13. Documentation. In case you need it, here is my documentation example!

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2 In this brief FMEA or Risk Assessment Matrix example, we would give the most attention to the second step- - depositing the cash- - as it has a much higher risk priority rating (100 vs. 32). 13. Documentation People don t usually think of documentation as a tool, but no matter what you call it, documentation is a critical part of making things better- - the goal of Lean Six Sigma. Documentation comes in many forms; here are some of the most common and useful. Policies Procedures Work instructions Training requirement checklists Roles and responsibilities Job descriptions Performance metrics How Identify the problem or issue you are addressing in creating the documentation. When creating any form of documentation, make sure you have identified and included ALL OF the relevant stakeholders for input. The most often overlooked groups are human resources, training, and finance. The document should have a title, version, and date. Identify a time cycle or event that would lead to a review and necessary updating of the document. Make sure that the existence, purpose, and content of the document are well communicated. Use it To communicate standards and expectations about how a process step or job is performed To standardize how work is done for better results To ensure that minimum requirements for performance and compliance are being met To have a better idea of how to allocate resources To develop and guide performance expectations and results Typically, in the Improvement and Control phases of Lean Six Sigma In case you need it, here is my documentation example! A boutique hotel in Austin decided to open a restaurant on the property. The owner of the hotel called me in to help them, as she said, Do things right, this time. The hotel had grown organically, completely driven by the owner s vision. She was a very creative and innovative woman and hired creative and innovative employees. Most of her employees had music or art backgrounds and knew nothing about running a business. 101

3 I met with the new management of the restaurant and we decided that one of the key ways to ensure success would be to create policies and procedures that would guide the employees and management. We began by brainstorming the key functions of the restaurant. We used sticky notes to share our ideas. Then, we sifted and organized the post- it notes on the wall into natural categories. I then asked each participant to vote for three categories that they felt needed to be dealt with immediately. Conveniently, we were able to winnow the procedures down to about five that needed attention, pronto. One of the policies and procedures that needed attention was inventory control and ordering. If the restaurant staff didn t get this under control, they would likely double order inventory or under order inventory and run out of food! We began by asking, "ʺWhat is the key objective of inventory ordering?"ʺ What did they want to achieve? Then we asked who should be involved in this. Next, we did another sticky note map on the wall that detailed the procedure for ordering step- by- step. Sticky notes are useful for this sort of work because you can move them around to make space for additional steps you want to add. After everyone approved the process, I took the sticky notes away and typed them up in the following form: Ordering/Stocking Procedure- - Team Leaders Objective Don t run out of inventory yet minimize inventory OVERVIEW The Steps to Managing Inventory 1. Take a physical inventory & figure out what you need 2. Assemble & calculate dollar amount for order 3. See if you have the cash to pay for the order 4. Revise the order 5. Order from the vendor 6. Receive inventory from the vendor 7. Restock and organize Periodically check sales against purchases (or is this a separate procedure?) 102

4 STEP #1 Figure out what you need When should you do this? Who should do it? What tools are available? Step #2 Assemble order and calculate total When should you do this? Who should do it? What tools are available? STEP #3 See if you have the cash to pay for the order When should you do this? Steps: Compare inventory on hand to the inventory checklist (see ordering/stocking tools) Fill out the inventory checklist Question the staff about their inventory needs as described on the checklist Every morning The store manager Inventory checklist Steps: 1. For each item of inventory that is depleted per the inventory checklist: a. Determine the quantity desired b. Multiply the unit pricing by the total number of units to come up with a dollar total per inventory item 2. Total all individual inventory amounts to a total dollar amount for the order on the inventory checklist Every morning The store manager Inventory checklist complete with updated pricing of each inventory item Verify that you have enough cash to pay off the vendor for the order this week by looking at the latest financial data located at Every time you place an order. 103

5 Who should do it? What tools are available? STEP #4 Revise the order When should you do this? The store manager. QuickBooks reports? Cash flow report? If you are unable to pay for the order this week, revise the order quantities and recalculate the totals. Check in with other executive team members about their cash outflows and inflows this week. Every time you place an order. Who should do it? What tools are available? STEP #5 Order goods from the vendor When should you do this? Who should do it? What tools are available? The store manager. Inventory checklist complete with updated pricing on each item. Steps: 1. Choose the appropriate vendor from the vendor list 2. Read the vendor s list for any special vendor requirements--such as timing of order, timing of delivery, etc. 3. Call the vendor, making sure to cover items on the How to talk to a Vendor checklist. (see ordering/stocking tools) 4. Write down the items that the vendor agreed to deliver on an order sheet (see ordering/stocking tools) 5. Place the sheet in the basket hanging by the back door Every morning The store manager Vendor list How to Talk to a Vendor checklist Order form 104

6 STEP #6 Receive goods What do you do if the order is wrong or damaged? When should you do this? Who should do this? What tools are available? STEP #7 Restock When should you do this? Who should do this? Steps: 1. Check delivery against original order; use the receiving checklist hanging by the back door on a hook 2. Verify that: The goods received are listed on the vendor s invoice The vendor s invoice includes all of the things ordered on the order sheet (that is in the basket by the back door) The goods received are fresh and not damaged The weight of items received matches the weight ordered 1. Write down the items that are in error on the vendor s bill of lading (name?) and make a photo-copy (?) 2. Call the vendor to complain and follow their procedures for correcting the order and billing 3. Staple it to the order sheet and place it in the basket by the back door. As goods are delivered The assistant store manager Receiving checklist Order sheet Steps: 1. Place the orders received in the appropriate area-- kitchen, cleaning closet, etc. 2. If the item is perishable: make sure to arrange the items so that the oldest items will be used first (FIFO--first in/first out) 3. Throw away damaged or unusable inventory As goods are delivered The assistant store manager Though many of these steps are simple common sense and employees performed most of them without this document, having written documentation allowed for standardization and control- - key components of Lean Six Sigma and in building good systems. 105

7 The Top Thirteen Tools Believe it or not, you have finished the tools chapter! We recommend that you review this chapter from time to time, even if most of the tools were already familiar to you. As you become more comfortable with Lean Six Sigma, we predict that you will continuously discover new ways to use the tools or variations of them, to make improvements within your organization. 106

8 Study Questions for Chapter 5 OBJECTIVES: o Discriminate between Lean Six Sigma tools o Select an appropriate Lean Six Sigma tool for a task 1. Which of the following is a tool for identifying the data you want to collect? Process map. Pareto chart. Check sheet. Spaghetti diagram. 2. Which of the following tools is best used when you are trying to determine the likelihood of success of various action plans? FMEA risk assessment matrix. The 5 S s. The 5 Why s. Spaghetti diagram. 3. Bob has been with the company for 15 years and he does a fine job running your accounts payable department. However, he is a little set in his ways and you have had a hard time convincing him that he should make a few changes to help the organization improve its cash flow situation. Which of the following Lean Six Sigma tools might help you in your efforts? Check sheet. Brainstorming. The 5 S s. Benchmarking. 4. You operate a business that specializes in customizing software for companies. Which benchmark metric would you be measuring if you were to measure the time it takes for the customer to pay for the software from the time you deliver it to the company? DSO (Days Sales Outstanding). DSI (Days Supply of Inventory). DPO (Days Payables Outstanding). DTB (Days to Bill). 5. You sell steering wheel parts to auto manufacturers. Your Days Sales Outstanding (DSO) is 47 days, your Days Supply Inventory (DSI) is 20, and your Days Payable Outstanding (DPO) is 40. What is your total number of days in the cash conversion cycle?

9 The finance department always struggles with creating the year- end financial statements and they have a variety of triggers for their difficulties that most of the employees are aware of. This year, they have asked you to help them tackle just a few of their more significant problems but don t have the time or resources to tackle all of their issues until the spring. Which tool would help you prioritize your work? Spaghetti diagram. Benchmarking. Pareto diagram. Documentation. 7. What is the main difference between a value stream map and a process map? A value stream map incorporates cycle times. A process map identifies waste. A value stream map encourages result silos. A process map is created at an operational level. 8. You have decided that the best Six Sigma Tool to use to identify areas for improving the police department s filings of criminal reports is the value stream map. Which of the following steps will you apply first in value stream mapping (VSM)? Generate ideas about how a future map for filing criminal reports will look. Pinpoint which steps in the filing process add value, don t add value but are necessary, or are wasteful. Identify time and quality metrics of the steps involved in filing criminal reports. Name each main step in the process of filing a criminal report. 9. Which of the following would you make the head of the fish in a fishbone diagram? Each manager has his or her own company credit card. The former CFO did not require managers to document spending. The cause for excessive personal spending by all of management. The former CFO preferred not to reimburse employees for purchases. 10. When creating a cause and effect diagram for the administration of the University of Idaho, which cause categories will you most likely use? The 2 T s. The 4 S s. The 6 M s. The 8 P s. 11. Which of the following depicts a workflow diagram? 108

10 Machine (Equipment) Method (Process) Man (People) Budgets not backed up with evidence of how they got them Managers randomly change budget figures Annual expenses divided by 12 no season fluctuation Slow feedback Require clearance thru general ledger system Reason for budget variances Historic figures, old data No documented Policy and Proc. Budget items have poor category choices Measurement (Data) Materials Environment (Policy and procedures) 12. Your workspace has become extremely cluttered and dirty. It has become tiresome each time you start a new project since you have to dig through your piles and stacks and weed through your s to find crucial materials. In response, you begin to apply the five S s to get organized. What is the first step in the five S s? Clean. Place items in order. Discard unnecessary materials. Establish a routine. 13. Besides answering all calls and opening and directing all mail to appropriate recipients, the Housing Authority s secretary is responsible for receiving rent payments from low- income housing tenants. She does a remarkable job performing the everyday tasks but has difficulty maintaining concise records of tenants rent payments. Which tool might you use to help standardize and control this activity? Documentation. The risk assessment matrix. 109

11 The workflow diagram. The impact/effect matrix. 110

12 Answers to the Study Questions for Chapter 5 OBJECTIVES: o Discriminate between Lean Six Sigma tools o Select an appropriate Lean Six Sigma tool for a task 1. Which of the following is a tool for identifying the data you want to collect? Process map. Incorrect. A process map (or flow chart) is a picture of the steps needed to accomplish an activity. A process map is created after data is collected and does not help a practitioner collect data. Pareto chart. Incorrect. The Pareto chart is essentially a histogram or bar chart that puts the columns in order of size, with the largest bar on the right, cascading down by size. A Pareto chart, then, is a summary of data not a way to collect data. Check sheet. Correct. A check sheet is a simple, structured form used for collecting and analyzing data. The data is captured at the place and time it is being generated. In its most simple form a check sheet is a list of items or events you expect to see. A check mark is made next to that line item each time it occurs. Spaghetti diagram. Incorrect. A spaghetti diagram is a summary of information already collected. The output of this tool is an understanding of the flow of information, people, or products involved in accomplishing something. It is basic, but highly insightful, to see where waste is occurring in the form of extra running around, multiple handoffs (crossed lines), backtracking, etc. 2. Which of the following tools is best used when you are trying to determine the likelihood of success of various action plans? FMEA risk assessment matrix. Correct. Using a risk assessment matrix will help to decide where to spend time by looking at severity of a risk, the possibility that it will occur, and the ability to detect it. The higher the risk number, the more attention it deserves and the more it needs to have effective controls in place. The 5 S s. Incorrect. The 5 S technique includes sort, straighten up, shine, standardize, and sustain. It is most often used to clean up or organize a work area or to make improvements when people spend too much time tracking down information or materials to complete a process step or task. The 5 Why s. Incorrect. The five why s are used to uncover the root cause of a problem. Spaghetti diagram. Incorrect. A spaghetti diagram is a visual depiction of how silly a process has become. It demonstrates a lack of flow. 3. Bob has been with the company for 15 years and he does a fine job running your accounts payable department. However, he is a little set in his ways and you have had a hard time convincing him that he should make a few changes to help the organization improve its cash flow situation. Which of the following Lean Six Sigma tools might help you in your efforts? 111

13 Check sheet. Incorrect. Check sheets are used as you are gathering information about a situation. A check sheet is not likely to convince Bob of anything in particular. A summary of checklist data might be convincing maybe. Brainstorming. Incorrect. Brainstorming in this instance would involve asking Bob s group to come up with ideas to resolve the problem. Since Bob is not convinced that he has a problem, having a meeting to brainstorm a solution would probably be frustrating and futile. The 5 S s. Incorrect. The 5 S s are steps that an individual or group goes through to tidy up a physical space. Cleaning up Bob s work area will probably not contribute to an improvement in corporate cash flow. Benchmarking. Correct. Showing Bob what competitors are doing regarding cash flow and accounts payable might motivate him to action. Setting targets for Bob s group using information from competitors or industry standards could also drive improvements. 4. You operate a business that specializes in customizing software for companies. Which benchmark metric would you be measuring if you were to measure the time it takes for the customer to pay for the software from the time you deliver it to the company? DSO (Days Sales Outstanding). Correct. When you look at the Days Sales Outstanding in this business, you measure the number of days between delivering the software and receiving payment from the customer. You want this number to be LOW! DSI (Days Supply of Inventory). Incorrect. Days Supply of Inventory measures the number of days a company holds raw, in- process, or finished goods before it sells it to customers. Because you sell customized software, you will not have this inventory. DPO (Days Payables Outstanding). Incorrect. If you were to look at the Days Payables Outstanding in your business, you would measure the number of days between the time you receive items from suppliers to the time you pay them. In this business though, you will not likely have many suppliers. DTB (Days to Bill). Incorrect. Your software company will want to take a look at this metric! Days to Bill measures the time period between delivering the software (or other product) to a company and sending out an invoice. To minimize this measurement, you should send an invoice at the time of delivery. 5. You sell steering wheel parts to auto manufacturers. Your Days Sales Outstanding (DSO) is 47 days, your Days Supply Inventory (DSI) is 20, and your Days Payable Outstanding (DPO) is 40. What is your total number of days in the cash conversion cycle? 13. Incorrect. This answer was derived by adding together the DSI and the DPO ( = 60) and then subtracting the DSO (60 47 = 13). 27. Correct. The total number of days in the cash conversion cycle is calculated by adding the DSO and DSI together ( = 67) and then subtracting the DPO (67 40 = 27). You should work on reducing this number! 112

14 67. Incorrect. To get this answer, you added together the DSO and the DPO ( = 87) and then subtracted the DSI from this total (87 20 = 67). You could have also gotten this answer if you did not complete the calculation and only added together the DSO and the DSI Incorrect. The answer of 107 could be derived by adding together all metrics: DSO, DSI, and DPO ( ). 6. The finance department always struggles with creating the year- end financial statements and they have a variety of triggers for their difficulties that most of the employees are aware of. This year, they have asked you to help them tackle just a few of their more significant problems but don t have the time or resources to tackle all of their issues until the spring. Which tool would help you prioritize your work? Spaghetti diagram. Incorrect. A spaghetti diagram is not a tool that allows you to prioritize actions. It simply diagrams what is and it usually depicts a mess! Benchmarking. Incorrect. Benchmarking is used to evaluate the actions of others, such as competitors or industry leaders. Benchmarking will not help you prioritize your tasks, and you do not need it to convince the employees that improvements need to be made. Pareto diagram. Correct. A Pareto diagram will rank the errors and issues in order of frequency and can help you determine which issues trigger the most problems. Pareto argued that 80% of problems are caused by 20% of the errors. Maybe your efforts on just a few issues per their request will solve 80% of their problems. Documentation. Incorrect. Documentation is important to help you remember what you did and why and also to evidence your efforts to others. But documentation in itself does prompt prioritization of issues. 7. What is the main difference between a value stream map and a process map? A value stream map incorporates cycle times. Correct. A value stream map is an enhanced version of a process map in that it has more data on it, including cycle times. A process map identifies waste. Incorrect. A process map doesn t necessarily identify steps of the process as wasteful. A process map is simple and identifies steps of the process. A value stream map encourages result silos. Incorrect. A value stream works against silos or activities that are selfishly concerned with only one department and could be performed at the detriment of another department. A process map is created at an operational level. Incorrect. Both value stream maps and process maps can be created at the operational and strategic levels. 8. You have decided that the best Six Sigma Tool to use to identify areas for improving the police department s filings of criminal reports is the value stream map. Which of the following steps will you apply first in value stream mapping (VSM)? Generate ideas about how a future map for filing criminal reports will look. Incorrect. The final step in the process of creating a value stream map is to envision a value stream 113

15 map of the future. This value stream map should eliminate non- value added and unnecessary steps and will be an improvement goal. Pinpoint which steps in the filing process add value, don t add value but are necessary, or are wasteful. Incorrect. The fourth step of value stream mapping is to clarify which step is crucial to the customers bottom line. This means you will identify which steps are value added, non- value added but crucial, and non- value added and unnecessary. Identify time and quality metrics of the steps involved in filing criminal reports. Incorrect. The third step in the process of developing a VSM is to identify any time or quality metrics to each step of filing a criminal report. Name each main step in the process of filing a criminal report. Correct. The first of the five steps in doing a VSM is to identify the level and the scope of your effort, which you have identified as the process of filing criminal reports for the police department. Afterwards, you need to identify the main steps involved in filing a criminal complaint. 9. Which of the following would you make the head of the fish in a fishbone diagram? Each manager has his or her own company credit card. Incorrect. This major cause of the managers excessive spending would be drawn as a diagonal spine off of the horizontal line stemming from the head of the fish. Because the former CFO failed to require managers to document their spending, the managers felt less constrained to make personal purchases. Thus, this is a major cause of the managers excessive spending. The former CFO did not require managers to document spending. Incorrect. Because the former CFO failed to require managers to document their spending, the managers felt less constrained to make personal purchases. Thus, this is a major cause of the managers excessive spending. The cause for excessive personal spending by all of management. Correct. The head of the fish is the cause or the reason for the problem; it is the effect to be examined. Thus, in this scenario, the effect that you are examining is the reason that managers are spending company funds on personal items. The former CFO preferred not to reimburse employees for purchases. Incorrect. Because the former CFO preferred not to reimburse employees for company purchases, he authorized the distribution of company credit cards to all managers. This would be drawn as a line off of the main cause. 10. When creating a cause and effect diagram for the administration of the University of Idaho, which cause categories will you most likely use? The 2 T s. Incorrect. The course material identifies three typical cause categories of an effect : the 4 S s, the 6 M s, and the 8 P s. The 2 T s are not identified as a cause category for these purposes. The 4 S s. Incorrect. Service industries may have the 4 S s as its main cause categories of the problem. The 4 S s include surroundings, suppliers, systems, and skills. Service industries might also have the 8 P s as its cause categories for a cause and effect diagram. 114

16 The 6 M s. Incorrect. The 6 M s, which include machine, method, materials, measurement, man, and mother nature, are most often used for manufacturing purposes, not for administrative purposes. The 8 P s. Correct. A university s administration would most likely use the 8 P s, which are price, promotion, people, processes, place/plant, policies, procedures, and products. 11. Which of the following depicts a workflow diagram? Correct. This diagram depicts a workflow, or spaghetti, diagram. It shows the movement of either a person or a thing. Machine (Equipment) Method (Process) Budgets not backed up with evidence of how they got them Man (People) Managers randomly change budget figures Historic figures, old data Budget items have poor category choices Annual expenses divided by 12 no season fluctuation Slow feedback Require clearance thru general ledger system No documented Policy and Proc. Reason for budget variances Measurement Materials (Data) Environment (Policy and procedures) Incorrect. This is an example of a fishbone diagram. It shows an effect and the main causes of the effect. Incorrect. This depicts a value stream map. Incorrect. This Lean Six Sigma tool is a process map with swim lanes. 12. Your workspace has become extremely cluttered and dirty. It has become tiresome each time you start a new project since you have to dig through your piles and stacks and weed through your s to find crucial materials. In response, you begin to apply the five S s to get organized. What is the first step in the five S s? 115

17 Clean. Incorrect. The third step is to shine or clean the workspace. This cannot be done easily when the workspace is cluttered. Place items in order. Incorrect. In the second step, you will straighten up or place papers, files, or s in an order that makes them easily retrievable. Discard unnecessary materials. Correct. As the first step in the five S s, you will sort papers, files, and s and discard unnecessary materials. Establish a routine. Incorrect. The fourth step in the five S s is to standardize or create a routine of applying the first three steps. 13. Besides answering all calls and opening and directing all mail to appropriate recipients, the Housing Authority s secretary is responsible for receiving rent payments from low- income housing tenants. She does a remarkable job performing the everyday tasks but has difficulty maintaining concise records of tenants rent payments. Which tool might you use to help standardize and control this activity? Documentation. Correct. Documenting for the secretary the procedures to follow when receiving rents will give her a guide on how this activity should be performed. While she may perform some of it without such a guide, the documentation will allow her to complete the tasks in the same order each time. The risk assessment matrix. Incorrect. The risk assessment matrix is not typically used for standardization or control purposes. Instead, you might have used this tool to identify the lack of controls for this activity in comparison to other activities. Such a tool could show you that you need to improve the accounts receivable process. The workflow diagram. Incorrect. The workflow diagram would not be used as a standardization or control tool. Rather, you might use the workflow diagram to show the current movement of either the secretary or the rent payments once they enter the Housing Authority. The impact/effect matrix. Incorrect. You might have used the impact/effect matrix to identify the impact and effort required by the secretary to complete your job responsibilities. And, in this circumstance, the activity involving the greatest impact and least effort to focus on turned out to be the task of maintaining concise records of rent payments. 116

18 CHAPTER 6: THE DMAIC PROCESS Objectives for this chapter: Define the phases of the DMAIC model Choose appropriate tools for each phase of the DMAIC model Classify activities of process improvement into the phases of the DMAIC process As we said in an earlier chapter, there are various process improvement models in existence and DMAIC is one of the most widely used. Pronounced duh- MAY- ik, this process is the key framework for more in depth Lean Six Sigma projects and is used widely in business problem solving. The DMAIC Phases Define * Measure * Analyze * Improve * Control This sequence can also be used to structure a Kaizen even, which is a much shorter and more focused activity than DMAIC. We detail Kaizen in the next chapter, but provide some comparison here to help define what DMAIC is and is not. DMAIC and Kaizen DMAIC and Kaizen are two approaches to doing Lean Six Sigma. Though there is overlap, like when the DMAIC sequence is used to organize a Kaizen event, the overall intent of each is very different. Let s look at what makes them different below. What do they do? DMAIC projects are best used when significant organizational, cultural, or process changes will result from implementation of the solution particularly if the solution involves something like the restructuring of a department or major realignment of job functions. The DMAIC framework allows ample time to investigate the risk inherent to larger change initiatives. Kaizen events are for quick hits that involve relatively less risk and can be accomplished in a day. Solutions implemented after a Kaizen event would be things like changing documentation or conducting simple training. What is the scope and complexity of the project? DMAIC projects focus on questions and problems where the root cause is not obvious. Cross- functional teams must be assembled for longer periods of time, say three months, in order to gather extensive 117

19 data, analyze, and implement a full- scale solution. Kaizen events normally take one week or less, have much smaller scope, and the problem solution is much simpler. What resources are allocated? DMAIC projects use specially trained Black Belts to work on projects as their full- time jobs. Team members work on the project part- time and continue with their normal jobs. In a Kaizen event, all members of the team focus ONLY on the project for its duration. An outside consultant may be used for facilitation. What is the focus of the team? In a DMAIC project, the team initially helps to define the problem statement and the measures (the D and M ), as well as to later participate in the AIC phases if it relates to their respective job function. For large projects, identifying stakeholders and setting up the definition and family of measures can take more time than analyzing root cause and possible solutions. Within a Kaizen event, the problem definition and measures are usually set up prior to the actual work on the project by the team. The group focuses on the improvement phase. If this is still confusing to you, re- read this after you have read the following chapter on Kaizen. DMAIC and OESH To add to the confusion, (or hopefully to reduce it) let s briefly compare the DMAIC and OESH models. In a nutshell, DMAIC is roughly the same as the Organizing * Executing * Sustaining * Honoring phases in OESH in that some of the same overall activities take place. The main differences are that OESH includes the Honoring phase, which is present during all the other OESH phases. Also, OESH has three specific steps- - including focusing on value added analysis- - within the Executing phase, which DMAIC does not have. Let s look at the figure below that compares the models side by side. 118

20 OESH and DMAIC MODELS compared OESH Organizing Executing Sustaining Reduce non-va Improve cycle time Reduce variation Honoring DMAIC Define Measure Analyze Improve Control We now return to the DMAIC explanation! How the DMAIC process works When conducting a DMAIC project, a project team follows these five phases or steps beginning with problem definition and concluding with the implementation of a solution to solve the underlying root causes. At the end, establishing standards, reviews, and best practices will help ensure that problem solutions stay in place and changes are sustained. The team s goal is to look at the current state or as- is situation, formulate a desired future state or should be situation, figure out the gaps between these, and address the gaps. The use of tools in DMAIC is also important. Here is a summary of the tools we discussed in an earlier chapter, along with the DMAIC phase(s) where they are most often used. 119

21 Tools for each DMAIC Phase DEFINE MEASURE ANALYZE IMPROVE CONTROL Brainstorming Brainstorming Brainstorming Brainstorming Brainstorming Benchmarking Check Sheets Check Sheets Benchmarking Benchmarking Process maps Pareto Charts Pareto Charts Process Maps FMEA Five Whys Five S's Documentation Cause and Effect Diagram Impact/Effort Matrix Spaghetti diagram Spaghetti diagram FMEA Documentation With these tools in mind, we now look at the DMAIC process, step- by- step and in detail. 1. DEFINE The purpose of the define step is to have the team and its executive sponsor decide upon the scope, goals, and performance targets for the Lean Six Sigma project. These are the basic elements of a project charter- - the document that sets up the project and formalizes it. While projects may differ depending on scope and expected outcome, the following are basic components or activities within the define phase. Clearly define the problem without speculating on a solution. An example of a problem statement might be to improve our external customer satisfaction ratings by 35%, from a basis of an average of a 4 out of 5 approval rating, within six months. The problem statement should include the thing to be improved, the amount of expected improvement from a baseline, and the timeframe for improvement. Some of this information is not obvious and has to be gathered within the define phase. Determine key stakeholders for the project and process. These can often be conflicting forces. For example, in improving the customer satisfaction there is the external customer who wants better service and the internal customer, who wants to cut the cost of customer service. Both customer sets need to be included as stakeholders if the project is to be successful in the long run. Understand what customer problem you are solving. Customer research such as focus groups, surveys, and interviews may be undertaken at this stage. It is important to define the problem in customer terms so that you are solving the right problem. Understand what is critical to quality. That is, what elements have to be included in or addressed in the project to make it successful in the eyes of the stakeholders? These can 120

22 start as high- level things like good service, easy to contact, or provides information that is useful, and will flow down to specific metrics in the measure phase. In the early example about the IRS, the critical to quality elements were timeliness, accuracy, and professionalism. Make projections on financial impact. Create a cost- benefit analysis (CBA) using existing data, showing expected impact of a successful project to the bottom line. Confirm that management is in agreement with the projections and timeline for results to be shown. Remember that full implementation of process improvements often takes several months after the actual project is completed. Be realistic about when benefits will be seen. Understand the process in question by using detailed process maps. Be careful to construct an as is flow versus a should be flow. You want to know only how things are done currently, as a basis for finding root cause. Make sure you have the right people on the team and that they are committed to the project. Team members need to have similar expectations about what is to be accomplished and about their role and level of participation. Because the ability of the team to function well together is so important to the success of the project, some time may be spent on team- building exercises- - particularly if team members are not all in the same location. 2. MEASURE A key component of a full- blown DMAIC project is the requirement for extensive data. This is a big difference from a Kaizen event, where the data requirement is much less. The following are components of the measure phase. Determine what you need to measure. This can be a complex activity of drilling down through the critical to quality elements from the define phase, to attach relevant metrics. You want to set up a balanced family of metrics and will often need to have both results metrics that show the outcome of a process or process step and operational or process metrics that show aspects of how well a process is operating. You saw an example of a balanced family of metrics in the chapter on Six Sigma Concepts. Figure out how to get the data you need. Often the data sets on what you want to measure do not exist or are not accessible. Creating and validating data sets can be very time- consuming work. (This includes getting enough data for data sets to be statistically sound. There are bodies of work just around how to set up and evaluate measurement systems!) One easy way of collecting data is the check sheet- - as discussed in the Tools chapter. 121

23 Compile data for baseline metrics. This means putting metrics to the as is state of the process you seek to improve. These measures can be for cycle time, quality, errors- - anything that is meaningful to the process and stakeholders! Test for capability and stability of the as is process. This can be done through fairly complex statistical work or as simply as plotting the plotting sets of data to see what patterns show. Because these tests are important in eventually reducing variation, they are included in this list. For a simpler start with DMAIC, however, you should not be held up by this (i.e. don t have to do it). Validate the appropriateness of your chosen metrics. This can be one of the most fun parts of the measure phase, because it means that you get to do a physical walk through of the process to get an idea of whether you are measuring the right things. Watch how the process actually works by seeing how people to their jobs. Think about what you are measuring and what the measures show about the process (or not). You might want to make some changes. 3. ANALYZE The objective in the analyze phase is to figure out root causes of things that are standing in between your current state or as is process, and the goals identified in your initial problem statement. One area of differentiation between analyze in a more formal DMAIC project versus a Kaizen event is the extensive use of data in full DMAIC projects. In a Kaizen event, this phase is more dependent on anecdotal data or experience. In a DMAIC project, the data drives you to conclusions about root causes- - even though the root causes can be quite different from what you expected. Basic parts of the analyze phase include: Use of tools to find root cause. The starting point to finding problems in a process is usually the as- is process map. As you now know from earlier chapters, some of these tools are the cause and effect diagram, the 5 why s, Pareto analysis, etc. Looking at cycle time. If increasing efficiency by speeding up a process is part of the project goal, you can turn the process map into a value stream map by adding and analyzing the lead- time and process time. This is often referred to as process analysis. Value stream mapping will be discussed in detail in a later chapter. Prioritize root causes of unwanted waste and variation. Link these to the outputs you most want to change. This will help show what areas you will be addressing in the next phase. 122

24 Realign team if necessary. Depending on where the main root causes lie, you may need different expertise on the team before moving into the improvement phase. 4. IMPROVE The goal of the Improve phase is to develop and deliver changes that will address and fix the root causes identified in the ANALYZE phase, which will get you to the should be state. The improvements need to be measured by and against the metrics set up in the baseline and must be sustainable. Typical elements of the improve stage include: Generate ideas on how to address prioritized root causes. This is often done through brainstorming and benchmarking. Even more than in the other phases, it is important for the team to include individuals who are engaged first hand in the process, to be part of the solution. Evaluate and prioritize these ideas. Use impact/effort matrix and operational modeling/scenario building to get an idea of how ideas might affect the process. Use FMEA analysis to see if potential improvements create other risks or problems that will need to be controlled. Select best ideas or solutions and build them into a should be process map. This is the basis of communications to everyone involved in the process improvements, as well as to management sponsors. Pilot new ideas to validate them. While a pilot will not give you identical results to real life, when done well, it can give good directional information about full rollout or implementation. Make sure to run the pilot for long enough to attain a meaningful data sample. Pilot results should be compared to baseline metrics and show positive results; otherwise, start again after refining the process. Develop a deployment plan for full implementation. Based on results of pilot(s), develop a plan for full execution of improvements. Due to the often large nature of the deployment and change, it can be good to do a rolling deployment- - one area, section, or region at a time- - and to use newly trained individuals from one deployment to help gear up for and manage the next. 5. CONTROL The final DMAIC phase is a critical safeguard for the new process once it is rolled out. In this stage, standards are set and communicated. Implementation of a new process is usually ongoing through the control phase. The project team transitions ownership of the new process to a sustaining team once improvements and metrics are stabilized. 123

25 Within the control phase, the following generally takes place: Create and document the new standard(s). New process, along with roles, responsibilities, and metrics need to be documented and disseminated. This is the documentation tool! Continue to work through implementation deployment. Make tweaks to the process as needed while the process moves from lab to production or real- time use. Update standards as needed. Create plans to make sure the new process is being followed correctly. This can involve audits, inspections, or dual accountability for tasks and processes until it is certain that the new process or activities are being done. Creating and following a robust audit plan (for example) for a period of three to six months can save on future headaches. Refine process and standards. As lessons are learned through the deployment, continue to make improvements and document them- - and include them in the on- going rollout. Review results with management. Though this is done throughout the DMAIC process, in this phase, the real results begin to accrue. Keep executive sponsorship updated on changes and any extra resource requirements needed to get through the deployment. Determine criteria for hand- off. Decide at what point the new process is stable enough and when the metrics for the new process (against baseline) show adequate improvement. When this point is reached, the project team disengages and regular process owners take over the sustaining role, though transition should be gradual. Validate the initial cost benefit analysis. Once the new process has stabilized and is in the sustaining phase, show savings. Hopefully, this is not much different from the original cost- benefit projections made in the define phase. Celebrate and publicize project results. A typical DMAIC project can take up to a year for full implementation. Be sure to celebrate successes and to publicize project results. Doing so will provide the basis for support and success when other projects are initiated. USING DMAIC- - A Scenario This chapter on DMAIC is fairly intense and may seem complicated. The example below is intended to show that DMAIC can be used fairly simply as a sensible problem- solving flow. Here s the scene: A manufacturer of oilrig drill bits and equipment wanted to make sure that all managers and decision makers had access to the most current performance data regarding sales, profit, and 124

26 manufacturing output. Like many organizations, the company was focused on achieving the forecasts it had promised to Wall Street. In order to achieve those forecast goals- - gross margin, operating margin, units sold, return on investment, and the like- - the company divided their annual projections into quarterly internal projections and their quarterly projections into weekly projections and their weekly projections into daily projections. One perceptive director noticed that divisions often worked against each other instead of together toward a common goal. For instance, the marketing department once offered a free lifetime warranty on all products. The marketing and sales departments easily met their weekly sales targets, but four months later, the customer care/warranty department suffered a blow to their metrics when their warranty budget was consumed in the first half of the year. In another example, the sales force, in order to increase the profit margins they were reporting, pushed high margin products and ignored low margin products. The manufacturing departments were unable to fulfill the demand for the high margin products because they had not geared their production toward these products. Customers ended up waiting too long for many of their products and cancelled orders. This adversely affected both the manufacturing department (who was criticized for taking too long to get the products to the customer) and the sales department (who suffered damaged relationships with the client and who never received their commissions for cancelled orders). The perceptive director decided that one reason this was happening was that the financial information and other key metrics were silo- ed. Because the finance division was splintered and served each division individually, no one could see the big picture impact of their decisions. He called for an increased sharing of information and for more timely information. At that time, many of the mistakes that were made were not caught until a month or more after the fact- - and by then, more damage had been done and was continuing to be done. This director s idea was to create a master, daily report of key business metrics that would be accessible to all stakeholders and decision makers within the company. In order to pull this off, a Lean Six Sigma project team expert took on the task of pulling all of the data together and creating a system for delivering the data consistently and promptly. After eight months, the final product was a daily metrics report that included key data including: Profit margins per product line and in total Warranty expense per product line and in total Number of units shipped Number of units in process Number of units backordered How quickly products were manufactured and shipped 125

27 How were sales being made? (Through relationships/salespeople, by phone, by internet, by retailers, etc.) Delivery time to customers In this example, the DMAIC steps or thought process would be something like this: DEFINE phase: Financial and operating data is not available in the right format to the right groups, which is affecting performance. A better way of doing things is needed. MEASURE phase: Determine the magnitude or effect this problem is causing in financial terms. Show where the pain is being felt. ANALYZE phase. Figure out why this problem is happening: why the data is not in the right format and why it is not going to the right groups. What are the gaps between where we are and where we SHOULD be? The main problem is that financial info is silo- ed and not centralized. IMPROVE phase: Of the problem causes we came up with in ANALYZE, which one(s) are going to be easiest and most effective to implement. It looks like we need to create a centralized reporting mechanism from which reports can be tailored to meet the needs of all key stakeholders. And, like in the IRS example, the metrics need to tie to performance and to be timely and accurate. CONTROL phase: In order to make sure the information flow is regular and standardized, IT created an automated system for managing, delivering, and continuously improving the quality of reports. The creation, testing, and implementation of the IT reporting to work in conjunction with business processes took most of the eight months. That wasn t too complicated, right? 126

28 Study Questions for Chapter 6 OBJECTIVES: o Define the phases of the DMAIC model o Choose appropriate tools for each phase of the DMAIC model o Classify activities of process improvement into the phases of the DMAIC process 1. What is the significant difference between DMAIC structured projects and Kaizen projects? Kaizen projects must be led by Six Sigma black belts. DMAIC projects allow ample time for investigation. Kaizen projects are complete restructurings. DMAIC projects require the complete focus of the team for the duration. 2. Which of the following Lean Six Sigma tools is usable in every phase of the DMAIC process? Pareto charts. Benchmarking. Brainstorming. Cause and effect diagram. 3. Which of the following activities occurs during the improvement phase of the DMAIC process? Build best ideas into a should be process map. Use tools to uncover the root cause. Figure out how to get the data needed. Make projections of financial impact. 127