Process Improvement: Which Methodology is Best for Your Project?

1. Process Improvement:Which Methodology is Best for Your Project? PMI Skyline Luncheon Sharon Valencia, PMP

2. Agenda • Definitions • Business Improvement Methodologies • Methodology Comparison • Process Management • Process Mapping • Enabling Project Success

3. Input Output What is a Process? • Any set of activities that when taken together, transform a series of inputs into an output, producing a result of value to a customer Suppliers Customer Process SIPOC

4. What is a Business Improvement Methodology? • A documented set of procedures, guidelines, and tools intended to develop better processes • Business improvement methodologies covered in this presentation: • Kaizen • Lean • Six Sigma • Lean Six Sigma • Design for Six Sigma (DFSS)

5. Kaizen • Defined: Philosophy of gradual, incremental, and orderly continuous improvement, creating more value and less waste; emphasis on process improvement and process control; Japanese word meaning “ongoing improvement” • Objective: Small improvements by optimizing existing systems • Requires: • Taking action on obvious problems and deviations to maintain process control • Establishing control through Standard Operating Procedures (SOPs) • 1-10 days

6. Kaizen’s Deming/ Shewhart PDCA Cycle Plan Do Check Act Observe and evaluate results to determine if the idea produced the desired results Start with an idea for doing the job better; study the current situation; identify the problem and formulate a plan Conduct experiments to investigate the idea; implement the plan on a small scale If desired results were achieved, implement the change into the SOP * It is also acceptable to use the DMAIC framework for Kaizen events

7. Lean • Defined: Focus on speed, efficiency, and elimination of waste • Objective: Maximizing process speed (cycle time) by reducing waste • Requires: • Elimination of waste (muda): Defects, overproduction, inventories, unnecessary processing, unnecessary movement of people, unnecessary transport of goods, waiting, designing goods and services that don’t meet customers’ needs • Value stream mapping: Map process and focus on elimination of non-value add activities • Ask what activities the customer is willing to pay for • Focus on process standardization

8. Lean’s 5s Approach Sort Sustain Straighten Scrub Systematize Keep clutter out of the workplace; Scrub all machines and the work environment to maintain cleanliness Determine what is necessary to perform the job; Eliminate unnecessary items from the workplace Arrange all essential items so that they are clearly marked and easily retrieved Make cleaning and organizing routine; promote an orderly work environment; perform work the same way every time (standardize) Sustain the other steps and continually improve the process

9. Six Sigma • Defined: Data-driven methodology focusing on reducing defects and variability • 6 σ = 3.4 defects per million (Motorola Shift) • σ = Sigma = Standard deviation • Objective: Reduce variability through continuous process improvement • Requires: • Processes must be in place • The processes must be predictable (in statistical control with normal distribution) • The processes must be improved by reducing variation (continuous improvement) • Data availability • Focus on understanding customer requirements

10. Six Sigma Distribution Lower Control Limit/ Specification Upper Control Limit/ Specification Normal, Bell-Shaped Curve/ Distribution of Values Defects Defects

11. Traditional Quality (3 σ: 66,807 DPMO) 54,000 incorrect drug prescriptions per year 40,500 newborn babies dropped each year Unsafe drinking water two hours each month 6 σ Quality (No Motorola Shift) One incorrect drug prescription every 25 years 3 newborn babies dropped each century Unsafe drinking water one second every 16 years The Importance of Six Sigma Source: Institute of Industrial Engineers

12. DMAIC Framework for Six Sigma Define Measure Analyze Improve Control Analyze the system to eliminate gap between current system or process and the desired goal; determine and reduce obstacles to achievement Define the goals of the improvement activity; determine project’s business case; identify customer; map current & future state processes; determine scope Measure the existing system or process; determine metrics; define project success factors Improve and implement the system or process; determine necessary activities to achieve goals Control the system or process, including risk, quality, cost, scope, change management; determine reporting needs

13. Lean Six Sigma • Defined: Approach to eliminating waste and variation • Objective: Increase quality and reduce defects/variation while increasing process speed and efficiency • Requires: The combination of both Lean and Six Sigma methods and tools

14. DMAIC for Lean Six Sigma Define Measure Analyze Improve Control • Integrate the methodologies and tools of both Lean and Six Sigma at each phase

15. Design For Six Sigma (DFSS) • Defined: DFSS uses tools, training, and measurements to enable the design and development of products, services, and processes that meet customer expectations at Six Sigma quality levels • Objective: Optimize the design and development processes to achieve Six Sigma quality levels from the beginning • Requires: A new product, service, or process to design and develop

16. DMADV Framework for DFSS Define Measure Analyze Design Verify Link CTQs to features & determine importance; perform process benchmarking; develop, evaluate, and select designs Define the goals of the design act; determine critical to quality (CTQ) characteristics and their relative importance Identify CTQs to be addressed; establish metrics for CTQs; determine how customer satisfaction will be measured Detain selected design; simulate process; ensure design meets CTQs; develop implementation plan Standardize; establish control metrics; develop transition plan

17. Methodology Analogy Lean Six Sigma Six Sigma Lean Design For Six Sigma Kaizen

18. Methodology Comparison

19. Lean and Six Sigma • Lean cannot bring a process under statistical control • Six Sigma does not dramatically improve process speed or reduce invested resources • Combining Lean and Six Sigma maximizes advantages and reduces the disadvantages of each individual approach

20. Which Methodology is Best? • “Best” is depends by the needs and current state of your organization • “Best” may be a combination of methodologies • An organization ready for Six Sigma is also ready for Lean or other methodologies • The name of methodology used doesn’t matter; what matters is leadership, commitment, vision, strategy, and follow-through from supplier to customer

21. Business Process Management • The future of business processes lies not in one methodology, but in the integration of technologies and methodologies in order to facilitate execution of the process • Customers are demanding customizations and total solutions • Innovative business processes can lead to competitive advantage • Business processes will drive IT

22. Changing Competitive Environment • The only thing certain in business is change • Industry boundaries are evaporating • The entire value chain is involved in providing total solutions to customers: • Competition • Collaboration • Partners may also be competitors

23. Process Mapping • Regardless of the methodology, start with mapping the current processes • Identifies current state, opportunities for improvement, process time • Allows identification of all process steps in order to determine which steps are value added or bottlenecks • Knowing current state will assist in identifying improvement opportunities • As-is vs. future process time, number of steps, handoffs, etc. • Determine steps which add value

24. Benefits of Process Mapping • Gain understanding of the process and process objectives • Answers who (including suppliers and customers), what, when, where, how, and duration • Identifies the information or data used in the process, decisions, bottlenecks • Identify sources of waste • Improve supplier and customer relations • Provides a common language for talking about the process

25. Sample Process Map

26. Internal Non-compliance to Industry Standards Scrap Rework Short Cuts to Beat the System Excess Inventory Capacity Constraints Low Efficiency/ Productivity/Yields Employee Symptoms Shared Responsibility External Benchmarking Company vs. World Class Performers Market Share Drop Negative Publicity Pricing Inflexibility Warranty Costs Indications of Process Improvement Opportunities

27. Enabling Project Success • Management buy in is required from the start • Align goals with the strategic direction of the organization • Combine project ownership and accountability • Manage change – do it early, do it often • Allocate appropriate staff and time • Train staff in applicable techniques • Eliminate process variation

28. Experience. Results. Sharon Valencia, PMP Principal Computer Sciences Corporation svalencia@csc.com