The Center for Industrial Effectiveness School of Engineering and Applied Sciences Lean/Six Sigma...

The Center for Industrial Effectiveness School of Engineering and Applied Sciences

Lean/Six Sigma OverviewAl Hammonds

for EAS 590, Spring 08

2The Center for Industrial Effectiveness

Why are we here?

Why do Lean?


Lean Thinking

Lean Production = Toyota Production System (TPS)

Identified in a five year ($5 million) MIT study of the worldwide automotive industry

Found that the production system used by Toyota was fundamentally different than traditional mass production


Lean Thinking Isn’t New

Lean thinking is more than lean production… it is a business philosophy.

Has roots back to Henry Ford’s production system.


Key Definitions

Making product flow through production without interruption.

FLOW

Giving the customer what they want, when they want it, and at the right price.

VALUE


Key Definitions

A culture in which everyone is striving to continually improve.

STRIVING FOR EXCELLENCE

A customer demand based method of controlling flow of products or services by replenishing in short intervals.

PULL


Inputs Outputs

MEASURABLES• Each independent entity maximizes their efficiency• Batch Process – departments compete

Inventory

Inventory

Process 3Process 1

Rework(Hidden?)

Customer

Process 2

Typical Mass Flow ProcessMaximize Efficiency and Economies of Scale


Inputs

Outputs

MEASURABLES• Performance is based on system effectiveness as a whole• Single piece or continuous flow

Process 3Process 1

Customer

Process 2

Lean Production Flow Process Goal: Elimination of Waste


How do you provide value to the

customer and make a profit?


Defining Value

Value Added Activity

An activity that transforms or shapes material or information (for the first time) to meet customer requirements.

Non-Value Added Activity

Those activities that take time or resources, but do not add to the customer requirements.


Exercise

Identify examples of Value Added Activities and

Non-value Added Activities

associated with your work.


8 Types of Waste

Waste of Waiting

Waste ofCorrection

Waste of Motion

Waste of Over-Production

Waste of Inventory

Waste of Processing

Waste of MaterialMovement

FLOW

Waste of Intellect


Traditional Approach

Ou

tpu

t

Waste

Output

This is not Lean

Cost Plus Mentality

Cost + Profit = Price

Output Output

Output

Was

te Was

te


Working Toward Lean

Working Smarter…

Not HarderToday’s Reality

Price – Cost = Profit

Waste

Waste

Waste

Waste

Ou

tpu

t

Ou

tpu

t

Output

Output


Lean Thinking Tools

Identify and plot all steps required to do a process. • Challenge every step by asking the “5 WHY’s”

NOTE!! If there doesn’t seem to be a valid reason for any steps identified in the value stream, consider eliminating the steps from the process.

VALUE STREAM MAPPING


Lean Thinking Tools

5S’s - Practices that create a workplace suited for visual control and lean manufacturing:

1. Sort (Seiri) = Keep only what is needed2. Straighten (Seiton) = Put everything in order3. Sweep (Seiso) = Clean everything4. Standardize (Seiketsu) = Make standards

obvious – everybody does it the same way5. Sustain (Shitsuke) = Institutionalize and

continual improvement.


Lean Thinking Tools

STANDARDIZED WORKThis tool ensures that the best method of conducting each activity is identified and steps are taken to ensure everyone does it this way.

The right people The right steps The right sequence Every time


Lean Thinking Tools

MISTAKE PROOFING (Poka-Yoke)Tools and techniques used to prevent people from doing things incorrectly. It can be a simple mechanical device or technique.

Get it right the first time Set people up for success, not failure


Lean Thinking Tools

TOTAL PRODUCTIVE MAINTENANCE (TPM)

A series of methods to ensure that every machine in the production process is always able to perform its required tasks without interruption.

Targets key equipment.


• On Time Delivery – gives the customers what they want when they want it.

• Flexibility – ability to run different types of products.

• Increased Capacity – provides more actual production time.

• Cycle Time - reducing setup time allows lot size to be reduced, which drives reduced cycle times.

• Costs - reducing Work In Process drives lower operational costs (carrying costs, scrap, rework, space utilization, etc.)

SET UP REDUCTION

Lean Thinking Tools


LEVEL SCHEDULING

The goal is to produce at the same pace every day minimizing variation in the workload.

Lean Thinking Tools


CELLULAR FLOW

Machines or processes are side by side with very little inventory between them. The goal is efficient, continuous flow.

Lean Thinking Tools


OPERATIONS BALANCING

Achieving the best arrangement of people, material, and equipment.

Lean Thinking Tools


Lean Thinking Tools

TAKT TIME Takt time sets the pace of production to match the rate of customer demand (sales) and is the heartbeat of the lean system.

Takt Time =Effective Working Time

Customer Requirement


Who Should Implement Lean Thinking Principles

Product Development Areas

Order Taking and Scheduling Processes

Manufacturing Operations

Logistics

Administrative Systems

Human Resources

************ EVERYONE! ************


Lean Implementation Process

COMMUNICATE &TRAIN

WASTE ELIMINATION5-S/VISUAL CONTROLS

PULL/CELL/ STANDARDIZED WORK

SET UP REDUCTION

LEAN LEVEL SCHEDULING

12-24 Month

s

Leadership & Develop Strategy

VALUE STREAM MAPPING


Why Do Lean ?

Companies implementing Lean Thinking report the following improvements:

• Productivity increases 15%-70%

• Rejects (PPM) decrease 50%-250%

• Inventory turns increase 55% - 70%

• Space required decreases 35% - 70%

• Employee involvement increases 70% - 95%

• Annual savings per employee $1,200 - $3,500


What Will Lean Mean?

You will attack waste in all its forms.

You will embrace and celebrate continuous improvement.

The only constant is change.


Lean is a never ending journey. It is a systematic approach to the identification and elimination of waste and non-value added activities through continual improvement in all products and services.

The Center for Industrial Effectiveness School of Engineering and Applied Sciences

Six Sigma


The History of Six Sigma

1987: Motorola initiates Six Sigma

1988: Some early successes and failures

1993: AlliedSignal embraces Six Sigma

1995: GE adopts Six Sigma (Jack Welch)

1996: Six Sigma starts to grow

2000: Six Sigma continues its evolution


What is COPQ ?Quantify the size ($) of the problem in language

that will have impact on upper management

Why is COPQ Important ?Identify major opportunities for cost reduction

Identify opportunities for reducing customer dissatisfaction & associated threats to salability

Stimulate improvements through publication

Prioritize the opportunities

Cost of Poor Quality (COPQ)


Profit

Total Cost to manufactureand deliver

products

Profit

TheoreticalCosts

Cost ofPoor Quality

COPQ

Price Erosion

TheoreticalCosts

Cost ofPoor Quality

COPQ

Profit

TheoreticalCosts

COPQ

Which Feels Better??

Why Focus on COPQ?


Traditional Quality Costs

Lost Opportunity

Hidden Factory

Additional Costs of Poor Quality

(intangible)

(tangible)

(Difficult or impossible to measure)

More SetupsExpediting CostsLate DeliveryLost SalesLost Customer LoyaltyLong Cycle TimesEngineering Change Orders

Rejects AdministrationInspection DispositionWarranty ConcessionsScrap Rework

Average COPQ approximately 15% of Sales

The Cost of Poor Quality “Iceberg”


What is Six Sigma?

A philosophy?

A problem solving methodology?

A set of tools?

A metric?


PhilosophyPhilosophyPhilosophyPhilosophy

MetricMetricMetricMetric

MethodologyMethodologyMethodologyMethodology

ToolsToolsToolsTools

Six Sigma Has Four Dimensions


Benefits of Six Sigma

Cost-of-Quality decreased - from 30.1% before 1988 - to 7.4% after 1993

Aim for:- 8% Revenue Growth per year- 6% Productivity Improvement per year

forever

Gross Savings of $1,225M in 1998


Some Companies Known to be Formally Applying the Six Sigma Methodology

MotorolaTexas InstrumentsAlliedSignalGeneral ElectricSonyDuPontFord Motor Company PolaroidDow ChemicalLockheed MartinToshibaBombardierNoranda/FalconbridgeCitiGroupBMWXeroxRaytheonCoca-ColaICI Explosives

Dell ComputersSeton Medical CentersAmerican ExpressMaytagPioneer Hi-Bred InternationalSeagate TechnologyMillard Refrigerated Services Canadian MarconiAvery DennisonBBA Group PLCCraneKorean Heavy IndustriesNokiaPechineySiebeThermo KingGenCorpIBMMaple Leaf Foods


Is 99% Good Enough?

99.99966% Good (6 Sigma)

20k lost articles of mail per hour

Unsafe drinking water for almost 15 minutes each day

5,000 incorrect surgical operations per week

Two short or long landings at most major airports each day

200,000 wrong drug prescriptions each year

No electricity for almost seven hours each month

Seven articles lost per hour

One unsafe minute every sevenmonths

1.7 incorrect surgical operations per week

One short or long landing every five years

68 wrong prescriptions per year

One hour without electricity every 34 years

99% Good (3.8 Sigma)


The Goals of Six Sigma

Defect Reduction

Yield Improvement

Customer Satisfactio

n

$


Technical SkillsChange Leadership

Six Sigma is About Leadership

20%

80%


Per

form

ance

Time

Incremental improvementQuantum

improvement

Six Sigma Projects

Continual Improvement...

Ongoing efforts


Performance Umbrella

A Performance A Performance OrganizationOrganization

Change management

Continuous improvement

tools

KaizenISO and QS-9000 practices

Safety practices

Statistical process control

Preventive maintenance

Six SigmaSix Sigma

Lean manufacturing

TQM


- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Sweet FruitDesign for Manufacturability

Process Entitlement

Bulk of FruitProcess Characterizationand Optimization

Low Hanging FruitSimple Tools

Ground FruitLogic and Intuition

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

We don't know what we don't know

We can't act on what we don't know

We won't know until we search

We won't search for what we don't question

We don't question what we don't measure

Hence, We just don't know

DFSS

Black BeltsLeanGreen Belts

White Belts

“Nike”

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Six Sigma Levels


The Infrastructure


Roles

Executive

Champion

Process Owner

Master Black Belt

Black Belt

Green Belt


Exercise:

You are the GM of a very successful cinema with many employees. You will be out of the country for three months and have asked your staff to fax you a weekly report each Monday morning. What information (measures) would you like to see in that fax?

Hollywood Inc. Weekly Report


Exercise:

You are heading to the cinema with some friends . . .

The movie you would like to see is playing in several cinemas in your area. All are about the same travel time from your home, charge the same amount, have the same stadium seating, and are showing movies at the same time. What criteria do you use to choose?


Critical to Who’s Satisfaction?

Supplier Perspective(Theatre)

Management) Good Popcorn

No Sticky Floors

Clean Restrooms

Short Lines

Good, funny, entertaining movies

Customer Perspective(Movie Goers)

. . . So why do such differencesin perspective exist ?

Ticket Sales

Concession Sales

Labor/Work Force Costs

Profit Reports

Other...


Being Customer Driven

Voice of the Customer

Critical to Quality Characteristics

Process Capability


Delighters(Increases consumer loyalty)

Performance(Competitive differentiation)

Must Have’s(Minimum requirements) (based on Kano principles)

Satisfying Customers


Maximizing Customer Alignment

Delivery

Price

Quality

NeedNeedDoDo

Cycle Time

Cost

Defects


Culture Change - Achieving Critical MassN

um

ber

of

Peo

ple

Implementation Time

Team Members

Green Belts

Black Belts

Master Black Belts

Convert 30% and you’ve got a new organization!!


Team Work

The Strength of the Wolf is in the Pack.


Advantages of Teams

Greater knowledge & experience base

Different perspectives

More total person power

Social bond, affiliation, identification

Willing to take more risks

Synergy – whole is greater than the sum of its parts


DPMO

0.00

0.01

0.10

1.00

10.00

100.00

1,000.00

10,000.00

100,000.00

1,000,000.00

Cross-functional Six Sigma Project Teams

Knowledge sharing triggered by sigma process benchmarks

Intranet-enabled best practices; real-time process metrics

Knowledge Sharing


DMAIC Overview


DMAIC Overview - Define

Define the Customer, they’re Critical to Quality (CTQ) issues, and the Core Business Process involved.

Define who customers are, what their requirements are for products and services, and what their expectations are

Define project boundaries the stop and start of the process

Define the process to be improved by mapping the process flow


What is a 6 Sigma Project

Hard $$

Fact based

Control plan

Systematic approach (apply DMAIC)


Problem Solving Comparison

Nike (Just Do It

Projects)Workout Lean Six Sigma

Goal / issue / outcome

Most likely nagging issues, could be

cost or cycle time Cost or cycle time

Improve cycle times, improve VA/NVA ratio, reduce waste

Cost reduction / defect reduction

Cost savings*Less than $25,000 Less than $50,000 Less than $100,000

Greater than $100,000

Time from problem identification to

solution Immediate 1-3 days 1 week 1 to 5 months

Time to implementImmediate

Days to less than 4 weeks

Days to less than 4 weeks Weeks to months

Project initiated by Anyone Anyone Anyone Upper management

ApprovalsWithin department

Within or cross departments Cross departments

Cross departments / Executive staff

Departments affected One One or more One or more One or more

Training None Low Low / medium High

Tools utilizedCommon tools* Common tools*

Common tools*, VSM, Flow, Pull,

Takt Statistical

This matrix represents a very broad approximation to the differences between these problem solving tools.

* Common tools: Pareto, Brainstorming, Team Dynamics, C&E diagrams, Flow Diagrams


A Project’s Evolution

30,000 feet

20,000 feet

10,000 feet

Landing

Black Belt

ProjectTeam

Potential Improvement

Topics, Subjects, Ideas

Project Definition and Selection

Sessions

Refinement w/ Stakeholders and diagnosis; enters

project in database

Launch/”start” of project

TeamKick-Off Meeting

Management Project Champions

Pre-Project Define Phase


Product focus

4 Types of Project Focus

Example: Critical manufacturing processes Critical transactional processes Critical engineering processes Improving these will save/make $$

Example: Product 1 Product 2 Product 3

Example: Biggest fire to address

Example: Complete x projects to save

$z

Process quality focus

Problem focus

Project cost savings focus


Defining Project Metrics

PrimaryPrimary

MetricMetric

BusinessBusiness

Metric(s)Metric(s)

FinancialFinancial

Metric(s)Metric(s)

ConsequentialConsequential

Metric(s)Metric(s)

SecondarySecondary

Metric(s)Metric(s)


Y=f(x)


DMAIC Overview - Measure

Measure the performance of the Core Business Process involved.

Develop a data collection plan for the process. Collect data from many sources to determine

types of defects and metrics. Compare to customer survey results to

determine shortfall.


Optimized Process

Prioritized X’sPrioritized X’s (Step 6)(Step 6)

Vital X’sVital X’s

3-63-6 Key Leverage Key Leverage X’sX’s

Output Variables (y)Output Variables (y)some X’s listed.some X’s listed.

Process MapProcess Map

Brainstorming, FMEA,Brainstorming, FMEA,C&E, Process MapC&E, Process Map

Screening DOE’sScreening DOE’s

DOE’s, RSMDOE’s, RSM

C&E Matrix and FMEAC&E Matrix and FMEAC&E Matrix and FMEAC&E Matrix and FMEA

Gage R&R, CapabilityGage R&R, Capability

4 Block Tools4 Block Tools

Quality SystemsQuality Systems

SPC, Control PlansSPC, Control Plans

MeasureMeasure

AnalyzeAnalyze

ImproveImprove

ControlControl

30 - 5030 - 50

10 - 1510 - 15

4-84-8

8 - 108 - 10

UnknownUnknown

Input Variables to be InvestigatedInput Variables to be InvestigatedInput Variables to be InvestigatedInput Variables to be Investigated


Variability

is the ENEMY

“Right the First Time” isthe most cost effective way

to achieve Customer Satisfaction

Variability is the Enemy


The Hidden Factory

Most materials go this way

Process Map (macro level)

StoragePrepare for

smelting(crushing...)

StorageMelt in

Reactor

Skim slagMelt in

furnaceDryslag

Store copperbottom

Cool slag atslag dump

Separate slagfrom copper

bottom

Arrival atHorne

Hidden Factory !!!!!


Normal Distributionµ

Point of InflectionPoint of Inflection

1

+ -

68.26%95.44%99.74%


What is 6 Sigma?

Z = 6 sigmas

= 1.0USL = upper spec. limit

10.0 16.0


Practical Interpretation of Sigma Scale

2 Sigma

3 Sigma

31%

6.6%

4 Sigma 0.62%

5 Sigma

6 Sigma

0.023%

0.0003%

% Good Prob. of Defect

4.5 hours/month

2 days/month

9 days/month

10 mins/month

9 sec/month

3.8 Sigma 1.0% 7 hours/month

69%

93.4%

99.4%

99.98%

99.9997%

99.0%

Being without electricity for...


Benchmarking Implications

10

100

1000

10000

100000

1000000

3 4 5 6 72

Sigma Scale of Measure

PPM

•

Restaurant Bills

Doctor Prescription Writing

Payroll Processing

Order Write-upJournal Vouchers

Wire Transfers

Airline Baggage Handling

Purchased Material Lot Reject Rate

Domestic Airline Flight

(0.43 PPM)

IRS - Tax Advice (phone-in)(140,000 PPM)

Fatality Rate

Best-in-ClassBest-in-Class

Average Company

Average Company

1


DMAIC Overview - Analyze

Analyze the data collected and process map to determine root causes of defects and opportunities for improvement.

Identify gaps between current performance and goal performance

Prioritize opportunities to improve

Identify sources of variation


DMAIC Overview - Improve

Improve the target process by designing creative solutions to fix and prevent problems.

Create innovate solutions using technology and discipline.

Develop and deploy implementation plan.


Design of Experiments


DMAIC Overview - Control

Control the improvements to keep the process on the new course.

Prevent reverting back to the "old way"

Require the development, documentation and implementation of an ongoing monitoring plan

Institutionalize the improvements through the modification of systems and structures (staffing, training, incentives)


Six Sigma is a Tool Box

Define Measure Analyze Improve Control

Adult Learning Model

Process Mapping

Multi Vari Variable DOE EVOP

Project Management

Cause & Effect Matrix

Correlation Fractional DOEResponse

Surface DOE

Computer Tools

Fishbone Diagram

RegressionFull and 2k

Factorial DOEMultiple

Regression

Descriptive Statistics

Statistical Analysis

Hypothesis Testing

Advanced DOETransition

Plans

Lean Tools ANOVALogistic

RegressionControl Plans

MSA FMEA SPC

CapabilityControl

Methods


The Highest Quality Producer is theLowest Cost Producer…How is this possible?

The Bottom Line

The Center for Industrial Effectiveness School of Engineering and Applied Sciences Lean/Six Sigma...

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