Utilizing People s Talents Examples Creates Tools/Solutions Higher skilled people performing lower skilled work Not maximizing staff strengths Failing to cultivate staff ideas for improvement Job dissatisfaction Employee turnover Increased costs Limited value to customers Bottlenecks Understanding the VOC and your people Staff A-B-C matrix Training & Development Creating team culture Transporting Examples Creates Tools/Solutions Poor office design - not accounting for work teams and flow Not properly leveraging technology (e.g. electronic documents) Longer cycle time Increased costs Lost capacity Value stream maps Creating work cells/ teams for high volume service areas Properly leveraged technology Spaghetti Diagram 11

12 Inventory Examples Creates Tools/Solutions Filled inboxes Backlog in inbox WIP Supply storage Stress Low throughput Poor service Bottlenecks 5S and Visual Management Triage workflow Performance goals Motion Examples Creates Tools/Solutions Search parties in the office Forms/Supplies centrally located Trips to printer/copiers Longer cycle time Increased costs Chaos Evaluating workflow Properly set up work centers 12

13 Excess Processing Examples Creates Tools/Solutions Performing more work than necessary Over-documentation Creating works of art Non-value added project time Increased costs Lost capacity Bottlenecks Understanding the VOC Use rule for getting work done Training/Development Attitude Examples Creates Tools/Solutions Whether you think you can or can t, you re right Not respecting needs of the customers Redundant discussions Inaction to pressing issues Inefficient, low quality work Performance metrics that promote the right behaviors 13

14 Symptoms of Inefficiency Variation in process cycle times to customers Waiting for customer information to filter in Variation in processes between employees Numerous and repeatable mistakes Complex filing structure or inconsistent filing system Excessive management time in the minute details not enough time spent for high-level activities Working ever harder, not smarter Develop success from failures. Dale Carnegie Where is Waste in Your Processes? 14

15 Where Do You Start? SUPPLIERS INPUTS PROCESS OUTPUTS CUSTOMERS Providers of required resources Who supplies each input? List all of the people/ organizations who provide input to the process. Resources required by the process What inputs are required to enable this process? List the inputs from the suppliers which are needed by the process. Numerical requirements on inputs Requirements: What are the requirements for the input to be acceptable to the process? Top level description of the activity. Resources required by the process Numerical requirements on inputs Requirements: What inputs are What are the required to requirements enable this for the process? Input to be List the inputs acceptable to from the the process? suppliers which are needed by the process. Stakeholders who place the requirements Who is the customer of each output? List all of the customers, both internal and external, who receive the outputs. Where Do You Start? SUPPLIERS Car Manufacturer Detail Shop Service Garage Bank of Credit Union Credit Agency Sales and Printing New Car Option Packages Wash / Fuel Credit Check Forms Requirements Finance forms are current and Financing Forms apply to correct finance agency Options Guide Pricing Guide INPUTS PROCESS OUTPUTS CUSTOMERS Car has low mileage to qualify as new Option packages are installed and functional Car is clean and full tank of gas Forms are current and acceptable by credit check agency Options guide is clear to the customer and sales person Pricing guide for the sale person is up to date and accurate Meet new client Understand client s needs in new car Present options to client, test drive Co-agreement on options, price & delivery Complete credit check & financing Sign paperwork & hand over keys New Client Account Dealer Sales Paperwork State Paperwork Financing Paperwork Service Contract Client Payment Requirements: Rapid transactions, no excess waiting (max 1 hour) All options available and installed same day Car clean and fueled Paperwork correct Best financing terms All manuals and service contract available and accurate Car Buyer Dealership Service Department US DMV Bank or Credit Union 15

16 Value Stream Map Customer Manual Process Waiting / Queue Manual Process Decision Manual Process Manual Process Waiting / Queue Manual Process * Indicates inefficiency Cause & Effect Problem: The stone on the Jefferson Memorial is deteriorating. Cause: Frequent washing of the stone The rest of the story... 16

17 Lean Practices in Action Managing the front door Setting consistent expectations and expecting consistent performance Bust the bottlenecks Level loading Implement pull and reduce WIP Utilizing lead time goals to help with project management What is Managing the Front Door? Everything that is done prior to starting the job. Being proactive can go a long way toward dictating how effective the job will be. The more hours that can be moved out of higher capacity periods and into time periods of less constraint will alleviate bottlenecks. Purposeful planning with clients up-front to set expectations in order to meet stated deadlines. Preventing confusion and communication loops. 17

18 Quick Checks - Summary Document expectations and responsibilities at each level in the process. If used properly, each team member will be working towards the Gold Standard and will know exactly what to expect in their work product. This includes technical and non-technical items. Consider including metrics that help outline the success of each stage of the process. Quick Checks - Summary Quick Checks help build consistency into the process at the various levels. Quick Checks help build quality into the process at all levels. Avoid the hot potato syndrome and get personnel at all levels to focus on providing only quality work to the next step. Set the expectations and watch personnel strive to meet it. Too often we just fail to set expectations. 18

19 Ways to Bust the Bottlenecks Eliminate non-value add activities Level-load work responsibilities Develop consistent work practices Quality control before the bottleneck Minimize re-work and loops Avoid batch processing Triage Add resources Level Loading 3R s Right people, right roles, right time. Without this you will most likely end up with bottlenecks because you will have higher level people performing way too much lower level work (and possibly vice versa). It is important to shift workload to the level and expertise it s most practically done at. Match capabilities to the job. 19

20 Pull & WIP Reduction Red Zone Principle Often times we are great at starting work but stall in finishing work (when we get into the red zone we kick field goals instead of getting touchdowns). Lead Time Goals While managing the front door, expectations are extremely effective in helping employees manage work load. Without setting these expectations, work tends to drag out. We begin to lose discipline. We think we still have plenty of time available until the deadline and it is easier to pick something else up. Setting time goals gives us an internal deadline to strive for since it is human nature to procrastinate to a deadline. It builds discipline. 20

21 Time Goals Help With Project Management Time goals help with project management because they break up our steps and processes into bite sized chunks. Each step has to hit their target for the project to be completed on time. Effectively managing each project means we should be seeing more completed projects with less chaos. To make this happen each step needs to hit their time goal target. Individual Project Management Techniques Quickly respond to external and internal customer phone calls and s, even if it is to set expectations for a later date. Start off each day tackling the most complex task or task you are dreading (try doing this before you even open ). You are the most efficient first thing; get that done and watch your productivity that day soar! Utilize the 3 Minute Rule to answer s. When you are checking s, if you can take care of the question/issue in 3 minutes or less, do it. If not, file it away and schedule a time to come back to it. 21

22 Case Study #1 City Municipality Contract Change Order Process Problem Statement: Change orders go through up to 10 approvals Change orders go through a manual approval process, then a redundant electronic approval process Certain personnel involved are not adding value Insignificant change orders are approved Focus Areas: Minimize time to approve change orders Eliminate manual paperwork and process change order exclusively in the HTE system Eliminate redundant approvals Case Study #1 - Results The quarterly capital purchases report to the Commission includes all change order activity Change in threshold requires City Commission approval Reduced approvals from 11 to 3 Eliminated the process of walking the change order form throughout city hall for manual approvals and move to purely electronic approval Overall goal to complete the approval of change orders within one week 22

23 Case Study #2 City Municipality HR Performance Review Process Problem Statement: Average past due 84 days Manual process of tracking when evaluations are due Lengthy performance review paperwork Performance reviews inconsistent in ratings Focus Areas: Reduce turnaround time Utilize current software to notify and track outstanding performance reviews Eliminate use of spreadsheets and manual data entry Revise performance review document To be approved by HR Board Case Study #2 - Results Employee evaluations moved to an automated online tracking system the organization already owned Reduced the evaluation from 10 pages to 2 pages Goal: Reduce turnaround time to 30 days 23

24 Case Study #3 University On-Campus Residence Halls Problem Statement: The process of moving students in and out of on-campus residence halls is a bottleneck, due to constrained time frames and inefficient procedures. Focus Areas: 1. Find proactive methods for communicating the procedures and expectations to students in advance of move in and move out periods. 2. Leveraging technology to more efficiently and more accurately track issuance of keys to students during move in/receipt of keys from students during move out. 3. Training of university staff and student resident advisors involved, with built in accountability for following the updated SOP s. Case Study #3 - Results Implementation of a real-time computer system to track changes of student profiles. More ownership taken by university staff responsible for checking in/out student residents. Elimination of paper key cards by utilizing electronic signature capability of swiping student ID cards on laptops or tablets present during move in and move out. Improved security over key access and improved tracking of keys issued. Decreased frustration by students, parents, and staff due to improved communications and reduced uncertainty. 24

25 Case Study #4 - University Maintenance Work Order Process Problem Statement: The residence hall maintenance work order process is not well defined, which leads to inefficiency, staff frustration, and customer dissatisfaction. Focus Areas: 1. Develop SOP s for proper management, storage, and safeguarding of inventory. 2. Leverage technology to gather detailed information on service requests. 3. Training of maintenance staff on use of technology and management of inventory, and training of university staff on student management by directing them to follow updated protocol. Case Study #4 - Results Implementation of an electronic work order tracking system that is user friendly to students and captures all data required by maintenance. Real-time communication of work order status changes to maintenance supervisors to monitor service requests for all areas they supervise. Improved communication to students on status of work orders. SOP s incorporate expectations for quality and accountability of inventory management and safeguarding. Decreased frustration by everyone involved due to forward flow/reduced work loops. 25

26 Success Stories Aluminum Trailer Company Implemented lean principles in 2009, following the economic downturn and a resulting drop in sales. Decreased warehouse space from 105,000 square feet to 50,000 square feet. Reduced sales cycle time from seven weeks to three weeks. In 2010, began applying green principles. Lighting upgrades, making recycling easier for line workers, and provided adequate bins for recycling. Goals were met, as was a 50% decrease in paper use in the office. If you think about green in the right way, it doesn t have to cost extra; it may take a little more care and a little more thought, but you will find that it saves costs and saves money. Steve Brenneman, Founder of Aluminum Trailer Company Success Stories Canyon Creek Cabinet Company Columbia Paint & Coatings Canyon Creak realized $1.19 million per year in cost savings through November 2007 Allowed for 70% additional production capacity. Canyon Creek Cabinet Company: Implemented lean principles in May 2006 Increased production from 900 cabinets per day to 1,000 cabinets per day. Columbia Paint & Coatings: Implemented lean principles in October 2006 Reduced the quality control inspection time by 36%. Cost savings expected to total $210,000 per year Decreased total lead time for non-stock products from 6-10 to 5 days 26

27 Remember the Goal? Contact Information Mike Sibley, CPA, CFE LSS Black Belt Partner Office: EXT Mobile: mikesibleydaytonabeachcpa Katie V. Davis, CPA Certified LSS Senior Manager Office: EXT katiedavisgainesvillecpa Blog: lean-six-sigma/ 27