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Introduction to Lean Six Sigma

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Introduction to Lean Six Sigma. A Human Resources Perspective. Agenda. Short Biography History of Lean Six Sigma (LSS) LSS Methodology Success Factors Application to HR Examples of project ideas New York ISO case study. About the Presenter. David Duda - PowerPoint PPT Presentation

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Introduction to Lean Six Sigma

A Human Resources PerspectiveIntroduction to Lean Six Sigma1AgendaShort BiographyHistory of Lean Six Sigma (LSS)LSS MethodologySuccess FactorsApplication to HRExamples of project ideasNew York ISO case study

2About the PresenterDavid DudaOver twelve years of LSS experienceDelta Airlines, Inc. 1998-2008Production based application of LSSNew York Independent System Operator 2008--PresentService/transactional based application of LSSCertified Six Sigma Black BeltContact Info: [email protected]

3The History of Lean Six SigmaA New Approach to Quality4History of Lean Six SigmaWhat is in a name?Lean -- Focuses on removing waste (muda) from processesSix Sigma Focuses on understanding and reducing variation in processesLean Six Sigma (LSS) Combines both approachesWhat is the Concept behind LSS? As wasteful activities are removed overall process variation is reducedLean Six Sigma is one of many methodologies developed through the Quality Revolution

5HistoryEvolution of QualityCraft ProductionEach item is uniqueIndividual parts made to fitQuality through craftsmanshipMass ProductionHigh volumeInterchangeable partsQuality through inspectionBetter ProductionUnderstanding of process variationQuality through process6Evolution of Quality--TimelineEli WhitneyWalter ShewhartDeming & JuranEiji ToyodaMotorola17981920s195019601980Eli Whitney-- The Quality Revolution began with Eli Whitney in 1798. In order to secure a government contract to manufacture 10,000 guns, Whitney introduced the concept of interchangeable parts.

Walter Shewart-- Dr. Shewhart worked with Western Electric from 1918 to 1924 where he introduced control charts. Shewhart also created the cycle of Plan, Do, Check, Act.Plan - What changes do we need to make? What data is needed?Do - Make the change, preferably a pilot study.Check - What was the effect of the change? What did we learn?Act - The new learning should lead to improvement, customer satisfaction.

W. Edwards DemingInstrumental in the reconstruction of Japan after WWII.

Eiji Toyoda - Former CEO of Toyota-- Along with his cousin Kiichiro pioneered in the 1940s and 1950s what today is known as Lean.

7Expanding Application of LSSInitially applied in production environmentsManufacturingSupply ChainMaintenance Repair and Overhaul (MRO)Rapidly grew into transactional applicationsFinancial InstitutionsInsurersContinued to expand to servicesHospitals and Health Care

Examples of Companies who have used LSS:Manufacturing/Production:Allied Signal/HoneywellGeneral ElectricMotorolaDelta Air LinesU.S. Military

Transactional IndustriesBank of AmericaAmerican Express

Service ApplicationsT.S.A (Airport Security)

There are 1000s of organizations. These are just a few well know entities.

8A Couple of QuestionsWhat does Six Sigma mean?A process that has a six sigma level of quality experiences only three defects per one million opportunities.Is it Important to have a six sigma level of quality?It depends on the customers perception of quality. If you are landing airplanes, it is critical to obtain at least a six sigma level of quality. If you are manufacturing coffee stirrers, lower levels of quality may be completely acceptable.

DPMO=Defects Per Million Opportunities9How Good is Good Enough?

10Lean Six Sigma MethodologyWhat is Lean Six Sigma?11LSS MethodologyDMAIC ProcessKey ConceptsUnderstanding VariationVoice of the CustomerVoice of the ProcessLSS Organizational RolesChampionMaster Black BeltBlack BeltGreen BeltYellow Belt12DMAIC ProcessThe appendix contains a slide that offers much more information on the deliverables of each step in the DMAIC process.

Tools that are typically used in each phase are also listed.13Key Concepts of LSSUnderstanding of VariationTwo types of variationControlled variation (Common Causes)Uncontrolled variation (Assignable/Special Causes)Improvement strategy based on type of variationControlled variation = Change the processUncontrolled variation = Deal with the special eventsVoice of the Customer (VOC)How does the customer describe qualityWhat is the customers tolerance for defectsVOC is often expressed as specification limitsGoals should align with the voice of the customer

Quote from W. Edwards Deming:

Management is prediction.Understanding variation is the key to accurate prediction.

14Key Concepts of LSSVoice of the Process (VOP)What is the current process capabilityHow much variation is in the processHow many defects does it produceWhat is the process averageWhat process inputs are important to final quality

Y=(x)Conceptual Summary of Lean Six SigmaThe Output (Y) is a function () of the inputs (x)Deming believed that 85% of all defects are caused by process failures, not people failures. For that reason, he believed that it was unwise to badger workers over poor quality. Instead, he favored collecting data from the process to understand which of the inputs to that process were critical to quality.

Final quality is achieved through controlling the variation in process inputs. Final inspection of the finished product does not prevent quality defects, it just prevents a portion of defected products from reaching the customer.15LSS Organizational RolesChampionsBusiness leaders who have a conceptual understanding of Six Sigma. They support the team by removing obstacles to project completion.

MBBMaster Black Belts are LSS experts who have a thorough understanding of all aspects of the methodology. They mentor and coach Black Belts. They generally have a strategic role in the organization and advise senior management on high impact improvement opportunities.

Black BeltBlack Belts lead cross divisional improvement efforts. They facilitate Green Belt and Yellow Belt training. They advise MBBs and Champions on local level improvements that can be made to support strategic initiatives. They coach Green Belts in the completion of local improvements (departmental level).

Green BeltsGreen Belts are trained in the fundamental concepts of LSS. They also have the ability to lead improvement teams in the use of some LSS tools. They are aware of the full potential of the LSS methodology so they can engage BBs and MBBs in the use of advanced tools to support the efforts they are leading. Green Belts lead local improvements in their area of expertise. They generally do not have full-time LSS responsibilities.

Yellow BeltYellow belts have a general understanding of LSS principles. They have no full time LSS responsibilities. Their understanding of LSS concepts makes them ideal team members for improvement projects.16Lean Six Sigma Success FactorsWhat are the building blocks for successful LSS programs?17Considerations for LSS SuccessOrganizational FactorsCommitment of Senior ManagementClear organizational vision and goalsEffective LSS training strategyLSS Team FactorsFlexibilityPracticalityFocus on Customers (Internal and external)Strengths of LSS MethodologyData BasedScalableStructured

Here are some factors that make can created obstacles to continuous improvement.

This list was compiled by Dr. Kaoru Ishikawa. Dr. Ishikawa traveled to many different companies, across diverse cultural backgrounds and products. He found these 10 obstacles to improvement were consistently exhibited in all companies to some extent and that success in improvement was directly proportional to how well the organizations dealt with these behaviors.

1. Passivity among top executives and managers; their avoidance of responsibility.2. People who feel that everything is fine and that there are no problems at all. These people are satisfied with the status quo and do not understand the significant issues.3. People who think that their own company is by far the best. (Egotists)4. People who think that the easiest and best ways for doing things are those which are familiar to them. They rely only on their own shallow experience.5. People who think only of themselves or their own division. 6. People who have no regard for other peoples opinions.7. People who scramble for distinction, always thinking about themselves.8. Despair, jealousy and envy.9. People who are oblivious to what is happening beyond their immediate surroundings. People who do not know anything about other divisions, other industries, or the outside world.10. People who continue to live in the feudalistic past. They include people who are engaged merely in business affairs, managers and line workers who lack common sense, and labor union members who are doctrinaire.

18Considerations for LSS SuccessLSS ChallengesIt is not a quick win approach to continuous improvementIt requires an investmentIt requires a degree of organizational humility

19Applying LSS in Human ResourcesCan I apply LSS to my processes?20Questions for ConsiderationYou have mentioned that LSS is an organizational approach. Can I learn LSS concepts and apply them to my area of expertise?What are the challenges faced when trying to apply LSS to HR processes when the larger organization hasnt embraced the methodology?What are the unique challenges for HR in the application of LSS?What types of process are idea for LSS application?Answers for the questions on this slide

Yes, but with limitations. LSS has an exhaustive tool set and many of the tool work wonderfully when applied to local processes. It is hard to drive bottom line results for an organization by applying tools locally. However, it can lead to local efficiencies. Always be mindful of the big picture. Try to avoid unintended consequences for down stream processes related to local improvement efforts. HR processes are involved in every value stream of the parent organization. It is hard to find HR processes that can be improved without the direct participation of many stakeholders throughout the organization.HR is unique in that most processes have two distinct customer groups (employer and employee), and thus potentially conflicting definitions of quality. Therefore, solutions must be win-win scenarios. Communication with the entire organization is extremely important. The improvement team should accept the responsibility of designing communication that clearly demonstrates the value of the change to both parties. Change management is extremely important.Any process that produces data. The answer to this question varies by organization. A process in which both customer groups are currently dissatisfied is a good candidate.21Effective LSS Application In HRA Case Study: The New York Independent Operator (NYISO)22NYISO Success FactorsWell-defined corporate mission and goalsExecutive commitment to LSSEstablished infrastructure to support LSSSystematic approach to LSS trainingFocus on core processes (affecting multiple value streams)Supportive corporate goal structure

23Reliable operation of the bulk electricity grid Managing the flow of power nearly 11,000 circuit-miles of transmission lines from more than 300 generating unitsAdministration of open and competitive wholesale electricity markets Bringing together buyers and sellers of energy and related products and servicesPlanning for New Yorks energy futureAssessing needs over a 10-year horizon and evaluating the feasibility of projects proposed to meet those needsAdvancing the technological infrastructure of the electric systemDeveloping and deploying information technology and tools to make the grid smarter

Background -- The Roles of the NYISO

24NYISOs Strategic Objectives

A Leader in ReliabilityA Leader in Market DesignAuthoritative Source of Information on Key IssuesExcellence in ExecutionSustain and Enhance Robust Planning processesLeader in Technology InnovationCase Study ProjectTitle: Reduce Cycle Time to Hire for Open PositionsProblemProject baseline data reviewed from November of 05 to November of 06Average cycle time to hire was 70 days (Median = 43 days)Standard deviation was 70 days57 percent of positions filled within 60 daysGoalFill open positions in 60 days or less 90 percent of the timeResult87 percent of positions were being filled in 60 days or less (2007)

25Overview of ImprovementsDefined and communicated HR Hiring Process / Roles to NYISO ManagementImplemented Kick-Off Meetings for all Openings:Review/Define Job Specs and Posting informationDiscuss salary range and position levelDiscuss Pre-Screening questions and timingDiscuss Recruiting strategyReview Hiring Process and HR/Hiring Manager RolesStandardized Pre-Screening process and questionsDeveloped standard interview format, questions, evaluationCreated dashboards for HR management and Senior Team reporting

26Controls OverviewProcess StepControl ActivityStrategy SessionRequisition signed by HR and Hiring Manager before recruiting beginsJob Description ChangesLegal Review for Fair Labor Standards Act ramificationsJob Posting PreparationHiring Manager review / signoff before postingOffer PreparationGeneralists secure approval signoff from Management and HR 27AppendixSupplemental Material28Improvement Process Road Map

Analyze

Control

ImproveDefineActivityIdentify ProblemComplete CharterDevelop SIPOC MapFinalize Project Focus

ToolsCharter FormMulti-Generational PlanStakeholder AnalysisCommunication PlanSIPOC MapVoice of Customer (VOC)Defect definitionGoal definition

AnalyzeActivityPropose Critical XsPrioritize Critical XsConduct Root Cause Analysis on Critical XsValidate Critical XsPrioritize Root Causes

ToolsPareto ChartsFishbone DiagramsBrainstorming5 WhysNon Value-Added Analysis

ImproveActivityDevelop Potential SolutionsDevelop Evaluation Criteria & Select Best SolutionsWork with EBPM&C to create Develop To-Be Process Map(s) Develop High-Level Implementation PlanDevelop Pilot Plan & Pilot Solution

ToolsBrainstormingSolution Selection MatrixTo-Be Process MapsPiloting and Simulation

ControlActivityDevelop SOPs, Training Plan & Process Control SystemImplement Process Changes and Controls Monitor & Stabilize ProcessTransition Project to Process Owner

ToolsControl ChartsStandard Operating Procedures (SOPs)Communication PlanImplementation PlanTraining PlanProcess Control Plans

Measure

DefineMeasureActivity Develop Operational DefinitionsDevelop Data Collection PlanCollect Baseline DataDetermine Process Performance/CapabilityValidate Business OpportunityReview EBPM&C process maps to create As-Is Process Map

ToolsOperational DefinitionsData Collection PlanGraphical AnalysisPareto ChartHistogramBox PlotRun ChartDetailed As-Is Process Maps

From: NYISO Green Belt Training ModuleIntro to LSS29This slide show tools and activities typically used in each step of the DMAIC process.

Why 6 Sigma?This slide is a graphical representation of what 6 Sigma means.30Sources of InformationThe New Economics: W. Edwards DemingLean Thinking: James P. Womack and Daniel T. JonesUnderstanding Statistical Process Control: Donald J. Wheeler and David S. ChambersLean Production Simplified: Pascal DennisKnowledge gained producing training material and supporting LSS training for the following organizations:Delta Air Lines, Inc.New York Independent System Operator

31Helpful LinksGeneral Info:Six Sigma Website: http://www.isixsigma.com

Organizations that provide Six Sigma Training:ASQ: http://asq.org/certification/index.html

BMGI: http://www.bmgi.com/

DisclaimerThis presentation was not prepared by, with, or for the New York Independent System Operator, Inc., and any opinions expressed or conclusions reached herein are not the opinions or conclusions of the New York Independent System Operator, Inc. 33Sheet1Sigma LevelDPMO6 Sigma3.45 Sigma2334 Sigma62103 Sigma66,8102 Sigma308,7701 Sigma697,672

&APage &P

-1s1s-2s-3s2s3s-1s1s-2s-3s2s3s-1s1s-2s-3s2s3sssssssVoice Of The CustomerVoice Of The ProcessUpper Spec LimitLower Spec Limit68.26 %95.44 %99.73 %6s Units from the mean to nearest spec. limit99.99999975