Combining Lean & Six Sigma

Prepared by Julian Kalac Lean Six Sigma Master Black Belt

September 30, 2014

1

Black Belt

Training

What is Lean Six Sigma?

1)Lean Manufacturing focusses on reducing

waste, Non-Value Add activity and “Speeding” up

the Process cycle Times.

1) Six Sigma is defined as 3.4 DPM (Defective Parts-

per Million), focusses on reducing defects and

process variation

2) Lean Six Sigma = Six Sigma “Quality”+ Lean

“Speed"

2

Lean Six Sigma Seeks to improve the quality of manufacturing and business process by:

identifying and removing the causes of

defects (errors) and variation.

Identifying and removing sources of waste within the process

Focusing on outputs that are critical to customers

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σ Use data-driven, measurement-based, statistical methods to Solve problems, improve performance

σ Focus: Surgical “inch-wide, mile-deep” investigation and resolution

σ Approach:

σ Solve problems at the system and root cause level

σ Implement robust control plans for sustained improvements

What is “Six Sigma”? An Analytical Methodology that Focuses on Reducing Process Variation

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The systematic elimination of waste and re-alignment of resources to deliver value to the customer faster, better, & more consistently

Lean in Manufacturing:

◦ Focus: Eliminate waste, non-value add steps, process constraints and bottle necks that cause problems in work throughput

◦ Approach: Intuitive and broad - “inch-deep, mile wide”

Leading to Leading to Eliminate

Waste

Reduced

Cycle Times

Increased

Capacity

•To help explain the Toyota Production System to employees and suppliers, the “House of Toyota” graphic was created by Taiichi Ohno and Eiji Toyoda.

•They chose the house shape because it was a familiar one – and also conveyed stability.

•The roof contains the primary goals of TPS: superior quality, cost and delivery through waste elimination

Value Added

Typically 95% of all lead time is non-value added

1. Overproduction

2. Waiting

3. Transportation

4. Non-Value Added Processing

5. Excess Inventory/Material

6. Defects

7. Excess Motion

8. Underutilized People

Non-Value Added

5%

Value Added

Any activity that is adding value to the part and the customer is paying for. Example: any process where

you are doing something to the part (cutting, welding, riveting, bending)

Non-Value Added

Any activity that does not add Value to the part.

Example: moving parts from one area to another, reworking parts, set-up/change-overs, repairs

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Single Piece Flow Just-In-Time Eliminate Waste

•Process parts one-at-a-

time or in small lots

instead of in large

batches or economies of

scale

•Quick changeovers

•Balanced and

continuous flows instead

of stop and start

processing

•Have just the right

amount of inventory you

need, when you need it,

where you need it

•Optimize the amount of

inventory required

•Ensure that your

resources are ready to

support the flow

•Never knowingly pass

on a defect

•Improve the capability

of your processes

•Fix failure modes when

they occur

•Determine and resolve

the deeper root causes

= =

The Toyota Production System

Model by Michael Kukhta Reference: Senji Niwa, from the Shingijutsu Organization. Niwa-san also worked directly for Toyota’s Taiichi Ohno (TPS creator) for 18 years.

“Classic Lean” Strength

“Supply Chain Management” Strength

“Classic Six Sigma” Strength

INSANITY “Doing the same thing over and over again and expecting different results”

Albert Einstein

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Risk & Reward

Continuous Improvement •Everyday culture of change in how and what we do •Focus on maintaining & improving process precision, accuracy and discipline •Often savings are not strictly monitored but just put back into the business •Can support & narrow Breakthrough Innov.

Amount of Resources and Activity

Incremental Innovation •Relatively small improvements that are faster, better cheaper, •Savings show up in bottom & top line

Distinctive Innovation •Significant advances and improvements by extending existing technologies/approaches •Adapting “other industry/sector technologies/approaches •Example: “Lean”/JIT/Single-piece-flow/Pull Systems in health care

Breakthrough & Disruptive Innovation •Fundamentally new technologies/approaches •Implementing things previously thought to be not possible •Often a birthplace of Distinctive & Incremental Innovation •Can fuel and clash with Conti. Impr. and process discipline

12

AA BB CC DD EEL1

L2

L3Customer Customer

DA DB DC DD DE

Enterprise

Process

Department

Lean breaks a process down to understand the steps and actions as they occur, the time and resources needed to complete, as well as the delay and wait time between process steps

Six Sigma evaluates a process in terms of performance, accuracy, and consistency

Targeted for improvement

Time

s

LSL USL

s6

Standard

deviation

Shift Process Average

Reduce Process

Variation

Robust Products and

Processes

Six Sigma Objectives Lean Objectives

Improve

Process Flow

Reduce Process

Complexity

Reduce:

Waste

Non-Value

Added Work

Cycle Time

Lean Six Sigma Improves Quality, Cost, and Delivery

Improvement Objectives

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Lost managemant

time cost

Maintenance

cost

Lost opportunity

Lost assets cost

Rerun cost

Lost

business,

goodwill cost

Lost

credibility

cost

Prevention cost

appraisal cost

Project

rework cost

Litigation

SS Titanic

Management

Waste Costs: Costs driven by problems and process steps that add no value

to products & services delivered to customers

Appraisal Costs: Costs incurred to determine the degree

of conformance to customer needs

Prevention Costs: Costs incurred to keep failure and

appraisal costs to a minimum

Failure Costs: Costs directly incurred

due to defects internal

to the system or after

delivery to the

customer

Voice of Customer

Voice of Process

The Voice of the Process is independent of the Voice of the

Customer

Sigma Capability

Defects per Million Opportunities

% Yield

2 308,537 69.15%

3 66,807 93.32%

4 6,210 99.38%

5 233 99.98%

6 3.4 99.99966%

99% Good (3.8 Sigma) 99.99966% Good (6 Sigma)

20,000 lost articles of mail per hour (based on 2,000,000/hr)

7 articles lost per hour

Unsafe drinking water for almost 15

minutes each day

1 unsafe minute every 7 months

5,000 incorrect surgical operations per

week

1.7 incorrect operations per week

2 short or long landings daily at an

airport with 200 flights/day

1 short or long landing every 5 years

2,000,000 wrong drug prescriptions each year

680 wrong prescriptions per year

No electricity for almost 7 hours each

month

1 hour without electricity every 34

years

18

99%

Good 99.99966% Good

20,000

5,000

200,000

7 hr

per month

Lost articles of mail per hour 7

Incorrect surgeries per wk 1.7

Wrong prescriptions each yr 68

Hours without electricity 1 hr

per 34 years

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X1 = _____ Y1 = _____

X2 = _____ Y2 = _____

X1 = _______ Y1 = _______

X2 = _______ Y2 = _______

X3 = _______ Y3 = _______

SIPOC Diagrams can be characterized as a 3-step, high-level (“30,000-foot)

Process Flow Diagram for a process

Critical to

Customer Quality

Requirements

(the “CTQ’s)

Key Inputs

(Materials &

Resources) and

Key Process Input

Variables

(KPIV’s)

Inputs Processes Outputs Supplier Customer

Secondary Metric

(e.g. Field Returns)

Primary Metric

(e.g. Scrap $/Month

Cycle Time is the actual production rate – It is the time

between two successive finished items coming out of your production cell.

Cycle Time is dictated by the slowest (longest) operation

in the cell.

40 min

20 min

25 min

15 min

30 min

1

5 4

3

2

•What operation controls the cycle? •What is the Critical Path? •How can you relieve or shift the bottleneck?

THE PROCESS PROCESS

OUTPUTS

CONTROLLED

VARIABLES

CUSTOMER

PROCESS

INPUTS

UNCONTROLLED

NOISE

VARIABLES

Process and Its Variables

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We know we must change Xs to create a change in Y…

But how do we know which Xs to change and how to change them?

y = f (x1, x2, …)

process output is key process and input factors

that cause variation in the output a function of

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•Monitor processes to prevent recurrence of variation, defects and non-value work

•Maintain performance levels •Find more creative ways to improve

•Fix root causes •Find/Implement Preventive Fixes

•Deploy changes organization •RESULT: Performance is more predictable ; culture changing

•Plan and apply Improve Tools to fix problems and reduce variation •Implement improvement opportunities •RESULT: Improve tools applied, changes implemented and performance improvement in place

DMAIC Improvement Model A Road Map for guiding Improvement Projects

•Identify customer problems •Identify performances standards •Identify improvement objectives

•Link problem to the key performance metrics •Find the right problems •RESULT: Problem Statement & Project Charter

Define

Measure

AnalyzeImprove

Control

Results

Define

Measure

AnalyzeImprove

Control

Results

•Map the process

•Validate the measurement system •Collect data •Link your metrics

•RESULT: Process maps and good quality data collected by listening to the process

•Identify sources of variation & failure points •Establish process capability •Identify improvement opportunities •Redefine and Re-prioritize •RESULT: Determine performance, Identify critical sources of variation and root causes

Black Belt

Training First Pass Yield (FPY)

Rolled Throughput Yield (RTY)

Receive Parts/information From your supplier

STEP #1

95.5% First Pass Yield (FPY1) FOLLOWING RECEIPT INSPECTION AND FALLOUT

STEP #2

97.0% First Pass Yield (FPY2) FROM INITIAL OPERATIONS

STEP#3

94.4% FPY3

AT FINAL STEPS OR ON

FIRST TEST ATTEMPT

ONLY 87.4%

RIGHT FIRST

TIME

45,000 ppm wasted

28,650 ppm wasted

52,350 ppm wasted

RTY = FPY1 X FPY2 X FPY3 = .955 X .970 X .944 = 87.4%

Black Belt

Training

1)High-Level Process Map

2) Suppliers, Departments,

Customers

3)Mid-Level Process Map

4)Specific Area ex Production

5)Detail-Level Process Map

6)Specific process/operation

7) (most commonly used)

Stop

Start Stop

Start

Start

Stop

Stop

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Black Belt

Training

VA/NVA Ratio= 46%

DPU = ____

RTYield = _____

SCORE CARD:

Building a Value Stream Map

I’m going to

have coffee

Fill c.

maker

with

water

Scoop

Coffee

into

c. maker

Get &

place

Filter in

c. maker

Drink

coffee

Is

taste

OK

Brew

coffee

Pour c.

into cup

Add

cream &

sugar

Water Supply

Process Shopping

Process

Electricity

Supply

Process

Eating

Equipment

Supply

Process Tasting

Process

Housekeeping Processes

Tra

nsa

cti

onal &

Support

Pro

cess

es

Pro

cess

Data

& Info

rmati

on

NVA = Non-value Added Time

VA = Value Added Time

VA Time

NVA Time

Temp of Water= ___

Quality of Water= ___

Pressure of Water= ___

Amount of Coffee= ___

Quality of Coffee= ___

Type of Coffee= ___

Defective Coffee= ___

60 sec 30 sec 60 sec 360 sec 10 sec 60 sec

10 sec 10 sec 5 sec 600 sec 30 sec

Accurate but not precise - On

average, the shots are in the center of

the target but there is a lot of

variability

Precise but not accurate - The average is not on the center,

but the variability is small

Source: iSixSigma

Statistical Analysis

0.0250.0200.0150.0100.0050.000

7

6

5

4

3

2

1

0

New Machine

Fre

que

ncy

0.0250.0200.0150.0100.0050.000

30

20

10

0

Machine 6 mthsF

req

ue

ncy

Is the factor really important?

Do we understand the impact for

the factor?

Has our improvement made an

impact

What is the true impact?

Hypothesis Testing

Regression Analysis

5545352515 5

60

50

40

30

20

10

0

X

Y

R-Sq = 86.0 %

Y = 2.19469 + 0.918549X

95% PI

Regression

Regression Plot

Apply statistics to validate actions & improvements

Is your error in the process or in the way you measure it? Could it be that you actually are “good” but the error in the measurement

system shows that you are not “good”?

Overall Variation

Occurrence-to-

Occurrence ( or Piece-

to-Piece) Variation

Measurement System Variation

Repeatability:

Variation due to gage

or measurement tool

Reproducibility:

Variation due to people or

operators who are measuring

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RESULTS FROM SIX SIGMA

IMPLEMENTATIONS

Inferior

Below

Average

Above

Average

Excellent

TO

TA

L Q

UA

NT

ITY

OF

IMP

LE

ME

NTA

TIO

NS

How Six Sigma is Implemented and Applied Will Determine the Results

Categorization of Results

Black Belt

Training

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What are the Methods and Tools?

“Lean” focuses on:

The systematic elimination of waste

and re-alignment of resources to

deliver value to the customer faster,

better, & more consistently

Supply Chain Management:

Mapping your processes

through the entire business

enterprise with standard elements

“Six Sigma” focuses on:

Use of analytical and methodical fact based

problem solving methods

Drastically reduce variation then control and

manage whatever variation is left over

Increase predictability, accuracy and precision

Product and Services

Cash/Funding

Information

Customer’s

CustomerSupplier’s

Supplier

SupplierSupplier CustomerCustomerYour Company

PlanPlan

Make DeliverSourceSource Make /

RepairDeliverMakeSourceDeliver SourceDeliverDeliverSource

ReturnReturn ReturnReturn ReturnReturn ReturnReturn ReturnReturn ReturnReturn ReturnReturn ReturnReturn

PlanPlan PlanPlan

LSL USL Ẋ

Theory of

Constraints:

Find & eliminate

the bottle necks

Business

Process Re-

engineering:

Start over

VA Time NVA Time

FLO

W

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