Lean Six Sigma An Overview

1. Lean Six Sigma An Overview “Safety is a Measure of Success”

2. Agenda • What is Six Sigma • What is Lean Thinking • Lean Six Sigma and Change • Lean Six Sigma Methodology • Lean Six Sigma Organization • Developing a Charter for Lean Six Sigma Project • Lean Six Sigma Financial Benefits “Safety is a Measure of Success”

3. What is Six Sigma ? • Sigma (σ), a Greek letter, denotes standard deviation. • Six Sigma is a metric that measures the performance of a process. • Six Sigma as a metric • A process running at Six Sigma quality level produces no more than 3.4 defective parts per million opportunities (DPMO). • The variation in the process is reduced so that it does not produce defects 99.99966% of the time. “Safety is a Measure of Success”

4. Lower Specification Limit (LSL) Upper Specification Limit (USL) Understanding and reducing variation # of Goals “Safety is a Measure of Success”

5. Why to raise the quality standard ? 3.8-Sigma 99% Good 6-Sigma 99.99966% Good 3.4 defects per million opportunities . • 20,000 lost articles of mail per hour. • 5,000 incorrect surgical operations per week. • Two short or long landings at most major airports each day. • 200,000 wrong drug prescriptions each year. • Seven articles lost per hour. • 1.7 incorrect operations per week. • One short or long landing every five years. • 68 wrong drug prescriptions per year. N Based on U.S. statistics in the 1990s “Safety is a Measure of Success”

6. What is Lean Thinking ? • Lean ideas originally developed in the United States (Ford Motors, 1914) and than widely used by Japanese (Toyota, 1950). • Lean Thinking is also known as lean, lean production, lean manufacturing, Toyota production system (TPS), Just-in-time (JIT) etc. • It is a common sense approach. • Lean is focused at eliminating the waste in the processes that in return increases the speed, improves the quality, and reduces the cost. “Safety is a Measure of Success”

7. Understanding Wastes Waiting Unwanted Transportation Overproduction Over Inventory Unwanted Movement 8 Wastes Over processing Unused Employee Creativity Defects “Safety is a Measure of Success”

8. Lean Six Sigma Definition • Lean Six Sigma is a rigorous, disciplined, and data driven business process optimization and problem solving methodology which aims to reduce variability, eliminate non-value added activities (waste), and reduce cost. • Lean Six Sigma is applicable to any process/activity and it is well-proven methodology worldwide. • Lean eliminates process wastes. • Six Sigma reduces process variability and defects. “Safety is a Measure of Success”

9. Lean Six Sigma and Change • In order to develop, sustain, and become competitive, we have to make changes. • Lean Six Sigma is all about: • Changing the culture of an organization • Changing the processes to meet new customer requirements and to remove constraints. “Safety is a Measure of Success”

10. Lean Six Sigma Methodology Practical Problem Lean Six Sigma Methodology Phase 2 Measure Characterization Analytical Problem Phase 3 Analyze Phase 1 Define Analytical Solution Phase 4 Improve Optimization Practical Solution Phase 5 Control DMAIC Define Measure Analyze Improve Control “Safety is a Measure of Success”

11. What is important to customers OR business goals? Define Phase • Define the problem. • Identify the customer(s). • Organize the team and define its roles and responsibilities. • Establish goals and milestones. • Establish the scope of the LSS project. • Define the metrics. • Map the process. • Develop data collection plan. COMMUNICATION “Safety is a Measure of Success”

12. How is the process performing? How does it look / feel like to the customer? How good is the data? Measure Phase • Collect data on current process. • Confirm the customer’s needs, and expectation. • Validate measurement system. • Determine input variables (X’s) that may impact output (Y’s). • Establish baseline measurement of current process. COMMUNICATION “Safety is a Measure of Success”

13. What are the most important causes of process waste, defects & variation? Analyze Phase • Narrow the focus to specific issues. • Develop a mechanism to analyze data. • Identify what is causing defects, waste and variation. Characterize the variables (X’s). • Find improvement opportunities. • Based on data analysis, revisit problem statement and assess the need to further scope the issues. COMMUNICATION “Safety is a Measure of Success”

14. Move the mean. Shrink the variance. Eliminate the waste. Improve Phase • Validate hypothesis about the root cause of the problem • Identify critical variables (X’s) • Identify alternate solutions • Determine optimal solution • Perform cost/benefit analysis • Design improvements • Pilot improvements • Implement and validate improvements COMMUNICATION “Safety is a Measure of Success”

15. How can we maintain the process improvements? Control Phase • Ensure corrective actions are taken. • Mistake-proof the process. • Transition the control of the new process to the process owner. • Provide techniques to sustain the improvements. • Measure the final capability. • Monitor performance. COMMUNICATION “Safety is a Measure of Success”

16. Lean Six Sigma Organization Roles & Responsibilities “Safety is a Measure of Success”

17. Developing the project charter 5 W and 2 H problem identification approach Example Problem Statement: • On-time delivery performance of all ABC units is only 60%. This results in customer complaints and shipment rejections that in turn increases the inventory levels. Goal: • Improve on-time delivery to 95% by the end of June 2009. Who? Identify customers complaining about the problem What? Define the problem accurately When? Timing - When did the problem start? Where? Location - Where is it occurring? Why? Identify the causes (5 WHYs) How? In what mode the problem occur How many? Magnitude or frequency of the problem “Safety is a Measure of Success”

18. Lean Six Sigma Practitioner Qualities • Customer focus, self-motivated and positive personality • Leadership skills • Excellent communication and presentation skills • Project management skills • Process and product knowledge is preferred • Team player • Result oriented • Data mining • Passionate • Patience • Learner “Safety is a Measure of Success”

19. Common Causes of Project Failures • Inadequate management support. • Inadequate time for Green Belts/ Black Belts and other team members . • Project Scope Is Too large • “Boiling the ocean” • Project Scope Is Too small • Projects with little business impact. • Solution-in-Mind • “Just Do It” projects do not require the rigors of the LSS DMAIC process. • Data not available or not valid. • Lack of “soft skills” (communication, leadership, team building, and change management). “Safety is a Measure of Success”

20. Example: Work Order Process Process Mean Improved Process Existing Process 1 50 100 Output Variation in weeks Customers Remember the Extremes (Variation), not the Average “Safety is a Measure of Success”

21. Lean Six Sigma and Financial Benefits • From 1986 – 2001, Motorola saved $16 billions. • From 1996 – 1999, GE saved $4.4 billions. • From 1998 – 2000, Honeywell saved $ 1.8 billions. • From 2000 - 2000 Ford saved $1 billion. • Over the past 20 years Six Sigma saved Fortune 500 companies an estimated $427 billion. “Safety is a Measure of Success”

22. “We are what we repeatedly do. Excellence then, is not an act, but a habit.”~ Aristotle, 4th century BC Greek philosopher Thank You Safety is a Measure of Success