Lean Six Sigma at Alliant Energy

1. Lean Six Sigma at Alliant Energy Larry Heckert LSS Master Black Belt

2. Agenda • Alliant Energy’s Journey • Six Sigma Overview • The Move to Lean • Lean/Lean Culture

3. Alliant Energy – Who We Are We are an energy-services provider. Our customers… Interstate Power and Light (IPL) • 527,000 electric • 234,000 natural gas Wisconsin Power and Light (WPL) • 457,000 electric • 179,000 natural gas

4. Generation Portfolio

5. Lean Six Sigma Timeline LSS Approval (Six Sigma emphasis) Lean Emphasis approval 2011 2010 2004 2005 2006 2007 2008 2009 2003 LSS Basics for all employees Black Belt Wave 1 Lean curriculum Training internal Green Belt Wave 1 Full-Time Black Belts & Decentralization

6. Breadth and Depth

7. Six Sigma Basics • Many factors cause the output of a process to vary • Inconsistent results • Output may not meet customer’s requirements (defects) • Using Six Sigma, sources of variation are: –Identified • Quantified – Eliminated or Controlled

8. Inputs Processes have many inputs Inputs influence the output in different ways To improve a process, we need to understand the relationship between inputs and the output Improving key inputs has the greatest impact on our output Six Sigma Basics X1 Output Process Y = f(x) Y X2 X3

9. DMAIC Methodology Define What’s the problem? How does the process work today? Characterization Measure Can I trust my data? What are the potential Key Process Input Variables (KPIVs)? Analyze How do we know we have found the most important input variables? Delivering Results Improve How can we improve the key inputs? Optimization Control Ensure it stays fixed. How can we control the key inputs?

10. Shift to a Lean Emphasis Our Six Sigma Experience • Application - Reduce variation or finding root causes • Projects typically 6 months or longer • Relies on data/technology for certain analyses • Limited impact on “the way we work” Lean • Easily applied to any process • Continuous improvement focus • Low-tech, hands-on approach • Focus on immediate or short-term improvements

11. Lean • A philosophy that emphasizes • Reduction of wasteful activities, • Getting products or services to flow, and involving • Continuous improvement, made by • The people who do the work, using • Experimentation Let’s consider an example

12. Lean in Auto Racing

13. Lean Principle – Precisely specify the value of a specific process as defined by the customer Each activity or task in a process is identified as: • Value-Added • Transforms the deliverables of a process in such a way that the customer is willing to pay for it • Done right the first time • Waste • Uses resources but doesn't contribute to the product or service • Customer wouldn’t want to pay for it (or wouldn’t if they knew about it) • Note: Some waste may be required (regulatory, legal, etc.) Goal = Eliminate or reduce the waste!

14. Critical To Satisfaction Safety Delivery Quality Cost Customer-Defined Value • First step of a Lean effort is to define the “voice of the customer” in meaningful and measurable terms A critical mistake is assuming we know what the customer wants!

15. The Eight Types of Waste

16. Lean Principle – Identify the Value Stream for each process and challenge all of the steps that do not add value (waste) • Value assumes you are creating something of value that a customer is willing to pay for • Stream refers to a sequential flow of activities needed to create an output and deliver it to the customer • Value Streams identify all of the steps currently required to move products or services from beginning to end

17. Making the Process Visible

18. Generation Value Stream Map

19. Lean Tools to Address Opportunities • Value Stream Map identifies opportunities • Quick Hits (Just do it!) • Focused Lean Events • RI Event • 5S (Workplace Organization) • 2P – Process Preparation • Six Sigma Project (Variation) Bursts become opportunities

20. Lean Building Blocks Continuous Improvement Pull/Kanban Cellular/Flow TPM Quality at Source POUS Setup Reduction Standardized Work Batch Reduction Teams Value Stream Mapping 5S System Visual Facility Layout

21. What does a Lean Culture look like? • Knowing what it looks like allows us to move our culture in the right direction • Four basic concepts: Every activity is structured Every customer-supplier is clearly connected Every flow path is simple and specific We improve through experimentation

22. Horizontal vs. Vertical

23. Lean Thinking Get rid of old, traditional concepts and assumptions Accept no excuses - Look for ways to make things happen Say “No” to status quo and assume new methods will work Don’t expect or worry about perfection, but look to continuously improve – starting now The primary cost of Lean events is effort – not capital If something is wrong, fix it on the spot Empower everyone to think of ways to solve problems. Good ideas come when the going gets tough. Before making decisions, ask “Why” five times to get to the root cause Look for wisdom from 10 people rather than one Improvement has no limits. Never stop trying to improve.

24. ? Lean Six Sigma at Alliant Energy