Lean Six Sigma. Shail Sood

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1 Lean Six Sigma

2 Agenda: Lean Six Sigma Overview Six Sigma Method Lean Method Summary To-do s Lean Six Sigma 2

3 Lean Six Sigma Overview Lean Six Sigma 3

4 What is Lean Six Sigma? Lean Six Sigma is the combination of two distinct and complimentary methodologies with an Enterprise-level perspective LEAN SIX SIGMA ENTERPRISE VIEW SIX SIGMA (Reliability) LEAN (Simplicity) Lean Six Sigma 4

5 Comparing Six Sigma and Lean for process improvement Six Sigma (Reliability) The relentless effort to systematically reduce variation Lean (Simplicity) The relentless effort to systematically reduce waste while improving the flow of value to the customer Six Sigma would help identify a customer requirement to answer calls within 19s and ensure 95% of calls are answered between 0s and 19s Call Center Example: Lean would reduce the length and volume of calls, decreasing FTE and facility requirements Lean Six Sigma 5

6 What is Value-Added? Any activity in a process that is essential to deliver the service/product to the customer. Must be performed to meet customer needs Adds feature to the service Enhances service quality, enables on-time or more competitive delivery, or has a positive impact on price competition Customers would pay for this work if they knew you were doing it Tip: If it s not clear whether a task is value-added to your customers, imagine what would happen if you STOP doing it would your external or end-customer complain? If so, then it is likely a value-added activity Lean Six Sigma 6

7 What is Business-Value-Added? Activities that are required by the business to execute Value-Added work but do not add value from an external end customer viewpoint. Examples: Order entry/processing, entering G/L transactions, etc. Tip: If you STOPPED doing an activity would your internal customers complain? If yes, then it is probably Business-Value-Added Lean Six Sigma 7

8 What is Non-Value-Added or Waste? Activities that add no value from either the external end customer s perspective and are not required for financial, legal, or other business reasons. Tip: If you STOPPED doing an activity would any customers (internal or external) know the difference? If not, the work is probably Non-Value-Added Lean Six Sigma 8

9 Six Sigma Method Lean Six Sigma 9

10 Six Sigma aids in eliminating defects by reducing variability The objective of a Six Sigma program is to reduce process variation to such a degree that six sigmas of variation ( % yield) will fit within the specification limits defined by customers. Lower Specification Limit (LSL) Reduce Variation Upper Specification Limit (USL) Losses or delivered defects 2 6 Lean Six Sigma 10

11 Six Sigma DMAIC Approach Define the Problem? 1 DEFINE Maintain gains through standardization 5 CONTROL 2 MEASURE Focus the improvement effort by gathering info on current situation 4 IMPROVE 3 ANALYZE Develop and Implement Solutions Identify the Root Causes Lean Six Sigma 11

12 Six Sigma principles and techniques Customer Centric Focus on customer needs and requirements Standardized & Repeatable Reduce variation in products and processes Process Focused Training & Change Management Think process, not function Empower employees Data Driven Focus on facts, not perceptions Reduce Defects Seek first pass success Six Sigma provides methods for reducing process variability Lean Six Sigma 12

13 Factors directly impacting the customer s perception of service quality are called Critical-to-Quality (CTQ) Requirements Timeliness Responsiveness Completeness Accuracy Quality Consistency Accessibility & Convenience Courtesy Lean Six Sigma 13

14 What impact does variation have on a series of dependent events? Organization / Process E X Inputs A X B C X D X F Products Y Y Y X Input or Process Variable Y = f(x) Y Output Variable Each step (operation) in the process (A, B, C, etc.) don t always take same amount of time: variability. E.g., step A takes on average 5 hours +/- 1 hr to complete, step B takes on average 4 hrs +/- 1.5 hrs to complete, etc. Variability in steps (operations) builds up, variation does NOT balance out, it is amplified! Time to receive output will have greater variation then the average of each individual steps variation. E.g., the total process time will be much greater than the average of each step, with a much greater overall variability in time than the individual steps. Lesson: Internal variation does not average out and will result in poor output to the customer. Lean Six Sigma 14

15 Lean Method Lean Six Sigma 15

16 The Seven Deadly Wastes Seven Deadly Wastes Excessive motion Chasing approvals Searching for information Service Environment Waiting time Waiting for approvals Meetings and conference calls Value-Added Project Work ~35% Other Searching for information Approval Wait Time Meetings and Conference Calls Over-engineering product Unnecessary processing time Errors Rework Poorly defined or communicated customer requirements Excess resources lacking clear work activities Corporate policies getting in the way of accomplishing the tasks at hand Redundant or unnecessary paper work Transcribing information multiple times Failing to meet customer requirements Rework Excessive resources Poor resource leveling to meet demand Minimal understanding of bottlenecks Unnecessary handoffs Unnecessary approvals Verification loops Lean Six Sigma 16

17 Becoming Lean Make the value-creating steps flow Maximizing value by producing only what is desired in the shortest time possible with the least resources Pull to customer demand Produce at the rate of customer demand only Pursue perfection Relentlessly pursue the elimination of waste by empowering employees with waste elimination tools and entrenching a culture of continuous improvement Lean Six Sigma 17

18 Pursuing Perfection Innovation versus Continuous Improvement Innovation Continuous Improvement Innovation involves: great strides, it tends to be abrupt and volatile the knowledge of a select few individuals and requires significant expense Continuous Improvement involves: small steps, it is typically gradual and constant input from everyone and significantly less expense Lean Six Sigma 18

19 Summary Lean Six Sigma 19

20 Simplicity (Lean) Combining Lean and Six Sigma is a combination that drives greater improvements than either alone Six Sigma The relentless effort to systematically reduce variation Enterprise Lean The relentless effort to systematically reduce waste while improving the flow of value to the customer EPDM EPDM EPDM Pro EPDM Pro Interlink E EPDM EPDM EPDM EPDM EPDM Pro EPDM Pro Interlink E EPDM EPDM EPDM EPDM EPDM MAC PAC EPDM EPDM EPDM MAC EPDM PAC EPDM MAC PAC EPDM EPDM EPDM MAC EPDM PAC CADS CADS CADS CODS CODS PADR CADS PADR CODS CODS MAC TSO PAC Simple, low reliability Complex, low reliability TSO CODS CADS CODS CODS CVS PADR CODS CADS CADS Enterprise Lean / Six Sigma Simple, high reliability Complex, high reliability Reliability (Six Sigma) Lean Six Sigma 20

21 Lean Six Sigma projects touch all parts of the organization Cost Reduction Productivity Improvement Market-share Growth Customer Retention Cycle-time Reduction Error Reduction Culture Change Product/Service Development Lean Six Sigma 21

22 To-do's Lean Six Sigma 22

23 Identify Lean Six Sigma projects First filter: Eliminate inconsistencies Initial Voice of Customer (VOC), team experience Second filter: Interviews with key stakeholders to identify greatest pain points and opportunity areas Surveys with key groups in the organization to identify pain points and opportunity areas <List all projects> <List filtered projects> <List filtered projects> Final filter: Select representative projects Selected Projects Lean Six Sigma 23

24 Document as-is processes of selected projects Process E X Inputs A B C D F Products Y Y Y X Input or Process Variable Y = f(x) Y Output Variable Lean Six Sigma 24

25 Build high level roadmap and milestones (Sample) Selected Projects Roadmap ( ) 1. #Project 1 12/07 1/08 2/08 3/08 4/08 5/08 6/08 7/08 8/08 9/08 10/08 11/08 12/08 2. #Project 2 3. #Project 3 4. #Project 4 5. #Project 5 (1) Production Ready (1) Marketing, Selling & Ops Support (2) Production Ready (2) Marketing, Selling & Ops Support 6. #Project 6 7. #Project 7 (3)- Production Ready (3) Marketing, Selling & Ops Support (5) Marketing, Selling & Ops Support (3) Production Ready (6) Production Ready (7) Production Ready Milestone Lean Six Sigma 25

26 Organization Redesign Concept Create a high powered team focused on long-term value optimization Team Charter Goals and objectives Roles and responsibilities Cross-functional concerns and interdependencies Key milestones and measures Team Blueprint Milestone workplan & critical path Initial review of initiatives, processes, and technologies Lean Six Sigma 26

27 Make sure your resources get what they need or your customers won t You may recall Maslow s contention that an individual s most fundamental needs must be met before that individual can focus on higher order concerns. Hierarchy of Employee Needs Company Objectives Growth & Career Development Start by addressing basic employee needs so they can remain focused on the marketplace Research shows that employee satisfaction is highly correlated with customer satisfaction Affiliation/place in the organization and cultural fit Rewards (compensation and benefits), performance measures Security and clarity of employment status, title, role, leadership structure, authority, office location, open and honest communication Lean Six Sigma 27

28 Goals & Objective. Lean Six Sigma 28

29 Roles & Responsibilities. Lean Six Sigma 29

30 Cross functional concerns & interdependencies. Lean Six Sigma 30

31 Key milestones and measures. Lean Six Sigma 31

32 Milestones workplan & critical path. Lean Six Sigma 32

33 Initial review of initiatives, processes, and technologies. Lean Six Sigma 33

34 Appendix Lean Six Sigma 34

35 Program Resources # Name Org Job Title Lean Six Sigma 35

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