Awareness Manual Sample

8/9/2019 Awareness Manual Sample

1/13Copyright OpenSourceSixSigma.comOSSS LSS Awareness Manual

Table of Contents

IntroductionCompetition………………………………………………………………..….…….… 2Course Overview………………………………………..…………………..……..…. 3

Course Objectives………………………….…………………………..……..……… 4Team Work………….……………………………………...…….………………………5

Process Management Definitions….………………………………………..…………………….……..….....7Process Ownership………….…………………………………………………….……9Cost of Poor Quality………………………..….………………………………….….14

Lean Principles Seven Areas of Waste…………………………….…………………………… .…..19Value Stream Analysis…………………………………………….………………….235S Principles….……………………………………….……………..………….…….26Poka-Yoke Methods………………………………………………..………………….32

Six Sigma Six Sigma Roles & Project Definition……………..…………………………………37Define Phase…………..………………………………………………..………...…..40

Measure Phase………………….………………………………………………..…….47Analyze Phase…………….…………………………………………….…………….52Improve Phase……..…………………………………………….……………………57Control Phase………………..…………………………..……………………………67

Glossary …………………………………………………………..…………………..78

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2/13Copyright OpenSourceSixSigma.com

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OSSS LSS Awareness Manual

It is through processes that work is performed in order to deliver a product or service to a customer.The management of these processes so that they are effective, efficient and adaptable is the ultimategoal. You may elect to use various tools, methodologies, management approaches and technologiesto achieve this goal. You will learn that Process Management is the collection and orchestration ofthese efforts in order to assure our business success. Approaching all aspects of business from a

process perspective will enable you and your organization to significantly improve and succeed. Youwill first learn some of the vocabulary of Process Management and then you will visually see howresults from everyday work are organized from a process perspective.

Process Management



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Process Management Vocabulary

In order to do something differently, one must first learn the vocabulary and understand themeaning of the various terms. Please read and be familiar with these terms.

Process Management

A Process is a logical, related, sequential (connected) set of activities andtasks that takes an input from a “supplier”, adds value to it, and produces anoutput that goes to a “customer”.

A Major Process is a process that usually involves more than one functionwithin the organizational structure, and its operation has a significant impact onthe way the organization functions. When a major process is to complex to beflowcharted at the activity level, it is often divided into sub-processes.

A Sub-Process is a portion of a major process that accomplishes a specificobjective in support of the major process.

Activities are the things that go on within a process or sub-process. They areusually performed by a single unit (a person, a machine or a department). Anactivity is usually documented in an instruction.

Tasks are the individual elements and/or subsets of an activity. Normally,tasks relates to how someone or some machine performs a specific assignment.






VocabularyVocabularyVocabularyA Process is a logical, related, sequential (connected) set of activities andtasks that takes an input from a “supplier”, adds value to it, and produces anoutput that goes to a “customer”.










VocabularyVocabularyVocabularyVocabularyVocabularyVocabulary

A Supplier is an entity, person or another process that provides an input intothe process under consideration.

A Customer is any entity, person or another process that receives an outputfrom the process under consideration.

Product/Service Business Processes are directly involved inproducing the delivered product or service such as manufacturing a boat orprocessing a check in a bank.

Administrative Business Processes (also called enabling processes)are all of the support processes such as order processing, accounts payableand hiring processes.

A Key Process is defined as a process that is important to the success of thebusiness or the customer and/or is in need of immediate improvement toalleviate a business problem.



Product/Service Business Processes are directly involved inproducing the delivered product or service such as manufacturing a boat or

processing a check in a bank.



VocabularyVocabularyVocabulary



Product/Service Business Processes are directly involved inproducing the delivered product or service such as manufacturing a boat orprocessing a check in a bank.





Product/Service Business Processes are directly involved inproducing the delivered product or service such as manufacturing a boat or

processing a check in a bank.






3


Process Management Vocabulary (cont.)

Process Management

A Process Management System is an approach used by managersand workgroups to ensure that the outputs of their work efforts are:1. Predictable (stable).2. Meeting customer requirements (capable).3. Are performed quickly and at low cost (efficient).4. Aligned and optimized to deliver correct results/value to a customer (effective).5. Capable of quickly changing to meet market and customer demands (adaptable).

It is a structured approach to aligning and optimizing how business processeswork together to repeatedly and consistently deliver results/value to a customer.

A Process Owner is a person who manages the process end-to-end toensure optimal overall performance, someone who coordinates functional/cross-

functional activities at all levels of a work process, a person who has theresponsibility to approve changes in the process and a person who sponsorsimprovement efforts (teams).

A Process Member is an individual who is a key contributor or supporterfor the successful completion of the deliverables from the process.






VocabularyVocabularyVocabulary














4


Process Architecture

Processes have a natural architecture. A major process, typically owned by an executive or seniormanager, involves more than one function within the organization and its operation has a significant

impact on the organization.A major process could be, say, accounts receivable including such sub-processes as invoicing,posting, quality control, reconciliation, approvals, tracking, etc.

The next level of detail is the various activities that occur in a sub-process. These are logicallygrouped to form the steps of the process. The various activities are usually documented andperformed by a single unit (a person, machine or department). Many people think of what they do asa set of repeated activities. To be more effective in their approach, their thoughts have to betransformed from activity thinking to process thinking.

Finally, the lowest level of the process architecture is the task level; the individual elements of an

activity. Normally, tasks relate to how someone or some machine performs a specific assignment.We all perform tasks at various levels and are therefore quite familiar with this concept.

Process Management

1. Obtain …2. Add …3. Move to …

Sub-Process 2

Tasks

Activities

Sub-Process 1

Major Processes

We all perform tasks at various levelsand are therefore quite familiar with thisconcept.

Many people think of what they do asa set of activities that they dorepeatedly. To create a more effectiveapproach, their thoughts have to

transform from activity thinking toprocess thinking.

1. Obtain …2. Add …3. Move to …

Sub-Process 2

Tasks

Activities

Sub-Process 1

Major Processes

We all perform tasks at various levelsand are therefore quite familiar with thisconcept.

Many people think of what they do asa set of activities that they dorepeatedly. To create a more effectiveapproach, their thoughts have to

transform from activity thinking toprocess thinking.



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Fundamental Relationship of Cause and Effect

Y = f(x) is a key concept that you must fully understand and remember. It is a fundamental principle tothe Six Sigma methodology. In its simplest form it is called “cause and effect”. In its more robust

mathematical form it is called “Y is equal to a function of X”. In the mathematical sense it is datadriven and precise, as you would expect in a Six Sigma approach. Six Sigma will always refer to anoutput or the result as a Y and will always refer to an input that is associated with or creates theoutput as an X.

Another way of saying this is that the output is dependent on the inputs that create it through theblending that occurs from the activities in the process. Since the output is dependent on the inputs wecannot directly control it, we can only monitor it.

For example, you can only measure or monitor the temperature (the Y) of an oven. If you want toaffect it or control it you must adjust the amount of heat (the X) coming into the oven by adjusting theflow of gas or electricity by using the temperature control knob. Here you can begin to see that the

temperature control knob is an input; that it is an independent action. If the temperature was too highand your food burned, the knob setting would be the cause of the problem. The next time you wouldset the temperature control knob, an input, to a lower temperature.

Process Management

• X1 . . . Xn

• Independent

• A Process Input

• The Cause of aProblem

• What Needs tobe Controlled

(X)(X) Y Y

• Y • Dependent

• A Process Output• The Effect• It is a Symptom• Can Only be

Monitored

is equal to a function ofis equal to a function of

This is the“Blending”or the wayin which theprocesscombines theinputstogether

with variousprocessactivities.

This is the“Blending”or the wayin which theprocesscombines theinputstogether

with variousprocess

activities.

The performance of an output or a characteristic we areinterested in is a function of the process inputs, called(X’s) and the manner in which the process combines themto provide the resultant output (Y). Written as Y = f(X).



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Definition of a Process

Simply stated, processes transform inputs into higher value outputs by blending the inputs together in aprescribed way. Inputs are provided to the process by suppliers. A Supplier is an entity, person oranother process that provides an input into the process under consideration. Therefore a supplier can

be internal to our company or external to it.A supplier can be as close as the output of the previous step in the process or a vendor more than athousand miles away. The outputs of a process always go to a customer. A Customer is any entity,person or another process that receives an output from the process under consideration. Just likeinputs, the customer can be as close as the next process step or a customer external to your companymany miles away.

In this course, you will learn to think of inputs as X’s and outputs as Y’s, once you grasp this approach,it becomes much easier to describe process behavior and improvement approaches. Later we will give

you a simple mathematical formula to further aid your ability. As you see in the graphic, the process isa set of activities and tasks that are accountable for the blending of the inputs to create a higher

valued output. For now you can generally categorize inputs as materials, information, people, energy,tools and equipment. Processes are also supported or governed by such things as methods,procedures, process rules and customer requirements.

The acceptable way to describe processes is to use a process flowchart or, sometimes called, aProcess Map. A process always has a definable start and finish and some number of steps in between.Process Maps are performed at various levels of detail but look similar to the one shown. Later you willlearn the different levels of Process Maps and their associated level of detail.

Going Further:A process is generally repeated over and over - although the frequency of replication may be low. Theoutput of one process can become the input to another process and a business is made up of a largenumber of processes to produce a product or service that a customer is ultimately willing to purchase.

Process Management

SuppliersInternal/External

CustomersInternal/External

Process

Transformation(Creating Value)

Requirements and Feedback Requirements and Feedback

Inputs (X’s) Outputs (Y’s)Process

ActivityTasks

Blending of Inputs

MaterialsInformationPeopleEnergyTools and Equipment

MethodsProceduresProcess rulesCustomer requirement

Step AStart I n

s p e c t

FinishStep B Step C Step D



Process





Process




Process




ActivityTasks

Blending of Inputs




ActivityTasks

Blending of Inputs





Step AStart I n

s p e c t

FinishStep B Step C Step DStep AStart I n

s p e c t

FinishStep B Step C Step D



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Process Hierarchy

Processes are classified as either core processes or enabling processes. A core process is directlyrelated to generating revenue, providing products or services to a revenue generating customer orcreating a strategic advantage for the company.

Typically there are only 4 to 6 core processes in a company and they are made up of various majorprocesses and sub-processes. Typical core processes are sales and marketing,manufacturing/fulfillment, design engineering, order entry and processing, etc. As you can readilybegin to comprehend, these are large processes to which many departments contribute.

Enabling processes exist to enable and support the execution of the core processes. A core processcould not sustain itself without the support and services provided by the enabling processes. Typicalenabling processes are Information Technology, Human Resources, Finance, Legal, Documentation,etc. Enabling processes do not touch or directly impact the external customer.

A part of Process Management is to identify those processes and process steps which are critical to thesuccess of these higher level processes. Metrics are generated to either monitor or control theperformance of these processes. Because the processes are critical to success, the associated metricsare tracked on a periodic basis in what is called a Process Management Summary report. The ProcessManagement Summary is most often owned by middle management and is a simple aggregation ofthe key inputs and outputs of each critical process. You will learn later that the metrics you will want totrack are called Critical X’s and significant Y’s or CTQ’s.

The Critical X’s and significant Y’s actually exist as part of the sub-processes and their numerousprocess steps. These consist of the many detailed activities, tasks and decisions involved in satisfying aprocess output. These processes are owned by the members of the process and their immediatemanager, this person is usually referred to as the Process Owner.

Process Management

Process A Process B Process C Process D Process E

Senior Management Owned

Middle Management Owned

ProcessMember and

Process OwnerResponsibilities

The many detailedactivities, tasks anddecisions involved insatisfying a process output

A core process is directlyrelated to generating

revenue, providing servicesto the customer or creating astrategic advantage for thecompany.

Enabling Processes Core ProcessesEnabling processes donot directly impact thecustomer. They mustexist to enable andsupport the execution ofthe core processes.

PM SummaryPM Summary PM SummaryPM Summary

Process A Process B Process C Process D Process EProcess AProcess A Process BProcess B Process CProcess C Process DProcess D Process EProcess E

Senior Management Owned

Middle Management Owned

ProcessMember and

Process OwnerResponsibilities

The many detailedactivities, tasks anddecisions involved insatisfying a process output

A core process is directlyrelated to generating

revenue, providing servicesto the customer or creating astrategic advantage for thecompany.

Enabling Processes Core ProcessesEnabling ProcessesEnabling Processes Core ProcessesCore ProcessesEnabling processes donot directly impact thecustomer. They mustexist to enable andsupport the execution ofthe core processes.

PM SummaryPM Summary PM SummaryPM Summary



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Process Hierarchy (cont.)

A Process Owner is a person who manages the process end-to-end to ensure optimal overallperformance, someone who coordinates functional/cross-functional activities at all levels of a workprocess, a person who has the responsibility to approve changes in the process and a person whosponsors improvement efforts (teams). A Process Member is an individual who is a key contributor or

supporter for the successful completion of the deliverables from the process.

It is important for you to understand that the core processes are made up of major processes which arethen made up of sub-processes. Some but not all of these sub-processes are critical to the success of thebusiness. In an ideal world we would immediately know all the critical processes. In reality wediscover them either systematically or because it is obvious they are causing problems.

Many people who have learned to think of processes tend to see process in terms of departments orfunctions. This is referred to as the “Silo” or vertical view of process flow. Value actually flowhorizontal across the many silos of a company, in other words, core processes expand horizontallyacross the company.

Process Management

Process Management Summary

Process Management provides a systematicapproach and knowledge about the true workflowwhile helping prioritize improvement efforts.

Benefits:1. Creates indicators to help manage objectively2. Focuses on the needs of the customer, the process and the

business3. Provides a structure for the continuous monitoring of an

organization’s capability to meet customer requirements4. Establishes work improvement priorities5. Provides a common language within and across

departments6. Links together all process activities so the team can better

understand and perform the necessary work7. Maintains the gains achieved by problem-solving teams

and process redesign teams

Process Management isall about your ability tobetter manage thebehavior andperformance of yourprocesses. ProcessManagement providesa systematic approach

and knowledge aboutthe true workflowallowing you to achieveimprovement efforts.The benefits include:Process indicators tohelp manageobjectively, creates afocuses on the needs ofthe customer, theprocess and thebusiness, provides astructure for the continuous monitoring of an organization’s capability to meet customer requirements,establishes work improvement priorities, provides a common language within and across departments,it links together all process activities so the team can better understand and perform their work andmaintains the gains achieved by problem-solving teams and process redesign teams.



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In this module you will learn about Cost of Poor Quality or COPQ. It is a symptom measured in lossof profit (financial quantification) that results from errors (defects) and other inefficiencies in ourprocesses.

You will use the concept of COPQ it quantify the benefits of an improvement effort and also todetermine where you might want to investigate improvement opportunities.

Cost of Poor Quality



10


Definition of COPQ

COPQ is a financial term that has been in existence for many years. It was generated as a way todetermine where companies were spending money because of the inability of processes to meetrequirements. In the traditional sense, outputs that do not meet requirements are a form of poor quality.

At its inception, COPQ was concerned with the ratios of where money was being spent to reduce theoverall cost from poor quality process outputs. It looked at what percentage of cost was spent onexternal failures at one end of the spectrum and on prevention costs at the other end. The goal was tobalance spending towards the prevention side in order to reduce the overall expenditures.

Over time and with Lean Six Sigma, COPQ has migrated towards the reduction of waste. Waste is abetter term, it includes poor quality and all other costs that are not integral to the product or service

your company provides. Waste does not add value in the eyes of customers, employees, or investors.To aid in the identification and its reduction, waste has been divided into seven different categories.


COPQ is Cost Of Poor Quality

• The term Cost of Poor Quality is a financial term that sums upall the costs associated with the prevention of problems,appraisal or inspection to obtain quality, the expense ofinternal failures and the expense of having failures at thecustomer.

• Poor quality is a form of waste that is not integral to theproduct or service your company provides.

• Waste does not add value in the eyes of key stakeholders(customers, employees, investors).

COPQ is a symptom measured in loss of profit

(financial quantification) that results from errors(defects) and other inefficiencies in our processes.



11


Cost of Poor Quality “Iceberg”

Generally speaking COPQcan be classified as tangible(easy to see) and intangible(hard to see). Visually you

can think of COPQ as aniceberg. Most of the icebergis below the water where

you cannot see it.

Similarly the tangible qualitycosts are costs theorganization is ratherconscious of, mat bemeasuring already or couldeasily be measured. The

COPQ metric is reported asa percent of sales revenue.For example tangible costslike inspection, rework, etccan cost an organizationin the range of 4 percent to 10 percent of every sales dollar it receives. If a company makes a billiondollars in revenue, this means there are tangible wastes between 40 and 100 million dollars.

Even worse are the intangible Costs of Poor Quality. These are typically 20 to 35% of sales. If youaverage the intangible and tangible costs together, it is not uncommon for a company to be spending25% of their revenue on COPQ or waste.


Tangible Quality Costs (4-10% of Sales)

Available or easy to measure costs from:

• Inspection• Rework • Warranty • Inventory

Difficult or impossible to measure costs from:

• Lost sales• Expediting• Redundancies• Late payment• Frustrated

employees

• People and equipment idletime• Lost customer loyalty • Long cycle times• More facilities• Lost reimbursements

Intangible Quality Costs (20-35% of Sales)

• Obsolescence• Scrap• Customer complaints• Legal

You have the ability to re-capture many of these costs.

Tangible Quality Costs (4-10% of Sales)

Available or easy to measure costs from:

• Inspection• Rework • Warranty • Inventory

Difficult or impossible to measure costs from:

• Lost sales• Expediting• Redundancies• Late payment• Frustrated

employees

• People and equipment idletime• Lost customer loyalty • Long cycle times• More facilities• Lost reimbursements

Intangible Quality Costs (20-35% of Sales)

• Obsolescence• Scrap• Customer complaints• Legal

You have the ability to re-capture many of these costs.

COPQ and the Hidden Operation

The darker area is commonly called the “Hidden Operation”. It is called this because in many cases,management does not know it exists due to the way data is reported about process performance orbecause we have become so accustomed to doing rework we don’t think about it, even though weknow it is not good.

In almost every process of every company, this Hidden Operation model can be found. Here is how it

works. An input comes into a process step called “Op i” for operation number “i”.

Work Arounds

Op i Op i + 1

Analysis ScrapOff-Line

Correction

Correctable?

Verified

?

No Yes

Quick FixesInspections

Scrap

Rework

Extra EquipmentIncreased Inventory

Increased Cycle Time

Frustration

Defects

Customer Dissatisfaction

Cost

Work Arounds

Op i Op i + 1


Correction

Correctable?

Verified

?

No Yes

Op i Op i + 1


Correction

Correctable?

Verified

?

No Yes

Quick FixesInspections

Scrap

Rework

Extra EquipmentIncreased Inventory

Increased Cycle Time

Frustration

Defects

Customer Dissatisfaction

Cost


13/13

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COPQ and the Hidden Operation (cont.)

The process blends the inputs together to change the form, fit or function in a value added way. Thenext step in the process is an inspection or verification step. If the product or service meets theestablished requirements, it passed on to the operation “Op i + 1”. However, if it does not meetrequirements it can not be passed on to the next operation in the process. It does not matter what the

service or product is, the same general actions occur; it could be a hamburger, a loan application, aproposal or keyboard for a computer.

At some point in the creation of these items they have to be verified that they are ok. When these itemsare found not to meet a requirement, some form of analysis will have to be performed to determine theextent to which the requirement is not met in order to make the next decision; is the deficiencycorrectable? If the answer is no, it is scrapped.

Most people think of the manufacturing a physical product when they hear the word scrap, like thehamburger or keyboard in the above example. However, what happens if say a proposal has so manyerrors on it that it is scrapped and the proposal is started all over? What has been scrapped? Thepaper and the staple, or is there something else that is of even more value? The answer is yes, it is thetime of the people who worked on preparing and completing the proposal. That time and theirsalaries have gone to waste.

If the item is correctable it either gets returned to the operation that created the problem to a specialarea called an off-line correction area; this is set up to correct such problems. One way or the other itis obvious that any effort to correct a problem is going to incur additional costs. And there are otherless obvious costs. What about the cost of the space to perform such actions, the cost for extraequipment, additional people, the cost of holding the bad inventory. Yes, inventory actually increases.

It may be that you can produce this item every 5 minutes, but what happens to your inventory if 10%do not meet requirements and each one stays in the Hidden Operation for a day before it is

corrected? At a minimum you have 10% more inventory on hand stuck in the Hidden Operation. If youare concerned about the cycle time to produce your product or service, imagine what happens to thevariation in output times when items fall into the Hidden Operation.

We have coined the Hidden Operation because many of the things we just discussed are not apparentto people. Performance metrics which are usually on the main part of the process do not expose suchoperations or work arounds. Quick fixes and inspection often get absorbed into the standard costingstructure, becoming “hidden” costs to the organization. You should engrain this model into yourthinking, you should always be looking for Hidden Operations. Your objective is to either reduce themsignificantly or eliminate their existence completely. Doing so will speed up your operations, improvequality, customer satisfaction, cost and improve working conditions. Does this sound like a COPQopportunity? Soon you will develop a workplace assignment where a key objective is to find andeliminate a “Hidden Operation”.


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