Six Sigma Simplicity “85% of the reasons for failure to meet customer requirements are related to deficiencies in systems and processes…rather than the.

Six Sigma Simplicity

“85% of the reasons for failure to meet customer requirements are related to deficiencies in systems and processes…rather than the employee.

The role of management is to change the process rather than badgering individuals to do better.”

- W. Edwards Deming (1900 -1993)

An Introduction to Process Improvement


Agenda

• What is Lean Six Sigma?• Why are we using it?• How are we deploying it?• L6S Roles and Responsibilities• DMAIC phases


History of Lean Six Sigma

• Began in 1979 at Motorola – Art Sundry at a management meeting – “The real problem at Motorola is that our quality stinks”

• Initiative was designed to help a business anticipate problems, not just react to them (Saved $2.2 billion over 4 years with Six Sigma)

• Lean began with Ford – then Toyota – emphasis was on improving efficiency by optimizing flow – based on Toyota Production System

• In the 1980’s it was named “Lean Production” because of the focus on removing waste

• In the late 1990’s Allied Signal and Maytag independently developed curriculum including aspects of Lean and Six Sigma

• The goal of combining these programs was to reduce waste and cost while improving quality


Who Has Used Lean Six Sigma?

• GE – operating margin improvement of 16.7% in 3 years• Allied Signal - $2 billion in cost savings in 5 years• Raytheon - $1 billion annually• Motorola - $500 million annually• Caterpillar - revenue grown of 80% in 4 years• Other examples:

– Amazon.com– Bank of America– GIECO– Chase– CSX

– Thousands more…


Common Objections to Lean Six Sigma

• Just another flavor of the month – here today, gone tomorrow • Too costly to implement• Not effective – have heard horror stories• It can be done without a formal program or structure• It’s another way to reduce headcount• It’s only theory


Top Ten Ways Lean Six Sigma Programs Fail

1. Make sure senior management is only lightly involved2. Choose the least-experienced employees to become ‘Black Belts’3. Select a Lean Six Sigma training company based on cost, not credentials (in

other words, skimp on training)4. Select projects that are not aligned with your core business strategy5. Select very low-value, low-impact projects6. Assign projects then forget about them7. Provide everyone in the company with Six Sigma awareness training, then

walk away8. Think of Lean Six Sigma as a collection of projects rather than business

transformation efforts9. Expect results in short periods of time – patience is a virtue10. Only expect operational improvements – customers may or may not ever

feel the improvements


• Lean concepts came from the Toyota Production System, translated through teachings of Ohno and Shingo

• The goal of Lean is to:– Eliminate waste (muda) such that you are only doing

value added work• Value added is defined as:

– Customer recognizes the value (willing to pay for it)– Changes the product in a desired manner– Processes that are done right the first time

What is Lean?


• Sigma is a letter in the Greek Alphabet• Sigma is a symbol which shows the degree of variation in a

process (standard deviation)• The goal of a Six Sigma capable process is to:

– Minimize variation – Center the process

• The degree of acceptable variation in a process depends on knowing the target.

Do you know where your target is?

What is Six Sigma ()?

How close are you to meeting your target?


Why Combine Lean and Six Sigma?• Simple:

– Common Sense– Reduction of waste– Reduction of variation– Reduced operating costs

• Complex:– Vision & strategic approach– Methodology that aligns improvements to strategic

objectives & utilizes aggressive goal-setting to drive real bottom-line financial improvement

– Tool for: customer focus, continuous improvement, people involvement, operational excellence

CustomerValue

HighLow

Po

rt

Am

eric

a’s

Co

st

Low

High

Six Sigma

Lean

Lean Six Sigma


What Lean Six Sigma Is / Isn’t

• What it isn’t– A here today/ gone tomorrow approach– The only way to solve a problem– Only applicable in manufacturing industry

• What it is– A data-driven methodology focused on bottom-line results– A methodology focused on driving out waste and variation

to improve efficiency– Culture focus on optimization– Structured approach to what we’re already doing


It’s About Changing Mentality / Mindset

• Traditional way of thinking– Problem = Trial and Error Solution

• This way can be painful, and is not always based on fact, leading to unforeseen consequences

– No view of upstream or downstream impacts

• Lean Six Sigma way of thinking– Practical Problem translated to a statistical problem,

which is solved by a statistical solution, and then translated to a practical solution

• Data-driven solutions that have long-lasting and meaningful impact to problems


Lean Six Sigma Way of Thinking (Stevedoring)

Reduce vessel start times from 24 minutes to 15 minutes

Practical Problem

Statistical Problem

Statistical Solution

Practical Solution

Vessel Start times are slower than expected

The assignment of the first move is statistically significant to vessel start times

First move for UTRs given at gate entrance, instead of at vessel


Types of ProblemsYou Will Normally Solve

Simple

Complex

How many times have you heard this? “I feel the problem is…”

Changing the Decision-Making ProcessesDecision-Making

Growth Path

1. Intuition, gut feel, I think …

2. We have Raw Data and look at it.

3. We make graphs/charts of the data.

4. We use advanced statistical tools to evaluate the data.


• Removal of waste to reduce time to execute processes

• Improving performance by flawless execution• Achieving rapid breakthrough improvement• Applying advanced breakthrough tools that work• Making a positive and deep cultural change• Ultimately –

“Getting Real Financial Results”

Lean Six Sigma Focus


Agenda



Why now?

Burning Platform• The slow-moving economy is keeping volumes low• In some regions, market share is shrinking compared

to our competition• Market competition is driving down rates• Increased pressure from union’s are driving up labor

costs• Customer wants things performed faster


Why we are doing this…

• Reduce daily firefighting, increase in strategic-thinking

• Improve profitability of business unit through more targeted projects

• Provide management tools that can be applied at all levels of the business

• Create a continuous improvement business culture• Identify a baseline for future improvements


Why we are doing this… (cont’d)

• Increase data exchange and communication between Management/ Operations/ Shared Service Center… It’s a Team Sport !

• Support your business to succeed and ultimately… Save / Make Money !


What does it mean to implement Lean Six Sigma?

• Setting clear expectations for breakthrough in business execution

• Achieving excellence through process characterization, optimization, and control

• Creating a “One Company” approach to drive performance breakthroughs – Same roadmap – Same tools– Same language– Driving improvement from facts


Our Common Enemy• Variation

– Common cause• Is present in every process • Is produced by the process itself (the way we do

business)– Special cause

• Unpredictable• Caused by unique disturbances or a series of them

• Waste– The 7 types of waste:

• Defects, Over-production, Transportation, Waiting, Inventory, Motion, Processing

– Waste is so often right in front of us that we don’t always see it!


Business Impacts of Variability

• Prevention Costs– Education and training– Safety– Controlling processes

• Appraisal Costs– Incoming inspection– Maintenance and calibration of equipment– Process audits

• Internal Failure– Incorrect gate transactions– Wrong boxes out gate– Rework– Re-inspection – Late Start Times

• External Failures– Processing customer inquiries– Incurring penalties/claims – Lost sales


Statistical Measures of Distribution

• Measures of the Center of Data– Mean: Arithmetic average of a set of values– Median: Reflects the 50% rank - the center number after a

set of numbers has been sorted

• Measures of the Spread of Data– Range: the distance between the extreme values of a data

set (Highest - Lowest)– Variance ( ): the Average Squared Deviation of each

data point from the Mean– Standard Deviation ( ): the Square Root of the Variance


Distribution Shape: Normal

• The Normal Distribution is a distribution which has certain consistent properties

• These properties are very useful in our understanding of the characteristics of the underlying system from which the data were obtained

• Many natural phenomena and most processes can be adequately represented by a normal distribution


The Normal Distribution

• Property 1: A normal distribution can be described completely by knowing only the :– mean and standard deviation

Distribution 1Distribution 1



What is the difference between these normal distributions?


The Normal Curve and Probability Areas

• Property 2: The area under the curve can be used to estimate the probability of certain “events” occurring

43210-1-2-3-4

# of standard deviations from the mean

40%

30%

20%

10%

0%

95%

Fre

qu

ency

99.7%

68% Cumulative probability of

obtaining a value between two values

Cumulative probability of

obtaining a value between two values


Voice of The Customer

Voice of The Process

USLUSLLSLLSL

Taking 6 Sigma One Step Further

• Compares the Voice of the Process to the Voice of the Customer

• Upper Spec Limit (USL) & Lower Spec Limit (LSL) come from the Customer


Dissecting Capability

LSL USL

Waste/defectsresulting in

additional cost

Process Distribution

EnvironmentProcess Variation

Material / Component

Variation

Measurement Variation


Upper Spe cL o we r S p e c

sss ss s

3 Sigma Process


Lower Spec Upper Spec

sss ss s sss ss s

6 Sigma Capability (in Red)Recall: this is 3 Sigma Capability


Visualizing – Which is Better? Why?

43210-1-2-3-4

0.4

0.3

0.2

0.1

0.0

Lower Spec. Limit

Upper Spec. Limit

3 Sigma

86420-2-4-6-8

0.4

0.3

0.2

0.1

0.0

Lower Spec Limit

Upper Spec. Limit

6 Sigma


Terminal X - Vessel Start Capability (Before)


Terminal X - Vessel Start Capability (After)


Waste

• Goal - Eliminate downtime (waste) such that you are only doing value added work

• The common types of waste:– Defects - incorrect data entry, inspection– Over production - preparing extra reports, reports not acted upon, multiple copies

in data storage– Waiting - processing monthly not as the work comes in (i. e. closings, billings,

collections)– Non-utilized resources

– Transportation - extra steps in the process, distance traveled (equip.)– Inventory - transactions not processed– Motion - extra steps, travel from office to office / desk to desk, extra data entry...– Excess Processing – redundant work, multiple sign-offs, multiple inspections


Sources Of Waste

• Layout (distance)• Long set-up times• Incapable processes• Poor maintenance• Poor work methods• Lack of training• Lack of adherence• Poor supervisory skills• Ineffective scheduling• Inconsistent performance

measures• Dies-Functional organization

• Excessive controls• No back-up/cross-training• Unbalanced workload• No decision rules• No visual control• Lack of workplace organization• Supplier/Partner quality• Inconsistent supply of detail

information• Over-engineering• Inspection

The longer waste occurs, the more accepting your become!


Waste in the Form of Rework

Waste Causes A "Hidden Factory"Increased Cost & Lost Capacity

• Each defect must be detected, repaired and placed back in the process

• Each defect costs time and money

20 Mins

Record data necessary for billing

30 Mins

Enter data into systems

10 Mins

30 Mins4223 Mins

Validate Documentation

Send Documentation to Biller

Create Invoice

5 Mins

Validate Invoice

2 Mins

Submit to customer

Yield After Inspection or Test

Waste

ReworkHidden Factory

NOTOK

OperationInputs Inspect First Time Yield

OK

Time, cost, people

90% Customer

Satisfaction


Everyday we are flooded by data and we are forced to make decisions:

• Outstanding Receivables Increases from 8% to 12%

• Overtime Increases from 716 to 833 Hours

• Company Earnings are Off $240 Million

• Near Miss Occurrences are Up 2%

• US Trade Deficit Rises By $40 Billion

Should We Take Action ?

How Do We Know When to Take Action?


2

3

Scr

ap L

evel

(%

)S

crap

Lev

el (

%)

1

J F M A J F M A

1996 1997

Party TimeParty Time

APRIL 1996• The factory scrap level is at a year low of 2%• Manager presents an award to the plant• Ceremony in the cafeteria: pizza and refreshments for all!• “Everyone should be proud of what you’ve accomplished”

Derived from Understanding Variation: The Key To Managing Chaos, Donald J. Wheeler, SPC Press. 1993.


2

3

1

J F M A M J J J F M A M J J

1996 1997

Manager wants to take back awardManager wants to take back award

Scr

ap L

evel

(%

)S

crap

Lev

el (

%)

JUNE 1996• Three consecutive months of scrap increases• Manager wishes he could take back the award• “Recognition has backfired”• Instead of holding the gains, scrap went right back up• Manager is thinking about taking action



2

3

1

J F M A M J J A S O N DJ F M A M J J A S O N D

1996 1997

No more “Soft Management”No more “Soft Management”

Scr

ap L

evel

(%

)S

crap

Lev

el (

%)

NOVEMBER 1996• Scrap rises to a value of 2.6% , manager decides to take action• A “special meeting” is called to solve this problem once and for all• After a sound lecture on the importance of scrap, the manager

leaves. Employees aren’t sure what to do. Besides, they have other metrics which have more importance. So they do nothing.



1996 1997

2

3

1

J F M A M J J A S O N DJ F M A M J J A S O N D J F M A M JJ F M A M J

Scr

ap L

evel

(%

)S

crap

Lev

el (

%) Manager concludes: “Tough Love Makes Things Happen”

Manager concludes: “Tough Love Makes Things Happen”

JUNE 1997

• Manager has seen reduced scrap levels since the end of last year. “Things are looking-up!”

• His takeaway: “A tough management style gets results!”



2

3

1


1996 1997

UCL

J F M M J J A S OJ F M M J J A S O

LCL

Scr

ap L

evel

(%

)S

crap

Lev

el (

%)

Statistical Process Control (SPC)

• Tells a different story…



Manager concludes, “Tough Love Makes Things Happen!”

Manager concludes, “Tough Love Makes Things Happen!”

J F M M J J A S OJ F M M J J A S O

2

3

Scr

ap L

evel

(%

)S

crap

Lev

el (

%)

1


1996 1997

Party TimeParty Time Manager WantsTo Take Back Award

Manager WantsTo Take Back Award

No more soft managementNo more soft management

UCL

LCL

SPC Tells a Different Story – Why ?

• Old View - “Hey, I made my decision based on data - How can I go wrong?”

• New View - “Your decisions were made from observing high and low points as signals. When in reality, it was all noise. Look at the data, there was no significant change in the process.”


1 Sigma

2 Sigma

3 Sigma

1 Sigma

2 Sigma

3 Sigma

60-75%

90-98%

99-99.9%

% of Data PointsUCL

LCL

TIME

The ItemWe Are Measuring

Rules of Standard Deviation“Where should the data lie?”


Terminal X - Vessel Start Times - Before


Terminal X - Vessel Start Times - After


Agenda



A Simple Approach

The right support +

The right projects+

The right people+

The right roadmap and tools=

The right results


The Right Support

• Infrastructure to drive Lean Six Sigma throughout the company is in place:– Champions for each business unit– Sponsors are identified and trained– Operational units provide subject matter experts– Data is made available– BU finance identifies the savings– BU leaders emphasize the urgency


The Right Projects

• Identifies a problem to be solved– Problem is of major importance to the BU

• Clear connection to business priorities– Strategic and annual operating plans

• Clear quantitative measures of success– Baseline, goals and entitlement well-defined

• Reasonable scope– Scope too large is a common problem

• Management support and approval– Needed to get the resources and

remove barriers

Reduce/optimize/increase: (project Y) from (current value) to (goal level) for (specific area) while holding constant (constraints)

“A project is a problem scheduled

for solution.” - J. M. Juran


The Right People

• Champions (BU)• Sponsors (BU)• Controllers (BU)• Process Owners (BU)• Master Black Belts (Process Excellence)• Black Belts (Process Excellence + BU)• Green Belts (BU)• Kaizen Facilitators (BU)


• Technical Conscience• Project Reviews• Mentor Belts• Assist Local Leaders

• DMAIC Execution (Teams)

• Complete the Charter• Break Barriers• Select the Team• Review Projects• Meet with Belt

• Establish Business Goals• Select Projects• Establish Project Priorities• Conduct Reviews• Verify Savings• Audit Control Plans

• Identify Projects• Monitor Lean Six

Sigma Metrics• Assist BU Leadership

Lean Six Sigma

Projects

MBBs

Belts

Sponsors

Local Leaders

BU Champs

Process Owner

• Own the Control Plan• Own the improvements

The Right People


Agenda



• Advocates Lean Six Sigma within the BU– Tracks number of Belts and projects– Develops hopper of Lean Six Sigma project ideas– Selects projects to be chartered

• Interfaces with the Process Excellence L6S Program Office

• Owns the project success within the BU

Champion Roles and Responsibilities


Sponsor Roles & Responsibilities

• Provides leadership and direction to the Belts– Articulates the need for a project– Breaks down organizational barriers– Stakeholder - key beneficiary of project improvement– Review progress continuously– Develops project charters with Belt


Controller’s Roles & Responsibilities

• The local controller is responsible for approving the savings claimed on projects– Be part of the chartering process for prioritization– Proper categorization as completion year EBITDA impact

or cost avoidance– At the conclusion of a project, the controller is

responsible for financial approval of the final savings determination for a local project

– By ‘Approving’ a completed project, the controller is agreeing that the stated savings are real


Process Owner’s Roles & Responsibilities

• Owns the changes to the process after the project is completed– Participates as part of the team– Ensures the change is implemented– Monitors the control plan and reacts as required


Master Black Belt Roles & Responsibilities

• Experts in Lean Six Sigma Tools and Methodology– Ensure results achievement– Assist in project identification and Lean Six Sigma

administration– Breaks down technical barriers– Coaches and mentors Belts during project– Continuously improves Lean Six Sigma process– Identify, share and deploy Best Practices– An optional Growth Path for Belts


Black Belt Roles & Responsibilities

• Leaders of strategic, high impact process improvement projects– Developers of a functional team– Experts in applied Lean Six Sigma tools– Change Agents– High energy result getters– Leadership development pool– 100% DEDICATED to Lean Six Sigma initiative


Green Belt Roles & Responsibilities

• Leaders of process improvement projects– Work in own functional area– Drive continuous process improvement – Technical process experts– Appliers of Lean Six Sigma tools– Change Agents


Kaizen Facilitator Roles & Responsibilities

• Leaders of Kaizen events– Primarily work in own functional area– Drive continuous process improvement – Technical process experts– Appliers of Kaizen tools– Change Agents


BU Champion

BU Leadership

L6S Process Excellence

Process Owner

BELT

Ext. Team Core Team

Sponsor

ProvidesBusinessDirection

Select a Project

Coach & Develop

Workstogether onthe problem

Monito

r & Assi

st

Provides Project Update

Works toimplement

BU Controller

Provide financial

calculations &

validation

High-Level Process Improvement Interactions


Agenda

• What is Lean Six Sigma?• Why are we using it?• How are we deploying it?• Roles and Responsibilities• DMAIC phases


Define What is the scope of the problem?

Measure What is the frequency of the problem?

Analyze Where and why does it occur?

Improve How can we fix the process?

Control How can we ensure the process stays fixed?

Process Output Y = f (Input variables x1, x2 ….)To improve Y, control the key x’s

A Simple Approach: The Right Roadmap & Tools


Define Phase

• During the define phase, the emphasis is on understanding the current state– Where the problem is occurring– Duration of the problem– What the problem is (in numbers)– What is the KPI– Financial impact of the problem– What is the scope and key stakeholders


Define Phase Toll-Gate Review

• At the end of the Define Phase, the team should have the following deliverables presented to the Project Sponsor, BU Financial Controller, and Master Black Belt for approval to proceed:– Internal and external customers identified– Contract reviewed– Current state map– Communication plan developed– Estimated Completion Dates for Measure, Analyze, Improve, and Control

phases determined– Team properly sized and resourced from appropriate areas– Objectives for project set with SMART goals


Measure Phase

• The Measure Phase is about understanding the current state and collecting data to establish a baseline– Key Process Input Variables (KPIV’s) and Key Process

Output Variables (KPOV’s) that have a heavy influence the process or are the result of the process

• In this phase, consideration is taken into how accurate and reliable the measurement system that we use is– Measurement system could potentially be the cause of

the problem


Measure Phase Toll-Gate Review

• At the end of the Measure Phase, the team should have the following deliverables presented to the Project Sponsor and Master Black Belt for approval to proceed:– KPIV’s and KPOV’s identified– Measurement System Analysis (MSA) conducted– Data collection plan created and executed– Baseline capability established– Appropriate graphs and charts developed to display

statistical data


Analyze Phase

• The Analyze Phase is where the team does a deep-dive on the data collected in order to determine the root cause of the problem

• The analyze phase involves determining where the gaps and opportunity areas lie that could provide the biggest impact to the problem


Analyze Phase Toll-Gate Review

• At the end of the Analyze Phase, the team should have the following deliverables presented to the Project Sponsor and Master Black Belt for approval to proceed:– Sources of Variation identified– Cause and Effect Diagram– Detailed process map generated for root cause– Pareto charts to highlight key sources of variation– Correlation studies to show causal relationship


Improve Phase

• The focus of the Improve Phase is to implement improvements that were brainstormed and agreed to in the analyze phase

• The improve phase typically involves ideas being piloted with the results being validated to ensure that no adjustments need to be made


Improve Phase Toll-Gate Review

• At the end of the Improve Phase, the team should have the following deliverables presented to Project Sponsor, Master Black Belt, and Process Owner for approval to proceed:– Implementation Plan– Results of pilot(s)


Control Phase

• The focus of the Control Phase is to establish how the results are going to be sustained and monitored

• The Control Phase typically involves the creation of metrics and plans to be executed when the metrics indicate that the process is not behaving as expected


Control Phase Toll-Gate Review

• At the end of the Control Phase, the team should have the following deliverables presented to the Project Sponsor, BU Champion, Master Black Belt, BU Financial Controller and Process Owner for approval:– Control Plan– Risk Analysis– Close-out Presentation


Project Tollgate Approvers

BU Champion

Sponsor

Process Owner

BU Financial Controller

Master Black Belt

Project Charter Approval X X X X X

Define X X

Measure X X X

Analyze X X X X X

Improve X X X

Control X X X X X

• Projects are continually reviewed and approved

• Recap of the tollgates and who’s will need to sign-off on the project

• Signatures can be electronic or scanned for now, and will be retained with the project documentation


Top Tools

• Process map• Cause and effects matrix• Measurement system analysis• Capability analysis• Descriptive statistics• Graphical techniques

– Box Plots– Histograms– Scatterplots– Time series plots– Run charts– Pareto charts– Check sheets

• Statistical process control charts• Correlation• Simple and multiple regression• Inferential statistics

– Confidence intervals

• Failure modes and effects analysis• Multi-vari studies• Fractional factorial experiments• Full factorial experiments• Response surface methods• Transformations• Normal distribution• Sample size determination• Test for Equal Variances• Fishbone diagrams• Hypothesis testing• F-test• T-test• Chi-square test• Tests for normality• Non-Parametric Tests• Analysis of Variance


A Simple Approach: The Right Results

The right support +

The right projects+

The right people+

The right roadmap and tools=

The right results

Everyone’s Responsibility

BU’s Responsibility

BU’s & Process Excellence’s Responsibility

Process Excellence’s Responsibility

BU’s Responsibility


The Lean Six Sigma Lifecycle

Project Sponsor & Belt

Everyone

Champion & Local Leadership

Project Sponsor

Process Owner

Project Sponsor, Project Team,

Process Owner

OpportunityIdentification

CharterDevelopment

CharterPrioritization

ResourceAllocation

ProjectExecution

ProjectMonitoring


Review

• What is Lean Six Sigma?• Why are we using it?• How are we deploying it?• Roles and Responsibilities• DMAIC phases

Six Sigma Simplicity “85% of the reasons for failure to meet customer requirements are related to deficiencies in systems and processes…rather than the.

Documents

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sigma simplicity slide

sigma programs

sigma capable

sigma training company

sigma awareness training

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goal of lean