01 Introduction To Lean 6 Sigma

Copyright 2009-2010 Equable
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01 Introduction to lean 6 sigma
1
Introduction to Lean Six Sigma
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Objectives
> Understand what is lean six sigma
> Understand what does a 6 sigma performance mean
> Learn what is the DMAIC framework
> Understand what are the opportunities to achieve the goal of 6 sigma
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What is Lean 6 sigma?
1st) Lean 6 Sigma is a management methodology and its goal is to improve
dramatically the speed and the quality of all your processes, services and
products. It is:
> The combination of Lean with Six Sigma
> A problem solving method which is Customer centric
> It allows decision making based on data, measurements & statistics
> A pragmatic & disciplined approach (no solution before measurement
of problem and its root cause analysis plus control of implemented
solution over time)
> Business oriented, providing high returns
> Focused on reducing variability, defects and non value added tasks
> A philosophy, a common language and a goal to reach
2
nd
) A performance level: an indication of how well a process is performing
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Lean Six Sigma
Lean Six Sigma is the integration of Lean and Six Sigma
! Increase speed of processes
! Eliminate the Wastes
! Improve quality
! Reduce defects and variation
An operational excellence methodology centered on Customers
A pragmatic, disciplined and results oriented approach
Lean Six Sigma
Resulting into
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Lean origins
1900-1940 1945-1990 1996 2002-Present
Mass production of
inexpensive cars using
the assembly line
Toyota
Production
System
Lean
Thinking Five
Principles
Lean and
Six Sigma
Integration
Womack & Jones Michael George
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Toyota Quality House
JIDOKA:
Hilighting/
Visualization of problems
Quality must be built in
during the manufacturing
process!
JIT:
Just In Time
Productivity Improvement
Making only "what is needed,
when t is needed,
and in the amount needed!"
Superior Quality
Reduce Costs & Delays
Improve Safety & Morale
+
Heijunka (Sequence plan) Standard Work Kaizen
Operational Stability
The Toyota Quality House was developed by Taiichi Ohno and Eiji Toyoda to make it easy to explain Toyota's
continuous improvement system to employees and suppliers. The aim of TPS is to eliminate all muri, mura,
muda (overburden, unevenness, waste) from the operations.
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Lean five principles
Specify Value from the customers point of view
Identify Value Stream map process & see wastes
Flow move one piece at a time continuously
Pull let the customer pull your product
Perfection always improve the process
From Lean Thinking by James P. Womack and Daniel T. Jones, Free Press
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Lean tools
Lean designates a set of tools which has been first used in Manufacturing in
the 60s (coming mainly from the Toyota Production System) and now used in
the service industry (business transactional processes). The Lean tools allow
the optimization of production and transactional processes:
> 7 forms of wastes (Mudas)
> 5 S (Clean, order and optimize the workplace)
> Kaizen event (Change to become good)
> Jidoka (Highlighting/Visualization of problems)
> Value Stream Mapping (Process value & Time analysis)
> Just in Time, Pulling systems & Kanban refurbishing systems
> Quick Changeover or SMED (Single Minute of Exchange of Dices - Setup time
optimization)
> TPM (Total Productive Maintenance)
> Process Standardization: alignment of the production with the demand (Takt time
synchronization, Heijunka (sequence plan), Standard Work)
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Six Sigma origins
1989- 1990- 1994- 1995-Present
Premise of Six
Sigma
Adopters
of 6 sigma
1st Six Sigma
Consulting
company
Six Sigma
expanded to non
manufacturing
functions +
DFSS
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Assumption:
Normal distribution
If I can place six times my
sigma value (standard
deviation) between my
process mean and a
specification limit then I am
operating at six sigma
6 sigma performance measurement
Characteristic
frequency
0
defects
3
10
1 2
50
!

Histogram
Specification
limit
> Sigma is a Greek letter which represents the standard deviation in
statistics.
> Performing at six sigma means that our process produces only 3.4 defects
per million of operations long term!!
6*!
Six Sigma
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6 sigma scale
Z
ST
value
1.5 !
2 !
3 !
3.82 !
4 !
5 !
6 !
Defects* per million of
opportunities (dpmo)
500000
308537
66807
10000
6210
233
3.4
% defects
50.0000%
30.8537%
6.6807%
1.0000%
0.6210%
0.0233%
0.00034%
*observed with long term data. With Z
ST
=Z
LT
+1.5
! ,
defects
Z
LT
value
0 !
0.5 !
1.5 !
2.32 !
2.5 !
3.5 !
4.5 !
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Six Sigma in terms of performance
Performance Commercial flights KPIs
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What does 6 ! mean in financial services
Performance (simulation)
" 14 billions of transactions per day*
" 4 billions checks per year*
" 4 billions credit card transactions per year*
" 2 billions financial transactions per year*
A 19649 defect reduction factor between 3 ! and 6 ! !
at 6! at 3! (6,68% defects)
" 47600 defects
" 13600 defects
" 13600 defects
" 6800 defects
" 935 Millions defects
" ~267 Millions defects
Processes
*EDS data
**VISA data
Services traditional performance
" 19.789 billions credit & debit card
transactions per year**
" 67283 defects " 1.322 billion defects
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Who is applying Lean Six Sigma?
> ALLIANZ
> AIRBUS
> AXA
> BANK OF AMERICA
> CLARIANT
> DEUTSCHE TELEKOM
> DHL
> GENERAL ELECTRIC
> HSBC
> SIEMENS AG
> ..
> 95%+ of Fortune 100 companies
GE advertised that by applying Lean Six Sigma/simplification to its core
processes it will deliver 8% organic growth GE Nov. 05 Immelt update
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Lean 6 sigma financial impact
Cost of poor quality
(in % Sales)
40%
35%
30%
20%
15%
10%
5%
DPMO 3.4 233 6210 66807 308537 500000
Sigma 6 5 4 3 2 1
Budget :
I sell 10 $ every unit
Operational margin = 25% (2.50 $)
every defect costs me 24 $!
at 2,67 ! (12,08% defects) I lost 40 cents for
every unit I sold!!
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Lean Six Sigma benefits
> Revenue growth through:
increased customer satisfaction
introduction of quality products & services
> Margin increase through:
less non quality costs (reduction of defects, wastes and manual
rework)
more productivity and capacity (reduced cycle times)
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Optimization Potentials with one project
> Cycle times: reduction of 30%-70%
> Defects: reduction of 70%
> Costs: reduction of 30%-50%
> Capacity: increased by 20%
> Productivity: increased by 20%-25%
> ROI of 3 to 4
> 4 months projects. Typical projects brings 300 to 400 K" of benefits
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Lean Six Sigma for which project?
Initial situation: I have an issue/project:
> I know the solution:
> I do not know the solution:
> It is an existing process or an
existing product:
> It is a new process or a new
product to design:
JUST DO IT
DMAIC
DFSS
(DMADV)
Method Timing
Immediate
4 to 6 months
6 months
KAIZEN 1 week
OTHERS 1+ year
Lean Six Sigma focus
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How to get the benefits of Lean 6 Sigma?
Select, train & coach people
Select key processes
Select Lean 6 Sigma projects
Complete Lean 6 Sigma projects#""
Market
/Customer
expectations
Company strategy
CTQs*
Cycle time
*CTQ Critical To Quality
Customer eyes
Quality
Cost
Processes
Voice of Customer
Continuous
Improvement
Loop
Risk
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Customer impact
mean moved from 3 days to 2.2
days. We are improving!
Traditional view
Lean 6 sigma view
mean moved from 3 days to 2.2
days and standard deviation from
0.5 to 1. With a spec of 4 days
maximum, we have more issues.
We are improving our internal
process from 7% of defects to
6.5%. Our customers will be
happier!
We measured end to end and
found out that our customer
process did not yet improve.
Not sure
Not sure certain
certain
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Who is doing what in Lean Six Sigma?
Top Management
Champion
Sponsor
Stakeholders
Finance
Master Black Belt/Expert
Black Belt/Project Leader
Green Belt/Team member
Engage/promote Lean 6 sigma
Select processes, projects & people.
Make plan. Change Agent
Has a business issue. Pays the costs of
the project and gets the benefits
Represent the functional teams which
will be impacted by pthe project
Validate the business case
Is a Lean Six Sigma expert. Train and
coach Black Belts and Green Belts
Delivers Lean 6 Sigma projects. Full
time project leader.
Contributes/leads Lean 6 Sigma
projects
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Lean 6 sigma example
Lets take an example:
> The cycle time of a distribution company, from customer order to
customer delivery should not exceed 3 days (our contractual terms &
conditions)
> The Customers complain.
> The competitors are better than us. They never exceed 3 days
> The Management says we are loosing money
> The team in place says we dispatch in average the same day we receive
the order and we always use a 24 hours delivery carrier
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What says Lean 6 sigma
> If there is an output, there is a process!
> If there is a process there is a performance variation
> If there is variation there is a probability of defect (missing our customer
specifications or our contractual obligations!)
> The customer feels always the output process variation. This is how he
perceives your quality!
> A 6 sigma process produces only 3.4 defects per million of operations
> A process operating at 3 sigma produces 66807 defects per million of
opportunities
> A 3 sigma process cost you up to 20 % of your sales revenue
> A 6 sigma process cost you less than 1% of your sales revenue
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The 5 phases of a Lean 6 Sigma project
(DMAIC framework)
Define
Measure
Analyze
Improve
Control
Define your business problem
Measure your process (Y) performance
Find the root causes (Xs) of the problem
Improve, implement new solution
Deliver Y performance over time
Close project
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The 5 phases of a Lean 6 Sigma project
Define
Measure
Analyze
Improve
Control
Define Y
Y AS IS Process performance
Find the root causes (As Is Y=f(Xs))
Y To Be Process
Y To Be Process performance over time
Close project
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Define
Define your business problem, your objective and your project plan
1. Deliver a Project Charter with:
Problem, Objective, Scope, Business Case, Risks identified
Process Map, Indicator, Project plan, Resources
Improve
M
A
I
C
D
Measure Measure your process performance (Y) and its defects
2. Define your CTQ(s)
3. Analyze the measurement system (Gage R&R)
4. Measure the current process performance and capability
Find 20% of root causes (Xs) which create 80% of the issues
5. AS IS process analysis (VSM, Cause and Effect analysis, FMEA, )
6. Data analysis (graphical analysis, statistical analysis)
7. Main root causes analysis synthesis
Design & implement solution(s) which fix the main root causes of issues
8. Design and develop solutions
9. Implement the solutions (Pilot and/or Deployment)
10. Control that the performance is better
Control that the performance is stable over time (stable solution)
11. Establish a Statistical Process Control
12. Close project, Verify financial gains
Analyze
Control
The 12 steps of a Lean 6 Sigma project
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process felt by the customer
Customer
Input
Order
Output
Unit delivery
Definition Specification Performance
limit
Targets/goal
CTQ* Lead time 3 days 99% < 3 days
Procurement
Collect Order &
Forward
to delivery dept
Ship
to Customer & Bill
Customer
Lead time is the measurement
*Critical To Quality
Problem statement: we miss our contractual obligations of delivering in less than 3 days
Process in which we have a business problem:
Define
?
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Measure
Measure your problem and your defects
Lead time distribution
Time from
order to delivery
in days
nb of
occurences
0
defects
Contractual/Customer
Specification
Limit
3 days
10
1 day 2 days
50
Histogram
Observed probability
of defects=12.03%
26/216
Variation
Trend
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Measure conclusion
I observed a probability of defect of 12.03%!
My performance is 2.67 !ST*. We have a problem!
6 sigma goal is to reach 0.00034% of probability of defect!
ZST value*
2 !
3 !
4 !
5 !
6 !
Defects per million of
opportunities
308537
66807
6210
233
3.4
% defects
30.8537%
6.6807%
0.6210%
0.0233%
0.00034%
12.03% 2.67 !
* For long term data with ZST=ZLT+1.5
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Analyze
Analysis finding the root causes (Xs)!
> Pareto chart of the 26 defects
Miss 3 pm
carrier for
outside
Paris
region
20
77%
Incomplete
shipping
address
4
15%
Other
2
8%
> 2 causes represent 92% of my defects
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Improve
2 actions taken:
> Speed cycle by
processing Outside
Paris region orders
first & organize an
earlier transfer to
shipping department
by removing some
non value added
tasks (unnecessary
sign offs)
> Change address
format and control it
at order time (avoid
quality issues)
Time from
order to delivery
in days
nb of
occurences
0
defects
Contractual/Customer
Specification
Limit
3 days
10
1 day 2 days
50
Histogram
Short term data
Observed probability
of defects=0%
Expected performance: 6 !
I can place 6 ! between
and the spec. limit and the
distribution is normal!
!

6x!
New Cycle time from order to delivery distribution
KAIZEN
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Control
2003 Delivery time performance
P99 = percentile 99%
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Take orders offline
(laptop)
Submit order to
Manufacturing
Sales
Repr.
Update orders
on Intranet
Synchronize orders
by email connection
Coordi
nator
orders
eBook
Production
orders
Nb of Manual
Human Interactions*
Before
4
6
After
1
1
W
e
b

O
r
d
e
r

B
o
o
k

p
r
o
j
e
c
t
* averages
st dev 1.6 st dev 1
What could Lean 6 Sigma do for you?
520 K$ of
saving
TOTAL 10 2
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% of time spent by 8 persons doing financial manual
entries before and after FPA project implementation
27% reduction of time spent by 8 financial analysts
gives 1.75 Full Time Employee proven benefit!
> 140 K$ saving
> Overtime reduced
> Interim reduced
> More time for analysis
(added value task)
Base Costs
What could Lean 6 sigma do for you?
Before After
100%
50%
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Summary
> Lean six sigma is a problem solving methodology that speaks with data,
which takes into account only the customer point of view & experience
and which propose solutions only after analysis, not before
> Six sigma performance is equivalent to 3.4 defects per million of
operations
> There is a direct link between our current level of performance and the
margins we are making
> Lean and Six Sigma have been integrated into Lean Six Sigma to achieve
one goal: reduce variation, wastes and non value activities in our
processes
> DMAIC is the framework to solve a problem and to complete a lean six
sigma project
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email: franck.strub@equable.fr
Six Sigma is a federally registered trademark of Motorola, Inc. Lean Six Sigma is a registered trademark of George Group Consulting, L.P..

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