How to Improve Your Bottom-Line Using Lean Six Sigma

How to Improve Your Bottom-Line Using

Lean Six Sigma February 26th, 2014

Presented by: Luis Socconini, CEO of Lean Six Sigma,

and Maysa Hawwash, National Manager of Talent Management Solutions

Drake International

For audio, it is recommended you dial in A copy of the slides + recording will be available post webinar

AUDIO: 1-877-668-4493 Access Code: 666 050 929

Event Password: 1234 WebEx Support: 1-866-863-3910

For more information, call 416.216.1067 2

Free Offer

We’re offering a free 30-minute Consultation about

increasing your organization’s effectiveness through Lean

Six Sigma.

Contact Maysa to take advantage of this exclusive offer!

[email protected]

416.216.1067

mailto:[email protected]

For more information, call 416.216.1067

Background

3

• Currently, many companies have:

– Slow delivery of their products or services

– Constant rejections and/or customer complaints

– Inconsistent quality

– Poor customer service

– High prices and costs

– Poor internal communication

THESE COMPANIES ARE DESTINED TO DISAPPEAR

“It is not the big who eats the small… It is the fast who eats the slow”

Jason Jennings


Lean Six Sigma Focus

4

“With lean six sigma, our monthly expenses are 40% less than before implementing this great philosophy”

Traditional Thinking Lean Six Sigma Thinking

Cost Cost

Profit Profit

Price Price

Cost + Profit = Price Price (fixed) - Cost = Profit

Price

Profit

Cost

John Darroch, CEO of Apollo Sprayers


Evolution

5

TQC

Quality Circle

JIT

Supplier Dev.

TQM World Class

TPM

TOC

Lean

Lean Oper.

Six Sigma

Lean Company

70s 80s 90s 2000s 60s 50s 40s

50% of Fortune 500 companies


Lean Six Sigma Focus

6

Non-value adding time

Value-adding time

Less: Time, Costs, Defects, Inventory, Space, Waste

Total Time

Total Time

More: Productivity, Customer Satisfaction, Quality, Cash Flow


Why Implement Lean Six Sigma?

7

• LEAN = Speed

– Flexible processes

– Teamwork

– Stable processes

– Continuous flow

• SIX SIGMA = Quality

– Problem solving

– Processes without variation

– Redesign and innovation

• Cost reductions

• Improvements in quality

• Improvements in personal satisfaction


Lean Six Sigma Applications

8

• Manufacturing

• Services

• Offices

• Hotels & Restaurants

• Government

• Healthcare

• Accounting

• Logistics

• Construction

• Bank

• IT

• Sports


Impact Over Time

9

Lean Six Sigma offers a significant jump towards improvement.

Time

Traditional Improvement Methods

Baseline performance

Be

nef

its

With Lean Six Sigma


Not Everyone Has the Same Focus

10

Planning Sales Safety Legal Design Cost Reduction

Engineering Production Packaging Marketing Installation Customer


Productivity Model

11

Productivity = Output

Input

PROCESSES

Parameters

Products/ Services Quality Cost Response Time Safety Motivation Social Impact Environmental lmpact

Manpower Materials Methods Machines Mother Nature Measurements

The 6 M’s

Input Output


Limitations to Productivity

12

Mu! 無理

無駄 Muri = Overburden

Mura = Variability

Muda = Waste


OVERBURDEN = Muri

13

Overburden occurs when workers and/or machines are

required to produce beyond their natural limitations or

capacity.

Muri

Overburden

Stressors

TOO HEAVY!

DIRTY! DANGEROUS!


VARIABILITY = Mura

14

ムラ

Mura

Variability

DEFINITION:

Total Variability = Material + Machinery + Methods + Manpower

MACHINERY METHODS

MATERIALS MANPOWER

EFFECT TOTAL VARIABILITY


WASTE = Muda

15

1 Overproduction

2 Excess Inventory

3 Defects

4 Movement

5 Over Processing

6 Wait Time

7 Transport

Others:

8 Energy

9 Talent

Work that adds value

Work that does not add any value, but is necessary under current conditions

Work that does not add value

Muda


Excess Inventory = Waste

16

Productivity Problems

Inventory

Long set-up times

Rework/Defects Work for Inspections

Variable Demand

Slow Production Time


Lean Six Sigma Tool Kit

17

• Define

– Project management

– Gantt chart

• Measure

– Data Collection

– Histograms, sigma level

– SIPOC

– Gauge R&R

• Analyze

– Process Capability

– Hypothesis Testing

– Confidence Intervals

– Ishikawa Diagram

– FMEA

– Multivari, Box Plots

– Analysis of Variance (ANOVA)

• Improve

– Design of Experiments (DOE)

– Regression Analysis

• Control

– Statistical Process Control (SPC)

– Control Plan

Strategy ◦ Hoshin Kanri

Structure ◦ TPM ◦ Value Stream Management ◦ Talent Management ◦ Lean Accounting

Basic Tools ◦ 5S ◦ Andon ◦ Value Stream Map

Tools to Minimize Cycle Time ◦ Cellular work ◦ Quick set-ups

Inventory Control and Planning ◦ Kanban

Tools to Improve Quality ◦ Poka Yoke, Standardized Work

Problem Solving ◦ 8 Disciplines/A3

Six Sigma Lean


Who Participates?

18

CEO, Director Directors Managers Company-wide 20 to 50% 10 to 20% 1 to 3% 1 out of 10 BB

Executive Champion Owner White Belt Yellow Belt Green Belt Black Belt Master BB

Training Lean Management 8 hrs. 8 hrs. 40 hrs. 40 hrs. 120 hrs. 240 hrs.

Drives LSS as a strategy ✔ ✔ ✔

Ensures resources ✔ ✔ ✔

Approves projects ✔ ✔ ✔

Guides improvement teams ✔ ✔ ✔

Provides resources and eliminates barriers ✔ ✔ ✔

Identifies and selects projects ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

Understands the philosophy and principles ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

Proposes improvement ideas ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

Proposes and participate in improvements ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

Masters basic tools ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

Masters lean tools ✔ ✔ ✔ ✔

Masters Six Sigma tools ✔ ✔ ✔

Masters LSS specialties ✔

LSS works because everybody participates!


Lean Company System

19

1. System/Process Design

2. Definition of Indicators

3.Implementation of System/Process

4.Measurement of Performance

7. Improve and Innovate

6. Corrective and Preventive

Actions

Opportunities

Comparison to Best Practices

(Benchmarking)

5. Analysis of Performance

PLAN

DO

CHECK

ACT

Adaptation cycles

Improvement cycles

Start

(Design and implementation)

Development

(Adaptation cycles)

Competent

(Improvement cycles +

benchmarking)

Reliable

(In control, improvement

cycles)

Lean Company

(Improvement cycles +

benchmarking + best in its class)


Design

20

• Design Methodology

• Prototypes

• Introduction to Manufacturing

• Validation


Commercial

21

• Marketing

– Surveys

– Strategy Development

– Campaign

Development

– Price Definition

Sales ◦ Customer Management

◦ Lean Sales Process

◦ Demand Driven Sales


Logistics

22

• Planning

– Resource Planning

– Scheduling

• Shipping

– Shipping Preparation

– Transport Coordination

• Warehouse

– Warehouse Design

– Receiving Materials

– Materials Management

– Inventory Counts

• Purchasing

– Negotiation

– Cost Analysis

– Pull System


Manufacturing/Service

23

• Layout Design

• Material Flow

• Work Sequence & Balancing

• Continuous Flow

• Quick Preparations

• Equipment Maintenance


Accounting

24

• Management accounting

– Strategy Management

– Budget

– Product Profit

• Operational accounting

– Cost Accounting

– Payroll

– Inventory

– Value Stream Analysis

• Financial accounting

– Invoicing

– Accounts Payable

– Accounts Receivable

– Credit

– Financial Statements


Quality

25

• Lean quality system

– Lean Documentation

– Quality Deployment

– Quality Plan

– Quality at the Source

– Supplier Certification


Implementation

26

Preparation Pilot Deployment

• Diagnostic • Hoshin Kanri

Strategies Box score

• Implementation Plan • Promotion of LSS • Define Product/Service Families • Lean Management Training

•Training • WB, YB, GB, BB

• Lean Accounting • Talent Development

• Value Stream Mapping • Analysis of Opportunities • Kaizen Events

• Value Office • Work Cells • TPM • Andon & 5S • SMED • Kanban • Standardized Work • Poka Yoke

• Sigma Kaizen Events

• Organizational Structure Value Streams

• Application to Every Process • Mature Lean Accounting • Lean Design • Lean Office • Lean Logistics • Lean Service • Lean Quality • Culture Change

Knowledge Habits Attitude

3 to 6 weeks 4 to 6 months 2 to 5 years


• Initial situation in car insurance

– 14 – 17 days to pay total loss

– Delivery time 40 – 45 days

– High internal cost per transaction

• Main actions

– Lean Service training

– Value stream map

– Service cell (capture, valuation, legal, payment)

• Results

– 24 hours payment for total loss

– Decrease of 75% cost per transaction

Insurance company


Painting Machines

28

• Initial situation

– Delivery time 3 weeks + shipping

– Sales only cover expenses (no profit)

– High Inventory

– No Available Capacity

• Main actions

– Re-Layout

– Manufacturing Cells

– Complete Training System

• Results

– Delivery time 2 to 3 days + shipping

– Cost reduction 40% (consistent)

– Sales increase 20% average

– Inventory reduction 55%


Logistic (Pharmaceutical)

29

• Initial situation

– Variable Demand

– High Inventory Levels

– Constant Back Orders

• Main actions

– Delivery Time Reduction (quick set up, cells, tpm)

– Kanban System Implementation in the Value Stream

• Results

• Total Inventory Reduction from 120 days to 15 days

• Cost Reduction for more than $50 million dollars

• Zero Back Orders


Supply Chain Without LSS

30

Supplier Factory Distributor Retailer Customer

Average 1353 668 477 395 201

Lead Time 4.5 4.06 3.5 3.2

Std. Dev. 1091 397 158 69 25

Variation 81% 129234 59% 14567 33% 11092 17% 4874 12%

Inventory (days) 95 22 23 12

0

500

1000

1500

2000

2500

3000

3500

4000

1 3 5 7 9 11 13 15 17 19 210

50

100

150

200

250

300

1 3 5 7 9 11 13 15 17 19 21

0

100

200

300

400

500

600

1 3 5 7 9 11 13 15 17 19 210

100

200

300

400

500

600

700

800

1 3 5 7 9 11 13 15 17 19 21

0

200

400

600

800

100 0

120 0

140 0

1 3 5 7 9 11 13 15 17 19 21


Supply Chain With LSS

31

Supplier Factory Distributor Retailer Customer

Average 228 220 216 203 201

Lead Time 4.5 1.86 0.8 0.5

Std. Dev. 63 57 64 27 25

Variation 28% 129234 26% 14567 29% 11092 13% 4874 12%

Inventory days 567 66 51 24

Kanban 1310 515 224 115

Days 6.0 2.4 1.1 0.6

0

100

200

300

400

500

1 4 7 10 13 16 190

100

200

300

400

500

1 4 7 10 13 16 19

0

100

200

300

400

500

1 4 7 10 13 16 190

50

100

150

200

250

300

1 4 7 10 13 16 190

50

100

150

200

250

300

1 4 7 10 13 16 19

Downstream Upstream


Why Some Can and Other’s Can’t

32

Skills Vision Incentives Resources Plans Changes + + + + =

Confussion

Anxiety

Slow Change

Frustration

False Starts

Skills Incentives Resources Plans + + + + =

Vision Incentives Resources Plans + + + + =

Skills Vision Resources Plans + + + + =

Skills Vision Incentives Plans + + + + =

Skills Vision Incentives Resources + + + + =


QUESTIONS?


Upcoming Webinar

Register @

drake-webinars.com

March 19, 12pm EDT

How to Improve Your Safety Training

Through Online Delivery

Presented by: Dan Hannan, Corporate

Health and Safety Director of Merjent, Inc.

and Mitch Diamond, President of

Exponential-Impact, a Drake International

company


Free Offer

We’re offering a free 30-minute Consultation about

increasing your organization’s effectiveness through Lean

Six Sigma.

Contact Maysa to take advantage of this exclusive offer!

[email protected]

416.216.1067

mailto:[email protected]

Thank You for Attending

For Questions please contact Maysa Hawwash

[email protected]

416-216-1067

How to Improve Your Bottom-Line Using Lean Six Sigma

Business

Transcript of How to Improve Your Bottom-Line Using Lean Six Sigma