Operational excellence through lean & six sigma


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Operational excellence through lean & six sigma

  1. 1. Business Transformation through Operational Excellence Harsh Upadhyay engineerharsh@yahoo.co.in
  2. 2. Operational Excellence Operational Excellence is a philosophy of leadership, teamwork and problem solving resulting in continuous improvement throughout the organization by focusing on the needs of the customer, empowering employees, and optimizing existing activities in the process. Strategic weapons for operation excellence’s are (but not limited to…) • Lean • Six Sigma • Lean Six Sigma Reference: http://en.wikipedia.org/wiki/Operational_excellence engineerharsh@yahoo.co.in
  3. 3. Strategic Weapon For Operational Excellence What is Lean? Lean is a set of principles whose fundamental goal is to eliminate waste and maximizing flow. What is Six Sigma? Six Sigma is about meeting customer requirements and stakeholder expectations, and improving quality by measuring and eliminating defects. What is Lean Six Sigma? Lean Six Sigma is a combination of Lean methods and Six Sigma approach which do more than simply improving processes by innovating business areas including operations, products, services and business models. It enables break through innovation thus destroying obstacles by creating an organizational climate in which innovation is instinctive. engineerharsh@yahoo.co.in
  4. 4. Continuous Improvement- The Key to Excellence in Execution Improvement- Continuous improvement can be achieved by operational excellence methodologies like Lean, Six Sigma, Lean Six Sigma. It focuses on process improvement and behavioural improvement of people and organization Lean focuses on reducing non-value Six Sigma focuses on reducing process add time variation Source: Continuous Improvement (The key to excellence in business processes) -Accenture engineerharsh@yahoo.co.in
  5. 5. Challenges With Implementation of Operational Methodologies Unsupportive culture and climate in the organization Lack of clarity in linking strategy to execution Limited focus on process excellence Little engagement or no engagement of top management Inadequate or insufficient metrics which are not aligned with customer value Lack of Employees engagement towards continuous improvement culture Treating continuous improvement as a project/program instead of a journey engineerharsh@yahoo.co.in
  6. 6. Strategies For Implementation of Operational Excellence Leaders in organization must lead operational excellence initiatives Operation excellence initiatives must be driven on organization’s top burning issues which are highly critical for customer and stakeholders Focus on values Customer value and shareholder value are not created by the same activities. As a rule, customers do not care what it costs to deliver a product as long as that cost is not passed along however shareholders care a lot about the costs for which that product is delivered For getting higher impact, the continuous improvement initiatives should maintain the balance between these values The organization should adopt issue-based or value-driven approach to issue- value- problem- problem-solving and process improvement engineerharsh@yahoo.co.in
  7. 7. Strategies For Implementation of Operational Excellence Organization capability enhancement through training and on-job coaching on- enabling continuous improvement initiatives to become self-sustained self- Promotion and retention of associates with deep operational excellence expertise is critical Top caliber high performers should be identified as “change agents” who can drive operational excellence initiatives in the organization Technology must be agile and responsive enough to support an organization’s operational excellence agenda Measurement of continuous improvement initiatives through PDCA or RCA in pre-defined and timely manner pre- engineerharsh@yahoo.co.in
  8. 8. Develop “T” People People who have broad experience in operational excellence People with deep skill in operational excellence Equal effort between “Going Wide” and “Going Deep” Spread Operational Excellence Across the Organization Develop Depth of Capability within the Organization engineerharsh@yahoo.co.in
  9. 9. Final Thoughts “Every day, little up” “Some days, big up” “Until you take the first step, it will not be possible to see the next step” engineerharsh@yahoo.co.in
  10. 10. Operational Excellence Case Studies engineerharsh@yahoo.co.in
  11. 11. Operational Excellence Deployment in Caterpillar Business Case The Caterpillar's growth was limited due to four years of flat revenues and extreme competition Operation Excellence Methodology Lean Six Sigma Goal of Lean Six Sigma Deployment Determined to regain its industry leadership position and continuous growth by customer-driven innovation and continuous improvements customer- Scope of Deployment 27 separate business units and over 72,000 employees in six continents with multiple spoken languages engineerharsh@yahoo.co.in
  12. 12. Operational Excellence Deployment in Caterpillar Action taken The CEO along with the strategic planning committee analyzed the customer requirements, market conditions and Caterpillar's capabilities and determined the vision of 2020 for the organization with 3 five years plans across all business units to achieve the vision. Through the rigor and disciplined enforced during the initiative, the entire company was aligned behind the same and specific objectives Trained 4200 employees in Lean Six Sigma who drove 1100 projects and served as mentors to the rest of organization Result Record profits and company achieve its 2010 goal engineerharsh@yahoo.co.in
  13. 13. Operational Excellence Deployment in PASCO Business Case The PASCO's growth was impacted due to low cost competition and its limited regional foot prints Operation Excellence Methodology Lean Six Sigma Goal of Lean Six Sigma Deployment Becoming a value added steel maker rather than a low cost steel maker by driving Six Sigma culture to change all employee’s way of thinking, current working style and mind-sets mind- engineerharsh@yahoo.co.in
  14. 14. Operational Excellence Deployment in PASCO Actions taken Trained employees in Lean Six Sigma Collected customer requirements and recommendations by sending their engineers to key customers which helped PASCO to understand the several product areas where customers were looking for more innovative solutions Focused on high potential market (Shipping and Automotive industries) where the company wanted to concentrate their R&D which led to major product innovation. For example, the company invented steel that remains rust-free in salt water, creating significant opportunities in rust- shipping and floating dock constructions Using Lean Six Sigma to drive interactions with global automakers, POSCO developed 21 varieties of high-grade steel designed to meet special high- industry needs, such as coated steel where the paint adheres easily engineerharsh@yahoo.co.in
  15. 15. Operational Excellence Deployment in PASCO Action taken cont. For maintaining the customer demand, PASCO increased global presence and with the help of Lean Six Sigma, it reduced finished steel inventories and cut lead time by 50%. In addition to growth and profitability, the Lean Six Sigma approach helped POSCO to restore and protect Korea’s natural environment by approaching an iron-making process that eliminates the sintering and coking processes, iron- which, in turn, reduces environmental pollutants Result POSCO has produced over US$ 1 billion in financial gains to date, including strong savings and record sales volumes Company has transformed itself from a regional, low-cost producer to a low- global, value-added provider of high-quality steel. POSCO is now the third value- high- largest steelmaker worldwide with “world’s most competitive steel firm” for three consecutive years. engineerharsh@yahoo.co.in
  16. 16. Operational Excellence Deployment in ScotishPower Business Case ScotishPower was losing its market share because of high customer attrition rate Operation Excellence Methodology Lean Six Sigma Goal of Lean Six Sigma Deployment Improve its customer service and sales operations thoroughly, to regain a market-leading position market- engineerharsh@yahoo.co.in
  17. 17. Operational Excellence Deployment in ScotishPower Action taken Established Business Transformation Department and trained hundreds of employees in Lean Six Sigma Launched 130 Lean Six Sigma Projects Designed the new process that approach to those clients who moved to different home and canceled their ScottishPower services Applied Lean Six Sigma to burning issues. For example, targeted marketing campaign that boosted use of direct debit payments by 14 percent, a simplified sign-up process for business customers that led to a 20 percent sign- increase in acquisition, and new meter reading processes with lower costs and higher accuracy Result Customers base increased from 3.2 million to 5.1 million in just four years Realized US$ 170 million in additional revenue and cost savings engineerharsh@yahoo.co.in
  18. 18. Operational Excellence Deployment in UNS Healthcare Business Case UNS Healthcare is an 800-bed public hospital and trauma center, whose 800- capacity was stretched to the limit. They needed more space but adding a new bed costs a million dollars and takes several years. The length of patient stay is a critical measure of effectiveness and efficiency. A shorter stay means that beds turn over more quickly and hospitals can treat more patients without investing additional capital. Operation Excellence Methodology Lean Goal of Lean Deployment Reduce the length of stay by 10% without affecting the quality of care engineerharsh@yahoo.co.in
  19. 19. Operational Excellence Deployment in UNS Healthcare Action taken Pilot program kicked-off in the orthopedics, medical oncology, pulmonary kicked- and infectious disease areas Determined the care plan and target discharge date of each patient at the time of admission into hospital. Smooth communication between hospital and patients about target date of discharge and steps involved in the process Written care plan and a whiteboard in every room with daily goals to help keep the patient focused on his or her discharge date Result Freeing up three to four hospital beds each day. Patient satisfaction scores went up by 10% over historic averages. Implemented the pilot program actions into the entire hospital, effectively raised capacity by about 80 beds and add $ 35 million to the bottom line engineerharsh@yahoo.co.in
  20. 20. Operational Excellence Deployment in UNS Healthcare Other Action with Lean initiatives were Top- Top-down review of day-to-day administrative procedures day-to- Reduced the waiting time of care performed by taking appointment in advance with proper load-balancing load- Improvement in patient hand-offs- review of how many times patients are hand-offs- handed off during their hospital stay. When hospitals adopted lean methods, they said “they tend to stop passing patients between care professionals”. Instead, they developed care teams of dedicated professionals who handled patients. “This reduces handoffs, it reduces medical errors, it reduces length of stay, and it improves patient satisfaction greatly.” More handoffs lead to more medical errors. And more medical errors lead to longer lengths of stay engineerharsh@yahoo.co.in
  21. 21. Operational Excellence in Financial Services Lean implementation in financial services is same as Lean implementation in manufacturing. Finance is just a different kind of factory. It is a processing factory, and there’s a lot of waste. Becoming lean involves eliminating the seven type waste in a process i.e. overproduction, waiting, over processing, poor transportation/logistics, inventory control, rework, and unneeded movement Impact of lean initiatives in financial services look like: An international commercial bank discovered the potential for 30% more efficiency in processing customer transactions – while improving customer satisfaction through more differentiated service A lean audit of one North American asset manager uncovered ways to make product pricing 12%-20% more efficient by carefully identifying and 12%- eliminating non-value added activities non- Analysts using a lean approach in one investment bank reportedly gained 20%- 20%-30% in analyst productivity and a 60% reduction in cycle time by redefining credit processes engineerharsh@yahoo.co.in
  22. 22. Customized Continuous Improvement Approach - By Leading Consulting Firms engineerharsh@yahoo.co.in
  23. 23. Adopting a Lean Mindset—A.T.KEARNEY Mindset— Lean mindset is the advocate of persistently pursuing the continuous improvement in cost, quality and service 4 principle of Lean Mindset are: 1. Define Value for which customer is willing to pay Define customer Understand customer needs Define customer values in term of quality, schedule and cost to fulfill customer needs 2. Remove Non-value added activities and process Non- Value stream Map (Pre & Post) Apply 5s and visual control system Implement Flow Implement pull system engineerharsh@yahoo.co.in
  24. 24. Adopting a Lean Mindset—A.T.KEARNEY Mindset— 3. Process improvement ownership must be aligned with process owner and process team 4. Strive for perfection (continuous improvement) through idea generation programs, innovation programs etc to make the process even more efficient and effective. engineerharsh@yahoo.co.in
  25. 25. Customer Focus Through BeLean™ - By Capgemini BeLean™ Methodology BeLean™ focuses on process or operation re-engineering and operational re- excellence by focusing on process, people and organization through implementation of Lean and Behavioural Change Management Its approach is the 3 Lean Principle: 1. Lean must bring about behavioural change 2. Lean must be tackled holistically, focusing on people and organization as well as processes 3. Deployment must be progressive – it must happen level by level Adopting these three principles makes Lean a means to achieving sustainable results – whether financial, operational, cultural or all of these. engineerharsh@yahoo.co.in
  26. 26. Customer Focus Through BeLean™ - By Capgemini Deploying Progressively Sustainable results are a consequence of behavioural change, which does not happen overnight. Therefore it is clear that a progressive approach to deployment taking one level at a time - will build a stronger result Level-1 (Taking control) Quick wins to create momentum and build a foundation of basic capability from which to progress Level-2 (Creating excellence) Delivering transformational results, embedding the Lean culture into the new business How to implement Lean successfully and deliver results that last-Capgemini engineerharsh@yahoo.co.in
  27. 27. 3 Phase Customer Improvement Approach- By Accenture Approach- The objective of 3 Phase continuous improvement approach is to sustain Behavioral changes throughout the organization These 3 phases are: 1. Business Evaluation – Focus on identify opportunities by capturing the customer’s voice and shareholder’s voice 2. Develop Transformation Roadmap- Determine the long term vision by top Roadmap- management, identification of manager who drive the implementation and implement the quick wins through Lean, Six Sigma or Lean Six Sigma. 3. Execute and build capability- Transfer the business improvement skills through capability- training and on-job coaching enabling the CI program to become self-sustained on- self- engineerharsh@yahoo.co.in
  28. 28. Thank You engineerharsh@yahoo.co.in