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2Access GE
GE Proprietary
ObjectivesIntroduction
Overview of GE’s performance improvement tools:• Workout• Six Sigma• Lean• Process mapping• Change Acceleration Process (CAP)
For each tool, review:> What it is> Key concepts/buzzwords> How the methods are used> Lessons learned> Success stories
3Access GE
GE Proprietary
GE Commercial FinanceCapital Solutions Corporate Finance
HealthcareFinancial Services
Real Estate
30+ Countries~20,000 Employees
8,000+ Front-end
Over 1 million customers
Global Presence … Local Underwriting Expertise
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GE Proprietary
One provider for your growth needs
• Asset-based loans
• Cash flow loans
• Second lien and junior secured loans
• DIP and POR financing
• Off balance sheet financing
• Interest rate management
• Leasing
• Equity
• Securitization
• Mergers & acquisitions• Working and growth capital• Refinancing • Recapitalizations• Corporate restructuring• Capital expenditures• Tax advantaged financing• Project finance
One toolkit of flexible financing solutions to best meet your needs
Growth needs Products & services
5Access GE
GE Proprietary
What is Access GE?
Different than a consulting company. We bring facilitation & methodologies, you bring your business knowledge and implement action items.
… GE Corporate Financial Services’ ACFC team
ACFC is a GE initiative:
At the CustomerFor the Customer
• GE leadership methods applied to your business
• Best practice sharing
• Tailored to your needs
• Utilized at your convenience
• Our facilitators, your decisions
• Creating a partnership with our customers
• More than just capital
7Access GE
GE Proprietary
Always remember the customer…
How the customer explained it
How the Project Leader understood it
How the Analyst designed it
How the Programmer wrote it
How the Business Consultant described it
How the project was documented
What operations installed
How the customerwas billed
How it was supported What the customer really needed
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GE Proprietary
Fundamental principle of GE approach
“Eighty-five percent of the reasons for failure to meet customer expectations are related to deficiencies in systems and
process… rather than the employee. The role of management is to
change the process rather than badgering individuals to do better.”
– W. Edwards Deming
9Access GE
GE Proprietary
Approach
Com
pone
nt o
f Suc
cess Q
Technical Strategy
ACultural Strategy
Work-OutKnowledge-
driven
Six SigmaData-driven
Leadership Development
GE Values & Leadership Traits
CAP
People Data
Selecting The Right Toolkit
(Process Change)
(People Change)
Lean/KaizenProcess mapping
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GE Proprietary
Comparisons
Time-Speed QualityLean
Kaizen TQMSix Sigma
ISO Baldrige
CostTraditional Management
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GE Proprietary
Work-Out
Scope ProjectA
Facilitate Work-Out (2 days)B
Follow-up: action plan implementation
C
Process
• Define measurement & success criteria• Commitment to complete action items• Cross-functional participation• Employees closest to the process• Positive attitude & open mindset
Factors for success
• 2 day session• Senior leaders scope the problem and set
goals• Participants brainstorm barriers, develop
solutions and action plans
How it works
• People driven problem solving methodology – leveraging brainstorming and employee empowerment
• Bottoms up approach…max buy-in• Not dependent on industry or function
What it is
Proprietary Model
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GE Proprietary
Customer Situation
Event Description
Company: Automotive aftermarket manufacturer and distributor
Unable to keep retailers stocked with aftermarket shifters and distributors
Customer Solution
Identified machine part availability as major bottleneck. Re-allocated labor to increase machine shop production.
Task force established to improve supplier quality.
Customer Benefit
Goal: Improve production from 235 to 400 finished shifter units/day in 3 months
13 people, cross-functional team, 2 day event at satellite manufacturing plant
Customer led an additional Work-out on the Distributor line with similar results.
Increased production from average of three parts per person per hour to 10 units per hour per person in under two months.
The savings in labor, components and overhead averaged out to $9 per item.
• $2.4MM of additional revenue• $450K of productivity
Increasing production capacity
14Access GE
GE Proprietary
Company: Metal former, $60MM RevenueCurrent performance at 4.8 inventory turns. Best in class 20 turns.
• Enhanced usage of ERP system • Rationalized stock list by 50% (700 to
350 items)• Reduced set up times by scheduling
product families• Reduced raw material parts by size
consolidation• Reduced suppliers and cost by
implementing consignment program
Goal: Increase inventory turns from 4.8 to 10/yr in 9 months
13 people, cross-functional team, 2 day event
Increased inventory turns from 4.8 to 9
• Eliminated $1MM of inventory
Customer Situation Customer Solution
Event Description
Customer Benefit
Increasing inventory turns
16Access GE
GE Proprietary
Measure of Quality
Process For Continuous Improvement
Enabler for Culture Change & Leadership Development
— 6σ is a Statistically based Quality Program. It is a Rigorous Methodology to Improve Process Control.
— 6σ provides a Process Based Approach to Continuous Improvement. It is Independent of the Measurement Involved &can be used to Improve any Business Process.
— To be Successful, 6σ requires a Radical Change in the way an Organization Works and its leaders behave.
To Identify and Meet Customer Critical to Quality Characteristics
What is Six Sigma?
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GE Proprietary
Activity Defects @ 99% Defects @ 99.9997%( 3.8 Sigma ) ( Six Sigma )
Mail 20,000 lost articles 7 lost articlesDelivery of mail per hour of mail per hour
Drinking Unsafe drinking water Unsafe drinking waterWater for 15 minutes per day for 2 minutes per year
Hospital 5,000 incorrect 2 incorrectSurgery procedures per week procedures per week
Air 2 abnormal landings 1 abnormal landing Travel at most airports each day every 5 years
Process Capability Needs to be Better Than You Think…
Sometimes 99% Is Just Not Good Enough
Measurement
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GE Proprietary
Six Sigma ConceptsConceptCritical-To-QualityCharacteristics (CTQ)
Defect
Defect Opportunity
DPMO
DefinitionCustomer performance
requirements of a productor service
Any event that does not meetthe specifications of a CTQ
Any event which can bemeasured that provides achance of not meeting acustomer requirement
Defects per million opportunities
Concept of defects at the core of six sigma
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GE Proprietary
Many X’s are involved in determining Y.Which X’s are of primary importance if we are to ensure that satisfactory Y’s will be produced?
The Focus of Six Sigma
YDependentOutputEffectSymptomMonitor
X1 . . . XN
IndependentInput-ProcessCauseProblemControl
f(X)Y=To get results, should we focus our efforts on the Y or X ?
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GE Proprietary
Identify the vital few
X
Process Variables(Xs)
Process
InputVariables
(Xs)
Outputs (Ys)
X XX
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GE Proprietary
Methodologies to achieve six sigma
Desig
nDM
ADV/DFS
SIm
provement
DMAIC
ManagementBPMS
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GE Proprietary
D M AI CDefine Measure Analyze Improve Control
Methodologies
Practical Problem
• Problem statement
• Collect data
Statistical Problem
• Characterize the process
• Capability
Statistical Solution
• Root cause analysis
• Measure the influence of the critical variables on the mean and variability
Practical Solution
• Verify critical variables and transfer function
• Change process
• Control the gains
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GE Proprietary
DFSSDefine Measure Analyze (re)Design Optimize
Methodologies
Verify
Predict Product Quality Performance while in the Design Stage by Developing / Determining the Transfer Function for the Mean and Variance of the Customer’s CTQ’s (Y’s) and Optimizing them by Manipulation of the X’s to provide a Robust and Reliable Solution
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The iterative processWhat does the customer expect?
How frequently are we producing defects (%Good, % Bad)?
Why are defects occurring?
What do we need to change? How can we fix it?
How do we sustain improvement?
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GE Proprietary
Customer Situation
Project Description
Company: Bridge Girder Manufacturer Employs approximately 500 employees, 3 facilities
High DSO’s across business. Receivables at $29MM, DSO of 108 Days
Customer Solution
New monitoring and calling process to independently verify State DOT has paid the Subcontractor and thus company can call for payment.
Customer Benefit
From the data, identified 3 types of customers: Owners (paid in 60 days), contractors (about half paid in 60 days), subcontractors for govt (none paid within 60 days).
Interviewed subcontractors to find out why they did not pay. Learned that in most cases they were holding the cash while claiming the State DOT had not paid
them yet.
Reduced DSO’s from 108 to 82 days and receivables from $29MM to $17MM.
Accelerated $12MM cash, at a savings of $1.4MM cost of capital, enabled $60MM new business
Decreasing DSO
26Access GE
GE Proprietary
Customer Situation
Project Description
Company: Pita Bread Manufacturer In business since 1975. 1 facility.
High flour usage and scrap
Customer Solution
Vital X identified: White/Wheat Mix
Change mix of flour from 50/50 to 75 white/25 wheat
Customer Benefit
Process knowledge experts suggested it was humidity and temperature in the environment (which would have been extremely expensive to fix).
Data analysis showed that scrap flour consisted mostly of wheat flour. Wheat flour is more granular than white flour and falls off the pita during various steps in the process while white flour is much finer and sticks better to the pita.
Average flour lbs/shift/hour reduced from 225 to 133
$50k annual savings
Reducing scrap
28Access GE
GE Proprietary
TPS is a system…not just a set of tools
Fundamentals in action…the House of Toyota
JIT Jidoka
Heijunka
TPS
•Pull
•Single PieceFlow
•Takt TimeProduction
•Stop at an Abnormality
•Autonomation
•Build in Quality
People
Leveling, Sequencing, Stability
29Access GE
GE Proprietary
Lean benefits
– Cost– Defects– Lead time– Inventory– Space– Waste!
+ Productivity+ Customer satisfaction+ Profit+ Customer responsiveness+ Capacity+ Quality+ Cash flow+ On time delivery
Lean
Waste Elimination
Using LESS resourcesfor MORE output
Growth
Work Time (value add)
Cycle TimeBefore
AfterWait Time (non value add)
Same work completed in less time
1. Improves processes
2. Reduces cost 3. Enables growthLean Attacks Waste Here
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GE Proprietary
Continuous movement of products, services and information from end to end through the process
Nothing is done by the upstream process until the downstream customer signals the need
Complete elimination of waste so all activities create value for the customer by continuous improvement
Define value from the customers perspective and express value in terms of a specific product
Map all of the steps…value added & non-value added…that bring a product or service to the customer
3Establish Flow
4Implement Pull
5Work to Perfection
1Specify Value
2 Map the
Value Stream
Lean Thinking Principles
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SORT Get rid of anything not needed
STRAIGHTEN Establish a place for everything and keepeverything in its place
SCRUB Keep everything very clean
SCHEDULE Establish a daily routine in each work cell to maintain and improve on the first three S’s
SCORE Regularly measure how well each cell is doing at maintaining and improving the first four S’s
plus a 6th S
SAFETY Establish and maintain a safe environment for employees
Workplace Organization and Cleanliness: 5S
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GE Proprietary
Overproduction
Inventory
Extra Processing
Motion
Defects
Waiting
Transportation
• Processing before next operation is ready• Processing prior to need• Making decisions too early
• Multiple credit applications awaiting approval• Unnecessary document / data storage
• Navigating multiple screens to input data• Multiple ways to do the same task• Printed material• Duplicate entries
• Navigating multiple screens to input data• Printing Material• Ergo…walking, bending, twisting• Looking for data / info
• Personal data incorrect• Missed customer due dates• Data entry errors• Rework
• Credit applications awaiting approval• Info awaiting an overnight “systems batch run”• Manual decisions• System downtime / response time
• Delivering hard-copies• Shipping hard-copies requiring signature
• Sub assemblies and components between feeder & main lines
• Material between operations & process steps• Inventory stored in warehouses• Buffer & safety stock inventory
• Planned re-work• Un planned re-work• Handwork…polishing, deburring
• Operators bending, turning, twisting, reaching, walking• Machines “cutting air”• Robotic motion “getting back to home”
• Poor quality of materials• Equipment failures• Missing customer due dates…internal & external
• Operators waiting• Machines waiting • Customers waiting
• Conveyance of any materials, tooling• Conveyance systems
What is Waste?…Examples7 Wastes Product Flow Knowledge Flow
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GE Proprietary
Thoughts On Implementing LEANFocus on the CustomerTarget processes that most directly touch the customer and drive growth for your business.
Measure Customer ImpactTranslate cycle time reductions to customer impact. Either through NPS or through incremental revenue and net income.
Get Everyone EngagedLean works best when you focus wing to wing and drive cross-functional participation.
Create a Continuous Learning CultureCreate new processes and don’t be afraid to fail. Try new approaches and learn from your mistakes.
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GE Proprietary
Customer Situation
Event Description
Company: Manufacturer and supplier of high quality automotive aftermarket instrumentation.
Kanban replenishment times were steadily increasing and not supporting the current production growth curve.
Customer Solution
Resized kanbans and improved routing to the stockroom
Eliminated obsolete stockroom inventory
Reorganized stockroom inventory to reduce the amount of travel to high use items
Customer Benefit
1 week on-site with cross-functional group of 15 employees
• 1 day 5S event focused on the stockroom • 4 days working with kaizen blitz teams on:
- Stockroom organization- Kanban routing- Kanban sizing
Stockroom reorganization resulted in a 54% decrease in distance traveled by stockroom personnel, or 223 miles per year!
$340,000 in benefits generated by:• Inventory reduction in dollars and units• Decreased cycle time for replenishing
kanbans.
Decreasing replenishment cycle time
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GE Proprietary
Process Mapping
Scope ProjectA
Facilitate session (2 days)B
Follow-up: action plan implementation
C
Process
• Define measurement & success criteria• Commitment to complete action items• Cross-functional participation• Employees closest to the process• Positive attitude & open mindset
Factors for success
• 2 day session• Senior leaders scope the problem and set
goals• Cross-functional participants document
process, identify and eliminate non-value added steps, develop action plans
How it works
• People driven methodology – leveraging process knowledge and employee empowerment
• Bottoms up approach…max buy-in• Not dependent on industry or function
What it isWhat It Could Be...
What You Think It Is...
What It Really Is..
What It Should Be...
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GE Proprietary
Reducing order lead timeCustomer Situation
Event Description
Designer and manufacturer of equipment used in the construction, maintenance, and repair of railroad tracks.
Rush Order backlog had grown to over $1.1MM. Daily shipments average at 87%.
Customer Solution
• Created standard price & delivery form• Implemented Stock items • Reduced lead times through supplier
stocking program• Visual management of Rush Order• Later pickup for Rush Orders
Customer Benefit
Decreased the backlog from $1.1MM to $160K after 10 months.
Increased daily shipments percentage to average of 94%.
2 day process mapping session with 10 cross-functional participants.
Mapped current state, identified value-added steps, developed solutions that reduced non-value added steps and rework.
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GE Proprietary
Change Acceleration Process
• A set of tools designed to accelerate implementation and increase success of change
• Focus on cultural and human aspects of change
• Effective to drive large changes where you anticipate some resistance
What it is
• 2-3 day session• Participants implement the change
management tools on a specific change happening in your business
• Participants develop action plans
How it works
What we will do
Scope ProjectA
Facilitate CAP (2-3 days)B
Follow-up: action plan implementation
C
• Define measurement & success criteria• Commitment to complete action items• Cross-functional participation• Positive attitude & open mindset
Factors for success
Proprietary Model
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GE Proprietary
IT implementationCustomer Situation
Event Description
Metal distributor and processor, with over 100 locations in US & Canada. $5B in annual sales.
Company moving from legacy system to SAP over the next 3 years
Customer Solution
• Created a robust training program• Established super-users• Documented new procedures• Developed comprehensive
communication plan around upcoming change, vision, status
• Created sub-teams to identify and address functional needs
• Established a process for obtaining and responding to feedback
Customer Benefit
Implementation rollout reduced by one week per site, worth several million dollars.
2 days, 15 cross-functional participantsdedicated to applying specific tools used to improve change effectiveness
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GE Proprietary
Integrating an acquisitionCustomer Situation
Event Description
Manufacturing and service company operating in the energy industry, with a presence in US, Mexico and Canada
Growth by acquisition strategy had amassed 8 business units, 13 locations in Texas and Louisiana
Customer Solution
Developed strategy for 2 business units: Pressure control and distribution
For each business unit, developed solutions addressing integration of Manufacturing, Sales, and Administration
Customer Benefit
Facility rationalization and utilization savings of $1.7MM
2 days, 20 cross-functional participantsdedicated to applying specific tools used to improve acquisition integrations
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GE Proprietary
Internet resources• www.lean.org• www.isixsigma.com• www.asq.org
Glossaries> http://www.isixsigma.com/dictionary/glossary.asp#A> http://www.leanadvisors.com/Lean/glossary/> http://www.mamtc.com/lean/intro_glossary.asp> http://www.leanqad.com/glossary/
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Dobyns, Lloyd and Lare C-Mason. Thinking About Quality, Times Books, 1994
Gupta, Praveen. The Six Sigma Performance Handbook. McGraw-Hill , 2005.
Harry, Mikel. The Vision of Six Sigma: Tools and Methods for Breakthrough. Sigma Publishing Company. 1994
Imai, Masaaki. Gemba Kaizen. McGraw- Hill, New York, 1997.
Imai, Masaaki. Kaizen. McGraw-Hill, 1986.
Pyzdek, Thomas. The Six Sigma Handbook. McGraw-Hill. New York, 2001.
Ulrich, Dave, etall. GE Work-Out. McGraw-Hill, New York, 2002.
Womack, James & Daniel Jones. Lean Solutions. Free Press 2005.
Bibliography
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GlossaryCore Process: All the functions and sequence of activities (regardless of where they reside in the organization), policies and procedures, and supporting systems required to meet a marketplace need through a specific strategy. It includes all functions involved in the development, production and provision of specific products or services to particular customers. In other words, emphasis is given to workflow – not to organization charts. New product introduction, order fulfillment and customer service are examples of what we mean by “core process,” a.k.a.: “business operating system”.
Cycle Time: The sum of process time, move time, delay time, inspect time and storage time from the customer or client's point of view. In other words, it encompasses all of the various categories of time from the point in which the customer orders the good or service until the good or service is delivered to the customer.Defect: Anything outside specification; unacceptable to customer. Any event that does not meet the specifications of a CTQ.(DFSS): Design For Six Sigma The act of designing an application, a product, a manufacturing or business process resulting in Six Sigma output to satisfy both customer and internal Critical to Quality variables.Defect: Any instance or occurrence where the product or service fails to meet customer requirements.
Defect Opportunity: Any event which can be measured that provides a chance of not meeting a customer requirement. It is a potential defect on a unit (output) which is important to the customer; example: specific fields on a form which creates an opportunity for error that would be important to the customer.
Discrete Data: Any data not quantified on an infinitely divisible scale. Includes a count, proportion, or percentage of a characteristic or category (gender, loan type, department, location, etc) also referred to as attribute data.
DFSS: Design for Six Sigma: Describes the application of six sigma tools to product development and process design efforts with the goal of “designing in” Six Sigma Performance capability.
DMAIC: Acronym for a process improvement management system which stands for Define, Measure, Analyze, Improve and Control. Lends a systematic, scientific fact based process structure to process improvement
DMADV: Acronym for a systematic, scientific fact based process for the design of a new product or process under the philosophy of Six Sigma
Failure Modes Effect Analysis (FMEA): A method of identifying and classifying the type, severity and detectability of all modes of failure of a product or process.
Fishbone: See Cause and Effect Diagram for definition. Also known as Ishikawa Diagram, Cause Effect Diagram
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GlossaryFlexibility: Addresses the responsiveness of the core process. The combination of externally driven delivery and internally driven cycle time defines flexibility.
Force field analysis: Identifies forces/ factors supporting or working against an idea; restraining factors listed on one side of the page, driving forces listed on the other; used to reinforce the strengths and overcome the weaknesses of obstacles
Gauge: An instrument used to generate a measurement number.
Gauge R&R: A study that determines how much of the observed variance of Y is due to the measurement system, basically telling us if our gauges are good enough.
SIPOC: Supplier, Input, Process, Output, Customer
Six Sigma: Level of process performance equivalent to producing only 3.4 defects per million opportunities; terms used to describe process improvement initiatives using sigma based process measures and/or striving for six sigma level performance.
Standard Deviation: Measure of the distance that points are scattered from the center point (mean). The most common measure of the variability of a set of data.
alue Enabling Activities: Steps/ tasks in a process enabling work to move forward and add value to the customer but not meeting all three of the value-adding criteria; should still be scrutinized for time and best practices – can it be done better?
Voice Of The Customer: Direct, focused feedback in the context of the customer’s experience with a product or service; providing clues about their expectations, perceptions and needs.
Waste: The nonvalue-added activities and resources incurred in meeting the requirements of the customer. Waste includes all the effort and costs associated with failures, appraisals and surpluses.
X: Variable used to signify factors or measures in the Input or Process segments of a business process or system.
Y: Variable used to signify factors or measures of the Output of a business process or system. Equivalent to the “results”. A key principle of six sigma is that Y is a function of upstream factors or Y = f(x,x,x,x).
Yield: Total number of units handled correctly through the process step(s).