Integration of Lean and Six Sigma for Maximizing Benefits Harry Shah, Ph.D. Lean Six Sigma MBB Business Excellence Consulting harry.shah@bizxlnc.com Mani Janakiram, Ph.D. Lean Six Sigma MBB Intel Corporation mani.janakiram@intel.com ASQ Lean & Six Sigma Conference - March 2010 Session H3 1 Topics Business Environment History of Lean and Six Sigma What is Lean? What is Six Sigma? Integration of Lean and Six Sigma Case Study Integration Strategy and Summary 2 1
Business Environment Today s leaders face a new reality. They need to: continuously improve business processes achieve breakthrough improvements achieve sustainable results improve processes in a timely manner They must consistently generate month-to-month financial results while continuously building a long term sustainable business model. Fierce new competitors, demanding customers, tight talent supplies, fluctuating markets and impatient investors add to the complexity. Past management approaches are no longer effective in this environment. 3 History - Lean & Six Sigma 1896 Sakichi Toyoda s power loom equipped with auto-stoppage device 1924 World s first automatic loom with zero changeover 1938 Flow production implemented in Toyota s first automobile factory 1945 Development of the Toyota Production System begins Quick die changeover machines implemented 1960 Pull system and kanban deployed across Toyota 1962 a a a a 1900 1920 1940 1960 1980 2000 a a a a Toyota wins Deming Application Prize 1965 General Motors forms first joint venture with Toyota to apply TPS - 1984 Six Sigma methodology introduced at Motorola - 1986 MIT publishes The Machine that Changed the World - 1990 GE adopts Six Sigma - 1995 Six Sigma adopted by financial services & hospitality industries - 2000 Lean Or Six Sigma? 4 2
What is Lean? Definition: Lean enables the production and delivery of the right amount of high quality products and services (as defined by your customers) at the right time, the first time, while minimizing waste. Principles: Specify the value from customer s perspective Identify the value stream for each process step Allow value step to flow at the pull of the customer Pursue perfection Empower and involve all employees 5 Lean Focus: Efficiency Speed/Throughput Elimination of Wastes (Muda) - TIMWOOD Transportation, Inventory, Motion, Waiting, Over Production, Over Processing, Defect Gemba (Place of Action) Goals: Improve process lead time and meet customer demands by: Reducing/eliminating non-value added and required non-value added steps Improving value added steps Reducing WIP (Inventory) Synchronizing operations 6 3
Little s Law Lean utilizes fundamental law called Little s Law to increase speed/throughput Process Lead Time = Work In Process Exit Rate Work in Process (WIP) Input Step 1 Step 2 Step 3 Step 4 Output Exit Rate (ER) Process Lead Time (PLT) 7 5-S Lean Tool Examples Line Balancing Theory of Constraints Simulation Pull System/Kanban/JIT Value Stream One Piece Flow Mapping Kaizen (Continuous Improvement) Setup Reduction Setup Reduction Setup Time Available Run Time Before Setup Available Run Time Time After I H G Pull System/Kanban One-Piece Flow A B C D F E Process Step 1 Kanban Material Process Step 2 Theory of Constraint Operation Time 14 12 10 8 6 4 2 0 Operation 1 Operation 2 Operation 3 Operation 4 Operation 5 Takt Time Operation 6 Operation 7 Value Stream Mapping 8 4
What is Six Sigma? Definition: Six Sigma is a management philosophy that seeks to increase customer satisfaction and profitability by improving business processes Principles: View performance from the position of the customer Make data driven decisions Use standard methodology (DMAIC) Establish governance Dedicate resources (~10%) Business Impact Catalyst to Drive Methodology Change Metric 9 1980 2000 Six Sigma Focus: Effectiveness Defects/Quality Model Based Analysis Y = f(x) Root Cause Elimination Vital Few (High Valued) Projects Goals: Improve quality and meet customer demands by: Reducing/Eliminating Defects Improving Process Capability/Product Reliability Improving both Revenue and Cost Leadership and Change Management 10 5
Six Sigma as a Metric Focus is on defect reduction Anything that does not Meet the Customers Expectations is a defect Six Sigma = 3.4 DPMO 11 Six Sigma Tool Examples Basic Problem Solving Tools Process Flow Diagram Pareto Diagram (80:20 rule) Cause & Effect Diagram Histogram Scatter Plot Box Plots Advanced Problem Solving Tools Sources of Variation Comparative Methods Design of Experiments Regression Analysis Multivariate analysis 12 6
Six Sigma as a Methodology Six Sigma DMAIC Improve existing product and/or process DFSS Design for Six Sigma DMADV Design/re-design new product and/or process 13 DMAIC Methodology ACTIVITIES TOOLS DELIVERABLES DEFINE OPPORTUNITY Select opportunities Define and scope the project Develop the team charter Map the process Identify quick wins Business scorecard Pareto Big Y, y, x schematic Surveys Team Charter form SIPOC, Top-down, Functional Team charter Project Plan Critical to customer requirements Process Map (As-Is) Quick win opportunities MEASURE PERFORMANCE Select Measures Define Measures Create Measurement Plan Conduct MSA Collect and Validate Data Establish Baseline Operational Definition Sampling Considerations Data Collection Form Gage R&R, Capability (Cp, Cpk), DPMO Input, Output, and Process Measures Operational Definitions Data collection plan Capable measurement system Baseline Performance ANALYZE OPPORTUNITY Develop Detailed Process Map Determine critical inputs Stratify the data Identify/Validate Root Causes Cause and Effect Diagram FMEA SOV / Multi-vari Chart Regression Design of Experiments Data analysis Process FMEA Sources of Variation Validated root causes IMPROVE PERFORMANCE Identify and Select the Best Solution Conduct pilot Plan for Full-Scale Implementation Brainstorming/Affinity Diagrams/ Solution Mapping/Mind Map Solution Selection Matrix FMEA Future State Map Cost/benefit analysis Solutions Cost/benefit analysis Improvement impacts and benefits Pilot Risk analysis CONTROL PERFORMANCE Develop a Detailed Control Plan Document final implementation results Identity standardization opportunities Transfer ownership Standards and Procedures (SOP) Training Plan Control Charts Cost/benefit analysis Transition plans Process Control Plan Updated Standardized Work Replication Opportunities Project Final Report / Closure 14 7
Six Sigma as a Catalyst to Drive Change Ingredient 1: Forces Intense Focus & Dedication To Fixing The Vital Few Ingredient 2: Connects our Best & Brightest to our Worst & Ugliest The CEO / Presidents Drive it Highly Visible Metrics Intense Governance Model Great Individual Contributors GREEN BLACK MASTER BELT BELT BLACK BELT Great Change Agents Effectiveness = Quality x Acceptance 15 Lean Six and Sigma Six Sigma is a fine mixture Lean: Six Sigma: Gemba Mindset System Mindset Efficiency Focused Effectiveness Focused Waste Elimination (TIMWOOD) Root Cause Elimination Lead Time Reduction Variability Project Mgmt. Lean & Defect Reduction Standardized Work (5S) Standard Methodologies Error Proofing LSS Governance LSS Incremental Improvement Breakthrough Improvement Rapid/Continuous Improvement Soft Vital Skills Few Projects Six Projects (Kaizen) Sigma ~90% Employees Involvement ~10% Employees Involvement Two Sides of a Coin 16 8
Lean Six Sigma DMAIC Methodology ACTIVITIES Lean Six Sigma TOOLS DELIVERABLES DEFINE OPPORTUNITY MEASURE PERFORMANCE ANALYZE OPPORTUNITY IMPROVE PERFORMANCE CONTROL PERFORMANCE Select opportunities Define and scope the project Develop the team charter Map the process Identify quick wins Select Measures Define Measures Create Measurement Plan Conduct MSA Collect and Validate Data Establish Baseline Develop Detailed Process Map Determine critical inputs Stratify the data Identify/Validate Root Causes Identify and Select the Best Solution Conduct pilot Plan for Full-Scale Implementation Develop a Detailed Control Plan Document final implementation results Identity standardization opportunities Transfer ownership Business scorecard Pareto Big Y, y, x schematic Surveys Team Charter form SIPOC, Top-down, Functional Operational Definition Sampling Considerations Data Collection Form Gage R&R, DPMO Capability (Cp, Cpk) Cause and Effect Diagram FMEA SOV / Multi-vari Chart Regression Design of Experiments Brainstorming/Affinity Diagrams/ Solution Mapping/Mind Map Solution Selection Matrix FMEA Future State Map Cost/benefit analysis Standards and Procedures (SOP) Training Plan Control Charts Cost/benefit analysis Transition plans VSM 5S Spaghetti Chart PLT & PCE (waste reduction) Simulation TOC Takt Time Kaizen Kanban Setup Reduction Visual Controls Error Proofing Standardized Work Team charter Project Plan Critical to customer requirements Process Map (As-Is) Quick win opportunities Input, Output, and Process Measures Operational Definitions Data collection plan Capable measurement system Baseline Performance Data analysis Process FMEA Sources of Variation Validated root causes Solutions Cost/benefit analysis Improvement impacts and benefits Pilot Risk analysis Process Control Plan Updated Standardized Work Replication Opportunities Project Final Report / Closure 17 Connecting Rod Mfg. Case Study This case study demonstrates how LSS can be effectively applied to improve efficiency and effectiveness of a manufacturing process 18 9
Business Opportunity XYZ Engines is targeting an aggressive growth strategy to double its engine manufacturing revenue within five years. It is currently experiencing cycle time and quality issues with its connecting rod manufacturing. Long setup time and too many process steps impacting cycle time More than desirable reject rates impacting quality XYZ Engine company wants to address these issues in a short time using LSS 19 Define: Project Plan Schedule Risk PM Cost Scope Strategic Alignment This project supports XYZ Engines corporate goal growth strategy to double its engine manufacturing revenue within five years. The project ROIC/NPV indicates significant value better than the companies IRR Opportunity Statement XYZ Engines is targeting an aggressive growth strategy to double its engine manufacturing revenue within five years. Cycle time and quality issues with its connecting rod manufacturing are inhibiting the progress. * Long setup time impacting cycle time * Too many process steps impacting cycle time * High reject rates impacting quality Goal Statement Reduce average process cycle time by >25% within 12 months. Improve product quality by 10% within 12 months. Project Scope In scope: Entire connecting manufacturing process including Drilling, Boring, Grinding, Chamfering and Inspection Out of scope: Product design and specifications Project Plan Activity Start End Define 5/1 5/15 Measure 5/10 6/15 Analyze 6/10 6/30 Improve 7/15 9/01 Control 9/15 10/30 Evaluate Benefits 11/15 Team G. German Champion/Team Lead M. Atkinson Master Black Belt B. Mac Production Engineer G. King Planning & Scheduling Engineer E. Pines Plant Manager W. Frank Quality Engineer W. Kidd IT Systems Analyst 20 10
Define: Process Flow Connecting rod: Small end drilling/boring/grinding/chamfering Drilling Station Boring Station Grinding & Chamfering Inspection Start Drilling Boring Grinding Inspection End Process Flow Diagram was used to understand the connecting rod manufacturing process and Value Stream Mapping and Simulation were used to identify value added and non-value added waste steps. DMAIC was used to define improvement needs, measure/analyze the CTQ factors needing improvement and control (lock-in) the recommended improvements. 21 Value Stream Mapping (VSM) Connecting Rod Mfg. Process Flow Information Flow Drilling Step Boring Step Grinding Step Inspection Step Customer Value Info. Info. Info. Info. Material Flow Cycle Time 1200 700 900 1100 Cycle time Cycle time Cycle time Cycle time Value add time Value add time Value add time Value add time VSM was done in order to identify process waste that needs to be eliminated 22 11
Theory of Constrains Connecting rod manufacturing: Small end Drilling, Boring, Grinding Buffer Drumbeat Rick Jose Deb MATERIAL RELEASE STEP 1 1200 units/shift STEP 2 900 units/shift STEP 3 700 units/shift PRODUCT OUTPUT non constraint Drilling A near constraint Boring B WIP Grinding C Rope Constraint Theory of Constraints (TOC) and Drum-Buffer-Rope (DBR) implemented to optimize flow and WIP based on constraints 23 Source: K. Kempf, "Optimizing Performance over the Factory Life-Cycle", Intel Technology Journal, Vol. 2, Issue 4, p. 1-6, Nov. 1998 Measure: Critical To Quality (CTQ) Cycle Time Measure Diameter Measure Average Cycle Time x x Current Avg. Cycle time x x x GAP x Defect Customer s Requirement Weeks Connecting Rod Performance Measures (CTQ): Cycle time total time to complete a connecting rod Defect processing flaws that result in rejection of a connecting rod 24 12
Analyze/Simulation: Root Causes Possible Root Cause: Excessive wait time before Grinding Box Plot of Wait Times Connecting rod manufacturing simulation Drilling Station Boring Station Grinding & Chamfering Inspection Start Drilling Boring Grinding Inspection End Drilling Boring Grinding Inspection Analysis showed wait time before Grinding is higher compared to others. Process Simulation confirmed these findings. 25 Improve: CTQ using DOE Determine the factors that provide the least boring diameter defects: Boring Diameter = f (Speed, Feed, Coolant, Rake angle) Defect rate (original) Defect Half Normal plot 99 Half Normal %probability 97 95 90 85 80 70 60 D A C Defect rate (after DOE) Defect 40 20 0 Effect Reject rate was higher at Boring station. DOE and RSM were used to optimize the parameters. Optimized parameters at Boring improved defect rate by 35% 26 13
Control: CTQ thro control charts Control charts for connecting rod diameter X and S Control Charts Control charts indicates connecting rod diameter is under control! 27 Connecting Rod Mfg. Case Study Connecting rod: Small end drilling/boring/grinding Cycle time Quality Original Processing Steps: 1.Drilling (4 machines) 2.Boring (4 machines) 3.Fine-boring (2 machine) 4.Grinding (2 machine) 5.Inspection (2 inspectors) 1 Issues Identified: Long setup time Long wait time (waste) Batch size issues Too many processing steps High defect rates Cycle time Quality 2 LSS Approach: 1.Optimized flow layout 2.Constraint based pull 3.SPC vs. Inspection 4.Un-batching 5.Improved setup LSS Tools Used: Value Stream Mapping Simulation Theory of Constraint DMAIC Significant improvement in cycle time and quality. ROI within 12 months!!! LSS Results Cycle time improvement Cycle time Quality 1 2 C pm improvement 28 14
Lean Six Sigma Integration Strategy Focus on exceeding customer expectations while improving revenue and cost Identify enterprise level processes Develop organization scorecard based on the business strategy and goals Identify vital few and continuous improvement projects Train employees in Lean and Six Sigma approaches Deploy vital few and continuous improvement projects. Use Lean and Six Sigma methodology and tools as appropriate. 29 Lean Six Sigma for Business Excellence CULTURAL TRANSFORMATION BREAKTHROUGH IMPROVEMENT» PRODUCT DEVELOPMENT Design for Lean Six Sigma CUSTOMER SATISFACTION Increases customer loyalty and market share Sustains and builds competitive advantages Achieves growth in sales and earnings Improves stakeholder value MANUFACTURING Lean Production System LEAN EFFICIENCY Built-in in Quality, Just-in in-time, Levelized Production SIX SIGMA EFFECTIVENESS Six Sigma Capability BUSINESS PROCESS / SUPPLY & DISTRIBUTION Lean Value Chain CONTINUOUS IMPROVEMENT» Thank you! 30 15