Six Sigma and Lean Integration


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  • There a number of formal and informal methods to determine the key x’s. One way is simply to get a team of the most knowledgeable people together and discuss what experience tells the are the drivers of a particular outcome measure. Another effective tool is a fishbone diagram...
  • Six Sigma and Lean Integration

    1. 1. Six Sigma and Lean Integration Johnson & Johnson Consumer and Personal Care December 2, 2004 Page:
    2. 2. Six Sigma and Lean Integration <ul><li>What is Six Sigma at Johnson and Johnson? </li></ul><ul><li>What is Lean at Johnson and Johnson? </li></ul><ul><li>How do Six Sigma and Lean work together? </li></ul><ul><ul><li>Synergies </li></ul></ul><ul><li>Challenges in deployment </li></ul><ul><li>Rewards: Driving business results </li></ul>
    3. 3. Six Sigma and Lean Integration <ul><li>What is Six Sigma at Johnson and Johnson? </li></ul><ul><li>What is Lean at Johnson and Johnson? </li></ul><ul><li>How do Six Sigma and Lean work together? </li></ul><ul><ul><li>Synergies </li></ul></ul><ul><li>Challenges in deployment </li></ul><ul><li>Rewards: Driving business results </li></ul>
    4. 4. Process Excellence
    5. 5. What is Process Excellence? Tools – Support the Principles The PE Strategy is to enable every J&J business leader to adopt, use and engrain these Business Management Principles in their organizations Role of Leadership Customer Focus Process Mgt. & High Perf. Environment Fact-Based Mgt. & Evaluation Improvement & Innovation Continuous Assessment & Renewal Dashboards Improvement Methodologies Business Assessment Best Practices
    6. 6. Assessments <ul><li>Competitiveness Assessment </li></ul><ul><ul><li>6 Processes: </li></ul></ul><ul><ul><ul><ul><li>Leadership </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Business Information and Analysis </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Business Planning </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Human Resources Management and Development </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Processes (Design, Supply Chain, Regulatory and Compliance) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Customer and Markets </li></ul></ul></ul></ul><ul><ul><li>Business Results </li></ul></ul><ul><ul><li>Process Excellence Deployment Assessment </li></ul></ul><ul><li>Lean Maturity Assessment </li></ul><ul><ul><li>Lean Maturity </li></ul></ul><ul><ul><li>Waste Identification, business value </li></ul></ul>
    7. 7. Metrics / Dashboards <ul><li>Key Metrics </li></ul><ul><li>Causal </li></ul><ul><ul><li>Drill down into lower level driver </li></ul></ul><ul><ul><li>Well dressed measures </li></ul></ul><ul><ul><ul><li>Definition of measures </li></ul></ul></ul><ul><ul><ul><li>Lagging and leading indicators </li></ul></ul></ul><ul><ul><ul><li>Benchmark </li></ul></ul></ul><ul><li>Visual </li></ul><ul><li>Reviewed periodically </li></ul>
    8. 8. Design Excellence Methodology used to develop products and/or processes that consistently meet customer requirements. <ul><li>Based on Six Sigma Approach </li></ul><ul><li>5 Steps </li></ul><ul><ul><ul><li>Define </li></ul></ul></ul><ul><ul><ul><li>Measure </li></ul></ul></ul><ul><ul><ul><li>Analyze </li></ul></ul></ul><ul><ul><ul><li>Design </li></ul></ul></ul><ul><ul><ul><li>Validate </li></ul></ul></ul>Execute with Excellence Do it right first
    9. 9. Six Sigma Methodology used to attack process variability in order to eliminate defects <ul><li>5 Steps </li></ul><ul><ul><ul><li>Define </li></ul></ul></ul><ul><ul><ul><li>Measure </li></ul></ul></ul><ul><ul><ul><li>Analyze </li></ul></ul></ul><ul><ul><ul><li>Innovative Improvement </li></ul></ul></ul><ul><ul><ul><li>Control </li></ul></ul></ul><ul><li>Use data to solve problems </li></ul><ul><li>Statistical approach </li></ul><ul><li>Rigorous training </li></ul>
    11. 11. Six Sigma DMAI 2 C Improvement Methodology 1 DEFINE 2 MEASURE 3 ANALYZE 4 INNOVATE IMPROVE 5 CONTROL Project SIPOC VOC Data Sampling Gage R&R Patterns Capability Process Analysis Multi-Vari Organize Causes Hypothesis Testing Regression DoE Solutions FMEA Pilot Implement- ation Closure Evaluate Monitor Document Standardize Control D efine M easure A nalyze I nnovate I mprove C ontrol
    12. 12. Six Sigma – D MAI 2 C - Chartered Projects   <ul><li>Content </li></ul><ul><li>Sponsor </li></ul><ul><li>Team Members </li></ul><ul><li>Description </li></ul><ul><li>Benefits </li></ul><ul><li>Base line </li></ul><ul><li>Entitled state </li></ul><ul><li>Goals </li></ul><ul><li>Timeline </li></ul><ul><li>Process </li></ul><ul><li>Aligned to organization objectives </li></ul><ul><li>Signed by sponsor, manager and Belt mentor </li></ul><ul><li>Results verified by finance controller </li></ul>
    13. 13. Six Sigma – D MA I 2 C - Statistical Analysis Demand variability weeks # 1, 2, 3, 4, 5 Calculation : Z (2.054 at 98 %CI) * σ Dem. Var. = 2.054 * 21 493 = 44 147 Demand variability weeks # 2, 3 Dem. Var. = 2.054 * 7 795 = 16 011 P-Value- 0.000 D M A I 2 C
    14. 14. Six Sigma – DMAI 2 C – Control Results <ul><li>Control </li></ul><ul><li>Control chart with control limits </li></ul><ul><li>Before and after project </li></ul><ul><li>Mean and Variability </li></ul>
    15. 15. Six Sigma / Design Excellence Improvement Strategies Is the gap small? Customer Requirements Process Capability Fundamental Redesign Iterative Improvement YES NO <ul><ul><ul><li>Design a new product / process </li></ul></ul></ul><ul><ul><ul><li>Broad approach </li></ul></ul></ul><ul><ul><ul><li>Blank sheet of paper approach </li></ul></ul></ul><ul><ul><ul><li>High Risk </li></ul></ul></ul><ul><ul><ul><li>Longer time span </li></ul></ul></ul><ul><ul><ul><li>Addressing many CTQs </li></ul></ul></ul><ul><ul><ul><li>Goal: Quantum Leap </li></ul></ul></ul><ul><ul><ul><li>Fix an existing process </li></ul></ul></ul><ul><ul><ul><li>Narrow Focus </li></ul></ul></ul><ul><ul><ul><li>Use current process model </li></ul></ul></ul><ul><ul><ul><li>Low Risk </li></ul></ul></ul><ul><ul><ul><li>Shorter Time Span </li></ul></ul></ul><ul><ul><ul><li>Addressing few CTQs </li></ul></ul></ul><ul><ul><ul><li>Goal: Improvement </li></ul></ul></ul>Design Excellence Six Sigma
    16. 16. Six Sigma and Lean Integration <ul><li>What is Six Sigma at Johnson and Johnson? </li></ul><ul><li>What is Lean at Johnson and Johnson? </li></ul><ul><li>How do Six Sigma and Lean work together? </li></ul><ul><ul><li>Synergies </li></ul></ul><ul><li>Challenges in deployment </li></ul><ul><li>Rewards: Driving business results </li></ul>
    17. 17. Lean Thinking Methodology used to transform large scale complex processes to deliver customer value faster, improve work flow and eliminate waste <ul><li>Road map (4 steps) </li></ul><ul><ul><ul><li>Prepare </li></ul></ul></ul><ul><ul><ul><li>Analyze / Plan </li></ul></ul></ul><ul><ul><ul><li>Execute </li></ul></ul></ul><ul><ul><ul><li>Continuous Improvement </li></ul></ul></ul><ul><li>Tools for key processes </li></ul><ul><ul><li>Supply Chain </li></ul></ul><ul><ul><li>New Products Development </li></ul></ul><ul><ul><li>Demand Generation </li></ul></ul>
    18. 18. Lean Thinking relies on 7 Key Fundamental Principles Goal Alignment All elements of the process have linked/common goals to achieve customer and shareholder defined outcomes. (All functions have goals that are aligned to the operational results- marketing, sales, quality, manufacturing, suppliers, human resources, information technology, etc.) Value Value is always defined from the customer’s perspective. Value Creation All activities (work) from the time a customer need is identified until it is satisfied must add value from the customer’s perspective in meeting that need. (They are willing to pay for it.) Pull Work is initiated only at the signal of demand. Work is synchronized and designed based on demand patterns and known events. Work and inventory are kept at the lowest level of investment possible and unique attributes are delayed until last point possible. Flow Both material and information flow are simplified and optimized to ensure the shortest possible cycle time. The end objective is one piece flow. Roles, Responsibilities and Culture Roles follow process design and responsibilities are based on process performance requirements (fit to process) and are designed to enable line of sight to the whole process. Continuous Improvement There is a systematic change and renewal process to bring about innovation and refinement of efficiency, rhythm time and quality in order to continuously drive down costs and cycle time.
    19. 19. Lean Thinking “Sources of Waste” <ul><li>Waste: “any human activity which absorbs resources but creates no value ” </li></ul><ul><ul><li>- Lean Thinking ; Womack & Jones, 1996 </li></ul></ul><ul><li>Taiichi Ohno, defined seven types of waste found in manufacturing processes... </li></ul><ul><li>Overproduction Waste </li></ul><ul><li>Inventory Waste </li></ul><ul><li>Conveyance Waste </li></ul><ul><li>Defect-Production Waste </li></ul><ul><li>Processing-related Waste </li></ul><ul><li>Operation-related Waste </li></ul><ul><li>Idle Time Waste </li></ul>But these ideas apply to most business processes… waste is any “ non-value-added ” activity, where “value” is defined by the customer
    20. 20. Lean Thinking - Make to Order Hierarchy Make to Order - Pull Make to Order - Push/Pull Inventory as a Control Point - Pull Inventory as a Control Point - Push/Pull Make to Forecast - Pull Make to Forecast - Push Ideal “ Postponement” Downward Drivers: 1) Cycle time >Order lead Time 2) Many SKU’s (large # of changeovers) 3) Demand variability > Mfg. Capacity 4) Many raws to many SKU’s High inventory carrying costs 5) High variability in demand (Entity is replenishing according to prior sales) Many J&J Companies (after Lean implementation) 1) Locked in to orders 2) Unresponsive to changes and customer needs 3) High potential for error 4) Production in anticipation of orders Worst Case
    21. 21. “ Lean Thinking Wheel” – Supply Chain M easurable L everageable I mplementable MLI 1. What is customer/market demand variability? 2. What is current supply constraints and variability? 3. Can we make to order? 4. Can we use postponement? 5. Can we use inventory as a control point? 6. What’s my Entitlement process? VSM-Line Live- Renewal 7. What is benefit of Entitlement? (Business Case) 8. What is my implementation plan to get there? 9. What’s my Competitive process? VSM-End State MLI 10. Start over!
    22. 22. Supply Chain - Elements of Lean Thinking <ul><li>Value stream mapping </li></ul><ul><ul><li>Current and Future states </li></ul></ul><ul><ul><li>Taking waste out of the processes </li></ul></ul><ul><li>Inventory as a control point (Pull Finished Goods) </li></ul><ul><ul><li>Demand driven replenishment </li></ul></ul><ul><li>Rhythm (How often do we make products) </li></ul><ul><ul><li>Impacts service and inventory levels </li></ul></ul><ul><li>Work-In-Process kanbans (Pull WIP) </li></ul><ul><ul><li>Demand driven production of components </li></ul></ul><ul><li>Raw material kanbans (Pull Raw Materials) </li></ul><ul><ul><li>Supplier managed replenishment </li></ul></ul>
    23. 23. <ul><li>Current State and Future State </li></ul><ul><ul><li>Flow of material or process </li></ul></ul><ul><ul><li>Flow of information </li></ul></ul><ul><ul><li>Value analysis </li></ul></ul><ul><ul><li>Projects to achieve Future state </li></ul></ul><ul><li>Applications </li></ul><ul><ul><li>Supply Chain (Internal and 3 rd party manufacturing) </li></ul></ul><ul><ul><li>New Products Development </li></ul></ul><ul><ul><li>Demand generation </li></ul></ul><ul><ul><li>Transactional processes </li></ul></ul><ul><ul><li>Human Resources </li></ul></ul>Value Stream Mapping
    24. 24. Value Stream Mapping Current State Future State
    25. 25. Inventory Replenishment Level (IRL) Inventory Replenishment Level (IRL) Safety Stocks Intranet Pull System – Finished Goods Inventory as a Control Point
    26. 26. Work-in-process Kanbans <ul><li>Work-in-process Kanbans (signals) </li></ul><ul><li>Visual </li></ul><ul><li>Simple </li></ul><ul><li>In the work environment </li></ul><ul><li>Linked to ERP system for transaction </li></ul>
    27. 27. Raw Material Kanbans Internet Based Raw Material Pull (Kanban) System
    28. 28. Lean Manufacturing Toolbox <ul><ul><li>Rapid Changeover </li></ul></ul><ul><ul><li>Standard Work </li></ul></ul><ul><ul><li>Center-lining </li></ul></ul><ul><ul><li>Maintenance Excellence </li></ul></ul><ul><ul><li>Cellular Manufacturing </li></ul></ul><ul><ul><li>Five S </li></ul></ul><ul><ul><li>Line Balancing </li></ul></ul><ul><ul><li>Layout Analysis / Improvement </li></ul></ul>
    29. 29. Lean Thinking in 3 phases <ul><li>Lean Manufacturing 2001-05 </li></ul><ul><ul><li>J&J Plants </li></ul></ul><ul><li>Lean Contract Manufacturing 2003-06 </li></ul><ul><ul><li>Contract sites </li></ul></ul><ul><li>Lean Enterprise 2004-07 </li></ul><ul><ul><li>Sales and Logistics </li></ul></ul><ul><ul><li>New Products Development </li></ul></ul><ul><ul><li>Transactional and Office processes </li></ul></ul>
    30. 30. Six Sigma and Lean Integration <ul><li>What is Six Sigma at Johnson and Johnson? </li></ul><ul><li>What is Lean at Johnson and Johnson? </li></ul><ul><li>How do Six Sigma and Lean work together? </li></ul><ul><ul><li>Synergies </li></ul></ul><ul><li>Challenges in deployment </li></ul><ul><li>Rewards: Driving business results </li></ul>
    31. 31. Six Sigma / Lean Integration Create a current Value Stream Map Lean Create a future Value Stream Map Lean Prioritize initiatives Six Sigma Charter Projects Six Sigma Use DMAI 2 C for project Six Sigma Use Lean Tools for project Lean Six Sigma Lean
    32. 32. Process Excellence Design Excellence Lean Six Sigma Data Based Problem Solving and Variation Reduction Create Customer Value by Eliminating Waste Design Based on Customer Needs Data Based Decisions + Reduced Waste + Customer Focus = World Class Manufacturing Business Metrics and Dashboards Six-Sigma Six-Sigma / Lean Synergies
    33. 33. Six Sigma and Lean Integration <ul><li>What is Six-Sigma at Johnson and Johnson? </li></ul><ul><li>What is Lean at Johnson and Johnson? </li></ul><ul><li>How do Six-Sigma and Lean work together? </li></ul><ul><ul><li>Synergies </li></ul></ul><ul><ul><li>Divergence </li></ul></ul><ul><li>Challenges in deployment </li></ul><ul><li>Rewards: Driving business results </li></ul>
    34. 34. Six Sigma / Lean Challenges <ul><li>After initial training, it does not stick: </li></ul><ul><ul><li>Belts do not continue to execute projects </li></ul></ul><ul><ul><li>“ This is hard work, when will I find the time” </li></ul></ul><ul><li>Other initiatives come on board: </li></ul><ul><ul><li>Six Sigma and Lean starts to be seen as fads </li></ul></ul><ul><ul><li>“ If I stand by, it will pass and I won’t have to do anything” </li></ul></ul><ul><li>Management becomes impatient with return: </li></ul><ul><ul><li>Six Sigma and Lean are long term investment </li></ul></ul><ul><ul><li>“ We need quick wins” </li></ul></ul>
    35. 35. Six Sigma / Lean Success Elements <ul><li>Change management </li></ul><ul><li>Visibility </li></ul><ul><li>Assessment </li></ul><ul><li>Control </li></ul><ul><li>Passion </li></ul>
    36. 36. Effective Change Management Despair Giving up High expectations Realisation of effort and complexity/Informed pessimism (doubt) Informed Optimism (confidence) Light at the end of the tunnel Optimism + - Time Pessimism with effective change management
    37. 37. Elements of Successful Change Management Strong Business Case Haphazard change, false starts Anxiety, frustration, learned helplessness Diminishing momentum, diffuse effort Low priority , bottom of the in-basket SUCCESSFUL CHANGE = = = = = Strong Business Case Strong Business Case Strong Business Case A Clear and Shared Vision A Clear and Shared Vision A Clear and Shared Vision A Clear and Shared Vision Capacity for Change Capacity for Change Capacity for Change Capacity for Change Actionable First Steps Actionable First Steps Actionable First Steps Actionable First Steps
    38. 38. Six Sigma / Lean - Change Management More than the process Beliefs/ Values Jobs / Organization Process Management / Measurement Systems
    39. 39. What’s wrong with this picture? Six Sigma & DMAI2C Smoke Tree Fence Chimney Antenna Door Window Stairs Shrubs Grass Porch Flowers Roof WIRES Meter Sky Fire
    40. 40. A picture is worth a thousand words Six Sigma & DMAI2C Six Sigma / Lean Make it Visual
    41. 41. Lean Thinking Assessment Scoring Example Johnson & Johnson Sample Country Lean Company Average Company Traditional Company
    42. 42. Lean Thinking Assessment Johnson & Johnson Plant Eliminating waste must turn in tangible financial benefits.
    43. 43. Lean Thinking - Monitor and Control
    44. 44. Six Sigma and Lean Integration <ul><li>What is Six Sigma at Johnson and Johnson? </li></ul><ul><li>What is Lean at Johnson and Johnson? </li></ul><ul><li>How do Six Sigma and Lean work together? </li></ul><ul><ul><li>Synergies </li></ul></ul><ul><ul><li>Divergence </li></ul></ul><ul><li>Challenges in deployment </li></ul><ul><li>Rewards: Driving business results </li></ul>
    45. 45. Six Sigma / Lean Thinking / Design Excellence Capital Efficient Profitable Growth Cost of Capital ROIC Growth Operating Margin Net Asset Turnover Cost Management Fixed Asset Management Working Capital Management Revenue Management <ul><li>Product Performance </li></ul><ul><li>Technical Support </li></ul><ul><li>Product Mix </li></ul><ul><li>Delivery Performance </li></ul><ul><li>Customer Service </li></ul><ul><li>Yield </li></ul><ul><li>Material Costs </li></ul><ul><li>Facility Utilization </li></ul><ul><li>DL and IDL Efficiency </li></ul><ul><li>Facilities Modernization </li></ul><ul><li>Capacity Utilization </li></ul><ul><li>Process Technology </li></ul><ul><li>Inventory turnover </li></ul><ul><li>DSO </li></ul><ul><li>Accounts Payable Days </li></ul><ul><li>Cycle Time </li></ul><ul><li>Market Penetration </li></ul><ul><li>Market Development </li></ul><ul><li>Product Development </li></ul>Process Excellence Projects Delivering Shareholder Value
    46. 46. Six Sigma / Lean - Driving the Business <ul><li>Lower inventories </li></ul><ul><li>Increased customer service </li></ul><ul><li>Value creation in lower costs </li></ul>Consumer and Personal Care Group 2001-2004
    47. 47. Thank you! Page: