The Six Sigma Journey

K. Semone Wagner

VP, Franchise Performance GroupMarch 4, 2005

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Today’s Discussion:

Obstacles & Challenges: The Usual Suspects

Getting Started

Year 1

To Institutionalization

Implementing Six Sigma

Operational Excellence

Overcoming Challenges in Getting Started

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1. Lack of Executive Leadership Sponsorship & Support

2. Proper Identification of Black Belt candidates

3. Ineffective Training at Black Belt ranks

4. Training without Active DMAIC Projects

5. BB Dedication not 100%

6. Misuse of Tools

7. Ability to Effectively gain the Voice of the Customer

Obstacles & Challenges: The Usual Suspects

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1. Lack of Executive Leadership Sponsorship & Support Limited general knowledge of the subject No Champion Training No Top- Down Approach

Overcoming Challenges

Gain an understanding as to their knowledge of Six Sigma…and their views Develop Communication Package for face to face sessions Develop Elevator Speech & how we use the philosophies of Six Sigma…how it

helps to prevent the ills of the past…use examples Let them know why and how it adds value…VOC, Data Collection, Metrics, etc. Let them know your expectations of them and how they can help Establish regular communication sessions Attend their staff meetings for a wider audience

Demystify Six Sigma…go ahead and give them the secret decoder ring!

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2. Proper Identification of Black Belt candidates…common mistakes “we have all these project managers…we can simply give them some training and

they’ll be our Black Belts” “John is a great business analyst, he will be our Black Belt” “Susie crunches numbers well…she’ll be a great Black Belt”

Overcoming Challenges

Not everyone is cut out to be a Black Belt…focus on process & business acumen first, then project management acumen

Leadership skills are key Depending upon your organization, the statistical component can increase or

decrease in importance If your organization is not taking a holistic deep dive into Six Sigma, it’s vitally

important to have the right people staffed in Black Belt positions …people who can significantly add value, reengineer end-to-end state processes, and who can lead and build a team to deliver results

At the end of the day, it’s all about results, results, results

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3. Ineffective Training at Black Belt ranks Reading Best Selling books = training Training without tools….no Minitab or stat package in place, no Toolkit

developed “we’ll only train 1 person at first…that way we can test this Six Sigma thing”

Overcoming Challenges

Reading books are a good source for information, but cannot replace class room education and formal training programs

Formal training allows Black Belts to establish an external network for help…since the organization is not fully Six Sigma yet, they will have few associates to draw upon for help, etc.

Train more than 1 person at a time, allow them the opportunity to have a BB “buddy” at work

Send your best

Make an investment…get the proper training required!

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Overcoming Challenges

4. Training without Active DMAIC Projects Huge hindrance, especially with statistical tools Classic & costly mistake Lack of good metrics adds to this dilemma

Prior to formal training, identify a true DMAIC project, project sponsor and overeducate the sponsor…for buy-in, support and understanding

Provide the trainee with a tool package specific to your organization and the way in which you want to communicate to clients…all tools represent a communication opportunity

Give the candidate support where needed (e.g. some Black Belts need help in team building, others need help with the Statistical component…understanding when and how to use tools is the biggest challenge)

If they do not have a “real” project to accompany them to training, DO NOT send them

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5. BB Dedication not 100%

Overcoming Challenges

...why would this happen? Side job Do this in addition to your regular, full-time job Right candidate, but, who will do their job if they are

dedicated? Work on “Nike” projects

Invest in the right training and talent, and, demand a return for your investment

You will not meet your goals if this happens BBs will not get through projects timely, thus results will be impacted Skill Set atrophy

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Overcoming Challenges

6. Misuse of Tools Gives wrong results and can potentially lead to bad decisions Quick way to kill credibility of the program

Develop your own tool kit and train staff in their use Important for BB’s to understand when and how to use tools…avoid paralysis

by statistical analysis Use tools that will be most valuable and construct in a way that’s easy for

clients to understand…less is more To the extent possible, brand your tools and your function, to help the

organization understand th Use MBBs to help you with the proper application of tools…mentor BBs

Boil it down to the key tools, and train, train, train

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Overcoming Challenges

7. Value & Importance of the Voice of the Customer Too expensive! “The business can speak for the customer, they know all the customer’s

issues” “If we talk to the customer, we’ll be letting them know we aren’t performing

well”

Make this easy…too often project teams will try to survey the world…don’t scare off the business sponsor

Customer Surveys: Get the right data, succinctly Make this easy, but do it and do it well Get to the truth Once VOC is gathered, communicate, communicate, communicate To the degree you can formalize this, the better

The VOC is the most important aspect of any DMAIC initiative

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Demystifying Six Sigma for Everyone

Speak their language…put in a framework that they can understand

Avoid Acronyms…or explain them

Avoid showing off…using terms that are not known or understood by all only seeks to build that resistance wall…people will naturally resist what they don’t understand

Sigma Levels – Just a rating scale…3 Stars vs. 4 Stars; Sri Lankan Hilton rating scale

Use examples that everyone can relate to: Bell Curve of Median house sales

Seek to make things simpler versus complex; other methodologies have failed at bringing the client into their world due to the complexities

Make the internal client part of the process

Operational Excellence

Getting Started

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Getting Started: Setting Expectations

Establish a Charter which details in specifics, your: Opportunity Statement Goals Scope Key Metrics Any assumptions that need to be known by

all

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Getting Started: Setting Expectations

Tell the Organization what you will EXPECT from the effort: Financially, for example:

• Return on Investment by End of Year 1

• ROI after 2nd Year

• By Value Lever?

• Departmental Goals

Organizationally….for example…• Enable a Process-Oriented Business Model and Culture

• Align the Organizational Efforts with Strategies

• Strengthen the Leadership Systems

• Create a Performance Measurement Dashboard that allows the organization to manage by fact

• Evolve the culture to have a more fact-based & process focus

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Getting Started: Benchmarking

Benchmarking Sources:

Internal Groups: Are there groups/business segments within your company that can help you?

External Groups: Talk to External groups What worked, what did not Companies that are new at this Companies that are mature at this

Consultancies: Can offer a wide array of services Real life scenarios and insights Generally unbiased in opinion

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Getting Started: Benchmarking Lessons Learned

Align Everything to Company

Mission, Objectives; Stay Focused Umbrella Theme vs. Six Sigma

• Six Sigma under the Process Management Umbrella

• Brand Process Management Model (Ex. “Just Right Service”, UHC “Operational Excellence”)

Tailored Course Development• Just-In-Time Training • Projects aligned with Resource

receiving training Use Only the top Performers as BBs,

which should be a feeder to Leadership Development Programs

Need Consistency in Champion Involvement; use various methods of Engagement

Need BB Dedication to Project Work –

100% dedication Use an External Consultant for

Program Installation, up to 1 – 2 yrs, then use skilled BBs to support training efforts

Ensure Process Management Model is pervasive in organization

• Establish Scorecards (Process/Functional)

• Agree Upon Most Important Business Objectives, Business Processes, Measures and Issues

Recognize limitations – not appropriate for all business problems

Need Visible Executive Sponsorship

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Getting Started: Sample Deployment Team

Training and DevelopmentOn-Line Courses?Individual Development PlnasLeadership Programs

Human CapitalRew ard & RecognitionBB positions (permanent, temp...career pathingJob Descriptions

Project TrackingWeb-Site Development

IT Solutions

CommunicationsNew slettersCampaiigns

FinanceBenefits Tracking

Deployment LeadershipProgram ManagementUpdate Calls to Champions, BBs, GBsOverall Coordination

Executive SponsorGeneral "Voice"

Operational Excellence

The First Year

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4th Qtr 20043rd Qtr 20042nd Qtr 20041st Qtr 2004

• Program Design

• Executive Approval

• Consultancy Selection

• Deployment Team Initiated

• Program Components

Role Definition

Curriculum Customization (CH, BB, GB)

Tool Development

Communication Plan

Web-Site Launched

Tracking Tool Design

• Champion Training (W1 & W2)

• Initial Project Mining

• BB & GB Candidate Selection efforts

• BB, GB Waves 1 & 2 begins

• Project Tracking Tool Launched

• Curriculum Developed

Line Manager

All Employee On-Line CBT Modules

• Financial Tracking/Web Site Launch

• Established Tollgate Process

• Monthly Champion update calls

• BB, GB Waves 1 & 2 conclude

• Line Manager Training (9, 1-day Sessions)

• On-Line CBT Modules Launched, Aug

• Champion Training Waves 3 & 4

• BB, GB Wave 3 begins

• Project Tracking Tool Report Package Refined

• Project Mining Continues for Pipeline Development

• MBB Role (Established process to provide consistent mentoring to BB, GB, & CH)

• Champion Monthly Status Reviews (Tollgate & Financial Status)

• BB, GB Wave 3 concludes

• GB Wave 4 concludes

• GB Wave 5 begins

• On-Line CBT Modules, continues

• Program Refinement Efforts:

Champions, BB results linked to Human Capital process

Establish goals for 2005

Evaluate program for additional curriculum (DMADV, Lean, etc.)

Establish Executive Metrics Scorecards

Project Mining Approach & Commitment

Project Tracking Report Package refined

Six Sigma Roundtable

Key Events Timeline

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Current State: Challenges & Actions Underway

Champion engagement is mixed and inconsistent Black Belt dedication to project work significantly lower

than expected Project progress is impacted, resulting in longer timelines Numerous projects require establishment of Baseline

data Hard savings below expectations & current estimates at

risk Lack of Defect Identification and Project Mining Activity Few Projects in Pipeline Financial/Benefit harvesting not natural for BBs…limited

Financial Support Resources to assist in Benefit Tracking mentoring, sign-off and training

Monthly reporting of key Operational Excellence metrics to drive appropriate actions

Metrics by Champion to highlight best practices

Champions to participate in project reviews during BB training

Positioning organization for better defect identification and project mining through targeted Workshop development

Project tracking tool under review for: User versatility Report package enhancement

Challenges Actions Underway

Culture Adoption

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Getting There: Moving From Launch to Benefits Realization

Define targets for 2005 by Business Area Link Program to Performance Management

System Set specific targets by functional area &

Champion… let’s be clear on what we expect Free up BBs… BB dedication needs to increase

substantially to realize desired benefits BBs to have greater access to Champions Finance Expertise to assist in establishment of

Scorecards Create Advisory Board of Business Champions

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A) Project-Based Improvement

R E S U L T S

B) Infrastructure Alignment

C) Governance for Transformation

R.I.P.?

TIME

Strategic Scorecard (especially predictive, preventive indicators)Integrated Management SystemCultural TransformationLeader Development/SuccessionEducating the Board of Directors

Marketing and DesignHuman Capital PracticesFinanceInformation System“Best Practice” exchangeSupply Chain

Project SavingsBlack Belts, Green Belts

Six Sigma – Path to Transformation

SOURCE: Juran Center for Leadership in Quality

R.I.P.?

Operational Excellence

To Institutionalization

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Expectations are Tightening

Business ProcessChange Rate

Time

Expectation of Improvement

What barely worked yesterday, will be

inefficient today, and will be totally unsatisfactory

tomorrow

What barely worked yesterday, will be

inefficient today, and will be totally unsatisfactory

tomorrow

> 15%/year

< 5%/year

SM

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The Challenge

We need to adopt and maintain a Philosophy of learning and action based on fundamental principles:

1. All work occurs in a system of interconnected processes.

2. Variation exists in all processes

3. Understanding and reducing variation are the keys to success.

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The Cost of Poor Quality (COPQ) “Iceberg”

Lost Opportunity

“Hidden Factory”

Average COPQ approximately 15% of Sales

Traditional Quality Cost

Additional Quality Cost

InspectionScrap

ReworkWarranty

ConcessionsDisposition

More SetupsExtra Machines

Expediting CostsLost Sales

Late DeliveryFloor Space

Lost Customer LoyaltyExcess InventoryLong Cycle Tines

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Motivation for change?

To accelerate our rate of quality and productivity improvement faster than our competitors

To deal with a world of rising health care costs To compete successfully with the best companies in the

world To establish standard language and approaches across

functions and across businesses To develop our next generation of leaders

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“When your business is healthy, it is difficult to behave as if you are in a crisis. That is why one of the toughest parts of managing… is to recognize the need for change and make it while you still have a chance.”

Bill Gates

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OpX: Implementation Focus

• DMAIC Skills• Sharing the Message• Establishing Functional Metrics• Building Project Pipeline• Focus on Cost Savings; Delivering on Commitments

• Mastering DMAIC Skills; Introduce DMADV• Standardizing the Message• Establishing Organizational & Strategic Metrics• Project Alignment to Strategic Objectives and across Segments• Delivering on Commitments

• Mastering DMAIC & DMADV• The Way We Do Business• Measure end-to-end Customer Processes• Self-Sufficient in Training with Internal Talent• Delivering on Commitments• Preeminent Healthcare Provider

ExecuteExecute InstitutionalizeInstitutionalizeLaunchLaunch

Approach vs. Program