01 LSS Introduction

Lean Six Sigma Operational - Delegate Workbook
Lean Six Sigma Introduction
History of Six Sigma

Established by Motorola in the 1980s and still being developed. Seen as a cornerstone to the companys culture Companies adopting 6 Sigma include General Electric, Allied Signal, ABB, BT, Sony, RBS, Lockheed Martin, Ford, Nissan and many others It is essential for companies to take responsibility for their own (unique) programme
SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008
SSG06301ENUK - Intro /Issue 1.3/September 2008
The British Standards Institution 2008
What is Six Sigma?

LSL USL
A systematic approach to process improvement Processes can be related to design, manufacturing or administrative functions It involves the use of statistical tools and techniques to analyse & improve processes The relentless pursuit of variability reduction and defect elimination
LSL USL
Where can Six Sigma be applied?

Six Sigma can be applied to all company processes A distinction is often made between:
Design applications (Design for Six Sigma) Manufacturing applications (Operational Six Sigma) Administrative and Service applications (Transactional Six Sigma)
The Six Sigma Metric
Sigma
Used in statistics as a measure of variation Standard Deviation The central philosophy of 6 Sigma is the reduction of variation in all our work processes
The Normal Distribution

Lower spec limit Upper spec limit
y 1 = 68.26% y 2 = 95.44% y 3 = 99.73%
-3 -2 -1 y +1 +2 +3 (Target)
The 3 Sigma mentality means 2700 defectives per million!
The 6 Sigma Metric

Lower specification limit
Normal Distribution Centred on Target Upper specification limit
-6 -5 -4 -3
-2
-1
+2 +3 +4 +5 +6 +1
Specification Limit
Defects per Million Percent within Specification (Centred Distribution) (Centred Distribution)
3 4 5 6
99.73 99.9937 99.99994 99.999999999
2700 63 0.6 0.002
From 3 Sigma to 6 Sigma

Lower spec limit Upper spec limit
Defects per Million
2700 0.002
Lower spec limit
Upper spec limit
Motorolas 6 Sigma Metric

1.5 Shift
Lower spec limit
Upper spec limit
-6 -5 -4
-3
-2
-1
+1
+2 +3 +4 +5 +6
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What does 6 Sigma mean in your daily life?

PPM
Prescription Writing Tax Advice Restaurant Bills 1,000,000 Payroll Processing
100,000 10,000 1,000 100 10
Baggage Handling Best in Class Airline Safety Rate

1 2 3 4 5 6 7
Sigma Level
11
History of Lean
Lean originates from the work of Taiichi Ohno who was looking to create effective production processes at Toyota after the Second World War The fundamental principle is the elimination of all forms of waste (or MUDA) Initially adopted by other Japanese companies it took some time to reach the West and is known by various names (eg Toyota Production System (TPS), Just-In-Time (JIT), etc) Leans systematic focus on the removal of waste is now being applied across many industrial sectors and is used by many of the organisations using Six Sigma
Waste is worse than theft! theft! Taiichi Ohno, Toyota
12
What is Lean? The five principles

Always define Value from the customers perspective Identify the Value Stream (and component activities) needed to take a product (or service) from customer request to completed delivery Ensure product or service activity Flows through the value stream without any delays Use Pull scheduling so that product is made or a service is provided only when the customer wants it Strive continuously to eliminate all forms of Waste from the processes involved
13
The Hidden Office/Factory

When a defect is produced (eg incorrect quote, unordered package delivered, wrong meal served) time, energy, raw material, and the companys capacity to undertake value adding work is reduced This all takes time, people, material, energy, and floor space.... Defects can cause the requirement to audit and inspect as well as creating the need for excess motion and/or transport Rework needs to be re-checked usually or we may need to start again and scrap the first attempt Often this non-value added activity is not shown within business metrics in operations its called the hidden factory, in transactional environments the hidden office
14
Lean and the 7 Deadly Wastes

Inventory Defects Waiting Overproduction Over-Processing Motion Transportation Full in-trays, long to-do lists, queues of orders waiting to be processed Wrong prices, wrong codes, missing information Delaying a decision until a colleague returns from a business trip Excessive copies, standard cc lists, hard copies of electronic documents Unnecessary approval routes for documents (false customers), duplicated process steps in different departments Walking to shared resources eg printers, copiers Interoffice mail, document movement
15
Lean Sigma Optimisation: the Link

Customer Focus - Defect Reduction - Business Growth Business Infrastructure - Green Belts - Black Belts - Sponsors Statistical Thinking - Prove with Data - Metrics - Variation Reduction Speed Flow Removal of Waste - Excess Inventory - Wasted Time and Motion Reducing Complexity
16
Process Yield
Raw Materials Mixing Forming Cooling Finished Product
This process has 100% yield. Our customers would be very pleased. Should we be just as happy?
0% Fail
Final Inspection
100% Pass
17
Rolled Throughput Yield

Rework & Repair Rework & Repair Rework & Repair
Final Inspection
0% Fail
Detailed examination reveals that we have rework or repair at each stage of the process.
100% Pass
18

Rework & Repair
7.5% of Units
Rework & Repair Rework & Repair
Final Inspection
0% Fail
6% of Units
5% of Units 100% Pass
RTY =
0.925
0.94
0.95
= 0.826 = 82.6%
19

RTY =
0.925
0.94
0.95
0.826 = 82.6%
We receive no credit for rework or repair! If we have labour costs of 300,000 per annum, then we are directly wasting 0.174 x 300,000 = 52,200 per year, without taking any account of material wastage or other costs In Six Sigma terms, this is known as the Hidden Factory
20
Cost of Poor Quality (as a Percentage Of Revenue)

Traditional Costs
Development Costs Maintenance and Service Recalls Rejects Warranty Claims Rework Scrap Opportunity cost if sales greater than plant capacity Complaint Handling Improvement Program Costs Lost Customer Loyalty Process Control
2-3% 20-40% 2040%
Inspection Costs Additional Labour Hours Cost to Customer Legal Costs Incorrect Orders Shipped Excess Inventory Quality Engineering and Administration Pricing or Billing Errors Quality Audits Longer Cycle Times
Hidden Costs
Supplier Control Premium Freight Costs Employee Turnover Planning Delays
Excessive Field Service Costs Expediting Costs
10
21
COPQ in Six Sigma Projects

Estimate the potential savings the project could yield (Define/Measure Phase). Quantify the actual savings once improvements have been made (Improve/Control Phase).
Cost of poor quality
Sporadic spike, historical focus of management attention
Chronic waste
Six sigma project/savings
Time
22
Which Process to Follow?

Problem Solving used when we were OK, now have a problem, and wish to return to the previous state (will not improve the process) Operational DMAIC used when we intend to improve any process which works on physical transformations of materials into products Transactional DMAIC used when we intend to improve any process which transforms data and information into the required outputs
11
23
DMAIC Improvement Process

Define Measure
Identify Opportunity Identify Key ys (Outputs) Identify Critical xs (Inputs)
Analyse Improve Control

Optimise xs Control xs
y = f(x)
24
Transactional Improvement Process

Define
Select Project Define Project Objective Form the Team Define Measures (y s)
Measure
Analyse
Develop Detailed Process Maps
START PROCESS STEPS DECISION STOP
Improve
Brainstorm Potential Improvement Strategies Select Improvement Strategy
Criteria Time Cost Service Etc A + + s B s + s C + D + s + +
10.2 10.0 9.8 9.6
Control
Control Critical x s
Upper Control Limit
Check Data Integrity
Lower Control Limit
10
15
20
Monitor y s
Map the Process Identify Customer Requirements
Determine Process Stability Determine Process Capability

LSL USL
Identify Critical Process Steps (x s) by looking for: Process Bottlenecks Rework / Repetition Non-value Added Steps Sources of Error / Mistake Map the Ideal Process Identify gaps between current and ideal
Plan and Implement Pilot Verify Improvement

LSL USL
y
Validate Control Plan
15
20
25
30
35
15
20
25
30
35
Identify Priorities Update Project File
Set Targets for Measures Phase Review
Implement Countermeasures
Identify further opportunities Close Project
Phase Review
Phase Review
Phase Review
Phase Review
12
25
Operational Improvement Process

Define
Select Project Define Project Objective Form the Team
Measure
Define Measures (ys)
Analyse
Identify Potential xs
C1 C2 C3
Improve
Characterise xs
Control
Control Critical xs
10.2 Upper Control Limit 10.0
y
Effect
Evaluate Measurement System

C4 C5 C6
. .. .. . .. .. .
y=f(x1,x2,..)
Optimise xs
4 1 2 1 2 1 2 1 2 5 1 2 1 2 2 1 2 1 6 1 2 2 1 1 2 2 1 7 1 2 2 1 2 1 1 2
9.8
Lower Control Limit
9.6 1 5 10 15 20
Analyse xs Map the Process Identify Customer Requirements

Run 1 2 1 1 2 2 1 1 2 2 3 1 1 2 2 2 2 1 1
Monitor ys
Determine Process Stability Determine Process Capability

LSL USL
1 2 3 4 5 6 7 8
1 1 1 1 2 2 2 2
y
Set Tolerances for xs Verify Improvement
15
20
25
30
35
Identify Priorities Update Project File
Set Targets for Measures
Select Critical xs x x x x x x x x x x x Phase Review
Validate Control Plan
LSL
USL
15
20
25
30
35
Close Project Phase Review
Phase Review
Phase Review
Phase Review
26
Three Dimensions of Six Sigma Performance

3 3 3
Complexity
3
Preventive approach for new processes Current efforts fire fighting

6 6
Variation
A balanced approach will give you the biggest benefits
Customer Requirements
(functions & specifications)
13
27
Summary
An initiative that extends and strengthens quality and productivity efforts A proven breakthrough contributor to the financial bottom line A detailed roadmap to process improvement A methodology that our people can and should be using to do their jobs
14

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01 LSS Introduction

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Lean Six Sigma Operational - Delegate Workbook

Lean Six Sigma Introduction

History of Six Sigma

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

SSG06301ENUK - Intro /Issue 1.3/September 2008

The British Standards Institution 2008

Lean Six Sigma Operational - Delegate Workbook

What is Six Sigma?

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

Where can Six Sigma be applied?

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

SSG06301ENUK - Intro /Issue 1.3/September 2008

The British Standards Institution 2008

Lean Six Sigma Operational - Delegate Workbook

The Six Sigma Metric

The Normal Distribution

y 1 = 68.26% y 2 = 95.44% y 3 = 99.73%

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

SSG06301ENUK - Intro /Issue 1.3/September 2008

The British Standards Institution 2008

Lean Six Sigma Operational - Delegate Workbook

The 6 Sigma Metric

Normal Distribution Centred on Target Upper specification limit

99.73 99.9937 99.99994 99.999999999

2700 63 0.6 0.002

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

From 3 Sigma to 6 Sigma

Defects per Million

Lower spec limit

Upper spec limit

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

SSG06301ENUK - Intro /Issue 1.3/September 2008

The British Standards Institution 2008

Lean Six Sigma Operational - Delegate Workbook

Motorolas 6 Sigma Metric

Lower spec limit

Upper spec limit

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

What does 6 Sigma mean in your daily life?

Baggage Handling Best in Class Airline Safety Rate

SSG06301ENUK - Intro /Issue 1.3/September 2008

The British Standards Institution 2008

Lean Six Sigma Operational - Delegate Workbook

Waste is worse than theft! theft! Taiichi Ohno, Toyota

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

What is Lean? The five principles

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

SSG06301ENUK - Intro /Issue 1.3/September 2008

The British Standards Institution 2008

Lean Six Sigma Operational - Delegate Workbook

The Hidden Office/Factory

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

Lean and the 7 Deadly Wastes

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

SSG06301ENUK - Intro /Issue 1.3/September 2008

The British Standards Institution 2008

Lean Six Sigma Operational - Delegate Workbook

Lean Sigma Optimisation: the Link

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

SSG06301ENUK Delegate Slides/Issue 1.3/ September 2008

SSG06301ENUK - Intro /Issue 1.3/September 2008

The British Standards Institution 2008

Lean Six Sigma Operational - Delegate Workbook