Lean six sigma introduction

Lean Six Sigma - Introduction
www.theapprentiice.com

Learning Objective
• Understanding Lean
• Principles of Lean
• History of Lean
• The Seven Wastes
• Understanding Six Sigma
• History of Six Sigma
• Why & how do we do Six Sigma ?
• Six Sigma Organization

Understanding Lean

What is Lean?

How Lean Emerged?
LEAN
Japanese
automotive
industry
Lead from
Toyota
50 years back…
In 1991…

Competing for the Future
(with Gary Hamel)

Approach to Lean
FROM TO
Managing results Managing the process
& results
The 5 Who’s The 5 Why’s
Problem-hiding Problem-solving
P-D-P-D tail-chasing P-D-C-A Cycle

Value
Stream
Value
5
Principles
of Lean
Pull
FlowPerfection

Value Value is best defined as what is the customer willing to pay for
• Value-adding activities transform the product closer to what the customer
actually wants.
• An activity that does not add value is considered to be waste.
Value adding
Process
• A process step
that transforms or
shapes a product
or service which is
eventually sold to
a customer
• Ex: Assembling
product parts
Non-Value adding
Process
• Those process
steps that take
time, resources,
or space, but do
not d value to the
product or service
• Ex: Transporting
parts from one
machining process
to the next
“Business Value
adding” Process
• A Non-Value
adding process
that is required by
law, regulation, or
customer request
to operate the
business
• Ex: Filling Tax
Returns

Tasks can only be defined as “Value-ding” by the Customer
• Registration
• Waiting
• Pre-screen
• Diagnosis
How long will you spend at the hospital?
What is the value?
How long will you be at the park?
• Ride the rides
• Wait in line
• Eat the food
• Play the games
What is the value?
Tasks can only be defined as “Value-adding” by the Customer
ELS CORE CONCEPTS
Value

Distinguish VA from NVA Activities
Activity
Selecting candidates to interview for hire
Completing expense report
Machining part
Assembling product parts
Walking to printer to pick up documents
Transporting parts from one machining process
to the next
Waiting for a response from a supplier

What is “waste”?
Muda
Mura
Muri
• Any activity that consumes resources without
creating value for the customer
• Unevenness in a process; for example an uneven
work pace causing people to hurry and wait
• Overburdening of resources (such as people or
equipment)
Types of Waste Descriptions
1
2
3
ELS CORE CONCEPTS

The Seven Wastes
• Waste is called “muda” in Japanese
• Waste is strain on an organization's time & resources
• Waste does not add value to the customers
• The more an organization can reduce waste, the better
T - I – M – W – O – O - D
Value Added (VA)
Non Value Added
(NVA)

The Seven Wastes
Transportation is the unnecessary movement of materials or
information.
• Movement of materials between Warehouses & Plants
• Moving materials, Files, documents & mails
Inventory is any material or supplies in excess of the appropriate
quantity, at appropriate time.
• Excess Raw material, In-process (WIP) and finished goods
• Long Cycle times, carrying cost
• Risk of obsolescence, damage
Motion is any movement of people that does not add value to the
product or service.
• In-efficient placement of frequently used supplies/tools
• People spend more time moving around than adding value to
customer

The Seven Wastes Cont…
Waiting – for man, machine, material or information.
• Customers waiting for products, services or information
• Excessive cycle time between process steps
• Waiting for files, information & approvals
Overproduction – making more, earlier or faster than the next process
can consume
• Larger batch size, insurance for customer order spikes or
manufacturing problems
• Printing reports, replying all on e-mails
• Most dangerous of all other wastes
Over-processing – any effort that doesn’t add value to the product or
service from customer’s perspective
• Complicated processes with un-necessary & redundant steps
• Multiple approvals / signatures, un-necessary forms/details
• Extra packing, Re-work loops

The Seven Wastes Cont…
Defects – are products, services or information that are inaccurate
and/or incomplete
• Cause serious customers dissatisfaction
• Result in high cost due to rework / customer returns
Under- Utilized Talent – not utilizing people skills, experiences,
knowledge or creativity to its potential
• Lack of empowerment
• Lack of cross training
• Lack of people centric culture which encourage participation &
suggestions from employees
and Finally the 8th waste…

Once Waste is identified
What you do?
• Eliminate – the cause of the waste wherever possible
• Simplify – the process or step that is creating the waste
• Streamline VA – complex processes
Maximize VA Eliminate NVA

Why Companies do Six Sigma?

COST + PROFIT = SALES PRICE
MARKET PRICE - COST = PROFIT
1. To deal with a world of declining
product prices!
Accelerate our rate of
improvement in quality and
productivity faster than the
competition
Why Six Sigma?

2. To successfully compete with
the best companies in the world!
Accelerate quality
improvement efforts and
productivity faster than
all of our competition!
3. To establish a common language and
approach across different
functions and branches of our
business!
4. Develop the next generation of leaders!
Why Six Sigma?

What is Six Sigma?

A philosophy of doing business that focuses on the continuous
improvement of processes.
(Doing business = provide any products or services)
Six Sigma focuses on defect prevention through the use of statistical
tools, rather than defect detection through inspection.
Six Sigma is a quality improvement philosophy that focuses on
eliminating defects through reduction of variation in a process
Six Sigma is ….

History of 6σ
• Initially developed at Motorola by Bill Smith in 1986
• Used old concepts and combined them
• Way of measuring defects and improving quality
• New methodology for reducing defects below 3.4 DPMO
(defects per million opportunities)

History of 6σ
• Motorola claimed in 2006 that over $17 billion in savings can be attributed
to Six Sigma
• Many companies since Motorola have also adapted Six Sigma
• General Electric
• Bank of America
• Caterpillar
• Honeywell
• 3M
• Amazon.com
• Boeing
• Whirlpool
And the list goes on…

 Sigma is a letter in the Greek alphabet.
 The term “sigma” is used to designate the
distribution/spread around the average of any
process or procedure.
 For a business or manufacturing process, the
sigma value is a metric that indicates how well that
process is performing. The higher the sigma value,
the better.
 Sigma measures the capability of a process to
perform defect-free. The sigma value also
indicates how often defects are likely to occur.
 As sigma values increase, costs go down, cycle
times and customer satisfaction goes up.
 Metric
 Benchmark
 Vision
 Philosophy
 Method
 Tool
 Symbol
 Goal
 Value
What is Sigma ?

s= Standard Deviation = Measure of variation around the average
Big s= Lot’s of variation = BAD!!!
sLevel = 1/2 the number of standard deviations (s) that will fit between the Spec
limits when the process is centered
Big sLevel = Lot’s of capability = GOOD!!!
s ss ss sssssss = 12/2 = 6 s
s sssssss
Customer Specs
= 8/2 = 4s
2
shas different uses and interpretations:
Different Uses of sigma

Important Points About Variation
No two things are alike; they always vary
 Variation always exists
 We can’t always observe or measure variation
 The more variation there is, the more it matters
 The opposite of variation is prediction
 We are not as interested in what has happened as in what
is about to happen
 The degree to which we can predict depends on the
amount and nature of variation

• Let’s have a look at two different airline pilots flying the
same plane!
• Pilot A lands 10 consecutive times within the boundaries of
the runway. He met the specification.
Variation Around a Target

• Pilot B also lands 10 consecutive times within the
boundaries of the runway!
Which pilot would you fly with?
Variation Around a Target

Excess inventory
Indirect Costs
R&A
Rejects
Engineering change orders
Long cycle times
Time value of money
More Set-ups
Expediting costs
Working Capital allocations
Inspection
Scrap
Rework
Lost sales
Late delivery
Excessive Mat’l
Orders/PlanningLost Customer Loyalty
5-8%
(less obvious)
Lost
Opportunity
Direct Costs
15-20%
Overtime
Cost of Poor Quality (COPQ)

• Cost of poor quality for an average company can exceed
20 - 40 % of sales revenue!
• In almost every company, where the cost of poor quality
is unknown, it exceeds the company’s profit margin!
• Most improvement efforts are not tied to bottom line
results. As a result, gains are sub-optimized and not
reflected in the accounting statements!
COPQ continues

How Much Can Variation Cost?
• Studies show that the cost of poor quality can be
25% of sales revenue for 3s companies!
• For 6s companies, the cost of poor quality has
dropped to less than 5%!
0%
5%
10%
15%
20%
25%
30%
3 4 5 6 7
%ofSales
Sigma Level
Cost of Poor Quality at Progressive
Sigma Levels

Key Success Factors for Six Sigma
• Committed leadership from top management
• Integration with existing initiatives, business strategy,
and performance measurement
• Process thinking
• Disciplined customer and market intelligence
gathering
• A bottom-line orientation and continuous
reinforcement and rewards
• Training

How Do We Do Six Sigma?

3σ 2σ 1σ 1σ 2σ 3σ
~3,000 DPMO
3σ
6σ 4σ 2σ 2σ 4σ 6σ5σ 3σ 1σ 1σ 3σ 5σ
~3.4 DPMO
6σ
Process
shift
Basic Principle for applying Six Sigma

Six-Sigma Problem Solving Approach
1. Define
2. Measure
3. Analyze
4. Improve
5. Control

DMAIC - Define
• Identify customers and their priorities
• Identify business objectives
• Select a six sigma project team
• Define the Critical-to-Quality (CTQ’s) characteristics
that the customers consider to have the most impact
on quality

DMAIC - Measure
• Determine how to measure the processes
• Identify key internal processes that
influence CTQ’s
• Measure the defect rates currently
generated relative to those processes

DMAIC - Analyze
• Determine the most likely causes of
defects.
• Identify key factors that are most likely
to create process variation.

DMAIC - Improve
• Identify means to remove causes of the defects.
• Confirm the key variables and quantify the
effects on CTQ’s
• Identify maximum acceptable ranges for the key
variables and a system to measure deviations of
the variable
• Modify the process to stay within the acceptable
ranges

DMAIC - Control
• Determine how to maintain the improvement
• Put tools in place to ensure that the key
variables remain within the maximum
acceptable ranges under the modified
process

Organization for Six Sigma

Organization for Six Sigma
Six Sigma Champions:
Project sponsors
and mentors
Six Sigma Master Black Belts:
Full-time program managers,
PMO heads and educators
Six Sigma Black Belts:
Full-time project
managers
Six Sigma Green Belts:
Part time project
coordinators and
assistants

• Champion:
 creates the vision of 6s for their business
 undergoes basic statistical training
 defines the path to implement 6s
 breaks barriers that prevent improvements
 mentors BB and MBB
 assists in deploying resources
 reports status of activities
• Master Black Belt:
 develops 6s program and training materials
 trains management and BB
 works with external suppliers/customers to extend 6s program
 coaches/mentors BB through projects, advises them in usage
of tools and interpretation of the data
 consults with management on strategic and tactical planning
 develops 6s culture and BB network
Roles & Responsibilities

• Black Belt:
 change agents
 selected for technical proficiency, interpersonal skills and
leadership
 provides expertise to improvement teams
 implements quality improvement activities
 develops and trains GB
 developed by statistical training, on the job application
and mentored reviews
 sets direction to teams, manages risk, transfers
knowledge, discovers new perspectives and obtains
financial results

• Green Belt:
 first line defense against defects
 trained in basic statistical tools
 identifies opportunities
 implements solutions
 maintains the improvements
• Team Member:
 participates in project teams
 supports goal of project (within their area of responsibility)
 continues using the 6s methodology that he has learned during the project

Thank-you

Copyright, 2016 by “The Apprentiice” . This presentation, including the information contained herein and any associated commentary,
("Materials") is provided as a service of The Apprentiice. These Materials are based on publicly available information as well as the
knowledge and experience of The Apprentiice’s employees at time of drafting; however future accuracy cannot be guaranteed. As such,
these Materials should not be solely relied upon without, or used as a substitute for, future consultation with The Apprentiice. Any further
use of these Materials requires the express written consent of The Apprentiice.

The following companies claim to have
successfully implemented Six Sigma in some
form or another:
 3M
 Amazon.com
 BAE Systems
 Bank of America
 BD Medical
 Bechtel Corporation
 Boeing
 Caterpillar Inc.
 Computer Sciences Corporation
 Convergys
 Credit Suisse
 Damco
 Deere & Company
 Dell
 Denso
 Eastman Kodak Company
 Evonik Industries
 Ford Motor Company
 General Electric
 Inventec
 Maersk
 McKesson Corporation
 Motorola
 Mumbai's dabbawalas
 Northrop Grumman
 PolyOne Corporation
 Raytheon
 Sears
 Shop Direct Group
 Starwood Hotels & Resorts Worldwide
 Unipart
 United States Army
 United States Marine Corps
 The Vanguard Group
 Wipro

Lean six sigma introduction

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