englehaupt

Session M119Go Lean: A

Lean Six Sigma Overview

56th Annual Professional Development Conference Nashville, TN

6/25/07

Bill EnglehauptDirector, George Group

Lean Six Sigma Overview - 2

Learning Objectives

Understand the origins of Lean & Six Sigma Understand the synergy of Lean Six Sigma Understand how Lean Six Sigma can help you:

How to increase service levels, with declining resources

How to increase customer satisfaction/customer responsiveness


Lean Six Sigma Builds Upon the Evolution of Continuous Improvement Initiatives based on experience

Continuous Improvement can be traced to Taylor’s time studies

Toyota created Lean to achieve Henry Ford’s low cost with GM’s variety of product

Motorola initiated “six sigma” to meet the challenge of Japanese chip quality and cost

Deming, Baldrige and Shingo Prize’s are Descriptive of success

GE Prescribed the Six Sigma infrastructure of success connected to business strategy

Lean Six Sigma integrates Lean lead time and cost reduction with Six Sigma quality and sustaining infrastructure of success

CraftProductionEli Whitney -

ProductStandards

Shewhart –StatisticalMethods

Juran –ProcessAnalysis

IndustrialProduction

StatisticalProcess Control

QualityControl

Taguchi –Customer

Focus

QualityEngineering

Deming –SystemsThinking

TQM -Total QualityManagementSmith

(Motorola) –Statistical

Rigor SixSigma v1

Welch/Bossidy –

OrganizationalInfrastructure Six

Sigma v2

Taylor –Time/Motion

Studies

ScientificManagement

Ford –Work

Analysis

AssemblyLine Manufacturing

Sloan –Modern

Management

Prof. Mayo –“Hawthorne

Effect”

MassProduction

Toyoda,Ohno,Shingo

ToyotaProduction

System

Womack& Jones

LeanEnterprise George, ITT

Industries, CAT, Xerox

Lean SixSigma

Harry –DMAIC

Gilbreth

ZeroDefects


Mathematical Foundation of Lean: Little’s Law*

The Lead Timeof Any Process = No. of Items of Work in Process

The Average Completion RateExample: congressional response•The Procurement Department Processes an average of

(12) Orders per Hour•There is a Backlog of (89) unprocessed orders•A 90th order is put into the queue•How long must the 90th order wait to be processed?

7.5 Hours = 90 Orders in Process12 Orders per hour

Order

* First proven by Dr. John D.C. Little, MIT, 1961

Little’s Law: Mathematics of Theory of Constraints and LeanLean is a set of tools to reduce the No. of items of Work In Process

Theory of Constraints is a set of tools to increase Avg. Completion Rate

Total lead Time = Process Value-Add time + Process Non-value Add time


Customer Satisfaction

1. Transportation (moving material/product from one place to another)

2. Inventory (material/product waiting to be processed)

3. Motion (excess movement and/or poor ergonomics)

4. Waiting (delays caused by shortages, approvals, downtime)

5. Overproduction (producing more than is needed)

6. Overprocessing (adding more value than the customer is willing to paying for)

7. Defects/Rework (correcting mistakes)Also People – un-used or under-utilized talents

“TIMWOOD”

IMPACT

Lead Time can only be minimized by the elimination of The Seven Types of Waste

Unpredictable

CenterProcess Reduce

SpreadXX

XXXX

XXXX

X XXX

On-Target

XX

XXXX

XXXX

X XXX

Off-TargetX

XX

XX

XX

X

X

XXX

XX

X

Six Sigma Focuses on the Elimination of Variation


World Class Operating Excellence Demands Integration of Lean and Six Sigma

Goal – Reduce waste and increase process speed

Focus – Bias for action/ Implementing Toyota tools

Method – Rapid Improvement Events, Value Stream Mapping

Goal – Improve performance on Customer CTQs

Focus – Use DMAIC with TQM tools to eliminate variation

Method – Management engagement, 1% dedicated as Directors and Black Belts

Six SigmaQuality, Cost +

Explicit Infrastructure

LeanSpeed + Waste +

Implicit Infrastructure

Lean Speed Enables Lean Speed Enables Six Sigma Quality Six Sigma Quality

(Faster Cycles of (Faster Cycles of Experimentation/learning)Experimentation/learning)

Six Sigma Quality Enables Six Sigma Quality Enables Lean SpeedLean Speed

(Fewer Defects Means(Fewer Defects Means Less Time Spent on Rework)Less Time Spent on Rework)


Consequently, the Lean Six Sigma Methodology We’ve Adopted Integrates Lean, Six Sigma, Theory of Constraints and Complexity Reduction Tools

• Review Project Charter • Validate Problem Statement and Goals

• Validate Voice of the Customer and Voice of the Business

• Validate Financial Benefits• Validate High-Level Value Stream Map and Scope

• Create Communication Plan• Select and Launch Team• Develop Project Schedule• Complete Define Milestone

• Identify Potential Root Causes

• Reduce List of Potential Root Causes

• Confirm Root Cause to Output Relationship

• Estimate Impact of Root Causes on Key Outputs

• Prioritize Root Causes• Complete Analyze Milestone

• Develop Potential Solutions• Evaluate, Select, and Optimize Best Solutions

• Develop ‘To-Be’ Value Stream Map(s)

• Develop and Implement Pilot Solution

• Confirm Attainment of Project Goals

• Develop Full Scale Implementation Plan

• Complete Improve Milestone

• Implement Mistake Proofing• Develop SOP’s, Training Plan and Process Controls

• Implement Solution and Ongoing Process Measurements

• Identify Project Replication Opportunities

• Complete Control Milestone• Transition Project to Process Owner

• Project Charter• Voice of the Customer and Kano Analysis

• SIPOC Map• Project Valuation/ROIC Analysis Tools

• RACI and Quad Charts• Stakeholder Analysis• Communication Plan• Effective Meeting Tools• Inquiry and Advocacy Skills• Time Lines, Milestones, and Gantt Charting

• Pareto Analysis• Belbin Analysis

• Value Stream Mapping• Value of Speed (Process Cycle Efficiency/Little’s Law)

• Operational Definitions• Data Collection Plan• Statistical Sampling• Measurement System Analysis (MSA)

• Gage R&R• Kappa Studies• Control Charts• Histograms• Normality Test• Process Capability Analysis

• Process Constraint ID and Takt Time Analysis

• Cause and Effect Analysis• FMEA• Hypothesis Tests/Conf. Intervals• Simple and Multiple Regression• ANOVA• Components of Variation• Conquering Product and Process Complexity

• Queuing Theory

• Replenishment Pull/Kanban• Stocking Strategy• Process Flow Improvement • Process Balancing• Analytical Batch Sizing• Total Productive Maintenance• Design of Experiments (DOE)• Solution Selection Matrix• Piloting and Simulation

• Mistake-Proofing/Zero Defects

• Standard Operating Procedures (SOP’s)

• Process Control Plans• Visual Process Control Tools• Statistical Process Controls (SPC)

• Solution Replication• Project Transition Model• Team Feedback Session

• Value Stream Map for Deeper Understanding and Focus

• Identify Key Input, Process and Output Metrics

• Develop Operational Definitions• Develop Data Collection Plan• Validate Measurement System• Collect Baseline Data• Determine Process Capability

Tools

Activities

Analyze ControlMeasureDefine Improve

RIE, 5S, NVA Analysis,Generic Pull Systems,

Four Step Rapid Setup Method

Identify and Implement Quick Improvements with Rapid Improvement Event (RIE)


Tools To Reduce Transactional Lead Time And Non Value Add Cost

1. Reduce the number of steps in the process by Value Stream Mapping to find and eliminate non value add steps

2. Reduce the utilization % of personnel by reducing: The variety of tasks and implementing re-use Multi-tasking and non value add time Planned load on high variation tasks

3. Reduce the variation in task times through data, analysis, standardization and re-use

4. Increase the number of alternate paths and people that can perform a task whose completion time is subject to high variation

5. Prevent rework using Design for Lean Six Sigma in support of Black Belts and reduction of utilization

6. Reduce external load from customer through up stream prioritization


LSS Supports the President’s Management Agenda

The President's vision for government reform is guided by three principles. Government should be: Citizen-centered, not bureaucracy-centered; Results-oriented; Market-based, actively promoting rather than stifling

innovation through competition. Agencies must earn passing grades (green lights)

on each of the five PMA categories—budget and performance integration, competitive sourcing, e-government, financial performance and human capital

Process-based thinking and operational improvement (e.g., Lean Six Sigma) will be a critical element.


Financial Processes are a Key Focus of the PMA

Organizational-level LSS improvement opportunities

Agencies don’t have accurate and timely information…e.g. on average it takes agencies almost 5 months of heroic efforts to close their books.(1)

Is there a foundation of good controls, business processes, and robust financial tools?

Critical business processes are also under review Could we improve the

performance of a typical purchasing process? Are the awards and

funding getting out on time? Are there glitches in order delivery? How is the contracts/ordering IT system performing?)

(1)Source: OMB


Examples from Others Who Have Made This Journey ITT Industries

“Our performance over the past five years – more than 160 percent total shareholder return – far outpaces our peer group and the S&P 500…Since its introduction in 2000, [Value Based Six Sigma] has significantly improved our on-time delivery, enhanced the quality performance of our products and services, and generated more than $1 billion in savings. VBSS is a set of incredibly powerful tools that are now an ingrained part of ITT Industries.” Steven Loranger, Chairman, ITT Industries, 2004 Annual Report

CAT “More than 30,000 employees are involved in 6 Sigma and are helping to shape the

Caterpillar of tomorrow…Thanks to the hard work of our people around the world and the discipline of 6 Sigma, Team Caterpillar has again effectively responded to our customers' needs. We met the challenges stemming from recent hurricanes with minimum disruption to our business and maximum responsiveness to the cleanup needs in the Gulf region and delivered the best third-quarter financial results in company history.“ Jim Owens, CEO, Caterpillar

Navair We are initially training up to 200 Black Belts by end of 2006. By October 2006, 50% of

the workforce will receive NAVAIR AIRSpeed training. Goals: Develop a workforce with the right skills, focused on the right workload, at the

right time, at the right cost, to deliver the right capability to the Warfighter. Identify $34 million dollars in saving by the end of FY06


1. A Sense of Urgency for change must exist

2. Strategically align and connect business metrics and Lean Six Sigma metrics

3. Senior organization leaders must be engaged in the process Line organization owns resources & are accountable for project results Lean Six Sigma should be integrated into the daily management practices of the

organization

4. Business Leaders own resources & are accountable for project results

5. A strong and respected Command Deployment Champion should report to Senior Leadership

6. Deploy critical mass of key full-time resources (Black Belts, Deployment Directors)

7. Resources should be selected from “future leaders of the organization”

8. Establish a consistent process for Project Identification and Selection

9. Actively manage Projects-in-Process to reduce/control project lead times Use Rapid Improvement Events for quick-hit projects

10.Track results rigorously: Lean Six Sigma results should “pay as you go” and be confirmed by objective parties

11.Black Belts/Green Belts must have team leadership skills

12.Integrate with other initiatives where applicable

Deployment Principles That Always Work – Critical Success Factors

englehaupt

Documents

target x

lean lean

process value

lean lead time

sigma goal

process controls

sigma overview

integration of lean