TWO DAY PROGRAMME ON

LEAN& SIX SIGMAMANUFACTURING PRACTICES

Faculty: Prof. A. Rajagopal,HEAD,SQC&OR UNITINDIAN STATISTICAL INSTITUTEPh: 0422-2441192

STATISTICS AS A KEY TECHNOLOGY IS NOT MERELY AN OPERATIONAL TOOL FOR PROFITABLE BUSINESS. BUT AS A POWERFUL ACCELERATOR AND CATALYST FOR ECONOMIC DEVELOPMENT PROF: P.C.MAHALANOBIS

ABOUT THE INSTITUTEPIONEERING QUALITY MOVEMENT IN INDIA BY SQC & OR DIVISION OF ISI70 years of existence as a centre of excellence promoting statistics as a key technology. One of the worlds leading organization recognized as an Institute of National Importance. At the Initiation of founder Prof. P.C.Mahalanobis, Dr.Walter Shewart visited the institute in 1947 to introduce SQC in the industries particularly in the textile sector in a significant way. Successfully demonstrated SQC / SPC not only as operational tool for profitable business but also as a powerful accelerator and catalyst for economic development.

Every year about 100 organizations are benefited in following this approach in different sector, Private Public Government, around the country. Over 10,000 projects has been carried out so far. Now Coimbatore Unit is introducing this approach to small scale sector also based on the widespread experience in the application of Textile sector.Objective: Improve Quality Reduce Waste / Rework / Rejection Increase Productivity Best utilization of resources including time.

The value of time

When, You Dont Work On Time,

You Can Explain,

TIME IS NOT GOODLONG LIFE WITHOUT QUALITY(OR)QUALITY WITH GIVEN LIFE

Quality TimePricePPMCompetitive EdgeWillingness to payTO BE THE FIRST AND FAST PLAYER

TODAYS BUSINESS ISSUES:

Quality and price are two axis of business so long. The Third axis emerged as -"THE TIME"- the factor taking leading position in business. SPEED" is the need of hour. To be FAST and to be FIRST has become the challenge".

Conventional Business approach is moving towards higher production (Quantity), which some time affects the Quality and may force to sell in discounts or as seconds, and to carry out "High Inventories

Quality in time" at the "least cost" is the mission statement, moving ahead in this changing environment.

"Statistical Methodologies" -that study the uncertainties, Analytical approach that economies the cost and which minimizes the waiting time/ idle time through such No investment- No cost tools enabled to maximize the return on valued resources.

TAKING OF THE BLINDERS

In strategy it is important to see distant things as if they were close and to take a distanced view of close things

Miyamoto MusashiThe Book of Five Rings

COMPETITIVE REQUIRES INNOVATION

No existing market share is safe today, no product life is indefinite. Not only is this true for high technology, but it is also true for all consumer products. Competition will tear away market niches and technology advantages from the established business through the weapon of innovation. Companies will become merely a shadow of their glory days or will vanish if they do not find a way to re-create their market success through a steady stream of innovative products and customer oriented solutions.

INNOVATING FOR COMPETITIVENESSInnovation requires the planned abandonment of established, familiar, customary or comfortable ways of working whether in product or services, competencies or human relationships or the organisation itself. Business AssessmentChange ManagementBreak through Planning SystemStrategic Decision MakingConclusion: Innovation means that you must be organized to allow constant change.

MANAGEMENT OF TIME

TIME CRESIS MANAGEMENT:Crisis involves two aspects. The cresis created by factors within ones control and such crisis can be avoided. Then those crisis created by factors beyond ones control and have to be faced.Major cresis can be avoid, if we act upon a situation at the right time. More often than not, there are two tendencies that present us from acting at the right time. Postponement of the unpleasant Non recognition of the problemPROCRASTINATION CREATES CRESIS: The tendency to do what ii easy, trouble free, and pleasant and leave for the future the issues that are difficult, Thus the difficult issues keeps piling up. They become irritants. We do not want this because it remind us of our inefficiency and incapacity to face unpleasant issues. A thing undone always remain with us.

DO THE UNPLEASANT FIRST:We can not expect every thing in life to be pleasant. Like the two sides of the coin, the unpleasant always goes with the pleasant.The one who does not postpone making a decision, right or wrong, to fulfill a responsibility, that person alone can be successful.Postponing something because it is unpleasant is wrong. It has the potential to create a crisis and when it occurs, we will be inadequately equipped to face it.RECOGNIZE THE PROBLEM AND ACT:We get used to the problem so much so chronically, that we dont recognize it as a problem. When there is a problem, we tend to say, There is no problem, Everything will be alright. But it will not be all right.

MURPHYS LAW:What can go wrong, will go wrong. The possibility of something going wrong is much greater than its going right. One can act upon a problem, however small it is, only when the problem is first accepted. Action presupposes a decision, a will, and the will can exists, only when there is recognition.KARMA: Everything will be all right if my karma is good. Karma does not work that way, the theory of karma is not fatalism. It does not justify passing the buck. It pins down the responsibility upon us. so accept problem as it occurs.

DEALING WITH THE ISSUES:For any business man, interference from competitor will be a problem. This is not created by him. This has to be faced. This requires inner strength. It is like learning to drive a car. The instruction cannot reproduce all possible traffic situations. The learner has to deal with particular situation as they occur.

EVERY EFFECT IS A CALCULATED RISK:When you make a business projection for the following year, factors like potential demand, availability of raw material, changes in tax structure, shrikes are taken in to account.Since every intelligent effort involves a calculated risk, only two results can be expected from every effort Success to different degree Failure to different degree.With every failure, a person seems to become more and more frightened and a time comes when are is not able to act at all. So it is important that we are prepared for failure in our effort, because success may not always come. Our power are limited, and there are factors beyond our control.

ACCEPT LIMITATIONS: To be for failure, it is necessary to recognize ones limitations. Our knowledge is limited and so we can not avoid many situations from occurring- otherwise we could avoid all accidents. sometime we have the knowledge but our power is limited and we feel helpless . If you permit yourself to be depressed for reasons you seem to have no control over, you become helpless and the outside factors will make you more and more inefficient and ineffective.Depression is a reaction. In action, you have freedom to exercise your will. Acceptance of facts is a precondition to an action, Non acceptance is an ideal condition for reaction in fact Non- acceptance itself is a reaction. Non acceptance does not alter the facts- the reaction creates a chain of reactions. SO ACCEPT THE FACTS AND KEEP ACTION.

TIME PRIORITIZATION:Water, Tumbler, pebbles, sand, stones, grane . All can be accommodated, if it is planned in priority while filling the tumbler without pilferage. We can find time for anything, provided we have passion for it.GOALS MUST BE CLEAR:Nobody works for failure. You do not have to make an effort to achieve a failure. Sometimes people invest in failing business for tax purposes. It is not a real failure. It is a calculated achievement.CORPORATE MANAGER:BE CLEAR ABOUT GOAL.What is to be accomplished. What is expected out of me. I must also know, what I expect of those who works for me.PRIORITIZING GOALS:With out conflict Based on resources (Time, Manpower, resources)Be concern with immediate plan without getting bogged down by the scale of the project.

What ever a leader does, other people do. The very thing. What ever the upholds as authority, an ordinary person follows that.- BHAGAVATGITA.KRISHNA TO ARUGUNA:If you runaway from this battle field, all others will also follow you. If you fail to do what is to be done, others will also do exactly that, because you are leader, whether you like it or not.- Set our Example.

Understanding lean

Lean:

A systematic approach to identifying and eliminating waste {non- value-added activities) through continuous improvement in pursuit of perfection by flowing the product at the pull of the customer.

Lean champion:

Subject matter expert in the tools of lean typically chosen to lead lean training, lean projects, and lean transformation.

Lean enterprise:

Any organization that continually strives to eliminate waste, reduce costs, and improve quality, on-time delivery, and service levels. Understanding lean

Lean production:The opposite of mass production. Muda:

A Japanese word, usually translated as waste, that refers to those elements of production that do not add value to the product.Takt Time:

The available production time divided by the rate of customer demand. Takt time sets the pace of production to math the rate of customer demand and becomes the heartbeat of any lean system.

Example for takt time

Time AvailableMinutesShift480Breaks-10Lunch-205S-10Meetings-5Changeover-220Maintenance-5Other-0Total minutes210Total seconds12600Demand Min900Avg1080Max1800Takt time (Min) =12600900Takt time (Avg) =126001080Takt time (Max) =126001800Takt timeMin 14.0Avg11.7Max7.0

BusinessProcess Improvement system

Everyone participatesAnything is open to questionLook at issues from larger perspectiveIdeas from anyone is respectedTalk to the ideas generated ; not the personNo complaining unless accompanied with solution and action planNo blamingGround Rules

Leadership VisionQuality . . . is the next opportunity for our Company to set itself apart from its competitors . . . ... Dramatically improved Quality will increase employee and customer satisfaction, will improve share and profitability, and will enhance our reputation.... [Six Sigma] is the most important training thing we have ever had. Its better than going to Harvard Business School. J.F. Welch

A Process Is A Collection Of Activities That Takes One Or More Kinds Of Input And Creates Output That Is Of Value To The CustomerDefinition of a process

6#2: When convinced of the value of thinking in terms of processes, most people still dont think in terms of processes#3:The word process generates fear and resistance. ProcessesAll activity takes place in terms of a process.The quality of the process determines the quality of the output.Shocking lessons#1: Most people do not think in terms of processes. They would rather think terms of isolated events.

Black Belt ProjectsSupplier QualityVoice Of The Shareholder (Profitability Analysis)Voice Of The Customer (Surveys)Stakeholder RequirementsCustomer Requirements PrioritizationCore Processes And Output MeasuresInternal Processes And Output MeasuresKey Subprocesses And Input MeasuresOther StakeholdersEmployeesLendersRegulatorsStrategic Focus

Pick-Up & DeliveryOrder/ LeasingBillingCustomer ServiceEquip. Mgmt.Core Process(Level I)Subprocesses(Level 2)CSR Qualifies Customers NeedsCSR Enters Case In CISBranch Schedules RepairServicer Fixes ProblemCSR Verifies Customer SatisfactionCustomer Calls For RepairCSR Completes CaseSubprocesses ThroughMicroprocesses(Level 3 And Below)Levels of Process

The Dimensions Of Process FocusDesignDesign For Six SigmaImprovementDMAICManagementProcess Management3 Dimensions of Process

BPMSWhat is BPMS? A nine step methodology designed to create ongoing accountability for managing entire cross-functional processes to satisfy process goals

Why BPMS ?Proven methodology to optimize process performance

Establishes value-added metrics to assess process performance takes the guesswork out of how a process is performingBPMS

Step 1:Create Process Mission C O P IProcess Mission Statement

Key Process VerbatimIssueRequirement

Purpose:Importance:Boundaries:Process Goals:Process OwnerBeginning PointEnd PointSProc.CTQRqmtOutputProcInputOperational DefinitionsData OwnerDefinitionUnitHow ManyDPU Process Management System

Clarify OperationalData DefinitionsValidate SystemDataDisplayStep 3:Document Customer and Process RequirementsStep 2:Document ProcessStep 4:Identify Output and Process MeasuresStep 5:Build Process Management SystemStep 6Establish Data Collection PlanStep 7:Process Performance MonitoringStep 8:Develop Dashboards with Spec Limits and TargetsStep 9:Identify Improvement OpportunitiesProcess Management System

Trend ChartProblem ParetoRoot CauseCorrective ActionsAssess your previous mission/goalsEvaluate if your process boundaries have changedAdjust and make corrections Assess current CTQs and if they reflect processAssess if any new CTQs or measures are neededAdjust and make corrections

A.Assess if current dashboards are representativeCollect Data and populate dashboardsAssess performance against targetsAdjust and make correctionsB.D. E.Develop actions to address variationC.Develop should be process mapCreate a simple data collection planBPMS

Step-1 : Create Process Mission Define process specific mission.

Mission statement of the plant

List out preliminary process goals

Measurable type Attribute type

Step-2 : Define & Document the Process Use SIPOC to define the process.

Use flow charts to create & validate process maps.Yet to be incorporated Ready for all plants Flowcharts are to be drawn on four different perspectives on a processWhat one think the process is.What the process really is.What the process could be.What the process should be.

30 Use SIPOC to define the process.

Starting at the TopKey business activities can be defined at different levels of the organization:Level 1 = highest-level view of work in the organizationLevel 2 = work that flows across several departments or within an entire department or work areaLevel 3 = a detailed view of of a particular processFillingSealingPackingNew ProductdevelopmentDemand GenerationDemand FulfillmentCustomerServiceOrdering MaterialsProducingPickingShippingMixingLevel1Level 2Level 3

35Which Flowcharting Technique Should I use?

31Types of Flowcharts Useful for Understanding Process FlowActivity flowchartsSalesTechnicalShippingCoordinatorDeployment flowcharts

Activity FlowchartsActivity flowcharts are specific about what happens in a process. They often capture decision points, rework loops, complexity, etc.

Deployment FlowchartsDeployment flowcharts show the detailed steps in a process and which people or groups are involved in each step. They are particularly useful in processes that involve the flow of information between people or functions, as they help highlight handoff areas.

43Value-Added and Nonvalue-Added StepsValue-Added Step:Customers are willing to pay for it.It physically changes the product.Its done right the first time.Nonvalue-Added Step:Is not essential to produce output.Does not add value to the output.Includes:Defects, errors, omissions. Preparation/setup, control/inspection.Over-production, processing, inventory.Transporting, motion, waiting, delays.

47How to Create an Opportunity FlowchartDivide page into two sections Value-added section smaller than cost-added-only sectionTime flows down the pageOnly join two Value-Added steps with an arrow if there are no Nonvalue-Added steps in betweenYesNoNoNoYesYesLoopLoopLoopValue-Added StepsNonvalue-Added Steps

Step-3 : Document Customer & Process Requirements Types of customers.

Translating VOC into specific requirements. this is the place for defining the QFD

7VOC ProcessOutcomes:A list of customers and customer segmentsIdentification of relevant reactive and proactive sources of dataVerbal or numerical data that identify customer needsDefined Critical-to-Quality requirements (CTQ)Specifications for each CTQ

What is Critical to Quality (CTQ)? What a customer tells us they want from our product / service or process outputCTQs are rendered from Voice of Customer (VOC) CTQs must be specificCTQs must be measurableCTQs must be actionable

CTQs always have three elements:CTQ Category (also known as an Output Characteristic or CTQ name, e.g. Claims Processing Timeliness)Customer Specification (customers requirement of our product/ service or process, e.g. 30) Unit of Measure (how output is quantified by the customer, e.g. Days)

CTQ Example: Claims Processing Timeliness: 30 Days

Category Specification Unit of MeasureWhat is Critical to Quality

23Example: CTQ TreeNeedDriversCTQsGeneralSpecificHard to measureEasy to measureEase of Operationand MaintenanceOperation Low qualification of operatorEasy to setup (training / documentation) Digital ControlMaintenanceMTBFMaintenanceDocumentationMinimum special tools / equipment requiredModificationCostMistake Proofing and One of 7 Management Tools Tree diagramStandardization Down time

Establishing a Performance StandardA performance standard translates customer needs into quantified requirements for our product or processCustomerNeedCTQProduct/ Process CharacteristicMeasureSpecification/ Tolerance Limit(s)Target 95 %90%Defect DefinitionBelow 90%

Step 3 Document Customer/Process Requirements VOC Guidelines Your OutputsKey IssuesCustomer RequirementsCTQsVoice of CustomerOutputs of your process are designed to satisfy customer needs profitablyCustomer needs are stated in the language of the customerClarification of the customers language identifies the key issuesDefined as customer performance requirements of a product or serviceKey issues are translated into customer requirementsSample CTQs

ReliabilityDurabilityAccuracyTimelinessFailure RecoveryEfficiencyCost SavingsEasy to UseQuick Response

Internal Customers

LeadershipProcess OwnersStakeholders

External Customers

ClientsConsumersRegulatorsBrokersVOC Translation ProcessBPMS

Sheet1

Voice of CustomerAfter Clarifying, the Key Issue(s) Is...CTQCustomer Requirements

Sheet2

Sheet3

Step 3 Document Customer/Process Requirements VOC Guidelines

Sheet1

Voice of CustomerAfter Clarifying, the Key Issue(s) Is...CTQCustomer Requirements

Sheet2

Sheet3

Measurement CriteriaThe measure must be importantThe measure must be easy to understandThe measure is sensitive to the right things and insensitive to other thingsThe measure promotes appropriate analysis/actionThe measure must be easy to get

Step 4 Identify Output/Process Measures: Measurement Matrix GuidelinesBPMS

CTQ Tree Template

CTQ

Key Issue

Specific CTQ

Customer Requirement

Target

Minimum

Lower Specification Limit (LSL)

Maximum Upper Specification Limit (USL)

Output Measurements

Process Measurements

Input Measurements

CTQ Template

CTQ Tree Template

CTQ

Key Issue

Specific CTQ

Customer Requirement

Target

Minimum

Lower Specification Limit (LSL)

Maximum Upper Specification Limit (USL)

Output Measurements

Process Measurements

Input Measurements

BPMSObjectives: Consolidate work performed in steps 1-5 onto one concise page which captures the essence of your process. Establish process specs/targets, control limits, and response plan for out-of-control/under-performing metrics. Why Is This Important?: A process management system allows a process owner to quickly respond to performance trends. It is an enabler for process optimization.Tools : Control PlanStep 5 Build Process Mgmt. System

Step-5 : Build Process Management System

Measures & Targets.

Monitoring System.

Contingency Plan.

Sheet1

Process Management System

Process Description:Process Customer :Customer Requirements :Outcome Quality Indicators :

Process Flow ChartMeasureCheckingRemarks

Desc.Target LSL USLChecking ItemFrequencyResp.Contingency planSOP/SOC/Document no.

Y1

Y2

Y2.1

X1

X2

X2.1

Sheet2

Sheet3

BPMSData Collection RoadmapStep 6 Establish Data Collection Plan Guidelines

Sheet1

MeasuresReporting Frequency of Measures (Daily, Weekly, Monthly)Upper Spec LimitLower Spec LimitOperation Definition of MetricGreen Calculation/ DefinitionYellow Calculation/ DefinitionRed Calculation/ DefinitionData TypeData OwnerDisplay MethodSampling Plan (what, where, when, how many)

Sheet2

Sheet3

Data Collection Plan

Sheet1

MeasuresReporting Frequency of Measures (Daily, Weekly, Monthly)Upper Spec LimitLower Spec LimitOperation Definition of MetricGreen Calculation/ DefinitionYellow Calculation/ DefinitionRed Calculation/ DefinitionData TypeData OwnerDisplay MethodSampling Plan (what, where, when, how many)

Sheet2

Sheet3

BPMSStep 6 Establish Data Collection Plan GuidelinesDecision to Collect New Data Is there existing data to help with problem solving mission? Is current data enough? Does the current data meet the process needs? Is the team just using data that is available? Decision to Sample It is often impractical or too costly to collect all of the data Sound conclusions can often be drawn from a relatively small amount of data One BB to finalise sampling strategyValidating Measurement Systems Data is only as good as the measurement system used to gather it. Measurement systems must be validated to ensure data is free from errors There are a variety of techniques to validate data consult a Quality representative or refer to your six sigma training Review the measurement system periodically to ensure consistency and stability over time Data CollectionConsiderations Can the new data be generated through systems modifications? Can data collection be integrated into existing work processes? Is all data being collected necessary to calculate process measures? Can some data collection efforts be curtailed because they dont add value?

BPMSStep 7 Process Performance Monitoring Guidelines Purpose of Control Charts

Determine whether or not process variation is due to special cause or common cause variation

Determine whether the process is in control or out of control

Upper Control Limit

Average

Lower Control LimitMeasurement Time

Sheet1

Type of DataVariation Over A Period of TimeVariation Over Time

Pareto DiagramRun Charts

DiscreteBar ChartsControl Charts

Pie Charts

HistogramsRun Charts

ContinuousBox PlotsControl Charts

Multi-Vari Charts

Sheet2

Sheet3

Process Performance Monitoring All Repetitive activities of a process have a certain amount of fluctuation .

Input, Process & Output measures will fluctuate.

Variation is the Voice of the Process Learn to Listen to it and Understand it.

BPMSStep 7 Process Performance Monitoring Charts

Chart2

638095.23809523870899.47089947092.9691249817

345744.68085106446099.29078014183.1839112504

346368.71508379940968.34264432033.2395541363

382716.04938271643895.74759945133.20716703

30000034920.63492063493.3129412638

166666.66666666725925.92592592593.4443632482

118421.05263157924122.80701754393.4751951186

166666.66666666717489.71193415643.6085907065

210526.31578947433138.40155945423.3365426513

148148.14814814816460.90534979423.6330379241

176136.36363636410101.01010101013.8225766199

1600008888.88888888893.8702159524

14375015972.22222222223.6450978238

25000034722.22222222223.3155151338

311475.40983606638251.36612021863.2713500711

206896.55172413825287.35632183913.4550680008

224137.93103448323946.36015325673.4783146854

71428.57142857147936.50793650793.9118344299

308333.33333333333333.33333333333.3339142116

129629.6296296314403.292181073.6861160349

0037302

0037309

0037316

0037323

0037330

0037337

0037344

Defectives per Million

DPMO

Sigma

Week Ending

Defective Rate/DPMO

Sigma

Defective Rate, DPMO, and Sigma for Purchase Order Request Process

CHARTS

Defect TypeOccurrenceCumulative Percent

No supplier name in Ulysses750%

Need Additional Data/Wrong Data from Requestor693%

Requisition Return Under $2500*1100%

No Supplier on Requisition0100%

No Quantity on Requisition0100%

System Problem - Ulysses0100%

Global Supplier List0100%

Adding Delivery Location0100%

Not able to enter EP Card into Ulysses0100%

Week EndingDefectives per MillionDPMOSigmaSamplesDefectsDefectives

9/28/01638095708992.971056767

10/5/01345745460993.181887865

10/12/01346369409683.241796662

10/19/01382716438963.211626462

10/26/01300000349213.311404442

11/2/01166667259263.441202820

11/9/01118421241233.481523318

11/16/01166667174903.611081718

11/23/01210526331383.34571712

11/30/01148148164613.631081616

12/7/01176136101013.821761631

12/14/0116000088893.87100816

12/21/01143750159723.651602323

12/28/01250000347223.321654

1/4/02311475382513.27612119

1/11/02206897252873.461453330

1/18/02224138239463.481162526

1/25/027142979373.9111288

2/1/02308333333333.331203637

2/8/02129630144033.691081414

2/15/0200

2/22/0200

3/1/0200

3/8/0200

3/15/0200

3/22/0200

3/29/0200

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6/7/0200

6/14/0200

6/21/0200

6/28/0200

7/5/0200

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8/2/0200

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11/15/0200

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12/6/0200

12/13/0200

12/20/0200

12/27/0200

1/3/0300

CHARTS

&A

Page &P

Defectives per Million

DPMO

Sigma

Week Ending

Defective Rate/DPMO

Sigma

Defective Rate, DPMO, and Sigma for Purchase Order Request Process

DATA

&A

Page &P

Occurrence

Cumulative Percent

Pareto for Purchase Order Request Defects for Week Ending 02/08/02

Sheet3

5647Total Count - SAMPLES103

54358914DEFECTIVES

00No Supplier on Requisition0

00No Quantity on Requisition0

01Requisition Return Under $2500*1

07No supplier name in Ulysses7

00System Problem - Ulysses0

00Global Supplier List0

00Adding Delivery Location0

24Need Additional Data/Wrong Data from Requestor6

00Not able to enter EP Card into Ulysses0

212Total Errors - DEFECTS14

Week EndingSigma

9/28/012.97

10/5/013.18

10/12/013.24

10/19/013.21

10/26/013.31

11/2/013.44

11/9/013.48

11/16/013.61

11/23/013.34

11/30/013.63

12/7/013.82

12/14/013.87

12/21/013.65

12/28/013.32

1/4/023.27

1/11/023.46

1/18/023.48

1/25/023.91

2/1/023.33

2/8/023.69

2/15/02

2/22/02

3/1/02

3/8/02

3/15/02

3/22/02

3/29/02

4/5/02

4/12/02

4/19/02

4/26/02

5/3/02

5/10/02

5/17/02

5/24/02

5/31/02

6/7/02

6/14/02

6/21/02

6/28/02

7/5/02

7/12/02

7/19/02

7/26/02

8/2/02

8/9/02

8/16/02

8/23/02

8/30/02

9/6/02

9/13/02

9/20/02

9/27/02

10/4/02

10/11/02

10/18/02

10/25/02

11/1/02

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11/15/02

11/22/02

11/29/02

12/6/02

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12/20/02

12/27/02

1/3/03

BPMS Key Considerations How do you want the information displayed? To what level do you want to drill down in the information? How might you want to segment the information for making critical decisions? Who should access the information? What supporting information do you want to see? Lower level dashboards should roll-up to higher level dashboards. Identify Universeof Potential MeasuresNarrow List ofMeasuresData CollectionDetermine Measuresw/Best Relationship to CTQsFinalize DashboardDashboard Creation RoadmapStep 8 Develop Dashboards Guidelines

External Environmental InformationDashboard IndicatorsInternalEnvironmental InformationProcess ReviewSatisfied withIndicators?Continue ControlActionsYesPlan/ImplementImprovementActions to CorrectNo ActionTroubleshoot DMADV QC/SGA/Quick Hit/DMAIC Identify Problem Diagnose Root Cause Remedy CauseProcess ImprovementProcess Redesign (process not capable of performing to standards)Step 9 Operate Process Management System & Identify Improvement Opportunities No

Sheet1

Process Management System

Process Description:Process Customer :Customer Requirements :Outcome Quality Indicators :

Process Flow ChartMeasureCheckingRemarks

Desc.Target LSL USLChecking ItemFrequencyResp.Contingency planSOP/SOC/Document no.

Y1

Y2

Y2.1

X1

X2

X2.1

Process Management Chart

Process Name :Process Owner :Date :

Process MapMonitoringResponse Plan

MeasuresTarget USL LSLData collection methodImmediate Control/FixProcess Improvement projects

Sheet2

Sheet3

Business Big Ys

Project YProcess Ys

YYYYKey output metrics that are aligned with strategic goals/objectives of the business. Big Ys provide a direct measure of business performance.Key output metrics that summarize process performanceKey project metric defined from the customers perspectiveAny parameters that influence the YX1X2X3Project Y Alignment

Project IdentificationCustomer wants andneeds should driveour actions!

A Great Project ShouldBe clearly bound with defined goalsIf it looks too big, it isBe aligned with Strategic Business Objectives and initiativesIt enables full support of businessShould have high Impact the Bottom LineBe felt by the customerThere should be a significant impactWork with other projects for combined effectGlobal business initiativesShow improvement that is locally actionableRelate to your day jobFocus on key CTQs

Selecting the Right ProjectsSix issues in selecting a project:ProcessFeasibility (Is it doable?)Measurable impactPotential for improvementResource support within the organizationProject interactionsTop priorities based on impact and performance:strategic issues

Project Prioritization MatrixThe desirability of a project increases as you move from the lower right to the upper left, and as the circle gets largerLowMedHi EFFORTLowMedHiIMPACTIncreasing Desirability

Success FactorsProject scope is manageableProject has identifiable defectProject has identifiable impactAdequate buy-in from key stakeholdersTo Be SuccessfulSet up project charter and have it reviewedMeasure where defects occur in the processAssess and quantify potential impact up frontPerform stakeholder analysisCommon PitfallsInadequately resourcing the projectDuplicating another projectLosing project momentumPicking the easy Y, not the critical YAvoiding PitfallsIdentify and get committed resources up frontResearch the project database and translate from other projects where possibleSet up milestones and a communications plan

Project Selection

A Good ProjectA good project: Problem and Goal Statements are clearly stated Defect and opportunity definition is clearly understood Does not presuppose a solution Clearly relates to customers and their requirements Aligns to the business strategy Uses the tools effectively Is data driven

A Bad ProjectA bad project: Is not focusedscope is too broad Is not clear on what you are trying to fix May be an already-known solution mandated without proper investigation Is difficult to see linkage to customer needs Is not clearly aligned with business objectives Has little or no use of tools Is anecdotalnot data driven

Project CharteringA Charter:Clarifies what is expected of the teamKeeps the team focusedKeeps the team aligned with organizational prioritiesTransfers the project from the Champion to the improvement team

Five Major Elements Of A CharterBusiness CaseExplanation of why to do the projectProblem and Goal StatementsDescription of the problem/opportunity and objective in clear, concise, measurable termsProject ScopeProcess dimensions, available resourcesMilestonesKey steps and dates to achieve goalRolesPeople, expectations, responsibilities

The Goal StatementThe Goal Statement then defines the teams improvement objective

Definition of the improvement the team is seeking to accomplish?Starts with a verb (reduce, eliminate, control, increase)Tends to start broadly - eventually should include measurable target and completion dateMust not assign blame, presume cause, or prescribe solution!SpecificMeasurableAttainableRelevantTime Bound

8 Steps To Bind A ProjectIdentify the customerWho receives the process output? (May be an internal or external customer)Define customer expectations and needsAsk the customerThink like the customerRank or prioritize the expectationsClearly specify your deliverables tied to those expectationsWhat are the process outputs? (tangible and intangible deliverables)Rank or prioritize the deliverablesRank your confidence in meeting each deliverable

8 Steps To Bind A Project Identify CTQs for those deliverablesWhat are the specific, measurable attributes that are most critical in the deliverables?Select those attributes that have the greatest impact on customer satisfaction

Map your processMap the process as it works today (as is)Map the informal processes, even if there is no formal, uniform process in use

Determine where in the process the CTQs can be most seriously affectedUse a detailed flowchartEstimate which steps contain the most variability

8 Steps To Bind A ProjectEvaluate which CTQs have the greatest opportunity for improvementConsider available resourcesCompare variation in the processes with the various CTQsEmphasize process steps which are under the control of the team conducting the projectDefine the project to improve the CTQs you have selectedDefine the defect to be attacked

Project Selection Workshop2 Ways :

Top- down method More effective & High impact projects. (Through CTQ selection workshop)

Bottom-up method Low impact & High numbers of projects

List down the Strategic Business ObjectivesList down the Key Focus Areas to achieve the SBOsPrioritize the KFAsList down the core processesList the impact of the core processes on the KFAsRank and prioritize the core processesList down the performance indicators for the prioritized list of core processesRank and Prioritize the CTQsGenerate projects list from CTQsCTQ Selection Workshop

Step 1- List down the Strategic Business Objectives & Key focus areas of your plant/deptt.CTQ Selection Workshop

CTQ Selection WorkshopStep 2 Core Processes of Each FunctionImpact of Core Processes on each KFASl #Key Focus AreasWtg of KFAsCore Process 1Core Process 2Core Process 3Core Process 4Core Process 5Core Process 6Core Process 7Core Process 8Core Process 9Core Process 10Process Absolute Importance (Column Sum : Sum of scores the process wrt SO)Process Relative Importance (Realative Importance = Absolute Importance / Total)List your process and What level of impact it will have on the KFA , 1=Low, 3=Medium, 9=High

CTQ Selection WorkshopStep3 Priority of CTQsSl #ProcessCTQs / MetricsAs IsMust BeGapEase to ImplementImpact on MarginsTranslation OpportunityRoot Causes Already Known with Confidence? (Yes / No)Is Problem Because of Variability?(Yes / No)Data Availability on Xs and YPriority12345678910111213141516171819201=Low1=High1=Low3=Low to Medium3 = Medium to High3=Low to MediumPriority =5=Medium5=Medium5=Medium Gap*Ease*Impact*Translation7=Medium to High7=Low to Medium7=Medium to High9=High9=Low9=High

CTQ Selection WorkshopStep-4 :

List of projects

Front line Project Selection

Sheet1

ISSUES OF COST REDUCTION & CUSTOMER SATISFACTION OBTAINED FROM EACH DEPTT THROUGH BRAINSTORMING

ISSUES SELECTED FROM OPERATIONS

FORMAT No.:

DEPTT./PROCESS/FUNCTION:AREA OWNER:

ISSUESSAVING POTENTIAL PER ANNUM (IN LAKH OF RUPEES)AVAILABILITY OF DATA (Y/N)ISSUES WHICH MAY BE IMPACTEDOTHER FUNCTIONS CONCERNEDPART OF THE EXISTING PROJECT (Y/N)REMARKS

Sheet2

M/S XYZ CO. LTD.

BUSINESS LEVEL DASH-BOARD

Sl. No.INDICESTARGETBASELINEMONTH-1M-2M-3M-4M-5M-6M-7M-8M-9M-10M-11M-12

1TURNOVER

2PBT

3PRODUCT COST/UNIT

4OVERHEADS

5SAVINGS FROM SIX SIGMA PROJECTS

6EXPENDITURES ON SIX SIGMA PROJECTS

REMARKS

M/S XYZ CO. LTD.

OPERATING DASH-BOARD

Sl. No.INDICESTARGETBASELINEMONTH-1M-2M-3M-4M-5M-6M-7M-8M-9M-10M-11M-12

1SAVINGS FROM SIX SIGMA PROJECTS

2EXPENDITURES ON SIX SIGMA PROJECTS

3SAVINGS FROM SIX SIGMA PROJECT-1

4EXPENDITURES ON SIX SIGMA PROJECT-1

5SAVINGS FROM SIX SIGMA PROJECT-2

6EXPENDITURES ON SIX SIGMA PROJECT-2

7SAVINGS FROM SIX SIGMA PROJECT-3

8EXPENDITURES ON SIX SIGMA PROJECT-3

SAVINGS FROM SIX SIGMA PROJECT-m

EXPENDITURES ON SIX SIGMA PROJECT-m

REMARKS

Sheet3

Thinking line for Project Selection Thinking line for Front-line project selection : Cost saving projects Cost avoidance projects Reliability/Process improvement projects Quality/ Customer/Competitor oriented projects. Ease of operation projects. Knowledge management projects. Material handling projects.

Production cycle time

PAY BACK WORKING:Existing Contribution in Rs. 4744113.0Contribution after Modernization in Rs. 6859511.0Increase in Contribution in Rs. 2115398.0Pay Back Period in Months 31.0ADVANTAGES: High Speed machines *High end product * High end marketHigher productivity (Present 35.91 gss is chronic problem in 80s)Cost reduction due to productivity utilization increase and way the minimization. Turnover increase with investment State of the art Technology Branded ProductLead SupplierFast Pay Back and first Player

Note: The Financial Overheads need to be taken after contribution, with present worth of future returns.EARLIER INTERNAL SCHEME:Only replacement Horizontal not vertically No increase turnover even after modernization Substance medium product in medium marketSpace kept idle

PRODUCTION CYCLE TIME Time gap between the starting time to produce a completed item (or Batch, ready for dispatch) till the next item (or Batch ) is started. The total time is production cycle time.CONTINUOUS IMPROVEMENT:Continuous Improvement View of Losses of Deviations from Normal

L(y) =K(y-m)2 = Taguchi Loss Function

Where, y = the value of the quality characteristic for a particular item of product or service,

m = the nominal value for the quality characteristic, and

k = a constant, A/d2

A = the loss (cost) of exceeding specification limits (e.g., the cost to scrap a unit of output), and

d = the allowable tolerance from the nominal value that is used to determine specification limits. LOSS FUNCTION :

The Continuous definition of quality, return to the sample of the production of stainless steel ball bearings, Every millimeter higher or lower than 25mm causes a loss that can be expressed by the following Taguchi Loss function:L(y) = K(y-m)2 = (A/d2)(y-m)2 = (Rs.1.00/ 52) (y-25mm)2 = (0.04)(y- 25mm)2 if 20 y 30, L(y) = Rs.1.00, if y < 20 or y > 30

Table shows the values of L(y) for the Quality characteristic (diameter of ball bearings)ILLUSTRATION:

ORDERING TIME, SETUP TIME, OPTIMUM PRODUCTION QUANTITY

The basic principle of inventory optimization and materials management is to minimize the competing costs of having either too little or too much in inventories of raw material, work in process, or finished goods.

Inventories provide indispensable buffers to improve the leveling of production activity, but they constitute a major investment of the funds of most firms.

The traditional method of timing production runs and inventory replenishment has been by reorder point. INVENTORY OPTIMIZATION AND MATERIAL REQUIREMENTS PLANNING

Reorder point control should be replaced with MRP for production items and by DRP (distribution requirement planning) for finished goods inventories. Under reorder point, total costs of inventory policy (TC) are generally taken to include the following as the most important cost elements:

TC = setup costs (or procurement costs) + holding costs + stock out costs A first approximation to the cost categories of this equation is to specify the total cost to be

(for never stock situation)

For D= Annual Demand, p=price per unit

The procurement or setup cost is c dollars per order, and the order or production run amount is Q units per batch. If the item is produced, it is at a daily rate of r and depleted at a daily rate of d.

The value for the effective rate of interest, i, is often taken to be about 30 percent, to include the opportunity cost of capital. insurance, obsolescence, and other costs of holding.

The above TC equation is minimized when This equation is for the case of setting up a machine to run the item to a certain inventory level, then running that machine on another item until stocks are nearly depleted.

The economical production quantity, or EPQ, is the approximate optimal value of units per batch to manufacture, assuming simplistic uniform demand rates for finished goods with simplified work centers. Although reorder point continues to be commonly used, superior total planning control is possible with computer-based MRP. Economical Production Quantity (EPQ):

INVENTORY THEORY AND MODELING:Proper control of inventory requires a delicate balance and careful, detailed planning. To the controller who sees funds tied up in material in the warehouse, work-in- process inventory, and finished goods not shipped, the natural reaction is that inventories are too high. To the production superintendent faced with the prospect of interrupted deliveries or silent production lines due to inadequate raw, in-process, or finished materials, the response must be that inventories are too low. Therefore, a balance is needed between holding large quantities to satisfy the latter and frequent stock replenishment to satisfy the former. This might be represented, as in below figure

If the replenishment quantity q is represented on one axis and the total inventory cost in dollars is represented on the other. Many reasons exist for keeping inventory. They include: to improve customer service; to hedge against demand surges and variation of production level; to take advantage of favorable prices; to ensure against error and loss; and to avoid production stoppage. Overproduction for any of these reasons can, on the other hand, increase costs through high investment and low capital turnover, material obsolescence, spoilage an deterioration, storage and handling excesses, and inefficient use of space due to overcrowding.

Two basic concepts of control models need to be cognized:Transaction reporting periodic review.

TRANSACTION REPORTING:Transaction reporting requires continuous, accurate updating of stock records to determine when a replenishment order should be initiated. Frequent stock activity, high volume requirements, and identifiable individual units may make this type of system more desirable. This system may entail perpetual (or continuous) record processing: e.g., reporting the use of each item and continuous monitoring of stock levels. When a predetermined reorder point is reached, an economic order quantity acquisition is initiated. This reorder point is set to ensure that sufficient stock is available to carry the production process until the replenishment supply is received.

A second concept is that records will be reviewed periodically (weekly, monthly, quarterly, etc.) and if the level of inventory for that ; item has fallen below a certain target level, anew ) order will be placed. If it has not, the record will be , returned to the file for review again at the end of the next period. Target levels, period lengths, and e replenishment quantities are dependent on frequency of use, replenishment lead time, and criticality of item. This system is usually more difficult to establish but results in lower clerical cost to maintain stock control. Both transaction reporting and periodic review systems can be maintained manually or by computer, if the inventory system is of sufficient size to warrant computer control.

EXAMPLE: A manufacturer uses wooden pallets for unit load shipping of the product. These pallets are used regularly at rate of 100 per month and purchased from a vendor Rs. 3.50 per pallet. They are stored in an unheated but covered shed until needed, 19 and it is estimated that it costs 20 percent of the unit value to pay for the investment and storage costs. PERIODIC REVIEW:

A fixed cost of 150 in clerical time and processing is incurred every time a replenishment order is processed. If pallets are available when needed, re -handling of the unit load of final product is necessary at a cost of Rs10 per unit. Delivery normally takes from 6 to 10 days from the time of order, and 6, 7, 8, 9, or 10 days are equally likely. To determine the EOQ, the following is considered: If C = replenishment cost S = storage cost I = number of inventory turnovers per year T = total cost per year for storage and replenishment R = rate of demand Q = order quantity (EOQ)

then Q can be calculated to be the order quantity which results in the lowest cost T Q = (2CR/S) = (2(50) (100)/ (0.2)(3.50))= 120 Pallets/ Order.I = ( R ) (Number of Months)/ Q = (100)(12)/ 120 = 10 Turnovers/ Year

In this example, a transaction system is to be used, and a reorder point needs to be determined which will provide protection during the reorder period of 6 to 10 days. Since it is equally likely that delivery can be at any time between 6 and 10 days, inclusive, the reorder point will be selected at the point that gives a cost balance between overstocking during the lead time and under stocking. Each time period of days from 6 to 10 has 1 chance in 5 of occurring in the replenishment cycle. By weighting the chances of various delivery possibilities by the cost of overstocking versus under- stocking, a weighted average of delivery days can be computed which establishes a basis of the reorder points.

In this example it may be computed as follows:Number of items demanded per day = 100/20* = 5 .*20 days assumes a 5-day workweek Average cost of overstocking = (5)( 3.50)(1/5)(x- 5)

where x = delivery period between 6 to 10 days Average cost of under stocking =(10 X 1/5)[10-(x -5)]

Solving for x as the point where the weighted-average overstocking cost equals the weighted-average under stocking cost: (5)(3.50)(1/5)(x- 5) = (10)(1/5)(10 -x) 3.5x- 17.5 = 20 -2x 5.5x = 37.5 x= 6.8

The weighted-average delivery period for the purpose of planning the reorder point is 6.8 days. Reorder point = (100/20)(6.8) = 34.0 In summary, place an order for pallets when the pal- let inventory drops to 34. Thus, you will provide an economical stock system for pallets as long as the costs and d factors or the delivery time factors do not change.

Pay back time

PAYBACK TIMEPayback Time is a rough and ready model that is looked upon disdain by many academic theorists . Payback sometimes called payout or payoff. Yet pay back is most widely used decision model, and it certainly is an improvement over the criterion of urgency or postponability.Further more, it is a handy device Where precision in estimates of profitability is not crucial and preliminary screening of a rash of proposals is necessaryWhere a weak cash and credit position has a heavy bearing on the selection of investment possibilities andWhere the contemplated project is extremely risky.

The Payback Calculations follows:P=I/OWhere P= Payback Time, I= Initial increment amount invested and O= The uniform annual incremental each inflow from operations.Essentially, payback is a measure of the time, it will take to recoup in the form of cash from operations only the original amount invested. Given the useful life of an assets and uniform cash flows, the less payout period , the greater the profitability or given payback period, the greater useful life of the asset, the greater the profitability. Note that, payback does not measure profitability, it does measure how quickly investment amount may be recouped.An investments main objective is profitability, not recapturing the original outlay. If a company wants to recover its investment outlay rapidly it need not bother spending in the first place. Then payback time is ZERO; NO WAITING TIME is needed.

The Major weakness of the payback model is its neglect the profitability. Continuous Technological up gradation is required to be in the competition.The profit earned is ploughed back, with additional investment in order to enhance the growth of the organizationSuch options involves various alternatives and working for return on investment.Firstly the technical feasibility is examined reliably predication is a valuable activity to design reliable systems.Failure have to be identified and proactedSystem need to be designed that is robust

Design Review:Determine if the product will actually work as desired and meet the customers requirementsDetermine if the new design is producible and inspectableDetermine if the new design is maintainable and repairableFinancial Feasibility: Net income Margin on Sales = Sales

RETURN ON INVESTMENT (ROI):The return on investment is measured by adding back interest to net income after taxes and dividing by total assets. It is a measure of the after tax profitability with which the firms total resources have been employed. Return on investment = Net income + interest Total Sales =192,000 + 40,000 2,000,000ROI=I= S-P PWhere P= The amount borrowed (or the amount invested )S= The amount paid back (or the amount collected) at the end of the year

RATE OF RETURN:

For example, assume the following situation.

Invest Rs.10,000 in a laborsaving machine. Labor savings = Rs 2500 per year. Useful life = 10 years. Company desires 10 percent return on investment. Machine will be depreciated for tax purposes over 10 years on a straight-line basis. Company has 50 percent tax rate. Machine will have no salvage value.

Annual Cash-Flow Computations: Compute the annual cash flow as follows (in this example, the savings are the same each year): Cash in from labor savings .Rs. 2500Cash out for taxes Rs. 750*Annual Net cash inflow..Rs.1750

* Income subject to tax = Rs2500- Rs.1000 depreciations = Rs.1500 at 50% = Rs750

RATE-OF-RETURN CALCULATIONS:The investment outlay is Rs.10,000. The annual cash savings is Rs.1750. A 10 percent return is desired. Look at Table B-4. Under the 10 percent column, read down to 10 years. The factor is 6.44. Multiply 6.44 by the annual savings of Rs.1750. The result is Rs.11,270. This means that the present value of the future cash inflows of Rs.1750 per year is worth Rs.11,270 today if a 10 percent return on investment is desired. Since the investment is only Rs.10,000 and the present value of future inflows is Rs.11,270, the investment would be made. If the actual return is desired, divide the investment by the annual savings, Rs.10,000/Rs1750 = 5.71, Again, look at Table B.4 and read across from year 10. The factor 5.71 is between 12 % and 14 % or about 13% return on investment.

COMPLEXITIES:

Variable Annual Savings: The cash savings generated from a capital project are seldom the same for each year of the life of the project. The savings may be different because of the use of accelerated depreciation, varying production levels, changes in tax rates, and other related items. The discounted cash-flow concept can be used with varying annual savings in two ways, as illustrated in the following example company has the opportunity to invest Rs.1000 in e of four alternative projects. Each project has an estimated life of 6 years and a total return of Rs.1800. The flow of the savings is as shown in this array.

RsRsRsRsRsRsRsRs

0 2 4 6 8 10 12 14 16 18 2030%

20%

10%

030%

20%

10%

0Rate of returnReciprocal pf Payback PeriodRECIPROCAL OF PAYBACK PERIOD COMPARED WITH RATE OF RETURN

INTERNAL RATE OF RETURN:

One approach is to calculate the rate of return on each project. The internal rate of return is the rate which is being earned on the unamortized balance of the investment, such as the rate on a home mortgage. Using Table B-4, the calculation is made using a trial-and-error approach. What rate will bring the future cash flow back to Rs.1000 today? The rates are, Project A: 25 + percentProject : 30 + percentProject C: 16 percentProject D: 25 percent

NET PRESENT VALUE:

The net present value of an investment is the difference between future cash inflows discounted at a specified rate and the amount of the original investment. If a desired rate of return is known, the present value of the future flow can be determined. Assume the company wants a 20 percent return on investment. The present-value factors for 20 percent for each year are given in Table B-2. Applying these factors to the flows for the four projects, a present value for each project is as follows: Project investment Present Value Net Present @ 20%ARs.1000 Rs. 1092 Rs. 92B 1000 1188 188C 1000 996 - 4 D 1000 1142 142Refer the table B-2

Using the net-present-value (NPV) approach, we see that project B has the highest net present value. Projects A, B, and D all have positive net present values, which mean that these projects all return more than 20 percent. Project B has the highest NPV, which makes it the most attractive alternative. Project C, with a negative NPV, returns slightly less than 20 percent. How would you rank projects if the original outlay is different? The one with the highest investment is likely to have the highest absolute Rupee NPV but may have a smaller return. Projects of this nature can be ranked by the use of a profitability index.

PROFITABILITY INDEX:

Project A has the lowest Rupee NPV. It also has the lowest investment outlay. The index shows, how- ever, that it has the highest return; i.e., the Rupee received discounted at 20 percent are higher relative to the investment than the Rupee received in either project B or project C. Rs.

Rs.

Rs.Rs.

Rs.

Rs.

TABLE : B-1 PRESENT VALUE OF RS.1 RECEIVED AT END OF THE YEAR INDICATED Present Value =1/(1+i)n

TABLE : B-2 PRESENT VALUE OF RS.1 RECEIVED AT MIDDLE OF THE YEAR INDICATED Present Value =1/(1+i)n-1/2

TABLE : B-3 PRESENT VALUE OF RS.1 RECEIVED AT END OF EACH YEAR FOR N YEARS

TABLE : B-4 PRESENT VALUE OF RS.1 RECEIVED AT MIDDLE OF EACH YEAR FOR N YEARS

Emulating the bench mark of Koba Yashi Mitsubishi Success Model

The KeysSmall group activity a. One suggestion per month per person.b. Short standing meetings to stress efficiency.

Cleaning and OrganizingKEY: 1Measured Management Objectives ( Safety, Horizontal Hierarchy, Clear Instruction from TOP)KEY: 2KEY: 3

Reducing Inventory. (Work - in - Progress)

a. All activity that dont add value to product are wasteful.KEY: 4

QUICK CHANGEOVER TECHNOLOGYAny one should be able to perform a quick changeover ever in new environments.Accept the change to shorten all changeovers to less than one cycle time. KEY: 5

Value Analysis of Manufacturing Methods (Improvement in Methods)Ask WHY five times for every motion of activity.Modular a management of predetermined Time standards(i) Material Handling Method KEY: 6

Zero Monitor Production Monitoring is a form of Waste Watching the running machine?KEY: 7

Integrating Functions Reduce the inventory at the joining points. Reduce the Joints and make seamless.Planned Maintenance activity.KEY: 8

Maintaining Machines and Equipment Prepare Preventive maintenance groupFull employee involvement in study groups KEY: 9

KEY: 10WORK FLOOR TIME POLICESEncourage the workers to do the next days preparation before they go home at night.

KEY: 11QUALITY ASSURANCE SYSTEMNext process is customer. No bad product to the next process.Workers perform inspection on their own product.

We must build quality in the processes themselves!Ill inspect what I make

POKA YOKA

KEY: 12DEVELOPING YOUR SUPPLIERSTreat external as internal division.Technical Support.

KEY: 13ELIMINATING WASTE WITH A TREASURE MOUNTAIN MAPOnly do those actions customer will pay.

KEY: 14EMPOWER WORKER TO MAKE IMPROVEMENTS Expand processing capability in the improvement corner.Building through Low-cost Automation Devices.

KEY: 15SKILL VERSATALITY AND CROSS TRAINING

KEY: 16PRODUCTION SCHEDULING

KEY: 17EFFICIENCY CONTROLDecide on standard times for each process.Compare the standard times to actual times.

KEY: 18USING MICROPROCESSORSMechatronics.Learnt about sensors and how they are used.

KEY: 19CONSERVING ENERGY AND MATERIALS Quantify the importance of conservation by showing energy and material costs as a percentage of total costs.

KEY: 20LEADING TECHNOLOGY - SITE TECHNOLOGYThere is no interest in the progress of the other players in the industry.People in the factory are content with the current site technology.The factory is about on par with the rest of the industry.

Taiichi Ohno's original enumeration of the seven wastes plus underutilized people. These are: Eight wastesOverproduction: Making more, "earlier, or faster than the next operation needs it.Waiting for the next process, worker, material, information, or equipment.Transportation: unnecessary transport of materials.Overprocessings of anything that does not add value.Inventories more than the absolute minimum required to meet customer demand.Motion: unnecessary movement (like waiting) of people.Production of defective parts or information.Not fully utilizing employees brain power, skills, experience, talents and creativity.

Value stream mapping

Value stream mapping from rfq to deliveryDetermine the process family.Draw the current state mapCreate a future state map Develop the action plan to get to the improved future state.

Four steps to Value stream mappingStep 1: product development Identify customer requirements, Define method of delivery, and Define typical quantity requirements.This value stream can serve more than one customer, but be sure to use similar primary processes. Use a pencil rather than a computer.

Step 2: process designCycle time (Operator and Machine cycle time)Changeover times,Average inventory queue,Average production batch size,Number of operations at each process,Package or container size,Available time (take out break and lunch times),Scrap rate,Machine up-time (availability), andNumber of product variations.Perform an upstream walk-through for each process step, observing and documenting as much of the following as possible.

Step 3: preparationRecord as much information as is pertinent in the process description box.Step 4: planningDevelop a future state map,Dream about perfection (Imagineering),Think outside the box,Develop alternatives to the current state map that are muda free, andFocus on velocity.

1% error Adds Directly to The Bottom Line

This business was very focused on its core processing activity, but less focused on the support functions. One of these support functions was the off-line handling and managing of its molds, which were quite fragile and breakable.

This was considered to be a less important activity than production and, as long as the molds were ready for production as required, Plant Management largely ignored this activity.

Also, the budget for this section was relatively small; in anyone year they would spend about $200,000 on the replacement of molds that were broken off line. As this was only about 1% of costs, the activity was never previously targeted in typical cost reduction programs. 1 % error Adds Directly to The Bottom Line

As part of an operational review, this organization investigated its 1 %errors and this previously ignored cost.

A comparison with similar plants showed that it was possible to operate with almost zero breakages and that the current expense could be eliminated with better handling and management. The procedures from the other plants were adopted to address the issue.

This resulted in breakages being almost eliminated. Focusing on this previously ignored 1 % error and adopting simple procedural changes added $200,000 to the bottom line. Contd

Process capability

PROCESS CAPABILITY RATIOThe concept of Process Capability Ratio (PCR), was defined asPCR = USL LSL / 6 (two sided)For one sided upper specifications only, the PCR is defined asPCRU = USL - / 3 (upper)And for one sided lower specifications only, the PCR id defined asPCRL = - LSL / 3 (Lower)The PCR aids in the evaluation of processes with respect to their specification limits.

Recommended Minimum values of the Process Capability Ratio

Process follow out for a normally distributed characteristics (One-sided specifications). For Two sided Double the value of Y- axis

INDICES OF PROCESS CAPABILITY SHORT TERM CAPABILITY

LONG TERM CAPABILITY

Example: PCRs AS FRACTION NONCONFORMINGPCRs may be translated into an expected fraction nonconforming, assuming a normal distribution for the characteristic of interest. For instance , a PCR = 1.25 for a two sided specification indicates that PCR = USL LSL / 6 = 1.25So that USL LSL = 7.5 andZ = 3.75 / = 3.75More extensive tabulation from Normal Distribution Table, show that,1 (3.75) = 0.000088Since we are considering a two sided specification, the expected fraction non conforming is 2 (0.000088) = 0.00018. Currently, quality controllers are concerned with parts per million (ppm) defective. For PCR = 1.25, we expect 180 ppm non conforming.

THE SIGMA CONVERSION GUIDELINESShort - TermTo Long - TermFROMShort - TermLong - Term

No Action+ 1.5

- 1.5 No Action

Product quality

WHEN TO USE DPO AND WHEN DPU? e-dpo denotes the probability that an opportunity will not have a defect. e-dpu denotes the probability that a unit will be defect free.In most practical situations, we have more than one CTQ (critical-to-quality) characteristics associated with a product and hence more than one opportunity of defect. Hence it is more rational to use e-dpo as a measure of yield. However, if the possible number of opportunities is infinitely large, then e-dpu should be used as a measure of yield.

PERFORMANCE MEASURES AT A GLANCEd: Number of defectsdpu: Defects per unitdpo: Defects per opportunities Dpmo: Defects per million opportunitiesZst: Short term sigma ratingZlt: Long term sigma rating = Zst + 1.5Y tp: Through put yield Y rt: Rolled through put yield Cp: Process capability (Potential) indexCpk: Process capability (performance) indexPPM: Parts per million defects

Yes

NO

YIELD: THE CLASSICAL PERSPECTIVEY final == S / Uwhere Y final == Final yieldU == Number of units testedS == Number of units that passIs the classical calculation of yield con-elated to other- major business metrics?

-Yield has always been considered a very important metric for guiding the business; however, no correlation is observed between yield and profit margin. How can this be explained?

IDEA OF ROLLED THROUGHPUT YIELD

In an organization the rate for winding, machine, laminating and processing Departments are 80%,98%,68%, & 99%. What is the YRT, YNA, PPM.In the process of producing 7500 units 50 defects were observed. The total type id defects that could have occurred were 10. Find DPU, TOP, DPO & YFT. The yield of 96%. What is the PPM Level?What is the PPM level for DPU of 2.5?EXERCISES

The 10 steps And Minimizing inventory investment

Ensure consistent sign in and sign out of goods.Identify rush periods and level load activity accordingly. Step #1: Get Organized Arrange warehouse/ store in a logical and orderly manner.Appropriate shelving/ rackingHigh- frequency items closest to entry / exit Group like products Clearly identified names and code numbers Ensure a high standard of housekeeping at all times. Use visual management techniques. Location indicators Reorder indicatorsLine marking

Step #2: Apply the Fundamentals with Rigor Use the fundamentals of supply chain management and stock calculation to set and review holding requirements. Step #3: Focus on Function, not Cost Recognize that the function of inventory is to maintain a supply promise to customers and manage the inventory to fulf1l this need. Inventory that does not move does not fulfi1 this need Base stocking policy on movement and service and not cost of product .

Step #4: Identify and Focus on Leverage Points The key steps of cost in inventory are the ownership of the item and the length of time of ownership. To minimize cost, activities should focus on eliminating ownership (as opposed to access) and/or minimizing the time between gaining ownership and shipping/using the item. Step #5: Limit and Prioritize Resources Limiting the funds available for investment in inventory will drive the need to prioritize inventory and extract greater value from the investment.

Step #6: Work on the 1% errors A key 1% error in inventory management is the tracking of receipts and delivery. By ensuring that the systems are followed and records kept, the data will be available to make sound stocking decisions. Step #7: Eliminate Duplication This includes duplication of items, but also duplication of locations and duplication of safety stock. Step #8: Question Everything The assumptions made when inventory levels were first set may no longer be valid. Have supply dynamics changed? Have customer needs/usage changed? Has our appetite for risk changed? Review inventory assumptions on a regular basis.

Step #9: Take Some Chances Seek to use innovations that do not have an obvious direct payback. For example, apply visual management techniques- Arrange for consignment stocks if this has not been your policy. Remember to understand and manage the risks. Step #10: Ignore Tradition Review what is preventing further improvement and change it! Review e-business changes that might provide further opportunity.

Quality tools with jidoka and poka yoke

Andon:A Japanese word meaning light or lantern. It is triggered by an abnormal condition or machine breakdown. It is a form of communication indicating that human intervention is required. Many times these are presented like a stoplight (red = stop, yellow = caution, green = go).Poke yoke (error Proofing):low cost, highly reliable devices or innovations that can either detect abnormal situations before they occur in a production process, or, if they occur, will stop the machines or equipment and prevent the production of defective products, those that prevent errors by an operator, and those that detect errors by an operator and give a warning, and those that defects in products and prevent further processing of them.

Heijunka:A method of leveling production for mix and volume. jidoka:This defect detection system automatically or manually stops production and/or equipment whenever an abnormal or defective condition arises. Any necessary improvements can then be made by directing attention to the stopped equipment and the worker who stopped the operation. The jidoka system posits faith in the worker as a thinker and allows all workers the right to stop the line on which they are working. It is now called autonomation in English. Continuous flow production:A production system where products flow continuously rather than being separated into lots. No work in process is built up.

Manufacturing resource planning (MRP II):MRP as just defined, plus capacity planning and a finance interface to translate operations planning into financial terms, and a simulation tool to assess alternate production plans. ERP is enterprise wide resource planning waste.Material requirements planning (MRP):A computerized system typically used to determine the quantity and timing requirements for production and delivery of items (both customers and suppliers). Using MRP to schedule production at various processes will result in push production, since any predetermined schedule is only an estimate of what the next process will actually need. Overall equipment effectiveness (oee):A machines overall equipment effectiveness is the product of its availability. Performance efficiency, and first pass yield.

First- pass yield (fpy):The time required to complete one cycle of an operation. The time elapsing between a particular point in one cycle and the same point in the next cycle. If cycle time for every operation in a complete process can be reduced to equal takt time, products can be made in single-piece flow. Cycle timeThe quality rate, is the percentage of units that complete a process and meet quality guidelines with out being scrapped, rerun, retested, reworked, returned, or diverted into an off-line repair area. FPY is calculated by dividing the units entering the process minus the defective units by the total number of units entering the process.

Mistake - Proofing emphasizes the detection and correction of mistakes before they become defects delivered to customers. It puts special attention on the one constant threat to any process: human error. Mistake Proofing is simply to pay careful attention to every activity in the process and to place checks and problem prevention at each step. Its a matter of constant, instantaneous feedback, rather like the balance and direction data transmitted from a cyclists ears to brain, keeping his or her bike upright and on the path. MISTAKE - PROOFING (OR POKA YOKE)

USES OF MISTAKE PROOFINGMistake Proofing can be used to:Fine tune improvements and process designs from DMAIC projects. Gather data from processes approaching Six Sigma performance.Eliminate the kinds of process issues and defects needed to take aprocess from 4.5 to 6 Sigma.BASIC STEPS IN MISTAKE PROOFINGMistake Proofing is best applied after completion of a through FMEAprediction and prevention review. Then we canIdentify possible errors that might occur despite preventive actions.Determine a way to detect that an error or malfunction is taking place or about to occur.Identify and select the type of action to be taken when an error is detected.

DIFFERENT KIND OF ERRORSForgetfulness Rail gate closingErrors due to misunderstanding Steps on break car with auto transmissionErrors in identification Bill amountErrors made by Amateurs Wilfull errors No cars at sight crossing in red.In advertent errors Crossing without noticingErrors due to slowness Delays, step on breakErrors due to lack of standards To discretion Surprise errors Malfunction without warningIntentional errors CrimesMistake happen for many reasons, but almost all can be prevented if we take theTime to identify when and why they happen.

The basic types of Mistake Proofing Device are:Control:An action that self corrects the process, like an automatic spell checker / corrector.Shutdown:A procedure or device that blocks or shuts down the process when an error occurs. Example. The automatic shutoff feature of a home iron.Warning:This alerts the person involved in the work that something is going wrong. Example. A seat belt buzzer. So is a control chart that shows that a process may be out of control.

Some common types of Mistake Proofing measures include:Color-and shape-coding of materials and documentsDistinctive shapes of such key items as legal documentsSymbols and icons to identify easily confused itemsComputerized checklists, clear forms, best-in-class, up-to-date procedures and simple workflows will help to prevent errors from becoming defects in the hands of customers.

MISTAKE PROOFING DOS AND DONTSDOs: Try to imagine all conceivable errors that can be made. Use of all your creative powers to brainstorming clever ways to detect and correct errors as part of the work process itself.DONTS: Fall into the to error is human mindset. Rely on people to catch their own errors all the time.

IMPLEMENTING THE LEAN KAIZEN

Vision StatementBroad ObjectivesFoster a commitment to continuous improvement with in- creased visibility of how we use time. Reduce or eliminate activities that do not add value. Foster a commitment to a high level of quality-doing the right things right the first time.Apply state-of-the-art tools for waste reduction and quality improvement. Change the management culture from "traditional" to "team oriented," enhancing employee involvement at all levels. Employ statistical management techniques as a new language for all employees, identifying problems when they occur, and resolving them at the lowest possible level in the organization. Train employees to be team leaders, facilitators, and team members in accordance with the new culture. Foster innovation and commitment to being world class all levels. Promote the use of consensus decision- making whenever possible as the foundation for the new culture.

Market Imperatives Compress lead-time from six weeks to two weeks. Improve on-time delivery performance from 75 to 95 percent. Current Conditions Backlog: 2-3 weeks (shippable orders) Setup times: punch, 45 minutes brake, 40 minutes hardware, 30 minutes spot weld, 25 minutes Material management: batch-push Subcontract lead times: 1-2 weeks Lot sizes: 90 days Inventory turns: 8 turns/year Lead time: 5-8 weeks (including outside processes) Facilities layout: process functional, multiple buildings Quality: Cost = 2% of sales Productivity: Rs. 8500 per employee/year (Rs. 12000 direct labour)

To be Vision Backlog: 3 days maximum (shippable orders) Setup times: punch, 9 minutes brake, 12 minutes hardware, 5 minutes spot weld, 9 minutes Material management: demand pull Subcontract lead times: 2-3 days Lot sizes: 2 weeks Inventory turns: 20 turns/year Lead time: 9-11 days (including outside processes) Facilities layout: cellular, single building Quality: cost < 1 % of sales Productivity: Rs. 10000 per employee/year (Rs. 130000 direct labor)

Model-line personnel will exhibit the following characteristics: Accept only zero quality rejections; Are not passive witnesses; Keep the flow; Continually suggest improvement;Are interested in production goals; Know how to do their jobs; Know how to do others' jobs; Can stop the line; Assist their teammates. Predict and avoid problems;Measure their own output; Measure their own quality; Understand the product; Understand the process; Call in resources as needed; Communicate, cooperate, collaborate; and Are team players and team leaders.

Role of Steering Team:Visits other successful companies; Provides organizational development through training; Generates, revises, maintains the vision; Develops and communicates the vision and plan, formally and informally; Acts as strong sponsor for the entire improvement process; Remains visible in the implementation process; Sets the example (good at the fundamentals); Demonstrates the new values of absolute quality and waste elimination; Models pro-active behavior; Begins and ends meetings on time; Uses consensus decision-making; Supports "do it right the first time"; Directs, informs, and guides the continuous improvement coordinator, outside consultants, and model-line team in a collaborative manner;

CondResolves disagreement by consensus; Meets periodically (not less than monthly) to review the progress of the program; Encourages and sponsors program activities and strongly sponsors the successful adaptation of the new philosophy at The Jobbe Shoppe; Chooses problem/opportunity areas for teams to work on; Creates guidelines and provides support to team (for example, defines boundaries, expectations); Meets with team leaders and program coordinator to review problem statement, milestones, and action plans;Manages change by spreading and demonstrating (by action) the new values; and Ensures the proper resources are assigned to accomplish the task within budget and schedule

Role of the Continuous Improvement CoordinatorCoordinates with steering team members; Reports status and problem areas to facilitate corrective action when needed; Establishes ongoing education program in collaboration with steering team; Ensures that teams have a fully developed project plan; Supports the teams in using quality improvement processes, applying Just-in Time (JIT) techniques, and developing as a team;Aids the team leaders in preparing for meetings, provides feedback on team meetings; Provides a link between team leaders and the steering team; Keeps up to date on world-class technologies; Instructs on general problem-solving techniques; Prepares and delivers team training on selected topics, serves as resource person to supervisors, team leaders, and members;

CondMonitors progress of the teams, consults on use of techniques; Shares experiences and results of team activities with others; and Observes group dynamics and works with team leader to design and implement activities that contribute to team health; Leads the team through the problem -solving process reflected in the project plan and schedule; Teaches/refreshes quality improvement and waste reduction JIT techniques; Communicates team progress to the team; Communicates/coordinates with supervisor and program coordinator, especially before and after team meetings; Shares experience and knowledge; Fulfills administrative duties; and Encourages team member participation.

Product/Process Characteristic: A word or phrase that describes some aspect of the product or service.Measure: A definition of how the product/processs characteristic is to be quantified. There may be several ways of quantifying a given characteristic.Target Value: Where we will aim our product/process. If there were no variation in the product/process, this is the value we would always achieve.Specification Limits: How much variation is the customer willing to tolerate in the delivery of our product or process?

Operational DefinitionsVOC - customers languageCTQ - Clarification of the customers language (key issue)Customer Requirements - Key issues translated:ReasonableUnderstandableMeasurableBelievableAchievable

Carry over CTQ and Specific CTQ from Step 3.Specification Limits - customer requirementsOutput Measures -measures used to determine how well customer needs and requirements are met Process Measures - measures that are internal to your process. They include quality and delivery measures important to your internal customers as well as waste and cycle time measures. They are correlated to the pertinent output measuresInput Measure - the key quality and delivery requirements placed on your suppliers

Objectives: Consolidate work performed in steps 1-5 onto one concise page which captures the essence of your process. Establish process specs/targets, control limits, and response plan for out-of-control/under-performing metrics. Why Is This Important?: A process management system allows a process owner to quickly respond to performance trends. It is an enabler for process optimization.Tools: BPMS Template

Understand process, perform SIPOC, develop measures around SIPOCEstablish measurement criteria, determine customer requirements, cost/benefit of data collectionCollect dataEstablish relationships to key measuresUse judgment and linkages to finalize

Does Your Project Y Pass The Alignment Test?All quality projects should be aligned to a Big Y and CTQ for the business. This ensures that project activity is organized and targeted to impact specific CTQs that the customer will feel.Not all Ys are useful measures of business performance or customer impact. Your Project Y should be correlated to a higher level Business Big Y or CTQ.You should be able to describe the link between your Project Y and the related Business Big Y or CTQ in specific terms.

You should have an assigned project. This session will address the definition of the project. What motivates it? Who will it impact? What is there to gain by doing it?

A goal of this training module is to be certain that you can define your project in terms that will relate to the Six Sigma process.

How do I define a potential Quality projectIs there a problem significant enough to be worth fixing yesIs there a process around what you want to fix YesHave you or can you measure the process? YesIs there a recurring issue? YesDo you already know how to fix the problem NoYou have a potential six sigma projectWhen selecting a project, consider these six issues:ProcessSelect a low-performing process that has high impact on CTQs.FeasibilityDont try to solve world hunger (too broad, too complex). As a guideline, a project should be expected to conclude successfully within 4 to 6 months.Measurable ImpactIn dollarsIn ROIIn defect/cycle time reductionIn customer satisfactionPotential for ImprovementA significant gap between customer requirements and process performanceHow great is the support for the initiative?How much resistance is there to change?What is the sense of urgency?Resource support within the organizationLeadership support is critical for success.Team coaches have the skills and capabilities to support multiple teams and are dedicated.Project interactionsMultiple teams affecting processChanges planned for the process (e.g., technology)

When selecting a project, consider these six issues:ProcessSelect a low-performing process that has high impact on CTQs.FeasibilityDont try to solve world hunger (too broad, too complex). As a guideline, a project should be expected to conclude successfully within 4 to 6 months.Measurable ImpactIn dollarsIn ROIIn defect/cycle time reductionIn customer satisfactionPotential for ImprovementA significant gap between customer requirements and process performanceHow great is the support for the initiative?How much resistance is there to change?What is the sense of urgency?Resource support within the organizationLeadership support is critical for success.Team coaches have the skills and capabilities to support multiple teams and are dedicated.Project interactionsMultiple teams affecting processChanges planned for the process (e.g., technology)

Business CaseFinancial loss from the current process sigma or the gain from the future process sigma

Problem StatementCTQ measureCurrent defect ratePeriod of problemWhere the problem is occurringCustomer(s) impacted

GoalNew process capabilityThe period the new performance level is expected to be valid Rationale

These steps work best when used in a Project Bounding Workout Session with the project team. Plan a minimum of 1-2 hours for the session, depending on the complexity of the project.