Introduction To Lean and Six Sigma Principles, Methods and Tools

Lean,
Lean, Six
Six Sigma
Sigma and
and Quality
Quality
in
in the
the Public
Public &
& Service
Service Sectors
Sectors
1
2008 e-Zsigma (Canada) Inc.
Objectives
1. Provide you with an introduction to
Lean principles, methods & tools
Six Sigma concepts, methods & tools
Basic quality management
2. Learn how these tools, methods and
principles can be applied successfully in
the Public & Service sectors
3. The importance of change management,
communication and leadership in a
continuous improvement culture
2
Agenda
Introduction to Lean Principles
Value-Added Assessment
8 Sources of Waste
Introduction to Six Sigma
DPMO (Defects per Million Opportunities)
DMAIC (Define, Measure, Analyze, Improve, Control)
Six Sigma Roles and Responsibilities
The Hidden Factory & Rolled Throughput Yield (YRT)
Opportunity Statements
Leadership, Change Management &
Communication in a Continuous Improvement
culture
3
Exercise Time!
4
2. Identify & map
the Value Stream
1. Define value 3. Reduce waste

from the customers and improve
perspective flow
5. Pursue 4. Move from

perfection push to pull
from customer
5
Lean is
A set of principles, concepts, and techniques designed for a relentless
pursuit in the elimination of waste. Producing a Just-In-Time system,
that will deliver to our customers
Exactly what they need

When they need it
In the quantity they need
In the right sequence
Without defects
And at the lowest possible costs
Image: http://halfwaytoconcord.com
6
Brief History of Lean
Taiichi Ohno - founder of the Toyota Production System (TPS)
1950 - Engineer Eiji Toyoda observations of the Ford US Rouge plant
TPS evolution shaped by post war Japan market demanding smaller quantities
of a greater variety of vehicles opposite to large batch production
Concept of flow predated TPS Henry Fords research on keeping assembly
workers stationary while the automobiles move
1973 oil crisis made global industry start to take notice and borrow methods
1990 The Machine That Changed the World, Womack & Jones, Landmark
study of the automobile industry Lean Manufacturing coined
Focus on improved productivity through adding resources that result in waste
elimination on reduced production lead-time
Today, lean manufacturing has become lean enterprise, spanning the entire
value stream: suppliers to customers focusing on getting the best possible
value from the collective effort across the supply chain
Manufacturing, financial services, telecommunications, healthcare etc
7
The Five Principles of Lean Thinking
1. Specify and Focus on Value

2. Identify the Value Stream
3. Allow value to Flow without interruptions
4. Let the customer Pull value
5. Continuously pursue Perfection
* These five principles apply to every process that
produces a product or service for an internal or
external customer in every industry.
8
Any process step, activity or task that transforms
the deliverables of a process such that the
customer and the community is aware of it and
is willing to fund and/or pay for it is considered
value added.
Value is always stated in the eyes of the
customer. Therefore, non-value-added has to be
everything else. Note: Community has been added for the Public Sector.
9
Non Value Added = Waste
Waste is defined as anything that does not
add value to the customer.
Lean Thinking requires an organizational
culture that is intolerant of all forms of
waste.
The goal of Lean is to banish waste.
10
So Where do we start?...
1. Define (Customer) Value
2. Identify & Map the Value
Stream
3. Reduce Waste & Improve
Flow
4. Move from Push to Pull
5. Pursue Perfection
Image: www.jdiamond.co.uk/lean.htm
11
Whats the Muda for you?
Muda is the one word of Japanese you might hear most
often in lean organizations since muda means waste. Waste
can be considered any activity which absorbs resources but
creates no value:
Mistakes which require rectification
Processing steps which aren't actually needed
Touching things more often than you need to
Unnecessary movement of employees and materials
People and processes waiting because an upstream activity has
not delivered on time
Goods and services which don't meet the needs of the customer.
12
Eight Sources of Waste (aka Muda)
1. Inventory 5. Motion
2. Waiting or Delays 6. Errors/Defects
3. Overproduction 7. Over-processing
4. Transportation 8. Underutilized
human capability
13
Tools to Make Waste Visible
1. Workplace Organization
a) 5S (or 6S)
b) Visual Workplace
2. Process Flow Charts
3. Spaghetti Diagrams
4. Value Stream Maps
5. Cause and Effect Diagrams
a) Five Whys
More on these tools later
6. Pareto Chart
7. Process Reports, Audits and Assessments
14
More Lean Tools & Concepts
5S (or 6S) Touch once principle
Visual Workplace JIT
Process reports, audits Pull & Kanban
& assessments
Single piece flow
Error-Proofing (Poka Yoke)
Work leveling
Rapid Change-Over
Work cells
Kaizen Events
Standardized work
15
Lean Thinking
A continuous improvement discipline and culture of
analyzing the flow of product, materials, people,
information and consumption of resources and
systematically
eliminating waste.
Lean = Better,
Faster, Cheaper
Increasing value for
the enterprise as well
as your customers.
16
Continuous Improvement
Lean requires that everyone is committed to
finding better ways to do things.
This means excellence in everything we do

for our customers as well as ourselves.
Continuous improvement is how to achieve

excellence and without it, you can not
become a Lean organization.
17
Organizational Culture Needs to Enable Lean
Lean Requires Organizational Rethink
Organizational goals and focus areas usually change
Traditional thinking is challenged process design, flow, supplier
relationships, etc.
Relationships with other functional areas (within the organization and external
partners) dramatically changes
This needs the right culture to be enabled in any
organization
Higher quality is the way to lower cost
Change is embraced
Profound knowledge is sought for problem solving
Candid conversations uncover problems
Decision making is taken to shop floor
Swift execution through an iterative cycle of projects
18
Lean requires a
CULTURAL
transformation.
Lean strategies
fails as a result of
not recognizing this
key element for
success.
19
Exercise
Using the value-added assessment (slide 9) as well as the
8 sources of waste (slide 13), identify two specific
examples of waste that you have experienced recently in a
process (where you may have been the customer
or the supplier).
Provide an adequate (process level)
description of the waste and the reason(s)
why you think it does not bring value to
10
the customer (or takes away value).
20
ge
v e ra
A
21
What is Six Sigma?
Six Sigma is a rigorous program & methodology
that organizations are leveraging to transform
themselves into best-in-class businesses.
This is achieved by a dramatic increase in

customer focus, establishment of near defect-
free processes, products, and services, with a
goal of maximizing shareholder value.
Eliminate
Eliminate defects
defects
Minimize
Minimize variation
variation
22
Brief History of Six Sigma
1980s Motorola - Art Sundry's critique, "Our quality stinks"
Motorola four-point plan: 1. Global competitiveness 2. Participative
management 3. Quality improvements 4. Motorola Training and Education
Center
1984 - 10X quality improvement launched & Motorola Manufacturing Institute
established in 1984
Senior Quality Engineer Bill Smith presented Six Sigma common metric to
Bob Galvin in late 1985 "The father of Six Sigma"
1987 - Six Sigma improvement program launched
1988 - Motorola received first Malcolm Baldrige National Quality Award
1990s - Motorola established Six Sigma Research Institute (SSRI) to
accelerate the achievement of "Six Sigma and Beyond". Black Belt concept
was created by Mikel Harry
Six Sigma adopted by Allied Signal (1993) and General Electric (1995)
DMAIC Six Sigma toolkit created and built upon by Mikel Harry and others
23
Five Dimensions
Customer centric
Process focused
Philosophy
Philosophy Measurement based & fact driven
Results oriented
99.9997% - 99% is not good enough!
Metric
Metricand
andGoal
Goal

3.4 Defects Per Million Opportunities (DPMO)
Near-zero defects
Step-by-step cookbook
Methodology
Methodology Rigorous project methodology
DMAIC, DMADV (DFSS) & others
Lean & Six Sigma toolbox

Basic quality tools
Tools
Tools Advanced statistical tools
Manufacturing AND service processes
A whole system of management
People
People&&Roles
Roles

An entire organization involving approach
Clearly defined support & leadership roles
ex. Black Belt, Champion, etc.
24
Voice of the Customer (VOC)
Customer Expectations Supplier Mandate
9Predictable results 9Controlled Processes
9Value for money 9Lean operations
9Accuracy 9First-time quality
9Service 9Service
9Timely, quick 9Efficient
9Flexible 9Nimble
What customers want is simple They want it perfect, they want it

now and they want it free! Robert
Robert Rodin,
Rodin, CEO,
CEO, Marshall
Marshall Industries
Industries
25
What is DPMO?
DPMO = Defects per Million Opportunities
The number of errors per unit observed
divided by the number of opportunities to
make a error for the process being studied
normalized to one million.
3.4 DPMO =
26
Example of DPMO
An application to open a new bank account has 27 critical to
quality elements (fields of information, supporting content, etc. that
are required for the application to be passed through for final
approval prior to the account being opened.
A sample of 150 applications were randomly selected from the last
3 months of processing to see what errors occurred.
Since each sample had 27 things that could go wrong, there are
(150 x 27) 4,050 opportunities for a defect.
The file review (sample) resulted in 18 applications having one or
more things wrong with them, and in total, 32 distinct types of errors
were found (more than one error per application in some cases).
DPMO = 32 4,050 x 1,000,000 = 7,901
27
Why DPMO?
Classical yield only looks at the ratio of good product versus total product.
In the previous example, the yield would be calculated as:
Yield = good applications total produced
= (150 18) 150 = 88%
DPMO forces us to examine the product or service (step or activity in the
process) at a more granular level, first determining what are the required
elements that must be present, complete and accurate for the product or
service to move to the next step of the process.
The more complexity there is in a process, the greater the chance that one
or more tings will go wrong. Therefore, DPMO includes complexity in the
assessment.
DPMO forces you to look at the hidden factory where expediting, rework
and delays occur, but would likely not show up in classical yield metrics.
The resulting detail from DPMO determinations can then help to prioritize
where improvements can be made.
28
How Good is Six Sigma?
If errors in a book were converted to sigma
6 sigma -
4 sigma - 1 word for all
Misspelled words in a book 1 word per of the books in
30 pages a small library!
The number of patients that went missing at the Ottawa Hospital converted to sigma
1 sigma - 2 sigma - 3 sigma - 4 sigma - 5 sigma - 6 sigma -
3.5 patients 1.5 patients 8 patients 5 patients 10 patients 1 patient every
per hour per hour per day per week per year 7 years
If you played 100 rounds per year & sigma was how many putts you missed...
2 sigma - 3 sigma - 4 sigma - 5 sigma - 6 sigma -
6 putts per 1 putt per 1 putt per 1 putt every 1 putt every
round round 9 rounds 2.33 years 163 years!
29
The DMAIC Approach
Define process improvement goals that are consistent with
customer demands and the enterprise strategy.
Measure key aspects of the current process and collect relevant
data.
Analyze the data to verify cause-and-effect relationships.
Determine what the relationships are, and attempt to ensure that all
factors have been considered.
Improve or optimize the process based upon data analysis using
techniques like Design of Experiments.
Control to ensure that any deviations from target are corrected
before they result in defects. Set up pilot runs to establish process
capability, move on to production, set up control mechanisms and
continuously monitor the process.
Source: www.isixsigma.com
30
Create & Implement Profound Solutions
Virtually
defect-free!
Before Improvements
Reduce process variation

Shift the mean (average) After Improvements
31
Implement Process Controls
Process Control Chart
Variation!
Helping process owners better manage their processes!
32
Common Six Sigma Roles
Deployment Champion
Project Champions
Process Owners
Master Black Belts
Black Belts
Green Belts
Yellow, White, etc. Belts
Image: http://www.far.on.ca/images/Team51Bikes.JPG
33
The Hidden Factory
Deliver to
Step 1 Good? Step 2 Good?
customer
Correct Analyze Correct Analyze
The Hidden Factory
Extra cost? Delays? Customer Satisfaction? Employee Frustration? Risk?...
34
Rolled Throughput Yield (YRT)
Step 1 Step 2 Step 3 Step 4 Step 5 Deliver to
Yield = 95% Yield = 95% Yield = 60% Yield = 90% Yield = 90% Customer
0.95 X 0.95 X 0.60 X 0.90 X 0.90 = YRT = 44%
Manager: Our on-time delivery in terms of target performance is 97%!

But at what cost? How big is the hidden factory? What is the first-pass
yield at each step of the process? Like DPMO, YRT is a metric that
enables a more granular view of the process, which can lead to targeted
process improvement activities.
In this example, there is only a 44% chance that one product or service
will go through all of the process steps without one or more things going
35
I/We have
a problem
Problem-Solving Roadmap
Existing Focus
Yes Root cause No Low No No Complex No New process
process on NVA, Cycle
& solution complexity & problem defects needs to be
management time or
known? localized? & variation created?
system? Waste?
No Yes Yes Yes Yes Yes

Implement DMAIC DMAIC
Lean Kaizen Design for
process project: project: Six
Just do it! Event Six Sigma
management Lean tools Sigma tools
(DMAIC) (DMADV)
system emphasis emphasis
No
Problem Problem Problem Problem Problem
solved? solved? solved? solved? solved?
Yes Yes Yes Yes Yes
END
36
Where Do We Start?
1. Identify opportunities for improvement
Voice of the customer and operational metrics
2. Definition, Prioritization & Assignment
High level opportunity definition/benefits analysis
Best fit solution: Kaizen, Lean, Six Sigma
Prioritization: Who, what and when?
3. Make it So!
4. Measure, measure, measure
37
Opportunity Statement
Name of process
Brief description of process
Current as-is state
Operational metric(s) and current performance
Future state
Measurable targets
Estimated organizational benefit
Known scope or constraints (obstacles)
38
People - Skills and Process
Todays Topics
Change - Caswells
flow, Paradigms
Communication &
Leadership
Human Capacity
Exercise
Process - Meetings
Image: http://www.strategicva.com/images/iceberg.jpg
39
Change Mgmt - Caswell flow
40
Change
From Joel Barkers video, Principles of Paradigm
1. New principles show up BEFORE they are needed.
( i.e. XML, Star Trek )
2. People who discover the paradigm first are those not
vested in existing paradigm.
3. A paradigm shift starts everyone back at zero.
4. Everyone can benefit from a paradigm shift , even if
they did not create it.
41
Change Exercise
Underutilized Human Capacity
(from 8 sources of waste - slide 12)
Groups of 3 or 4 - best answer
WINS
What exotic hidden talent or idea
does one of your group have and
how will it change the world?
42
Communication / Leadership
What are key characteristics?
Colin Powell - .ppt file of 18 lessons
#5 "Never neglect details. When
everyone's mind is dulled or distracted
the leader must be doubly vigilant.
( contra 80-20 rule?)
43
Meetings that HUM
Define the perfect meeting
Various types of meetings
3 characteristics:
Plan, Participate, Produce
44
Planning
O A R (R) that drives the meeting
Committee member rather than Chair can
lead this
RSVP with New Business
45
Promote Participation
Chair initiates the tone with Objective
and Agenda
Encourage interchange and
volunteerism, providing resources for
projects
Note-taker to record Action Summary
46
Produce Results
Consensus: Not always possible
Co-operation: Support of committee
Commitment: To process and actions
Lack of success: Private not public review
with Chair
47
Learning vs. Time vs. Benefit
(Before deciding to move forward)
What levels are necessary, viable, and

desired? optimize the combination
Benefit
Time
Learning
48
Final Quote from Powells slides:
http://www.blaisdell.com/powell
Leadership is the art of

accomplishing more than the
science of management
says is possible.
49
What Weve Covered Today
8 Sources of Waste
DPMO (Defects per Million Opportunities)
DMAIC (Define, Measure, Analyze, Improve, Control)
Six Sigma Roles and Responsibilities
The Hidden Factory & Rolled Throughput Yield (YRT)
Opportunity Statements
The vital role Leadership, Communication & Change
Management play in a culture of Continuous
Improvement
50
Your Personal Scorecard
Do you have a better understanding of:
Lean principles, methods & tools?
Six Sigma concepts, methods & tools?
Basic quality management?
Do you think you and your team can apply these to
the Public as well as Service sectors?
Do you recognize the important role change
management, effective communication and
leadership plays in a continuous improvement
culture?
Are you interested in learning more about Lean &
Six Sigma and how it can be successfully
deployed in your organization?
51
Closing Remarks & Discussion
For more information:
Bill Clarke
General Manager,
Centre for Government Excellence
A Division of e-Zsigma (Canada ) Inc.
Ottawa, Ontario Canada
Dir: 613-830-0322
bclarke@e-zsigma.com
www.e-zsigma.com
Thank you!
52

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Lean,

1. Define value 3. Reduce waste

5. Pursue 4. Move from

Exactly what they need

1. Specify and Focus on Value

2. Waiting or Delays 6. Errors/Defects

This means excellence in everything we do

Continuous improvement is how to achieve

This is achieved by a dramatic increase in

Lean & Six Sigma toolbox

What customers want is simple They want it perfect, they want it

DPMO = 32 4,050 x 1,000,000 = 7,901

Reduce process variation

Helping process owners better manage their processes!

Correct Analyze Correct Analyze

The Hidden Factory

Extra cost? Delays? Customer Satisfaction? Employee Frustration? Risk?...

0.95 X 0.95 X 0.60 X 0.90 X 0.90 = YRT = 44%

Manager: Our on-time delivery in terms of target performance is 97%!

No Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes

What levels are necessary, viable, and

Leadership is the art of

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