Lean Six Sigma Lean 201 Introduction. TECH QUALITY and PRODUCTIVITY in INDUSTRY and TECHNOLOGY

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1 TECH QUALITY and PRODUCTIVITY in INDUSTRY and TECHNOLOGY Before we begin: Turn on the sound on your computer. There is audio to accompany this presentation. Audio will accompany most of the online presentation materials through out the semester. 1 TECH QUALITY and PRODUCTIVITY in INDUSTRY and TECHNOLOGY Week 13 Lean Six Sigma Basics: Lean Lean Six Sigma Lean 201 Introduction 3

2 LEAN SIX SIGMA PROCESS Champion Define Measure Lean 101 Analyze Improve Lean 201 Control Identify Opportunities Set Team Ground Rules Current State Process Map Identify Waste Examine Process and Data Finalize KPIVs Identify Constraints Determine Process Control Plan Select Project Voice of the Customer Analysis Potential KPIVs Identified Quick Hit Improvements KPIVs Verified Develop/ Evaluate Solutions Exploit Constraints Recognize/ Reward Complete Project Charter Determine KPOVs Data Collection Link KPIVs to KPOVs Future State Process Map Finalize Financial Estimates Launch Project Team Link KPOVs to CTQs Create Basic KPOV Graphs Pilot Study Implementation Plan Full Implementation Initial Financial Estimates Lean LEAN SIX SIGMA TOOLS Measure Lean 101 Lean 201 Champion Define Analyze Improve Control Affinity Diagram Ground Rules Worksheet Process Mapping Process Observation Worksheet KPIV Analysis Solution Matrix Theory Of Constraints Process Control Plan Project Selection Matrix SIPOC CTQ Tree Ishikawa Diagram Spaghetti Diagram Advanced Pivot Tables and Charts Impact Effort Matrix Little s Law Recognize Improvement Achieved Project Charter Voice of the Customer Analysis Create Data Collection Plan 5S Advanced Graphing Techniques Future State Process Map Variability Principle ROI Tool CTQ Tree Measurement Systems Analysis Visual Controls Pilot Implementatio n Checklist Project Management ROI Tool Basic Statistics Process Modeling and Simulation Implementatio n Checklist Basic Graphing Techniques Lean Lean Six Sigma Lean 201 Single Piece Flow 6

3 TOYOTA PRODUCTION SYSTEM Key Lean Concepts developed at Toyota Single Piece Flow Pull Production TAKT Time Just-in-Time Toyota Production System Heijunka Jidoka Autonomation Built In Quality Stop at Abnormalities Level Loading Sequencing Stability 7 SINGLE PIECE FLOW Single Piece Flow Using a one piece at a time process to complete a product or service One benefit is to eliminate stagnation of work (queue) in and between processing steps. Cell Arrangement of people, systems, items, and methods with the processing steps placed right next to each other (physically or digitally) in sequential order, through which parts are processed in a continuous flow. A B C A B C 8 SINGLE PIECE vs. BATCH FLOW Batch Single Piece Flow Catches Defects Too Late Catches Defects Immediately How many more? You only have one Where are they? You know where it occurred What is the root cause? Root cause known quickly The Next Process is the Customer Never Send Defects! 9

4 WHY USE SINGLE PIECE FLOW CTQ Batch Production Single Piece Flow Quality Risk WIP FIFO Lead time Productivity * Changeover time ** * Single Piece Flow productivity can be improved by balancing processes versus Takt Time. ** Changeover time impact can be reduced by SMED or reducing changeover time. 10 WHERE to START? Start within the area with the biggest potential of lead time reduction or Start with the pace maker process that are the process steps in the value stream that are closest to the customer. 11 ROADMAP for CONTINUOUS FLOW Creating Continuous Flow 1. Cell Content: Start looking at what items you should have in the cell. 2. Actual Work: Then analyze actual work to be done in the cell. 3. System, Item, and Lay out: Optimize System, Item, and Cell Lay out for creating continuous flow. 4. Work Distribution: Distribute the Work among the 5. Implement, Sustain, and Improve: Actual implementation of Continuous Flow in a Cell 12

5 SELECTING ITEMS for CELLS Think carefully about assigning right items to your cell. Here are some guidelines: 1. Flexibility Cells for multiple items + More flexible for changing demand + Pushes you to create short changeover time (waste reduction) Cells for one item Cells for multiple items A B A&B A&B 13 SELECTING ITEMS for CELLS 2. Similarity of processing steps Start with the product/service, that is the customer s interest. Identify a group of products/services that go through the same or similar steps. Process Steps & Equipment A B C X X X X X X X X X X X X X Map together in one Value Stream Map. After analyzing, you might come up with the conclusion to have step 5, 6 and 7 in one cell. When required steps of the different products vary too much, then separate cells. For example, item C does not look to be suitable for the cell. 14 SELECTING ITEMS for CELLS 3. Variance of different product types Total Work Content of the product going through the cell should not variance more than 30%, otherwise take them apart. Time A B Max. ~ 30% 4. Takt Time (production pace) Purpose: Match Customer Demand Pace with Production Pace. How often should we finish an item to serve the customer on time? It s the heartbeat of the process 15

6 CONTINUOUS FLOW Is the the system able to handle the Takt Time? If a system is part of Continuous Flow Cell, you should make sure it is appropriate enough for handling the flow. Effective System Cycle Time < Fastest Takt Time (20 25%) Fluctuation in demand Equipment is often less flexible than people 16 CONTINUOUS FLOW Is the product/service right for flow? Ideal characteristics for a flow process include: high volume, low variety high frequency of use stable input For example Pay roll Purchasing Customer Service Centers Manufacturing 17 IMPROVING THE SYSTEM: PAPER KAIZEN What are the Work Elements for making one piece? Work Element is the smallest increment of work done in one step or by one person, not overall system time. Each process consist of a series of work elements. By collecting all the work elements in the cell, you get the total work content of the cell. Determine the actual work by observation using a Process Study Form. Breaking work in elements helps you to expose and identify waste 18

7 IMPROVING THE SYSTEM: PAPER KAIZEN Guidelines Get REAL DATA, do not rely on standard time or data from the past. Get it yourself. Time each work element separately, otherwise you will include waste. Once individual elements timed, then time operator s complete cycle from start to finish. Compare to see the waste. Time an experienced operator who is fully qualified to perform the job. Separate operator work time from system cycle time. 19 Time IMPROVING THE SYSTEM: PAPER KAIZEN Current K J I H G F E D C B A First understand all the work elements that make the total work (Current) then have a critical look on the work elements and design improvement on paper (Improved) to reduce wastes. First analyze the Total Work Content, and design improvement on paper Improved K I H G F E D Total Work Content for one item in the cell are activities A K. B A Paper Kaizen Approach of immediately leaving out wasteful steps by eliminating some steps on paper before implementation. Paper Kaizen Elimination: C and J Time reduction: A and F 20 IMPROVING THE SYSTEM: PAPER KAIZEN 210 Takt Time 205 sec K I H G F E D B A 1 F K E D I B H A G 1 2 then connect to Takt Time. Takt Time 110 sec. E D H K B G A F I Operator Balance Chart Picture of distribution of work among operators in relation to Takt Time. Simple Visual Quantative No guesswork Takt Time 82 sec. = Operator 21

8 OPERATOR BALANCE # : # Lean Option Maximize operator work. Let Op. 4 do other things Option A Balance the line Buffer for variance Takt Time 45 sec. Option B Lean Option Continuous Improving More variance reduction, reduces buffer. Eliminate by reducing more waste OPERATOR BALANCE What is the optimal way of distribution the work? 2x Takt Time Specialize Takt Time 38 sec. Do it all H G F H G F There are a lot of way to distribute the work among operators, here two examples: E D B A H G F E D B A E D B A How will you design that in your physical or digital layout. 23 CELL LAYOUT Cellular environment is an area of continuous flow. Physical or Digital Incoming Forms Out Multi functional Co located One piece flow Balanced waste removed Cross trained team Staffed within the interval Standard work A cell can also be digital/software. Think of operators work in a flow by aligning systems. Digital workflow can help to let different systems work together in a flow. 24

9 CELL LAYOUT How can the process be laid out so a cell (equipment and people) is as efficient as possible? Avoid isolated islands of activities. Minimize inventory accumulation between processes. Design good ergonomics. Remove barriers, both physical and digital for the operator. Make value creating activities easily accessible. Keep manual, operator based work steps close together to allow flexible work element distribution. 25 Lean Six Sigma Lean 201 Pull Systems 26 TOYOTA PRODUCTION SYSTEM Key Lean Concepts developed at Toyota Single Piece Flow Pull Production TAKT Time Just-in-Time Toyota Production System Heijunka Jidoka Autonomation Built In Quality Stop at Abnormalities Level Loading Sequencing Stability 27

10 WHAT is a PULL SYSTEM? A system in which each process takes what it needs from the preceding process when it needs it and in the exact amount needed. Employs a variety of visual signaling devices and uses the concept of Kanban Just in time focused Controls production system and limits inventory Simplifies or eliminates documentation Customer pulls the flow 28 WHAT is a PUSH SYSTEM? A system in which products are pushed through production or distribution, based on a schedule. Ready or not, here I come! Products are produced only when scheduled Assumes receiving work centers will be ready for the products when they arrive Output continues without regard to actual downstream needs Response is delayed and the system disrupted due to short interval changes 29 PULL and PUSH DIFFERENCES Planning o Push: Work is completed based on a planning system o Pull: Work is completed based on authorization from downstream users Work Authorization o o Push: Work is immediately sent to downstream user upon completion Pull: Work is not forwarded to next operation until requested 30

11 WHY USE PULL? A conventional system, based on a schedule, generates unneeded inventory (overproduction) because true customer needs never fit perfectly with schedule. For the same reason, it can also generate shortages. Schedule : Customer need : Inventory : SHORTAGE SHORTAGE Pull ensures best inventory control with high customer satisfaction. 31 WHY USE PULL? Conventional Push system: PROCESS #1 PROCESS #2 WIP =? PROCESS #3 Yield=2/h Yield=1/h Breakdown Yield=2/h RAW MATERIAL WORK IN PROCESS FINISHED GOODS Pull System Standard WIP = 3 PROCESS #1 PROCESS #2 PROCESS #3 Yield=2/h Yield=1/h Breakdown Yield=2/h RAW MATERIAL WORK IN PROCESS FINISHED GOODS Pull improves work in process management 32 HOW DOES PULL WORK? Legend Inventory END CUSTOMER 1 2 Material Information 1 Sequence / Timing nd LEVEL SUPPLIER 1 st LEVEL SUPPLIER nd LEVEL SUPPLIER PROCESS #3 PROCESS #2 PROCESS # nd LEVEL SUPPLIER 33

12 HOW DOES PULL WORK? Min/Max is the most often used methodology to manage supermarket/buffer inventory level. Pull Pull Pull Max> Min> Replenish High performance companies use Kanban to communicate needs to preceding process. 34 KANBAN A Kanban is a signal used by a downstream operation to request a material replenishment Kanban Supplying Process Using Process Required Part/ material Signals can include: cards, carts, bins, labels, etc. 35 Lean Six Sigma Lean 201 Heijunka 36

13 TOYOTA PRODUCTION SYSTEM Key Lean Concepts developed at Toyota Single Piece Flow Pull Production TAKT Time Just-in-Time Toyota Production System Heijunka Jidoka Autonomation Built In Quality Stop at Abnormalities Level Loading Sequencing Stability 37 HEIJUNKA Heijunka is the foundation of the Toyota Production system, and is the process of leveling and sequencing an operation. There are three main elements of Heijunka 1. Leveling: Overall leveling of a process to reduce variation in output 2. Sequencing: Managing the order in which work is processed (Mixed Production) 3. Stability or Standard Work: Reduce process variation 38 HEIJUNKA Customer Demand Heijunka Leveling Toyota Production System Just-in-Time Jidoka Heijunka Main elements of Heijunk: 1. Leveling Reduction in variation 2. Sequencing experienced by the system. 3. Stability or Standard Work 39

14 Lean Six Sigma Lean 201 Jidoka 40 TOYOTA PRODUCTION SYSTEM Key Lean Concepts developed at Toyota Single Piece Flow Pull Production TAKT Time Just-in-Time Toyota Production System Heijunka Jidoka Autonomation Built In Quality Stop at Abnormalities Level Loading Sequencing Stability 41 JIDOKA Jidoka allows processes to operate autonomously by shutting down automatically if an abnormality occurs or having human intervention to shut down. This prevents defects from passing to the next process. 1. Autonomation: Automation with human intelligence operate autonomously 2. Stop at Every Abnormality Abnormal Fix the process (problem) before moving on. 42

15 Lean Six Sigma Lean 201 Lean Deployment 43 DEPLOYMENT ROADMAP 1. Set the strategy 2. Find a change agent 3. Get the knowledge 4. Seize a crisis to motivate change 5. Map your value streams, creating a future state plan 6. Eliminate waste by executing the plan 7. Expand the scope to other areas Don t Wait!! Opportunities multiply as they are seized 44 KEY FACTORS for SUCCESS 1. Leadership Commitment 2. Ramp up with Results 3. Consistency of Purpose 4. Knowledge/Training 5. Wide spread Communication 7. Use Metrics 8. Reward and Recognition 9. Balance Between Short Term and Long Term 10. Best Practice Sharing (Community) Don t be afraid to give up the good for the great! 45

16 WHY ORGANIZATIONS FAIL 1. Too busy managing day to day no time for continuous improvement and organizational learning 2. Belief that past strategies and approaches will continue to be effective in the future 3. Management through control and efficiency 4. Organizing and managing through departments 5. Using people as operational labor, not experts 6. Let lean be perceived as a downsizing exercise 46 Lean Six Sigma Lean 201 Return on Investment 47 RETURN ON INVESTMENT (ROI) ROI analysis used to: Make the connection between waste, variability, quality, customer/staff dissatisfaction, productivity, etc.to the organization s finances. Quantify the current Cost of Poor Quality (COPQ) utilizing real data To provide the business case for process improvement work. Show me the money! 48

17 WHERE to USE ROI Champion/Define: To help quantify the potential impact of one project over another Measure/Analyze: To help process improvement teams understand the financial side of the problem/process to be improved. Improve: o o To help process improvement teams understand the resources, supplies, equipment needed to test an improvement during PDSA cycles. To quantify the improvements impact. 49 RETURN ON INVESTMENT TOOL Provides practical application in identification and quantification of: Project Costs Pilot and Implementation Costs Hard and Soft Financial Impacts Productivity Impacts Materials, Equipment & Purchased Services Cost Savings Revenue, Interest and Accounts Receivables Impact ROI Tool Developer: Deanna Suskovich, CSSMBB Ancerra Corporation 50 ROI WHERE TO WE START Gather the following information: o Project Charter o Baseline Data o Process Observation worksheets, checksheets, Waste Walk Worksheets any other data collection information o Current State Process Map o Any additional analysis the team has done to this point in time 51

18 RETURN ON INVESTMENT TOOL The summary of the ROI analysis, including the ROI calculated in years is shown on the worksheet labeled Project ROI Summary. 52 PROJECT COSTS and EXPENSE STUDY Utilizing the Project Charter: Calculate the # of resources dedicated to the team for the duration of the collaborative or project. Estimate how often and for how long you are meeting. If additional resources are utilized include. NOTE: This is typically done by the Management Guidance Team or Collaborative Coordinators prior to the team formation. 53 RETURN ON INVESTMENT TOOL Utilizing the ROI template, identify and list the project costs and expenses under the Project Costs and Expenses worksheet as shown in the template below. 54

19 COST of POOR QUALITY (COPQ) Go to the Cost of Poor Quality Worksheet in the ROI Tool Workbook: 1) Write down the process steps which the team identified as wasteful 2) Utilizing the data and observation information quantify: What waste is occurring How often How much time does it waste Repeat for each impact area 55 RETURN ON INVESTMENT TOOL 56 RETURN ON INVESTMENT TOOL Complete the template ultimately arriving at a total for Productivity, Materials, Equipment and Purchased Services, Revenue and Accounts Receivables and Interest Impact for the project. 57

20 PILOT and IMPLEMENTATION COSTS Go to the Implementation Costs & Expense Summary Worksheet in the ROI Tool Workbook: o Identify and quantify if additional resources will be utilized in testing improvements (PDSA Cycles) o Overtime o Identify and quantify if additional equipment or supplies may be needed in testing improvements o Supplies o Copies outsourced, etc. 58 RETURN ON INVESTMENT TOOL 59 RETURN ON INVESTMENT TOOL The information from the various worksheets is automatically transferred to the Project ROI Summary worksheet where the ROI in years is calculated.. 60

21 Lean Six Sigma Lean 201 Theory of Constraints 61 THEORY of CONSTRAINTS (TOC) Funnel System throughput cannot be increased unless the throughput is increased at the worst bottleneck in the valueadding chain. The neck of the funnel is a constraint A constraint is also called a bottleneck or a pacing operation. 62 THEORY of CONSTRAINTS (TOC) Steps To Focus Improvement at a Constraint 1. Identify the constraint physical or policy 2. Decide how to exploit the constraint get the most out or through the constraint. 3. Subordinate everything else adjust the rest of the system to enable the constraint to operate effectively. 4. Elevate the constraint invest time, energy, and money to eliminate the constraint. 5. Go back to Step 1, but beware of inertia. Source: H. William Dettmer, Goldratt s Theory of Constraints: A Systems Approach to Continuous Improvement, ASQC Quality Press, 1997, p

22 LITTLE S LAW of RESPONSE Little s Law: TAT WIP OR Funnel Work in Process (WIP) Turn Around Time (TAT) Output Rate (OR) is determined by the funnel s neck (or the demand rate if demand < OR) Source: J.D.C. Little, 1961, A Proof for the Queuing Formula L=lW Operations Research. 9, pp APPLYING LITTLE S LAW to the HOSPITAL LAB There are 4 jobs in each in basket: Prep Sample Test Sample Prep Report Review Report In Out Output Rate = 1/day Output Rate = 1/day Output Rate = 1/day Output Rate = 1/day 65 APPLYING LITTLE S LAW to the HOSPITAL LAB There are 1 job in each in basket: Prep Sample Test Sample Prep Report Review Report In Out Output Rate = 1/day Output Rate = 1/day Output Rate = 1/day Output Rate = 1/day 66

23 THE VARABILITY LAW Operational variability and Turn Around Time (TAT) are interlinked. When one increases, the other increases in a non linear relationship. Turn Around Time (TAT) Variability 67 THE UTILIZATION PRINCIPLE Utilization of a resource and Turn Around Time (TAT) are also interlinked. When one increases, the other increases in a non linear relationship. Turn Around Time (TAT) 50% 80% Utilization 100% 68 STOCHASTIC CONGESTION EFFECTS 69

24 THE UTILIZATION PRINCIPLE Variability early in a series of process steps is worse than variability later. Turn-Around Time (Minutes) Week END OF WEEK 13 MATERIAL Resources: Paper Your Company s Secret Change Agents by Richard Tanner Pascale and Jerry Sternin 2005 ROI Tool Assignment: Assignment Homework #5 71

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