Lean six sigma introduction

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Lean Six Sigma - Introduction

Learning Objective• Understanding Lean• Principles of Lean• History of Lean• The Seven Wastes• Understanding Six Sigma• History of Six Sigma• Why & how do we do Six Sigma ?• Six Sigma Organization

Understanding Lean

What is Lean?

How Lean Emerged?

Japanese automotive

industry

Lead from Toyota

50 years back…

In 1991…

Competing for the Future (with Gary Hamel)

Why Lean ?

Approach to LeanFROM TO

Managing results Managing the process & results

The 5 Who’s The 5 Why’s

Problem-hiding Problem-solving

P-D-P-D tail-chasing P-D-C-A Cycle

ValueStream

5 Principles of Lean

FlowPerfection

Value Value is best defined as what is the customer willing to pay for

• Value-adding activities transform the product closer to what the customer actually wants.

• An activity that does not add value is considered to be waste.

Value adding Process• A process step

that transforms or shapes a product or service which is eventually sold to a customer

• Ex: Assembling product parts

Non-Value adding Process• Those process

steps that take time, resources, or space, but do not d value to the product or service

• Ex: Transporting parts from one machining process to the next

“Business Value adding” Process• A Non-Value

adding process that is required by law, regulation, or customer request to operate the business

• Ex: Filling Tax Returns

Tasks can only be defined as “Value-ding” by the Customer

• Registration• Waiting• Pre-screen• Diagnosis

How long will you spend at the hospital?

What is the value?

How long will you be at the park?

• Ride the rides• Wait in line• Eat the food• Play the games

What is the value?

Tasks can only be defined as “Value-adding” by the Customer

ELS CORE CONCEPTS

Distinguish VA from NVA Activities

Activity

Selecting candidates to interview for hire

Completing expense report

Machining part

Assembling product parts

Walking to printer to pick up documents

Transporting parts from one machining process to the next

Waiting for a response from a supplier

What is “waste”?

• Any activity that consumes resources without creating value for the customer

• Unevenness in a process; for example an uneven work pace causing people to hurry and wait

• Overburdening of resources (such as people or equipment)

Types of Waste Descriptions

ELS CORE CONCEPTS

The Seven Wastes

• Waste is called “muda” in Japanese

• Waste is strain on an organization's time & resources

• Waste does not add value to the customers

• The more an organization can reduce waste, the better

T - I – M – W – O – O - D

Value Added (VA) Non Value Added (NVA)

The Seven WastesTransportation is the unnecessary movement of materials or information. • Movement of materials between Warehouses & Plants• Moving materials, Files, documents & mails

Inventory is any material or supplies in excess of the appropriate quantity, at appropriate time. • Excess Raw material, In-process (WIP) and finished goods• Long Cycle times, carrying cost• Risk of obsolescence, damage

Motion is any movement of people that does not add value to the product or service. • In-efficient placement of frequently used supplies/tools• People spend more time moving around than adding value to

customer

The Seven Wastes Cont…Waiting – for man, machine, material or information. • Customers waiting for products, services or information• Excessive cycle time between process steps• Waiting for files, information & approvals

Overproduction – making more, earlier or faster than the next process can consume • Larger batch size, insurance for customer order spikes or

manufacturing problems• Printing reports, replying all on e-mails• Most dangerous of all other wastes

Over-processing – any effort that doesn’t add value to the product or service from customer’s perspective • Complicated processes with un-necessary & redundant steps• Multiple approvals / signatures, un-necessary forms/details• Extra packing, Re-work loops

The Seven Wastes Cont…

Defects – are products, services or information that are inaccurate and/or incomplete • Cause serious customers dissatisfaction• Result in high cost due to rework / customer returns

Under- Utilized Talent – not utilizing people skills, experiences, knowledge or creativity to its potential • Lack of empowerment • Lack of cross training• Lack of people centric culture which encourage participation &

suggestions from employees

and Finally the 8th waste…

Once Waste is identified

What you do?

• Eliminate – the cause of the waste wherever possible

• Simplify – the process or step that is creating the waste

• Streamline VA – complex processes

Maximize VA Eliminate NVA

Why Companies do Six Sigma?

COST + PROFIT = SALES PRICE

MARKET PRICE - COST = PROFIT

1. To deal with a world of declining product prices!

Accelerate our rate of improvement in quality and productivity faster than the competition

Why Six Sigma?

2. To successfully compete withthe best companies in the world!

Accelerate qualityimprovement efforts andproductivity faster thanall of our competition!

3. To establish a common language andapproach across differentfunctions and branches of our business!

4. Develop the next generation of leaders!

Why Six Sigma?

What is Six Sigma?

A philosophy of doing business that focuses on the continuous improvement of processes.(Doing business = provide any products or services)

Six Sigma focuses on defect prevention through the use of statistical tools, rather than defect detection through inspection.

Six Sigma is a quality improvement philosophy that focuses on eliminating defects through reduction of variation in a process

Six Sigma is ….

History of 6σ• Initially developed at Motorola by Bill Smith in 1986

• Used old concepts and combined them• Way of measuring defects and improving quality• New methodology for reducing defects below 3.4 DPMO

(defects per million opportunities)

History of 6σ• Motorola claimed in 2006 that over $17 billion in savings can be attributed to

Six Sigma• Many companies since Motorola have also adapted Six Sigma

• General Electric• Bank of America• Caterpillar• Honeywell• 3M• Amazon.com• Boeing• WhirlpoolAnd the list goes on…

óSigma is a letter in the Greek alphabet.

óThe term “sigma” is used to designate the distribution/spread around the average of any process or procedure.

óFor a business or manufacturing process, the sigma value is a metric that indicates how well that process is performing. The higher the sigma value, the better.

óSigma measures the capability of a process to perform defect-free. The sigma value also indicates how often defects are likely to occur.

óAs sigma values increase, costs go down, cycle times and customer satisfaction goes up.

Metric Benchmark Vision Philosophy Method Tool Symbol Goal Value

What is Sigma ?

s = Standard Deviation = Measure of variation around the average

Big s = Lot’s of variation = BAD!!!

sLevel = 1/2 the number of standard deviations (s) that will fit between the Spec limits when the process is centered

Big sLevel = Lot’s of capability = GOOD!!!

s ss ss sssssss = 12/2 = 6 s

s sssssss

C ustomer S pecs

= 8 /2 = 4s2

s has different uses and interpretations:

Different Uses of sigma

Important Points About Variation

No two things are alike; they always varyVariation always existsWe can’t always observe or measure variationThe more variation there is, the more it mattersThe opposite of variation is prediction

- We are not as interested in what has happened as in what is about to happen

- The degree to which we can predict depends on the amount and nature of variation

• Let’s have a look at two different airline pilots flying the same plane!

• Pilot A lands 10 consecutive times within the boundaries of the runway. He met the specification.

Variation Around a Target

• Pilot B also lands 10 consecutive times within the boundaries of the runway!

Which pilot would you fly with?

Variation Around a Target

Excess inventory

Indirect Costs

R&ARejects

Engineering change ordersLong cycle times

Time value of moneyMore Set-ups

Expediting costsWorking Capital allocations

InspectionScrap

Rework

Lost salesLate delivery

Excessive Mat’l Orders/PlanningLost Customer Loyalty

(less obvious)Lost Opportunity

Direct Costs

15-20%

Overtime

Cost of Poor Quality (COPQ)

• Cost of poor quality for an average company can exceed 20 - 40 % of sales revenue!

• In almost every company, where the cost of poor quality is unknown, it exceeds the company’s profit margin!

• Most improvement efforts are not tied to bottom line results. As a result, gains are sub-optimized and not reflected in the accounting statements!

COPQ continues

How Much Can Variation Cost?

• Studies show that the cost of poor quality can be 25% of sales revenue for 3s companies!

• For 6s companies, the cost of poor quality has dropped to less than 5%!

10%15%20%25%30%

3 4 5 6 7

Sigma Level

Cost of Poor Quality at Progressive Sigma Levels

Key Success Factors for Six Sigma

• Committed leadership from top management• Integration with existing initiatives, business strategy,

and performance measurement• Process thinking• Disciplined customer and market intelligence

gathering• A bottom-line orientation and continuous

reinforcement and rewards• Training

How Do We Do Six Sigma?

3σ 2σ 1σ 1σ 2σ 3σ

~3,000 DPMO

6σ 4σ 2σ 2σ 4σ 6σ5σ 3σ 1σ 1σ 3σ 5σ

~3.4 DPMO

6σ Process

Basic Principle for applying Six Sigma

Six-Sigma Problem Solving Approach

1. Define

2. Measure

3. Analyze

4. Improve

5. Control

DMAIC - Define

• Identify customers and their priorities

• Identify business objectives

• Select a six sigma project team

• Define the Critical-to-Quality (CTQ’s) characteristics that the customers consider to have the most impact on quality

DMAIC - Measure

• Determine how to measure the processes

• Identify key internal processes that

influence CTQ’s

• Measure the defect rates currently

generated relative to those processes

DMAIC - Analyze

• Determine the most likely causes of

defects.

• Identify key factors that are most likely

to create process variation.

DMAIC - Improve • Identify means to remove causes of the defects.

• Confirm the key variables and quantify the effects on CTQ’s

• Identify maximum acceptable ranges for the key variables and a system to measure deviations of the variable

• Modify the process to stay within the acceptable ranges

DMAIC - Control

• Determine how to maintain the improvement

• Put tools in place to ensure that the key variables remain within the maximum acceptable ranges under the modified process

Organization for Six Sigma

Six Sigma Champions:Project sponsorsand mentors

Six Sigma Master Black Belts:Full-time program managers, PMO heads and educators

Six Sigma Black Belts:Full-time projectmanagers

Six Sigma Green Belts:Part time projectcoordinators andassistants

• Champion:- creates the vision of 6s for their business- undergoes basic statistical training- defines the path to implement 6s- breaks barriers that prevent improvements- mentors BB and MBB- assists in deploying resources- reports status of activities

• Master Black Belt:- develops 6s program and training materials- trains management and BB- works with external suppliers/customers to extend 6s program- coaches/mentors BB through projects, advises them in usage of tools

and interpretation of the data- consults with management on strategic and tactical planning- develops 6s culture and BB network

Roles & Responsibilities

• Black Belt:- change agents- selected for technical proficiency, interpersonal skills and

leadership- provides expertise to improvement teams- implements quality improvement activities- develops and trains GB- developed by statistical training, on the job application

and mentored reviews- sets direction to teams, manages risk, transfers

knowledge, discovers new perspectives and obtains financial results

• Green Belt:- first line defense against defects- trained in basic statistical tools- identifies opportunities- implements solutions- maintains the improvements

• Team Member:- participates in project teams- supports goal of project (within their area of responsibility)- continues using the 6s methodology that he has learned during the project

Thank-you

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The following companies claim to have successfully implemented Six Sigma in some form or another:

3M Amazon.com BAE Systems Bank of America BD Medical Bechtel Corporation Boeing Caterpillar Inc. Computer Sciences Corporation Convergys Credit Suisse Damco Deere & Company Dell Denso Eastman Kodak Company Evonik Industries

Ford Motor Company General Electric Inventec Maersk McKesson Corporation Motorola Mumbai's dabbawalas Northrop Grumman PolyOne Corporation Raytheon Sears Shop Direct Group Starwood Hotels & Resorts Worldwide Unipart United States Army United States Marine Corps The Vanguard Group Wipro

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