Lean Six Sigman for Service


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Lean Six Sigman for Service

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