Six Sigma, Lean, Just-in-Time, International Quality Standards and Awards

Quality Management 1

Six Sigma, Lean, Just-in-Time, International Quality Standards and Awards

January 2012


Sig Sigma

January 2012


Six Sigma

• Six Sigma is a business management strategy, originally developed by Motorola, USA in 1986

• Six Sigma is making breakthrough improvements to processes to efficiently provide customers with products and services they want and need.

January 2012


Six Sigma

• Six Sigma was heavily inspired by the quality improvement methodologies of the six preceding decades, such as Total Quality Management , based on the work of pioneers such as Deming, Juran, Crosby, and others.

January 2012


Six Sigma

• Six Sigma is based on following cornerstones– Continuous efforts to achieve stable and predictable

process results (i.e., reduce process variation) are of vital importance to business success.

– Manufacturing and business processes have characteristics that can be measured, analyzed, improved and controlled.

– Achieving sustained quality improvement requires commitment from the entire organization, particularly from top-level management

January 2012


Six Sigma

• What makes Six Sigma different from other TQM initiatives:

January 2012


Six Sigma• What makes Six Sigma different from other TQM initiatives:

– Improvements are structured as projects– Six Sigma process steps (DMAIC) are followed rigidly– A clear focus on achieving measurable and quantifiable financial

returns from any Six Sigma project.– A special infrastructure of "Champions", "Master Black Belts",

"Black Belts", "Green Belts", etc. to lead and implement the Six Sigma approach.

– A clear commitment to making decisions on the basis of verifiable data, rather than assumptions and guesswork

– An increased emphasis on strong and passionate management leadership and support

January 2012


Six Sigma

• As of 2006 Motorola reported over US$17 billion in savings from Six Sigma.

• Other early adopters of Six Sigma who achieved well-publicized success include Honeywell and General Electric, where Jack Welch introduced the method.

• By the late 1990s, about two-thirds of the organizations had begun Six Sigma initiatives with the aim of reducing costs and improving quality

January 2012


Six Sigma

• A six sigma process is one in which 99.99966% of the products manufactured are statistically expected to be free of defects (3.4 defects per million)

January 2012

Quality Management 10January 2012

Specification Limits

LSL USL

Specification Limits are applied to individual measurements.

Specification limits are decided by people. Control limits are determined by the data

(voice of the process).


Cp = (USL – LSL)/ 6s Cp is the ratio of Total

Tolerance to the 6s Process Spread.

It shows how capable the process would be if it were perfectly centered.

Cp = Potential Capability

Cp Index Demonstrates Potential Capability

3s

LSL

USL

LSL

LSL

USL

USL

Cp = 1

Cp = 2

3s

4s 4s

Cp =1.33

6s 6s

This is a “Six Sigma” process.


Six Sigma Breakthrough Strategy

Integrate intoDaily Work

Characterize Existing Process

Control

Improve

Analyze

Measure

Define

Optimize the Process!

Recognize Opportunity for Improvement


Define

Identify what’s important to the customer. Define project scope.1

MeasureDetermine what to measure (Y) and validate the measurement system.2

Quantify current performance and estimate improvement target.3

Analyze

Identify causes (Xs) of variation and defects.4

Provide statistical evidence that causes are real.5

ImproveDetermine solutions (ways to counteract causes) including operating levels and tolerances.6

Install solutions and provide statistical evidence that the solutions work.7

Control

Put controls in place to maintain improvement over time.8

Provide statistical evidence that the improvement is sustained. 9January 2012


Critical-to-Customer (CT) Characteristics

CTQ: Critical to Quality (or

Function)

CTC: Critical to Cost

• Most Six Sigma projects focus on CTQs… reducing variation and improving the quality of the process output.

CTD: Critical to Delivery (or

Timeliness)• As quality improves,

timeliness improves (less downtime, scrap and rework).

• Timeliness can be improved further by eliminating waste to achieve lean material flow.

• Cost means “cost to the customer”, not internal costs.

• Six Sigma teams should strive to provide product to customers in a way that can improve the customer’s costs.


Cause vs Effect

January 2012


Golf Score •Position of hands•Feet position•Elbow position•Lateral plane•Club length•Weight shift

The golf score, and business results, are improved by identifying and controlling the key process input variables (Xs).

Y = f(x)Find the Critical x’s

A person cannot improve his/her golf game by focusing on the score (Y).




Lean Concept

January 2012


Lean Concept• Business improvement method to to produce better products or

deliver better services using fewer resources (doing more with less) • Elimination of waste(s)• Techniques and tools

– VSM (Value Stream Mapping)– QCO (Quick Change Over)– Poka Yoke– Kanban– TPM (Total Productive Maintenance)– Visual Management– Standardized Work– Etc.

January 2012


VSM definition

• Value Stream Mapping is a pencil-and-paper tool that helps you see the flow of information and materials as a product makes its way through the value stream

January 2012


VSM current

January 2012

Raw materialsSuppliers

NUTMANUF.

C/T = 3.5 second

C/O = 15 sec

Yield = 99%

1 Person

EPE = 4 weeks

I

C/T = 7.5 seconds

C/O = None

Yield= 100%

1 Person

EPE = Day

BOLT Hardening

PAINT (NUTS)

Steel Balls15 days 5 days 15 days

ASSEMBLY

C/T = 6 seconds

C/O = 0

Yield = 95%

1 Person

EPE = 4 weeks

C/T = 15 seconds

C/O = 0

2 PeopleYield = 98%

EPE= 4 Weeks

SHIPPING

Staging

80 linkages/mo -40 silver - 20 gold - 20 blackTray 10 Pieces

2 shifts

Weekly delivery

1X Week

PRODUCTION CONTROL

MRP

90/60/30 dayForecasts

CUSTOMER

15 days

6 - weekForecast

PacificSteel Co.Pacific

Steel Co.PacificSteel Co.

Weekly Fax

Daily ShipSchedule

DailyOrder

I

I

NutsI

7 sec15 days

Production Lead Time =55 days (3300 sec)

Value Added Time =64 sec.(<1 day)

5 days 10 days 15 days15 days15 sec 12 sec 30 sec

Weekly Schedule

Concurrent work add longest lead-time

Daily

Plts

Bolts

5 days

5 daysRaw bolts10 days


Seven types of waste

• Overproduction• Transportation• Inventory• Motion• Correction• Overprocessing• Waiting

January 2012

Type of WASTE Definition ExamplesOverproduction Producing more of an item

than the customer needs Issuing more reports than are requested Reports too detailed or lengthy to meet the need Scanning in 90 pages of back-up, when only 1 is needed

Waiting Unnecessary wait time between value-added tasks

Waiting for information Waiting for authorization or approval

Transportation Unnecessary movement of the item

Transporting a document from one place to another Transferring electronic data from one place to another Multiple hand-offs

Over-processing Any activity performed upon the item that is not required by the customer

Providing more detail than is necessary Reformatting data for multiple report formats Detailed cost calculation for a first, rough offer preparation

Inventory & Bottlenecks

Allowing more than one item to be in queue for the same process step (backlog)

Many charges needing to be processed at same time The use of a filing system for “items in process” Work piling up because employee is absent

Excess Motion Extra motions required by the person to perform the process task

Searching for documents or electronic files Searching for information within a document or file Walking to the copy machine

Questions & Rework

Any task not performed right the first time or done more than once; asking for needed information

Rewrites/reformats of data Entering data into a computer more than once Reviewing charges Re-charging Investigating discrepancies

Poor People Utilization

Not using people’s ability; inefficient use of people’s time

Re-assignment of resources before tasks are completed Not acting upon the good ideas of employees Employees not empowered to make decisions appropriate

for their level

The 8 Types of Waste

24


Identifying opportunities for improvement

January 2012


NUTMANUF.

C/T = 3.5 second

C/O = 15 sec

Yield = 99%

1 Person

EPE = 4 weeks

I

C/T = 7.5 seconds

C/O = None

Yield= 100%

1 Person

EPE = Day

BOLT Hardening

PAINT (NUTS)

Steel Balls15 days 5 days 15 days

ASSEMBLY

C/T = 6 seconds

C/O = 0

Yield = 95%

1 Person

EPE = 4 weeks

C/T = 30 seconds

C/O = 0

2 PeopleYield = 98%

EPE= 4 Weeks

SHIPPING

Staging

80 linkages/mo -40 silver - 20 gold - 20 blackTray 10 Pieces

2 shifts

Weekly delivery

1X Week

PRODUCTION CONTROL

MRP


CUSTOMER

15 days

6 - weekForecast



Weekly Fax

Daily ShipSchedule

DailyOrder

I

Raw bolts10 days

I

NutsI

7 sec15 days

Production Lead Time =55 days (3300 sec)


5 days 10 days 15 days15 days15 sec 12 sec 30 sec

Weekly Schedule

Concurrent work add longest lead-time

Daily

Plts

Bolts

5 days

5 days

QCOKaizen

Kanban

Level Load

Error proof

5S

ConstraintMgt.

TPM

Pull Systems

Std. Work

Six Sigma


Future state VSM

January 2012


80 linkages/mo -40 silver - 20 gold - 20 black1 piece capable

2 shifts

CUSTOMERPRODUCTION CONTROL

LevelProduction

6 - weekForecast



7 sec6.75 days

Production Lead Time =11.25 days (675 sec)


2 days (2.5 days)2.5 days12 sec 45 sec

Nut Mf g.

Batch

Paint Bolt Hrd. / Assy.OXOX

Heijunka

2.5 days

(Conveyance)

Daily ship

Milk run daily


WeeklyFirm Order

1.25 days Buffer Safety

Painted Nuts Raw Nuts

Raw Balls

Supermarket

Plates

2 days

5 days

2.5 days

1.75 days

C/T = 3.5 second

C/O = 5 sec

Yield = 99%

1 Person

EPE = Day

C/T = 6 second

C/O = 0

Yield = 95%

1 Person

EPE = Day

C/T = 15 second

C/O = 0

Yield = 98%

2 People

EPE = Day

T/T = 45 second

Bolts

1.25 days

Safety

Longest lead time


Value Stream Map (VSM)

January 2012

Suppliers

RetrieveMail

SeparateBills

SeparateBills

SeparateBills

OpenBills

LettersIn Box

Store

Sort by duedate

Addressenvelopes

Monthly bill for services

Weekly deliveryfor supplies

3 times / Week

Home 20 day grace period

notification

Current State Map: Current State Map: Paying Bills at HomePaying Bills at Home

CUSTOMERsPacificSteel Co.Pacific

Steel Co.USPSStamps

PacificSteel Co.PacificSteel Co.Pacific

Steel Co.PacificSteel Co.USPS

StampsUSPSStamps Weekly shopping

Shipping

Daily mail

Daily BillReview

Write Check

Re-StoreStage

Mail

Daily Letter

collection

Memory

Shopping list

C/T = 60 sec

C/O = none

Yield = 99%

1 worker

C/T = 180 sec

C/O = none

Yield = 85%

1 worker

C/T = 20 sec

C/O = none

Yield = 99%

1 worker

C/T = 65 sec

C/O = none

Yield = 90%

1 worker

C/T = 75 sec

C/O = none

Yield = 99%

1 worker

C/T = 40 sec

C/O = none

Yield = 99%

1 worker

C/T = 20 sec

C/O = none

Yield = 99%

1 worker

Delivery


Value Stream Map – Swim Lanes

Customer

Post Office

Home

Bank

Sends bill

Primary Customer: CreditorsTheir needs:• Payment received on-time• Right amount

Delivers mail

Get mail

Sort mail

Read and re-stack mail

Write checks

Address & stamp envelopes

Put in mail box

Receives payment

Picks-up & delivers mail

Verify balance

Verify charges with spouse

Buy stamps

?

?

InIn InIn InInInInInIn

InIn

January 2012


Error proofing (Poka-Yoke)

• Poka-yoke (ポカヨケ )is a Japanese term that means „fail safing" or "mistake-proofing". A poka-yoke is any mechanism in a lean manufacturing process that helps an equipment operator avoid (yokeru) mistakes (poka).

• Its purpose is to eliminate product defects by preventing, correcting, or drawing attention to human errors as they occur

January 2012


Poka Yoke principle

• Either the operator is alerted when a mistake is about to be made, or the poka-yoke device actually prevents the mistake from being made

January 2012


Poka Yoke examples

January 2012


Just-in-Time

January 2012


Just in Time (JIT)

• Just in time (JIT) is a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs.

• Just-in-Time is producing only what is needed, when it is needed and in the quantity that is needed.

January 2012


Just in Time (JIT)

• Push system– Marketing forecasts tells the factory what to

produce and in what quantity• MRP

• Pull system– Production demand comes from the customer

• Kanban

January 2012


Just in Time (JIT)

• Prerequisites for JIT:– “Six sigma” quality– Reliable suppliers– Reliable production equipment– Flexible workforce– Close distance to customer

January 2012


Kanban

January 2012


Lean Six Sigma• In recent years, some practitioners have combined Six Sigma ideas

with lean manufacturing to create a methodology named Lean Six Sigma.

• The Lean Six Sigma methodology views lean manufacturing, which addresses process flow and waste issues, and Six Sigma, with its focus on variation and design, as complementary disciplines aimed at promoting "business and operational excellence”

• Companies such as IBM use Lean Six Sigma to focus transformation efforts not just on efficiency but also on growth. It serves as a foundation for innovation throughout the organization, from manufacturing and software development to sales and service delivery functions.

January 2012


Continuous Improvement (CI)

• Continuous improvement process is an ongoing effort to improve products, services, or processes.

• These efforts can seek "incremental" improvement over time or "breakthrough" improvement all at once.

• Delivery (customer valued) processes are constantly evaluated and improved in the light of their efficiency, effectiveness and flexibility.

• Continuous improvement is fundamental to success in the global marketplace.

January 2012


Savings from CI (€)

• FY 05actual 95,2 M • FY 06actual 131,3 M• FY 07 actual 150,4 M

January 2012


CI results

• Continuous Improvement initiative at Johnson Controlshelps company to gain US$626 million in FY2006 savings

• The company-wide Continuous Improvement (CI) initiative is an important reason Johnson Controls posted record 2006 sales and earnings despite challenging markets, according to company executives that spoke at a recent global conference call with the CI team.

• “Six Sigma, Lean and Best Business Practices (BBP) are critical to our financial results and quality performance,” said Steve Roell, Johnson Controls’ vice chairman and executive vice president

January 2012


ISO 9000

January 2012


ISO 9000

• Quality management Standard issued by ISO (International Standards Organization)– designed to help organizations to ensure that

they meet the needs of their customers and other stakeholders

• First published in 1987,revised in 1994 and 2000, adjusted in 2008

• Globally adopted – in 2009 over 1 million organizations have been certified to ISO 9000

January 2012


January 2012


Contents of ISO 9001

• ISO 9001: 2008 Quality management systems – Requirements (30 pages)– Section 1- 3 : Scope, Normative Reference, Terms

and Definitions– Section 4 - 8: Requirements:

• Quality Management System• Management Responsibility• Resource Management• Product Realization• Measurement, analysis and improvement

January 2012


Summary of ISO 9001• Quality policy is a formal statement from management, closely

linked to the business and marketing plan• Quality policy is understood and followed by all employees• Decisions made on recorded data• QS is regularly audited and evaluated for conformance and

effectiveness• Records about raw materials and products – traceability• Organization determines customer requirements• System for communication with customer• New product development – testing to show whether product

meets design, regulatory and user requirements

January 2012


Summary of ISO 9001• Performance reviews through internal audits and meetings.

Determination if QS is working and possible improvements• Dealing with past and potential problems. Records activities

and monitors effectiveness• Documented process for dealing with actual and potential

non conformances (suppliers, customers, internal problems)• Making sure:

– No one uses bad product– What to do with bad product– Deals with root cause of the problem– Keep records and use them to improve the system

January 2012


Certification to ISO 9001• Not done by ISO organization but by independent certification

bodies • In CZ about 50 organizations, mostly linked to large international

certification organizations (TÜV, SGS,DQS, Norske Veritas, etc.)• Assessment based on extensive sample of sites functions,

products, services and processes.• List of problems:

– Action requests– Non-compliances

• Certificate ISO 9001:– Valid 3 years– Limited by a (product) scope and locations covered

January 2012


Auditing to ISO 9001

• Two types of audit:– External (certification)– Internal

• Compliance auditing (1994 version)– Tell me what you do– Show me where it says that– Prove that this is what happened

• Effectiveness auditing (2000 version)– Will this process help you to achieve your stated

objectives?

January 2012


Industry – specific interpretations of ISO 9001

• ISO 9001 standard is generic but can be applied to almost all types of business– Police departments, banks, hotels, shops

January 2012


Industry – specific interpretations of ISO 9001

• AS 9000 Aerospace Basic Quality System Standard

• ISO/TS 16949/2009 Automotive manufacturers QS standard

• ISO/IEC 90003:2004 Computer software QS

January 2012


ISO 9001 survey

• Conducted in period 10/2010 – 2/2011• A total of 11,722 survey responses were

received from 122 countries

January 2012




EFQM Excellence Model

January 2012


EFQM Excellence Model• EFQM (European Foundation for Quality Management)

Excellence Model is not a standard • It is a management framework used by over 30 000

organizations in Europe and beyond• The EFQM Excellence Model is used as a basis for self-

assessment• Doing this an organization grades itself against the 9 criteria• Goal is to identify current strengths and areas for

improvement against strategic goals. • Next step is definition and prioritization of improvement plans

to achieve sustainable growth and enhanced performance

January 2012


1. Leadership 2. Strategy 3. People 4. Partnerships & Resources 5. Processes, Products and Services 6. Customer Results 7. People Results 8. Society Results 9. Key Results

9 Criteria of the EFQM Excellence Model

ENABLERS

RESULTS



January 2012

4

5

5

5

5

2

2

2

2


Fundamental concepts

The Fundamental Concepts of Excellence are the underlying principles of the EFQM Excellence Model

The principles are the essential foundation of achieving Sustainable Excellence for any organization.

They can be used as the basis to describe the attributes of an excellent organizational culture. They also serve as a common language for senior management

January 2012




Achieving Balanced Results Excellent organizations meet their mission and progress towards their vision through planning and achieving a balanced set of results that meet both the short and long term needs of their stakeholders and, where relevant, exceed them.

Adding Value for Customers Excellent organizations know that customers are their primary reason for being and strive to innovate and create value for them by understanding and anticipating their needs and expectations.



Leading with Vision, Inspiration & Integrity Excellent organizations have leaders who shape the future and make it happen, acting as role models for its values and ethics.

Managing by Processes Excellent organizations are managed through structured and strategically aligned processes using fact-based decision making to create balanced and sustained results.



Succeeding through People Excellent organizations value their people and create a culture of empowerment for the balanced achievement of organizational and personal goals.

Nurturing Creativity & Innovation Excellent organizations generate increased value and levels of performance through continual and systematic innovation by harnessing the creativity of their stakeholders.



Building Partnerships Excellent organizations seek, develop and maintain trusting relationships with various partners to ensure mutual success. These partnerships may be formed with customers, society, key suppliers, educational bodies or Non-Governmental organizations (NGOs).

Taking Responsibility for a Sustainable Future Excellent organizations embed within their culture an ethical mindset, clear values and the highest standards of organizational behavior, all of which enable them to strive for economic, social and ecological sustainability




January 2012

4

5

5

5

5

2

2

2

2


Processes Subcriteria 5c

• Products and processes are designed and developed based on customer needs and expectations– How the organization designs, manages and

improves its processes in order to support its policy and strategy and fully satisfy, and generate increasing value for its customers and other stakeholders

January 2012


Item to reviewIs the organization:• Using market research, customer surveys and other forms of

feedback to determine customer needs and expectations for products and services both now and in the future and their perceptions of existing products and services

• Anticipating and identifying improvements at enhancing products and services in line with customers future needs and expectations

• Designing and developing new products and services to address the needs and expectations of customers

• Using creativity and innovation to develop competitive products and services

• Generating new products and services

January 2012


Evaluation of Enablers

• Approach• Deployment• Assessment & Review

January 2012


Evaluation Enablers• Approach

– Sound• Approach has a clear rationale• There are well defined and developed processes• Approach focuses on stakeholder needs

– Integrated• Approach supports policy and strategy• Approach is linked to other approaches as appropriate

• Deployment– Implemented

• Approach is implemented– Systematic

• Approach is deployed in a structured way

January 2012


Evaluation Enablers (2)

• Assessment and Review– Measurement

• Regular measurement of the effectiveness of the approach and the deployment is carried out

– Learning• Learning activities are used to identify and share best

practices and improvement opportunities– Improvement

• Output from measurement and learning is analyzed and used to identify, prioritize, plan and implement improvements

January 2012


Scoring Enablers

• O - 10%– No evidence or anecdotal

• 15 – 35%– Some evidence / Implemented in ¼ of the areas

• 40 – 60%– Evidence / Implemented in 1/2 of the areas

• 65 – 85%– Clear evidence / Implemented in ¾ of the areas

• 90 – 100%– Comprehensive evidence / Implemented in all relevant areas

January 2012


Evaluation Results• Results

– Trends• Trends are positive or there is sustained good performance

– Targets• Targets are achieved• Targets are appropriate

– Comparisons• Comparisons with external organizations takes place and results compare

well with industry averages or acknowledged “best in class”– Causes

• Results are caused by approach

• Scope– Results address relevant areas

January 2012


Scoring Results• O - 10%

– No results or anecdotal information• 15 – 35%

– Positive trends and satisfactory performance on some results, some areas addressed

• 40 – 60%– Positive trends and sustained good performance on many results over at least 3

years, many areas addressed• 65 – 85%

– Strongly positive trends and sustained excellent performance on most results over at least 3 years, most areas addressed

• 90 – 100%– Strongly positive trends and sustained excellent performance in all areas over at

least 5 years, all areas addresed

January 2012


EFQM Excellence Award

• Established in 1992 (1st winner Rank Xerox)• Based on EFQM model of excellence• Robust process of candidate assessment

– Team of international assessors– Documentation reviews– On site visits and interviews

• Most national Quality Awards are based on this model

January 2012


Relation between ISO 9000 and TQM

• ISO 9000 is compatible with, and can be viewed as a subset of TQM

• ISO 9000 and TQM are not in competition

January 2012


Total Quality

• Total quality is an approach to doing business that attempts to maximize an organization’s competitiveness through the continual improvement of the quality of its products, services, people, processes, and environments.

January 2012

Six Sigma, Lean, Just-in-Time, International Quality Standards and Awards

Documents

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quality management2

quality management11cp

quality management9

sigma different

sigma project

sigma approach

total quality management