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Leading Lean Six Sigma

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This executive presentation explains what Lean Six Sigma does and how it works, what you can expect for results, and presents two alternatives for implementation.

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Leading Lean Six Sigma

  1. 1. Transforming Operations with the Lean Six Sigma Toolkit Leading Lean Six Sigma
  2. 2. Agenda • Objectives & Introductions • The process improvement toolkit • What is Lean Six Sigma? • Two paths to better business • What can you expect to accomplish? • Q & A Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 2
  3. 3. Session Objectives • Do we really need to explain why? • Lean Six Sigma in an improvement framework • The Lean Six Sigma purpose and process • Two paths to implementing Lean Six Sigma • What you should expect from a LSS program Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 3
  4. 4. Who is Avocus Group LLC? • Simply stated, we provide the best value in terms of experience, cost and results • Results-driven business improvement • Lean Six Sigma certification training, mentoring, execution and program management • We are change agents, delivering tangible benefits to our clients • Chicago-Based, founded in 2000 • Global client base, global solution delivery Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 4
  5. 5. Our Clients include leading Fortune 1000 and middle-market firms Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 5 T O S IT Services Operations Strategy TO TO TOS TOS T OS TO TOS TO O S TO OS S TO T OS TO S O
  6. 6. Small savings create big profits Before After % Improvement Sales $1,000 $1,000 Variable Costs 600 540 10% Operating Margin 400 460 15% Fixed Costs 300 300 Net Profit (Loss) $100 $160 60% Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 6
  7. 7. Our Operations Improvement Toolkit Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 7 Leadership and Execution Activity- Based Costing Lean Six Sigma Theory of Constraints
  8. 8. Lean and Six Sigma have complimentary goals and approaches Lean • Efficient operation of the entire value chain • Eliminate Waste • Align production with demand • Reduce inventory • Increase flexibility • Improve process safety and efficiency Six Sigma • Rigorous analysis of individual activities • Eliminate Variability • Broadly define quality, but closely define metrics • Statistical analysis of root causes and effects • Formal hypothesis testing • Ongoing data monitoring Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 8
  9. 9. Lean focuses on standardization, improvement and sustainability Stability Process Improvement Cultural Change Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 9
  10. 10. • 5S To improve and maintain cleanliness and orderliness • 7W Eliminate wastes in a structured way • Standardized Work Instructions for work operations • Increase safety and ergonomics in working places • Visual Management Use standard approaches in ground markings, info- boards, clothes • Key Performance Indicators Provide performance indicators and targets to all levels Lean strives to make processes repeatable, simple and safe Stability Process Improvement Cultural Change Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 10
  11. 11. • Value Stream Mapping to identify improvement opportunities • Set-Up Reduction to minimize changeover time and increase flexibility • Productive Maintenance increasing equipment efficiency and availability • Quality improvements with a goal of Zero defects as the quality standard • Zero Inventory and Pull Production Produce what is needed, when it’s needed and nothing else Lean focuses on standardization, improvement and sustainability Process Improvement Cultural Change Stability Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 11
  12. 12. • Continuous Improvement Sustain improvements with continuous search for new internal and external opportunities • Continuous development Involves developing and training employees in improvement techniques and required behaviors • Ongoing Management Focus Supporting team work and responsibility assumption at all levels • Work Teams Delegate work to teams and reduce non-value-added oversight • Leader Development Promote leadership and coaching capabilities and encourage initiative Lean focuses on standardization, improvement and sustainability Cultural Change Stability Process Improvement Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 12
  13. 13. 5-S and 7 W's are at the core of Lean Implement 5-S • Sort • Systemize • Sweep & Clean • Standardize • Self-Discipline Eliminate 7 Wastes • Overproduction • Inventory • Transportation • Over-processing • Idle Time • Operator Movements • Poor Quality Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 13
  14. 14. What is a Value Stream Map? Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 14
  15. 15. Six Sigma • Overall objective is to reduce process variation • Detailed analytical, data-driven methodology for eliminating waste and defects from discrete activities • Based on established statistical process control techniques, data analysis methods and systematic thinking • Ultimately strives for 3.4 defects per million events Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 15
  16. 16. So who is the better golfer? Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 16
  17. 17. Graphical View of Six Sigma Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 17 USL = 6σLSL = - 6σ Target +3σ Measured Process Customer Requirements (USL, LSL) defined at ± Six Sigma from the measured Process Mean
  18. 18. How do Sigma Levels relate to real-world defect rates? Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 18 1,000,000 100,000 10,000 1,000 10 1 0.1 1 2 3 4 5 6 7 IRS Tax Advice Bogie Golf Baggage HandlingBurglary Case Closure Tech Center Wait Time Order Processing Airline FatalityFlight Delays Sigma Level
  19. 19. The Six Sigma DMAIC Methodology Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 19 Define •DPO •Cost of Poor Quality •Surveys •Warranty •Pareto Charts •Flow Charts •SIPOC •VOC •Kano Model •CTQ Trees •Project Charter Measure •Blueprints •Process Sheets •Metrics •Flow Charts •Linkage Matrices •FMEAs •Measurement System Analysis •Capability Analysis Analyze •Multivariate Analysis •SPC & Charting •Basic Stats - Hypothesis - Basic DoE •Check Sheets •Histograms •Scatter Diagrams •Regression Improve •Designed Experiments - Full Factorial - Fractional - Comparison •Measurement System Analysis •Capability •Statistical Tolerance of Process Control •Control Plan •Operator Illustrations •Operator Instructions •Error Proofing •Automated Control •QMS •Variation Monitoring
  20. 20. Your best implementation path depends on where you are “The High Road” “The Low Road” • Top-Down Approach • Executive Sponsorship • Big-Picture Authority • Appropriate Budget • Bottom-Up Approach • Usually Mid-Level Sponsor • Process or Functional Authority • Minimal Budget Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 20
  21. 21. Implement Projects Implement Projects The "High Road" Implementation Process Overview Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 21 Build Project Portfolio Plan & Staff Projects Implement Projects Implement Quick Hit Projects Transition to Process Owners Monitor & Control
  22. 22. The "High Road" Implementation Process Overview Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 22 BuildProjectPortfolio Select Program Champion Confirm Strategy & Goals Conduct ABC Analysis Conduct TOC Analysis Identify Opportunities Analyze Benefits and Returns Select Projects Form PMO Plan&StaffProjects Identify Project Champions Create Project Plans Determine Staff Requirements Select Staff for Belt Assignments Conduct Belt training Conduct Manager Training
  23. 23. The "High Road" Implementation Process Overview Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 23 ImplementProjects Implement Metrics Rapid Improvement Workshops Visual Management Standard Work for Operators & Managers DMAIC / Reduce Variation Assess Management Capability IdentifyQuickHitProjects Kaizen Blitz 5S 7W Supplier Improvement Visual Management Implement Standard Work Assess Management Capability
  24. 24. The "High Road" Implementation Process Overview Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 24 TransitiontoProcessOwners Confirm Standard Work for Managers in place Complete manager assessments Transition staff where needed Conduct additional training Coach and shadow Monitor&Control Implement Balanced Scorecard Establish management by exception Control chart reviews Stress the system – schedule goal increases Confirm correlation to financial results
  25. 25. The "Low Road" Implementation Process Overview Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 25 Implement Projects Implement Projects Identify Opportunities Plan Projects Implement Quick Hit Projects Monitor & Control Communicate Results
  26. 26. Each approach has benefits and challenges Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 26 Challenges Benefits High-Road • Visibility to pilot projects • Lower-level buy-in • High visibility from the start • Executive exposure • Focus on results • Company-wide opportunities • Program funding • Broad authority to direct support • Access to the best talent • Scale opportunities Low-Road • Managerial support for projects • Limited funds • Narrow opportunity set • Upper-level buy-in • Diversion of resources • Communicating wins • Selling the program • Low exposure • Autonomy • Close proximity to pilot projects • You know your team • Low-Hanging Fruit • Direct Accountability for results • Personal satisfaction
  27. 27. A basic 5-S initiative saves a $1 billion retailer over $1 million annually Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 27 25% Improvement Target 15% due to Admin Error 2% Shrink Total Retail Turnover $1 Billion $30 Million $4.5 Million $1.1 Million Theft & FraudProfit & Other Costs
  28. 28. A "small" project will save one retail distributor over $1 million Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 28
  29. 29. High-Tech Company: $500,000 annual savings per Black Belt Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 29 Each Black Belt completes two $250k projects per year Up to 90 people will have Black Belt by end of year 1 Expected annual savings between $15 million and $45 million
  30. 30. Let's look at the economics Costs Benefits LSS Green Belt • 1 Week Certification Training • About $2,000 training cost $75,000/yr savings per Green Belt: • Complete one $50,000 project for certification • Approx. 2-3 projects per year • Est. $25,000 per project LSS Black Belt • 4 Weeks Certification Training • About $5,000 training cost $300,000/yr savings per Black Belt: • Complete one $50,000 project for certification • Approx. 2-3 projects per year • Est. $150,000 per project • Mentor and lead Green Belts on additional projects Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 30
  31. 31. Some final thoughts • Lean Six Sigma is a bottom-up process. At every stage, request as little as possible from above. • Start with small wins, not big programs • Don’t hand this off to the Junior Varsity. It takes leaders to drive change. • It also takes leaders to sustain change. Evaluate managers as you fix your processes. • Remember, nothing succeeds like success. Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 31
  32. 32. Thank you and good luck on your Lean Six Sigma Journey! Great Lakes Office West Chicago, Illinois West Coast Office Lafayette, California Jack Kahler (630) 621-4659 Direct jkahler@avocusgroup.com Visit our website at www.avocusgroup.com AVOCUS GROUP LLC Descartes EVOLUTION 2009 User Conference © 2009 Avocus Group LLC. All Rights Reserved. Page 32

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