Lean Six Sigma. Applications to Transactional & Service Process Environments

Transcription

1 Lean Six Sigma Applications to Transactional & Service Process Environments

2 WHAT IS VARIATION? Obtaining different results when the same thing is done repeatedly WHAT IS WASTE? ANYTHING not done right the first time ANYTHING that introduces delay into a process 0-02 Lean Six Sigma History Slide 2

3 Objectives Understand the market and workplace forces driving the need for Lean Six Sigma in the Transactional environment Key Lean Six Sigma Tenets Key differences between Manufacturing and Transactional/Service Environments Case Study Transactional Environment (Quoting) 0-02 Lean Six Sigma History Slide 3

4 Traditional Performance Paradigm In the past, companies believed a gain in one performance area required a trade off in one or more of the other dimensions. Shorter Cycle Times Improved Process Quality For example, to decrease cycle time firms hired more people, which drove up costs, while process quality suffered to get tasks completed. Lower Costs 0-02 Lean Six Sigma History Slide 4

5 New Performance Paradigm The new paradigm says a performance gain in one area requires or will result in performance gains in the other dimensions. For example, achieving a sustainable decrease in cycle times require that rework, errors, and other inefficiencies be eliminated in the process, resulting in higher quality and lower costs. Shorter Cycle Times Lower Costs Improved Process Quality 0-02 Lean Six Sigma History Slide 5

6 The Lean Six Sigma Strategy To implement the new paradigm, companies turned to two major process improvement strategies Lean and Six Sigma. Lean focuses on reduced lead time and reduced costs. Shorter Cycle Times Lean Six Sigma Improved Process Quality Six Sigma focuses on improved quality and reduced costs. Lean Six Sigma combines the benefits and power of both strategies. Lower Costs 0-02 Lean Six Sigma History Slide 6

7 Lean Production History Concept pioneered by Toyota Adopted by other Japanese manufacturers Discovered much later by Western manufacturers Known by many names: Toyota Production System Just-In-Time Lean production Originally focused on reducing waste in manufacturing Now huge gains are being achieved by applying Lean to transactional and service environments 0-02 Lean Six Sigma History Slide 7

8 Lean Focuses on Eliminating the Seven Deadly Wastes (TIM T. WOOD) Waste in Transportation Waste of Inventory (Excess Stock on Hand) Waste of Movement (Excess Worker Motion) Waste of Talent (Employee knowledge, talents) Waste of Waiting (Idle Time) Waste of Overproduction (Currently Unneeded Stock) Waste of Over Processing (Misused Capacity) Waste of Defective Products The Seven Deadly Wastes are inherent in EVERY process Lean provides the methodology, tools, and techniques to reduce and eliminate them! 0-02 Lean Six Sigma History Slide 8

9 Six Sigma History Motorola was the first advocate in the 80 s; gathered momentum in late 80 s/early 90 s Six Sigma involves use of statistical tools and structured problem-solving approach to attack high payback projects Project implementers called Black Belts and Change Agents Also being applied very successfully in transactional & service environments 0-02 Lean Six Sigma History Slide 9

10 Six Sigma Terminology Sigma ( ) = Standard Deviation Key measure of variability Emphasizes the need to control both the average and variability of a process Six Sigma Quality Sigma Quality Level (SQL): measure used to indicate how often defects are likely to occur Realization that 99% Yield is not good enough, examples: Unsafe drinking water almost 15 minutes each day 2 short or long landings at most major airports each day No electricity for almost 7 hours per month Six Sigma Quality = 3.4 Defects per Million Opportunities (DPMOs) 0-02 Lean Six Sigma History Slide 10

11 Lean Six Sigma Framework Define: Clearly define the problem that needs to be solved Measure: Map the process & gather data Processes may be mapped already; if not map them Data may be available; if not, get it; or utilize information / tribal knowledge to estimate Analyze: Brainstorm or use Statistical methods to find root cause Use Cause & Effect Diagram or 5-Why Statistical methods: Hypothesis testing Improve: Develop potential solutions that address root causes Rank order solutions (if more than 1) Test & Validate Solutions Control: Put a plan in place to hold the gains Error-Proofing: Make mistakes impossible OR Make mistakes so obvious, they can be corrected immediately Implementation plan: Assign accountabilities and responsibilities 0-02 Lean Six Sigma History Slide 11

12 How do YOU define (in Payroll): The CUSTOMER Waste? Poor Quality? Exercise! Capacity? Costs? 0-02 Lean Six Sigma History Slide 12

13 Why Do These Problems Require Both Lean and Six Sigma? Inconsistent processes/quality negatively affects customers & business In a value stream, material spends 95% of its time waiting Poor quality increases cycle times 10% rework/scrap can increase cycles time by 40% & reduces capacity Slow cycle times reduce the rate of quality improvement Capacity problems are masked by slow cycle times Lean tools accelerate cycle time reduction and Six Sigma brings a process under control Lean Six Sigma optimizes capacity, reduces lead time, and eliminates variability in all processes 0-02 Lean Six Sigma History Slide 13

14 Six Sigma and Lean Contributions Six Sigma is the Unifying Framework Six Sigma provides the over-riding methodology (DMAIC and DFLSS) Six Sigma provides the improvement infrastructure Six Sigma provides the burning platform for improvement Lean provides: Key measure and analyze tools to visualize problems and pin-point where to improve Powerful improvement tools to turbo-charge improvement efforts by reducing waste and increasing process speed 0-02 Lean Six Sigma History Slide 14

15 Lean Six Sigma Employs the Evolved Deployment Model for Success Train Business Leaders to use a rigorous Value Based Project Selection process Analyze each business to understand relative opportunity of process improvement vs. offering complexity reduction Strategy Integration Focus Execution Train Black Belts and Green Belts in Lean Six Sigma DMAIC and Team Leadership Implement a Projects in Process management system and stage gating Train Project Sponsors to ensure accountability and long-term results Leverage experts to support reduction of offering complexity Quality of Thinking Building Infrastructure Commitment Rapidly deploy the best people as Black Belts in a critical mass Create an effective organization of improvement resources in line organizations Implement a rigorous process for measurement and tracking of project financial results Integrate Lean Six Sigma into the daily management practices of the business 0-02 Lean Six Sigma History Slide 15

16 Lean and Six Sigma Are Essential for the Success of the Company Lean Speed + Waste Reduction + Implicit Infrastructure Goal Reduce waste and increase process speed Six Sigma Quality + Cost + Explicit Infrastructure Goal Improve performance on Customer Critical Requirements Focus Bias for action/ Implementing Toyota tools Method Kaizen events, Value Stream Mapping Lean Speed Enables Six Sigma Quality (Faster Cycles of Experimentation/learning) Focus Use DMAIC with Total Quality Management tools to eliminate variation Method Management engagement, 1% dedicated as Champions and Black Belts Six Sigma Quality Enables Lean Speed (Fewer Defects Means Less Time Spent on Rework) 0-02 Lean Six Sigma History Slide 16

17 Lean Six Sigma Must Be Applied to All Processes, Not Just Manufacturing Customer Facing Processes Pricing/Quotations Order Management Customer Service Accounts Receivable Internal Business Processes Engineering Change Notice Cycle Production Scheduling Cycle All can and should be attacked using Lean Six Sigma quality and time tools 0-02 Lean Six Sigma History Slide 17

18 Manufacturing vs Transactional Environments

19 Key Differences between Manufacturing and Transactional Environments Transactional/Service Environments Less Tangible Often electronic-based Processes often: Decision / approval-based Interdependent (non linear) & Cross-Functional Quality, defects, waste, etc are relatively invisible (not measured) or not evident until experienced by customer Because of this, we need to think more broadly about the Lean Six Sigma discipline and apply the right tools for the problems at hand 0-02 Lean Six Sigma History Slide 19

20 Case Study: Improving Quoting Process