Presentation by Peter Peterka of Six Sigma.US to ASQ Section 1508 Tampa/St Petersburg on March 9, 2009

1. Objectives
D
• Give a brief history of the Six Sigma methodology
M
• Provide a summary of the principles for
A
implementing Six Sigma in a business
I
C
• How to restart a stalled or inactive initiative
• Getting engagement from organizational leaders by
ASQ Section 1508 St. Petersburg /
implementing Business Process Charting
p g g
Tampa DINNER MEETING Monday
Monday,
March 9, 2009
Bringing a Stalled Six Sigma Initiative Back to Life
by Peter Peterka
To receive a copy of the presentation send an email to tampa@sixsigma.us
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Common Mistakes
Project Failure Stats
• Thinking the key to Six Sigma is Statistics, Statistics,
Statistics - NO! IT IS A MANAGEMENT SYSTEM !!!
• 71% of projects fail each year
• Overemphasis on Cost Reduction
• They take 84% more time than planned
• Failure to address improvement as part of the job
• They cost 56% more money than planned
• They achieve 93% of what they set out to • Ignoring team dynamics as a cause of project failures
deliver (falling to 67% on projects that are • Overreliance on the Black Belt, Six Sigma equals projects
delayed or over budget) • Not understanding common cause vs. special cause
• 0.5% of project managers admit to working on variation
failed projects • Failure to apply the concept of the customer internally
• Recognizing management’s involvement not just
commitment
Why should Six Sigma be any different? • Ignoring the management of change
- Peter Peterka
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2. Change is never easy An Overview of Six Sigma – Why?
but not always bad….
• Six Sigma is a business strategy and methodology
• Six Sigma creates Breakthrough Performance
• Six Sigma saves money
• Six Sigma improves a company’s value in the eye of
their customer:
– Reduced Cost
– Improved Delivery
– Faster and more on target New Products
• Six Sigma applies to all organizations and processes
“The problems we face cannot be solved with
the same thinking that created them.”
-Albert Einstein
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An Overview of Six Sigma – What? A History Lesson
• Breakthrough Improvement • Infancy
– In 1984 Motorola developed the concept of Six Sigma
• Systematic and Focused Approach
performance
• Right Projects
– They had major issues in Manufacturing and
• Right People
Assembly with the focus on defect reduction
• Right Project Management – There was a lot of training on great tools but limited
• Methodology for Sustaining The Gains insight on application
• Right Results – Texas Instruments, Kodak, others tried later to
implement
• Process Thinking
• Right Place / Right Time from Walmart MBB
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3. A History Lesson A History Lesson
• Adolescence • Young Adulthood
– In the mid-1990’s AlliedSignal and GE popularized the – Focus begins to change to focus on application to
method major financial contributors to the business, not just
for operations or individual functions
– A variety of roadmaps are developed with varying
tools to apply for process improvement – Defined roadmaps are developed for development of
new product offerings and services
– The focus changed from defect reduction to ROI
– GE focuses majority of it’s efforts on Non
Non-
–SSome efforts started towards application to Design
ff t t t d t d li ti tDi
Manufacturing / Services, Financial services
and Service functions, especially in GE
– Bank of America, JPMorgan Chase, American Express
– Ford, DuPont, 3M, Dow Chemical are other follow-ons
enter into the game
in these efforts
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A History Lesson Why ‘do’ Six Sigma?
• It should be identified as a business strategy for improvement
• Adulthood
and value generation
– Focus changes to value generation for the entire • It’s focus is on providing breakthrough performance
business – a corporate initiative, not just a ‘quality • It can aid in saving money
thing’ • It can improve a company’s value in the eye of their customers
– Roadmaps are defined separately for Development and shareholders through:
efforts (DFSS) and Process Improvement (DMAIC) – Reduced cost
– Improved delivery performance
– Integration of Lean practices and tools becomes more
– Reduced warranty claims and costs
widely visible
– Improved and on-target new offerings (products and
– Applications to government, military, health care, services)
hotels, and other businesses continues to rise • The application to all processes in all organizations
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4. The DMAIC Methodology
Transforming Business Decisions
Methods used to
Issues
solve problems
1. Simple, non critical, easily reversed
Feelings
What is
Define important?
2. Following trends, minor changes in
Simple Problem
processes, could be reversed if necessary
Solving Tools
Measure How are we doing?
3. Differences between groups, major process
Process Analysis
changes, changes difficult to reverse
h h diffi l
Tools & Methodology
4. Major process changes or large capital
Analyze What is wrong?
Complex analysis
expense, changes nearly impossible to
DOE, Regression
reverse
Improve What needs to be done?
Change the methods used to make decisions
from feelings to the use of data How do we guarantee
Control performance?
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Tools in the Funneling of X’s Financial Control Model
Y = f (X1 X2 X3 X4 X5 X6 X7…Xn) Project Y
Define
PM identifies process
Project Charter And potential savings
123 4-6 1 2 3 4 5 6 7 8 9 10 11 12
?
Measure 12 Month Financial Control Period
Process Maps
Process Map C&E prioritizes inputs
C&E Matrix Implement
MSA on X’s assures can be controlled
Analyze Improvements
MSA
FMEA reduces variation and
FMEA effects for “inputs gone wrong”
Multi-Vari
Improve Multi-Vari identifies Noise variables
and reduces the X’s for DOE 2 Month
Report Quick Wins 6 Month
DOE Financial
DOEs identify the Critical Xs and Financial
Control their relationship to the Y Review Review
Control Plans
SPC Develop controls for Critical Xs to
maintain performance of the Y
Y = f (X5 , X22, X37)
12 Month Financial Review
The Roadmap “funnels” down the Xs from the trivial
many to a “vital few” - the Red Xs
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5. Key Lessons for Leaders What is Crucial for Success?
• Demand for breakthrough improvement
First…
• A systematic and focused approach
1. A compelling reason for change must be articulated
• Selection of the right projects
2. Leadership team must be trained, and must believe
• Training and holding accountable the right people
that Lean Six Sigma is the solution, and drive projects
• Management leadership for implementation of project
Then…
findings
3. Select the best people to become Black Belts
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• Project management to drive projects to completion
4. Assign critical mass of Black Belts full time
• Controls and conformance for sustaining the gains
5. Projects driven by strategy
• Driving for the right business results, financial or other
6. Institutionalize by transferring training and coaching
• Acceptance of process thinking throughout the business
initiative from Consultant to internal organization
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Deployment Principles That
Six Sigma Success Factors
Always Work – Critical Success Factors
• The bottom line focus and big dollar impact
1. A Sense of Urgency for change must exist
– Encourages and maintains top management commitment
2.Strategically align and connect business metrics and Lean Six
• The emphasis on - and consistent use of - a unified and
Sigma metrics
quantitative approach to process improvement
3.Senior organization leaders must be engaged in the process
– The DMAIC methodology provides a common language so
Line organization owns resources & are accountable for project
that experiences and successes can be shared through the
results
organization
Lean Six Sigma should be integrated into the daily management
–C Creates awareness th t decisions should be based on
t that d i i h ld b b d
practices of the organization
factual data
4.Business Leaders own resources & are accountable for project
• The emphasis on understanding & satisfying customer needs
results
– Creates focus on doing the right things right
5.A strong and respected Command Deployment Champion should
– Anecdotal information is replaced by factual data
report to Senior Leadership
• The combination of the right projects, the right people and the
6.Deploy critical mass of key full-time resources (Black Belts,
right tools
Deployment Directors)
– Careful selection of projects and people combined with
hands on training in using statistical tools in real projects
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6. Deployment Principles That
TWENTY KEY LESSONS LEARNED
Always Work – Critical Success Factors
7. Resources should be selected from “future leaders of the
1. The time is right.
organization”
2. The enthusiastic commitment of top management is
8. Establish a consistent process for Project Identification and
critical.
Selection
3. Develop an infrastructure.
9. Actively manage Projects-in-Process to reduce/control project
4. Commit top people.
lead times
5.
5 Invest in relevant hands-on training.
training
Use Rapid Improvement Events for quick-hit projects
6. Select initial projects to build credibility quickly.
10.Track results rigorously: Lean Six Sigma results should “pay as
you go” and be confirmed by objective parties 7. Make it all pervasive, and involve everybody.
11.Black Belts/Green Belts must have team leadership skills 8. Emphasize DFSS.
12.Integrate with other initiatives where applicable 9. Don’t forget design for reliability.
10. Focus on the entire system.
Gerald J. Hahn, “20 Key Lessons Learned,” Six
Sigma Forum Magazine, May 2002, pages 28-34.
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Secretariat 1973 Belmont Stakes quot;The Photoquot;
TWENTY KEY LESSONS LEARNED
11. Emphasize customer CTQs (critical to quality).
12. Include commercial quality improvement.
13. Recognize all savings.
14. Customize to meet business needs.
15. Consider the variability as well as the mean.
16. Plan to get the right data.
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17. Beware of dogmatism.
18. Avoid nonessential bureaucracy.
19. Keep the tool box vital.
20. Expect Six Sigma to become a more silent partner.
Gerald J. Hahn, “20 Key Lessons Learned,” Six
Sigma Forum Magazine, May 2002, pages 28-34.
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7. Key Elements of Business Process Charts
Business Process Charting
Business Metric number with operational
1.
• A graphical and numerical analysis method for
definition
any type of business process data used for
Process Owner Labeled on Chart
2.
insight into understanding and improvement of
Business Data Plotted over time often monthly
business results. 3.
Business Goal Marker
• Based upon Statistical Thinking Theory 4.
Statistical Based Limits often based on
• Directed toward identifying opportunities for 5.
Individual and Moving Range to start
improving business results
• A way to engage business leaders!
Peter Peterka Peter Peterka
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Key Elements of Business Process Chart How to: Determine the Proper Metrics
1. Name and number of
Business Metric:
• Actual Process Map of Business Process
5. Statistical Limits
• Cause and Effect Matrix approach relating metrics
2. Process Owner Metric 1.42
to business goals
• Affinity Brainstorming of Metrics
• Have each business leader give their 10 “sweat”
metrics
ti
• Traditional Financial Measures
• Customer Measures
• Indicators or Predictors of Performance (Xs)
4. Business
Goal
3. Business Data Plot Overview time often
monthly
Peter Peterka
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8. Example of Business Measures:
Determine the Operational Definition for the Metric
• Customer • % Waste
• Definitions that will be interpreted the same way
Complaints
by different people in different situations. • $$ Waste
• Economic Profit
• Same method of calculation • Raw Material Costs
• Order Fulfillment
• Same method of counting • Cycle Time
• Product Availability
• Inventory Turns
• Customer Credits
• Premium Freight
• Inventory Levels
• IMC Index
• Delivery Costs
• DSO
• Number of New
Products/Sales $$ • Market Share
• Safety
All Great Six Sigma Projects!!
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The Current Method of Business Analysis
Metrics for Six Sigma Implementation
• Summarize business results with a table of
• Percent Projects Completed
numbers.
• Savings from Projects
• Compare to last period, same period last year or
• Percent Projects in Company Database
goal.
• Percent Course Attendance
• React to big percent changes; ignore small percent
• Consultant work days changes.
• Instructor Scores • Focus attention on those portions that are getting
• Percent Courses with Correct Material worse.
• Six Sigma Billing Errors
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9. Three Methods of Analysis
Three Methods of Analysis
The Goal Approach The Average Approach
– Current values are judged to be either – Compare actual results to average results
acceptable or not based on comparison with the – Above vs. Below average is not a meaningful
goal, target, budget limit, etc. “break point” in performance
– Alternate between “doing okay” and “in – Below average months are inevitable
trouble”
– Creates internal comparisons that may not be
• When “ “doing okay” ignore it
” either fair or helpful
• When “in trouble” take action – Other variations on this approach include:
• On-again, off-again approach is the complete • Best/worst result (there will always be one!)
antithesis of continual improvement.
• Best/worst result in X months
• Goals are useful as a means to improvement,
but when they become the end, to the degree of
disrupting improvement, they are a problem!
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Three Methods of Analysis “To Measure or Not to Measure”
The Business Process Chart Approach Raw Monthly Number: $, Total, %
– Results are judged first on whether they Aggregate Numbers
represent a real change in the underlying Percent to Sales or Similar Business Ratio
process (special cause) or not (common
Mix of Monthly and Year to Date
cause)
Percent Changeg
– The capability of the business process is
% Change vs. Same Month Last Year
compared to any goals, targets, etc.
Year to Date Percent Increase
Take Care with Accounting Accruals/Adjustments
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10. Statistical Thinking is ....
Benefits of Business Process Charting
• Improve Business Results • A philosophy of learning and action based on the
following fundamental principles:
• Make better predictions, improve credibility
– All work occurs in a system of interconnected
• Detecting real trends not “phantom”
processes,
• Learn more about processes
– Variation exists in all processes, and
• Ask more helpful questions
p q
– Understanding and reducing variation are keys
• Identify chronic opportunities for Six Sigma
to success.
• Engage Champions more in Six Sigma
• A Way of Thinking
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Benefits of Statistical Thinking
What Action is Appropriate?
• Strengthens the connection between improving the
business and improving the business process
• Improve predictability and credibility
Something Important
• Defines the appropriate direction for action
• Focuses scarce resources on the right issues
•LLearn faster about processes
ft bt
I
• Engaging Champions more in Six Sigma
Last Period This Period
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11. Common-Cause and Special-Cause
Variation
It Depends!
• From Common Causes
What is happening to me? What happened to me?
– Systemic, Chronic, Built-in Variation
• From Special Causes
– Sporadic, Exceptional, Atypical Variation
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Appropriate Type of Action
The Special and Common Cause Spectrum
• If special causes dominant
– Isolate and address the special cause(s)
The Real World
– Don’t over-fix
• If common causes dominant
Massive Common
Special Causes
– Make a permanent change to the
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Cause Only
system
– Don’t tamper after at each data point
It is important to know, at any point in time,
which type of variation is dominant.
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12. 0
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Goal