Integrating Six Sigma and Lean Manufacturing The Challenges & Benefits

1. Integrating Six Sigma and Lean Manufacturing The Challenges & Benefits Frank Garcia ADVENT DESIGN CORPORATION

2. SIX SIGMA or LEAN MANUFACTURINGNeed to lower costs & reduce lead time? • Material flow is poor • Error rate is high • Can’t deliver ontime • Equipment too slow

3. Six Sigma or Lean Manufacturing? LEAN MANUFACTURING: Reduce Lead Time by eliminating waste in the Value Stream Provides the Game Plan and Plays SIX SIGMA: Reduce process variation Provides the Play by Play Analysis and Instant Replay

4. Six Sigma or Lean Manufacturing? LEAN MANUFACTURING: Flow Focused Lean cannot bring a process under statistical control SIX SIGMA: Problem Focused Can not dramatically improve process speed or reduce invested capital NEED BOTH!

5. Integrating Six Sigma with Lean Manufacturing • Increases customer satisfaction • Improves profitability & competitive position • Has historical integration problems • Requires a different system model • Requires implementation & sustaining plans

6. Lean Manufacturing System • Goals are • Highest quality • Lowest cost • Shortest lead time • Achieved by eliminating waste in the value stream • Industry benchmark: Toyota Production System (TPS) • TPS is applied I.E. and common sense • Principle: organization supports the value adder

7. Definition ofValue -Added • Value is added any time the product is physically changed towards what the customer is intending to purchase. • Value is also added when a service is provided for which the customer is willing to pay (i.e. design, engineering, etc.). • If we are not adding value, we are adding cost or waste. 90% of lead time is non-value added!

8. Value Stream The value stream is the set of all the specific actions required to bring a specific product (good or service) through the critical management tasks of any business: 1. Information Management 2. Transformation

9. The EIGHT Wastes • Inventory (more than one piece flow) • Overproduction (more or sooner than needed) • Correction (inspection and rework) • Material Movement • Waiting • Motion • Non-Value Added Processing • Underutilized People

10. Six Sigma System • A defined management process and CTQ goal (3.4 ppm) 3 sigma is 66,807 ppm! • Driven from the top • Focused on Voice of the Customer • A data analysis and problem solving methodology • Strong focus on variation reduction • Supported by highly trained problem solvers

11. 5 to 8 % 15 to 20 % Late Delivery Engineering Change Orders More Set-ups Long Cycle Times Lost Sales Expediting Costs Excess Inventory Excessive Material Orders/Planning Working Capital Allocations Uncovering Quality’s Hidden Costs Traditional (Tip of the Iceberg) Warranty Scrap Rejects Rework Lost Opportunities Additional Costs of Poor Quality

12. Six Sigma Variation Reduction Process Variation Should be Less Than Specs Variation Reduction is Cost Reduction

13. “ You have heard us talk about span, the “evil” variance our customers feel in our response Reducing the variance provides better control of the process. to their requests for delivery, service or financing.” Six Sigma’s () Focus: Reducing Variance A process mean tells us how the process is performing while the variance gives us an indication of process control.

14. One (1)  represents 68% of the population Two (2)  represents 95% of the population Six (6)  represents 99.999997% of the population What is Six Sigma () Quality? Population mean () or average With 6  Quality, approximately 3.4 items in a population of 1,000,000 items would be unacceptable.

15. Six Sigma System Improving Profitability A 1 Sigma Improvement Yields….. • 20% margin improvement • 12 to 18% increase in capacity • 12% reduction in number of employees • 10 to 30% reduction in capital Source: Six Sigma - Harry & Schroeder

16. Six Sigma Financial Impact Areas:The Savings Categories • Cost Reduction (including cost at standard and costs not included in standard cost) • Cost Avoidance (can be difficult to document) • Inventory Reduction • Revenue Enhancement • Receivables Reduction

17. Six Sigma System A culture characterized by….. • Customer centricity: What do they value? • Financial results • Management engagement & involvement • Resource commitment: 1 to 3% of staff full time • Execution infrastructure: black & green belts, teams

18. Define & Measure Validate Data Collected Characterization Analyze Vital Few Factors For Root Cause of Problem Improve Identify appropriate operating conditions Optimization Control Sustain - Insure Results to Bottom Line Six Sigma Problem Solving Steps Process Breakthrough Strategy

19. The DMAIC Cycle Six Sigma In Action SDCA Define Measure & Analyze Plan-Do-Study-Act Teams Benchmark Analysis tools ID variability Management Commitment SDCA Employee Involvement Control Improve Plan-Do-Study-Act Design of Experiments SDCA = Standardize-Do-Check-Adjust

20. Six Sigma Tools Check Sheets:Checklists of what is to be accomplished,etc.. Scatter Diagrams:A graphical representation between two measurements (variables). Fishbone or Cause and Effect Diagrams:Provides a starting point for problem analysis. Problems are diagrammed into categories of Machinery, Material, Methods and Labor (Manpower). Pareto Charts:A method for organizing errors based on the number of errors created by a particular attribute (ex. Machine, Supplier, Product, Individual, etc.).

21. Six Sigma Tools Process Maps or Flowcharts:Graphical representation of a process or system showing process or product transformation. In other words, what is being done, by who and what choices are being made. Ideally process maps should include cycle times, defect information, etc. X-Y Matrix:A ranking method used to prioritize process inputs (X’s) to process outputs (Y’s). FMEA’s (Potential Failure Mode and Effects Analysis):A detailed document which identifies ways in which a process or product can fail to meet critical requirements.

22. Six Sigma Tools - Process Maps or Flowcharts What are the X’s (Input variables) at each process step? What are the Y’s (Output Variables) at each process step? Remember Y = f (x) • Remember Valued Added versus Non-Value Added • Remember Cycle Times and Defects

23. Technical Trainers, Mentors: Full-Time Commitment Black Belts Project Leaders- Full-Time Commitment Senior Management Master Black Belts Project Leaders- Part-Time Commitment Provides direction, removes obstacles, reviews progress Green Belts Champions and Leaders Traditional Six Sigma Implementation- Who is Involved

24. Six Sigma Information Flow

25. The Bad News:Six Sigma Program: Implementation Issues • Some of the facts: • 80% of Six Sigma Implementations fail. • Traditional Six Sigma implementations have largely been attempted at large Fortune 500 Companies due to the large investment in people, training and overall support. • Training costs alone for a “wave” of 25 people can cost $250,000 for this 4 to 6 month training period. Training costs and personnel requirements can overwhelm many smaller organizations.

26. Need for Six Sigma & Lean External - Satisfying Customers….. • Quality, Warranty, and Cost • Customers Require Six Sigma • Customers Require Lean Manufacturing • Competitors are implementing Lean & Six Sigma • Staying in business

27. Need for Six Sigma & Lean Internal - Improving Profitability through….. • Operational Cost Reduction • Improve Productivity • Reduce Scrap and Rework • Reduce Inventory & WIP • Engineering Design Cost Reduction Define-Measure-Analyze-Design-Verify (DMADV) • Stabilize & Quantify Process Capability • Input for Product and Design Process

28. Lean Six Sigma Model

29. Lean Techniques Six Sigma Analysis, Problem Solving & Training Supply Chain Management You Can Apply Six Sigma Techniques to Complement Existing Lean Capabilities Lean Training & Implementation VSM Waste Reduction Process variation Inventory Reduction & Control

30. Lean Six Sigma Implementation Historical Implementation Problems • Only Six Sigma or Lean Implemented - big $ savings but money left on the table • Separate Six Sigma & Lean initiatives competing for best resources • Difficulty in sustaining the gain

31. Lean Six Sigma Implementation Some Solutions……. • Need to implement in the correct order • Policy deployment to align business objectives (Flow, Waste & Variation Reduction) • Focus on shop floor results, not class room skills • Experienced teachers & coaches • Standardized work to institutionalize the gains

32. The Lean Six SigmaStrategy: • Lean 6 is a CHANGE STRATEGY for accelerating improvements in processes, products, and services to improve a company’s performance leading to improved financial performance and competitiveness of the organization. • Goals: • Improved Customer Satisfaction • Increased Profits • Improved Process Capability by Reducing Variance • Increased Market Share • Support Continuous Improvement • Sustained Gains for Completed Projects

33. Lean and the 6 Structure FULL TIME COMMITMENT Problem solver, Teacher, Mentor. Expert in use of the tools M.B.B Black Belt Problem solver,Proficient with tools Problem solver, assists Black Belt. Working Knowledge of tools Yellow and Green Belt 25-50% Functional 6Sigma Team Member. Familiar with tools Problem Solving Problem Solving Team Members Waste reduction and Continuous Improvement LEAN Manufacturing Practices Training Costs- up to $2,500 Week (excludes lodging, travel and salary)

34. Why Not Rent a Belt (Black, Yellow or Green) Pay for only What You Need to Solve Real Business Problems? • Easier for Small Business to Justify • Focused on Solving Companies’ Problems • Joint Problem Solving and Knowledge/Skill Transfer • Easier to Meet Customer Mandates to Use Lean Six Sigma Techniques • Provides Evolutionary Approach to Lean/Six Sigma Implementation and Training

35. How Do We Use Lean Six Sigma Techniques • Get Management commitment • Assess the operation & understand the Process using a Value Stream Map (Product families & Production data) • Identify lean improvements & kaizens without automation • Implement lean improvements using VSM plan • Identify processes requiring Six Sigma analysis • Analyze, eliminate, and control variation • Start the cycle again!

36. The Lean Six Sigma Cycle VSM Commitment & Assessment Recommended Solutions Set Up Layout Cells Visual Continuous Improvement Variation Reduction DO IT! Implementation Plan Information Systems

37. Output(s) Input(s) Understanding the Process:The 1st Step and Foundation of Lean Six Sigma Y = f(X) are a function The Lean Six Sigma process attempts to control the outputs by controlling the inputs (those Critical to Quality or CTQ’s)

38. Value Stream MapAn Assessment Tool • The value stream map follows the production path from beginning to end and shows a visual representation of every process in the material and information flows • Shows how the shop floor currently operates • Foundation for the future state

39. Using the Value Stream Mapping Tool product family current state drawing Understanding how the shop floor currently operates. The foundation for the future state. future state drawing Designing a lean flow plan and implementation

41. Value Stream Map (Current State) Orders Every 2 Weeks Production Control New Jersey Porcelain (Round Stones) Randomly Placed Orders (Various Sizes) Andrea Aromatics (Scented Oils) Alanx (Shaped Stones) Order as Needed Various Customers Average of 6,000 Stones per Day in Various Size Orders (8 to 20 case & 200 to 400 case range mainly) 30 Cans of Oil Every 2 Weeks 59,000 Stones Every 2 Weeks 50,000+ Stones Every 2 Months (via stringer) Bi-Weekly Production Schedule Daily Shipping Orders Daily Shipments Existing Work Cell Soak & Dry Packaging Labeling Cartoning Case Packing Shipping APAI Automatic Stapler Multiple Batch Tanks Ameripack Flow Packager Manual Manual I I I I I I up to 250 stones in WIP 0 0 125 Cans of Oil 20,640 Round Stones 49,000 Shaped Stones 1 Operator 4290 Stones 1 Operator 1/2 Operator 1/2 Operator 90,504 Stones 1 Operator C/T = 25 - 65 min. C/O = 10 min. Rel. = 100% C/T = 1 sec. C/O = 5 min. Rel. = 85% C/T = 3 sec. C/O = 2 min. Rel. = 80% C/T = 2 sec. C/O = N/A Rel. = 100% C/T = 1 sec. C/O = N/A Rel. = 100% 11.6 Days 0.7 Days 15.1 days 27.4 Days Lead Time 65 minutes, 7 seconds Value-Added Time 65 min. 7 seconds

42. Value Stream Map (Future State) Orders Every Week Production Control New Jersey Porcelain (Round Stones) Randomly Placed Orders (Various Sizes) Andrea Aromatics (Scented Oils) Alanx (Shaped Stones) Monthly Order Various Customers Average of 6,000 Stones per Day in Various Size Orders (8 to 20 case & 200 to 400 case range mainly) Bi-Weekly Production Schedule (large orders) 12 to 16 Cans of Oil Once a Week 30,000 Stones Once a Week 25,000 Stones Once a Month (via stringer) Daily Shipping Orders Daily Shipments 4 Cases Existing Work Cell Soak & Dry Packaging Labeling Cartoning Case Packing Shipping APAI Automatic Stapler Multiple Batch Tanks Ameripack Flow Packager Manual Manual I I I I I up to 250 stones in WIP 0 0 75 Cans of Oil 40,000 Round Stones 25,000 Shaped Stones 1 Operator 4290 Stones 1 Operator 1/2 Operator 1/2 Operator 30,000 Stones in a supermarket type arrangement with stocking levels by shape and scent 1 Operator C/T = 25 - 65 min. C/O = 10 min. Rel. = 100% C/T = 1 sec. C/O = 5 min. Rel. = 85% C/T = 3 sec. C/O = 2 min. Rel. = 80% C/T = 2 sec. C/O = N/A Rel. = 100% C/T = 1 sec. C/O = N/A Rel. = 100% Increase Reliability 10.8 Days 0.7 Days 5.0 days 16.5 Days Lead Time 65 minutes, 7 seconds Value-Added Time 65 min. 7 seconds

43. Questions to Ask About the Value Stream • Is the step valuable? • Is the step capable? • Is the step available? • Is the step adequate (capacity)? • Is the step flexible?

45. Lean ManufacturingConcepts & Techniques • Flow: Setup Reduction, Cellular Manufacturing, Batch Size Reduction, Visual Workplace, Layout • Pull: Kanban Systems, Supply Chain Management, Point of Use • Perfection: Quality Systems including variation reduction, Training

46. Road Map to Lean Six Sigma Lean to improve flow and reduce inventory & lead timeSix Sigma for Process Variation in Value Stream

47. Low Productivity Electrical Device AssemblyThe Challengein Two Steps • Client wanted wave soldering and robotic pick and place • Functional operational layout • Reject rate 5 to 8% • Extensive material staging • No space • Initially, 13 people in Aurora cell • Low output: 300 units/day

48. Lean Six Sigma Techniques Used • Process mapping • Cellular Manufacturing & Layout • Balance Cycle Times Between Work Stations • Reduce Batch Size & parts staging • Quality Data Collection & Analysis (Reduce Reject Rate)

49. Cellular Assembly Layout

50. WORKSTATION CYCLE TIME: 25sec., 1.25 min. PER 3 UNITS REJECT DATA 2 LED SOLDER & CUT 7 TEST SAMPLES 4 5 6 8 9 ATTACH BACK COVER, STAKE STRAP & ATTACH STRAP ASSEMBLY #1 COLD STAKE TEST PCBs CONTACTS ASSEMBLY & SOLDER BUTTON & BATTERY ASSEMBLY LABEL GLUE SWITCH/ ATTACH STRAP PACK LED PLACEMENT 1 INSERT SWITCH ACTIVATOR LED SOLDER & CUT REJECT DATA TEST PCBs 3 ASSIST Cell Changes REJECT DATA AFTER CHANGES WORKSTATION CYCLE TIME: 25sec., 1.25 min. PER 3 UNITS 4 TEST SAMPLES 1 2 3 5 6 ATTACH BACK COVER, STAKE STRAP & ATTACH STRAP PCBs from supplier ASSEMBLY #1 COLD STAKE TEST PCBs CONTACTS ASSEMBLY & SOLDER BUTTON & BATTERY ASSEMBLY LABEL GLUE SWITCH/ ATTACH STRAP PACK INSERT SWITCH ACTIVATOR REJECT DATA