Six Sigma Deployment


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

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Six Sigma Deployment

  1. 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 2 1 March 2009 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 3 4 March 2009 March 2009
  2. 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 5 6 March 2009 March 2009 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 7 8 March 2009 March 2009
  3. 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 9 10 March 2009 March 2009 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 11 12 March 2009 March 2009
  4. 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? 13 14 March 2009 March 2009 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 15 16 March 2009 March 2009
  5. 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 pp • 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 17 18 March 2009 March 2009 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 19 20 March 2009 March 2009
  6. 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. 21 22 March 2009 March 2009 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. g g 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. 23 24 March 2009 March 2009
  7. 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 25 26 March 2009 March 2009 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 27 28 March 2009 March 2009
  8. 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!! 29 30 March 2009 March 2009 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 31 32 March 2009 March 2009
  9. 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! 33 34 March 2009 March 2009 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 35 36 March 2009 March 2009
  10. 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 37 38 March 2009 March 2009 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 39 40 March 2009 March 2009
  11. 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 41 42 March 2009 March 2009 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 p g 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. 44 43 March 2009 March 2009
  12. 12. 0 500 1000 1500 2000 2500 3000 Individual Value May-99 60 65 70 75 80 85 90 Jun-99 Nov-97 Jul-99 Jan-98 Aug-99 Mar-98 Sep-99 May-98 Oct-99 Jul-98 Nov-99 Dec-99 Sep-98 E Jan-00 Nov-98 Feb-00 Jan-99 Mar-00 Mar-99 Apr-00 May-99 May-00 A ACE Jul-99 47 45 Jun-00 Month Special Cause Flag Jul-00 Sep-99 Aug-00 Nov-99 Sep-00 Jan-00 Oct-00 CONTINENTAL AIRLINES Mar-00 Nov-00 Weather in Houston New Product Growth May-00 Dec-00 Jul-00 Jan-01 Feb-01 Sep-00 Growth Line Mar-01 Nov-00 Business Metric with Special Cause Apr-01 Jan-01 May-01 Mar-01 March 2009 March 2009 0 0 500 500 1000 1500 2000 2500 3000 1000 1500 2000 2500 3000 May-99 May-99 Jun-99 Jun-99 Jul-99 Jul-99 Aug-99 Aug-99 Sep-99 Sep-99 Oct-99 Oct-99 Nov-99 Nov-99 Dec-99 Dec-99 Jan-00 Jan-00 Feb-00 Feb-00 Mar-00 Mar-00 Apr-00 Apr-00 May-00 May-00 48 46 Jun-00 Jun-00 Jul-00 Jul-00 Aug-00 Aug-00 Sep-00 Sep-00 Oct-00 Oct-00 Nov-00 Nov-00 New Product Growth New Product Growth Dec-00 Dec-00 Jan-01 Jan-01 Feb-01 Feb-01 Growth Line Mar-01 Mar-01 Apr-01 Apr-01 May-01 May-01 Forecast March 2009 March 2009 Goal