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Lean Six Sigman for Service


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  • 1. Lean Six Sigma for Service by Michael L. George
  • 2. Using Lean Six Sigma for Strategic Advantage in Service
    • Services have 30-80% waste
      • Activities that have no value to the customer
    • Service activities are not used to collecting and using data about their processes
    • Focus on how the customer perceives value instead of how we are arranged internally
    • Shift resources to where their impact is maximized
  • 3. What is Lean?
    • Lean focuses on speed of execution
      • Velocity of a process is proportional to its flexibility
    • Maximize process velocity
      • Speed acceleration tools
    • Optimize work flow
      • Rapid action Kaizen teams
    • Eliminate delays
    • Quantify and eliminate complexity
      • The complexity of the service generally adds more nonvalue added costs than both poor quality or slow speed process problems
    • Eliminate non value added steps
    • 80% delays caused by 20% of the process steps
  • 4. Indications of Fat
    • WIP backlog
    • Slow processes are expensive processes
    • Chasing information
    • Decision loops
    • Interruptions
    • Expediting necessary
    • Work lost in cracks
    • No visibility of overall process
  • 5. Little’s Law
    • Backlog ties up resources
    • Lead time= Work in Process/average completion rate
      • To increase efficiency, limit the amount of work you allow into the process
      • This works for materials, but not for face time with the customer
      • Pull system is good control mechanism
        • Cap at maximum WIP, create buffer, triage work coming out of the buffer as a pull
  • 6. Process Efficiency
    • Process efficiency = value-add time/ total lead time
    • It qualifies how much opportunity exists
    • Track work items through system and create a time value map
      • Does that part of the process add value recognized by the customer?
    • Work to eliminate non value added sections
      • Less required waste for accounting, legal, or regulatory requirements
  • 7. What is Six Sigma?
    • Six sigma focuses on accuracy
    • Recognize opportunities and eliminate defects based on customer’s value
    • Eliminate variation
    • Use statistical tools
    • Seek documented, repeatable processes
      • Infrastructure to support continued progress
      • Identification of customer critical to quality needs
  • 8. Core Elements of Six Sigma
    • Management must be engaged
    • Allocate resources to high priority projects
    • Train everyone
    • Eliminate variation
      • Drives narrower bell curves
      • 99.9997% +/- 6 standard deviation from the mean
  • 9. Invisible Work Cannot be Improved
    • Use a value stream analysis to diagram the process flow
      • Find time traps
    • Get agreement on areas of waste.
    • Establish ownership and create priorities.
    • Display priorities
    • Track and display daily performance
    • Manage expectations
      • Communicate
      • Provide feedback
  • 10. Customer Post Solicitation on FBO Address Inquires Receive Questions Post Q&As O Buyer O Buyer Amend Solicitation Respond to Protests O Buyer Receive Protest Validate protest Amend if required Review questions Draft Notice Chart 6 Upload tech drawings Refresh bid library Develop answers Post notice Determine need for amendment Issue CO determination PCO O Buyer Solicit Offers Issue Solicitation Determine need for amendment
  • 11. Value is in the Eyes of the Customer
    • Customer critical to quality “must haves” are the highest priority for improvement
      • Next are ROIC and Net present value
  • 12. Value Based Management
    • Price paid is a reflection of value to the customer
      • How well do your services meet the customer’s needs
      • What customer needs are you not meeting
      • What offerings have no value to customers
      • How do you compare to your competition
      • What are world-class levels of performance
  • 13. Use VOC to Transform
    • Align your priorities to your customer’s
    • Transform customer needs into functional requirements and then into design requirements
      • Quality Function Deployment
      • Segment market, research market, analyze data
      • Repeat to refine understanding of customer needs
    • Define, measure, analyze, improve, control
  • 14. The goal of VOC
    • Contribute at such a high level of service that our work promotes and fosters to continued advancement of the organization’s mission
  • 15. Lockheed Martin
    • Understand value from the customer’s prospective
    • Understand where product and service value are created in the organization (value stream)
    • Optimize for flow to get to optimal performance
    • Focus on cycle time and pull
      • Shrink process time to the minimum to speed response to customer changing needs
    • Achieve Six Sigma quality at lean speed
  • 16. Rollout Challenges
    • Convince folks to devote time to LSS
    • Understand need for changes in layout
    • Sometimes lean changes required are counterintuitive to services
      • Reduce WIP
    • Translate LSS into lingo understood within workplace
    • Build an awareness of what waste looks like
  • 17. Rollout hints
    • Give business units the credit
    • Tailor models to fit
    • Use a pace that fits organizational readiness
    • Don’t force it on people– generate pull
    • Solve problems cross functionally
    • Speed creates more noticeable improvements and quicker results
    • Data gathering and analysis takes time
  • 18. Identifying Burning Platforms
    • Burning Platforms are your biggest competitive or strategic challenges
      • Here you will create shareholder (taxpayer) value
      • Represents your competitive advantage
      • Compare against world class
      • Do a value stream and compare value creation vs value destruction
      • Measure growth potential also
        • Compare investment required vs EV of payoff
  • 19. Possible Actions
    • Shut down processes that destroy value, are unprofitable in the market, where competitors are advantaged
    • Invest to improve position of processes where you are competitively advantaged, even though you are currently destroying value and not getting a profit
      • Should be close to breakeven re economic profit
  • 20. Comparing Opportunities
    • If you are value neutral, at economic breakeven, yet competitively disadvantaged, weigh the costs of removing waste to the potential EV of being more responsive to the customer
    • If you are competitively advantaged and creating value, just monitor to maintain market.
      • Not as critical to invest
      • Better opportunities in other value streams
  • 21. Value added
    • The task adds a function or feature that the customer will pay for
    • The task provides you a competitive advantage (reduced price, faster delivery, better quality)
    • The customer prefers what we will produce over our competitors
  • 22. Business Non Value Added
    • Gotta do these even though the customer will not pay for it
    • Required by law or regulation
    • Reduces financial risk
    • Financial reporting requirements
    • Critical to process stability
  • 23. Non value Added
    • Rework, expediting. Multiple signatures, counting, handling, inspecting, setup, downtime, transporting, moving, delaying, storing
    • Create congestion, variation, complexity
    • Does not consume existing capacity while producing higher revenue
  • 24. Create Time Delay Diagrams
    • Look for time traps
    • Look for build up in WIP
    • Consider what are the cost drivers/ failure modes
    • Evaluate cost to remove impediment vs expected value of improvement
    • Pareto chart is a good tool for comparing contributions of process corrections toward error rates
  • 25. DMAIC
    • Use these tools to
    • Define: Value stream map, non value added analysis
    • Measure: Process cycle efficiency, process sizing
    • Analyze: Constraint identification, Time trap analysis, Queuing theory
    • Improve: Kaizen, Process flow improvement
    • Control: Visual control process
  • 26. 5S = Improve
    • Sort
    • Straighten
    • Shine
    • Standardize
    • Sustain
    • Plus one Safety
  • 27. Questions?