Six Sigma Vs Kaizen


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Innovation and Incremental Improvement

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Six Sigma Vs Kaizen

  1. 1. 6σ & Kaize n Profit thru Quality
  2. 2. profit thru quality
  3. 3. KAIZEN-The Concept Kaizen….means improvement  Ongoing improvement  Involves everyone  Both Managers & Workers Kaizen Philosophy  Our way of life need to be constantly improved  Working life, social life, home life Kaizen embodies  Productivity Improvement  Total Quality Culture  QC Circles  Zero Defects  …..etc. profit thru quality
  4. 4. KAIZEN-The Concept Masaki Imai profit thru quality
  5. 5. KAIZEN-The Concept profit thru quality
  6. 6. KAIZEN-The Concept KAIZEN INNOVATION profit thru quality
  7. 7. KAIZEN-The Concept Process Oriented Approach  Leads to Improved Results  Focus on the process improvement without loosing sight of the expected results. People Oriented Approach  Focus on ….  Discipline  Time Management  Skill Development  Participation and Involvement  Morale  Communication profit thru quality
  8. 8. KAIZEN-The Practice Management Group IndividualTools Seven QC Tools Seven QC Tools Common Sense New Seven Tools New Seven Tools Seven QC Tools Professional SkillsInvolves Managers and QC Circles Everyone ProfessionalsTarget Systems and Process Group Work area Individual work areaImplementation Small investment Mostly inexpensive InexpensiveCostResults New System and Improved work On the spot Facility improvement procedures improvement profit thru quality
  9. 9. KAIZEN-The Practice Just In Time- Management Oriented Kaizen  Exact number of required units brought to each successive stage of production at the appropriate time  The advantage of JIT  Shortened Lead Time  Reduced time spent on non-process work  Reduced inventory  Better balance between processes  Problem clarification profit thru quality
  10. 10. KAIZEN-The Practice Group Oriented Kaizen- SMALL GROUP ACTIVTIES  Informal, voluntary small groups, organized within the company  Carry out specific improvement activities  Many forms:-  QC circles, Suggestion Groups, Workers group………  QC Circles…the most famous  Emphasis on problem solving in the work area  Advantages of QCC  Sense of teamwork  Improved communication  Improved morale  Acquire new skills  Labor-Management relationship improved profit thru quality
  11. 11. KAIZEN-The Practice Individual Oriented Kaizen- SUGGESTION SYSTEM  Individual provides suggestion on how to improve his work area.  Helps the individual to be Kaizen conscious.  Also helps in….  Workers to speak out.  Opportunity for management to help workers.  An valuable opportunity for two way communication  Suggestions normally covers:-  Savings in energy, material and other resources  Improvement in working environment  Improvements in machines, processes, jigs and tools  Improvements in customer services profit thru quality
  12. 12. KAIZEN- Implementation Seven Conditions for Successful Implementation of Kaizen Strategy  Top management commitment  Top management commitment  Top management commitment  Setting up an organization dedicated to promote Kaizen  Appointing the best available personnel to manage the Kaizen process  Conducting training and education  Establishing a step-by-step process for Kaizen introduction. profit thru quality
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  14. 14. Figure 2.2 Ideal pattern from innovation Time Figure 2.3 Actual pattern from innovation Time profit thru quality
  15. 15. INNOVATION plus KAIZEN rd St anda New KAIZEN INNOVATION dard Ne w Stan KAIZENINNOVATION profit thru quality
  16. 16. KAIZEN and INNOVATION KAIZEN INNOVATION1. Effect Long-term and business as Short term and dramtic usual2. Pace Small Steps Big Steps3. Time frame Continuous and Incremental Intermittent and non- incremental4. Change Gradual and constant Abrupt and volatile5. Involvement Every-one Selected champions6. Approach Collective group efforts, Individual ideas and efforts systems approach7. Mode Maintenance and Improvement Scrap and Rebuild8. Effort Orientation People Technology9. Practical Requirements Little investment but great Large investment but little effort efforts to maintain to maintain10. Advantage Works well in slow growth Better suited in fast growth economy economy profit thru quality
  17. 17. Another comparison of Innovation and KAIZEN Innovation KAIZENCreativity AdaptabilityIndividualism Teamwork (systems approach)Specialist-oriented Generalist-orientedAttention to great leaps Attention to detailsTechnology-oriented people-orientedInformation: closed, proprietary Information: open, sharedFunctional (specialist) orientation Cross-functional orientationSeek new technology Build on existing technologyLine + staff Cross-functional organizationLimited feedback Comprehensive feedback profit thru quality
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  19. 19. About Six Sigma Six Sigma Was Developed at Motorola in the 1980’s As a Method to Improve Process Quality. It Was First Used to Improve Manufacturing Process Capability and Then Migrated to Business Processes Capability Companies That Have Deployed Six Sigma: Bank of America, Motorola, GE, IBM, Kodak and Many More The Basic Premise Is, All Processes Have Variation. Variation Is the Enemy. profit thru quality
  20. 20. Six Sigma Philosophy ?  Know What’s Important to the Customer (CTQ)  Reduce Defects (DPMO)  Center Around Target (Mean)  Reduce Variation (Standard Deviation) profit thru qualityGE Company ProprietaryNovember 1998
  21. 21. SIX SIGMA-Definitions• Business Definition  A break through strategy to significantly improve customer satisfaction and shareholder value by reducing variability in every aspect of business.• Technical Definition  A statistical term signifying 3.4 defects per million opportunities. profit thru quality
  22. 22. SIX SIGMA DEFINATIONSIf your yield is… Your DPMO is…. Your Sigma is… 30.9% 690 000 1σ 69.2% 308 000 2σ 93.3% 66 800 3σ 99.4% 6 210 4σ 99.98% 320 5σ 99.9997% 3.4 6σ profit thru quality
  23. 23. SIX SIGMA-Definitions In brief, Six Sigma is a process control method to improve the quality of products or services in a continuous manner. This method uses six standard deviations of a normal distribution as the limits of customers’ acceptance of the system’s products. This method is applicable to manufacturing as well as service industries. With six sigmas, only 3.4 defects per million are allowed, or an acceptable level of 99.9997% is required profit thru quality
  24. 24. Six Sigma Performance With 99 % Quality With Six Sigma QualityFor every 300000 letters 3,000 misdeliveries 1 misdeliverydeliveredFor every week of TV 1.68 hours of dead air 1.8 seconds of dead airbroadcasting per channelOut of every 500,000 4100 crashes Less than 2 crashescomputer restarts Source: The Six Sigma Way by Peter Pande and Others profit thru quality
  25. 25. Who is Implementing Six Sigma At least 25% of the fortune 200 claim to have a serious six sigma program - Michael Hammer. Financial - Bank of America, GE Capital, Electronics - Allied Signal, Samsung, Sony Chemicals - Dupont, Dow Chemicals Manufacturing - GE Plastics, Johnson and Johnson, Motorola, Nokia, Microsoft, Ford. Airline - Singapore, Lufthansa, Bombardier And hundreds of others in Americas, Europe, Sub Continent. profit thru quality
  26. 26. Six Sigma Results Company Annual Savings General Electric $2.0+ billion JP Morgan Chase *$1.5 billion (*since inception in 1998) Motorola $ 16 billion (*since inception in 1980s) Johnson & Johnson $500 million Honeywell $600 millionSix Sigma Savings as % of revenue vary from 1.2 to 4.5 %For $ 30 million/yr sales – Savings potential $ 360,000 to $ 1.35million.Investment: salary of in house experts, training, process redesign. profit thru quality
  27. 27. Key Concepts of Six Sigma At its core, Six Sigma revolves around a few key concepts.  Critical to Quality: Attributes most important to the customer  Defect: Failing to deliver what the customer wants  Process Capability: What your process can deliver  Variation: What the customer sees and feels  Stable Operations: Ensuring consistent, predictable processes to improve what the customer sees and feels  Design for Six Sigma: Designing to meet customer needs and process capability profit thru quality
  28. 28. Dissecting Process Capability Premise of 6σ Sources of variation can be:  Identified  Quantified  Eliminated or Controlled Unstable Parts & Inadequate Inadequate Materials Design Process Margin Capability LSL USL Defects Acceptable Defects Process Capability profit thru quality
  29. 29. Six Sigma Methodology Define Define the problem and customer requirements.Control Measure Measure defectcurrent incarnation. the process in its rates and document Analyze process data and determine the capability of the process. Improve the process and remove defect causes. Control process performance and ensure that defects do not recur. Improve Analyze “Common sense” doesn’t mean “commonly done” or when done, done well. profit thru quality
  30. 30. Six Sigma MethodologyProject Phases Define Measure Analyze Improve Control Identify,  Collect data  Analyze  Improvement  Establish evaluate and on size of data, strategy standards to select the selected establish  Develop maintain projects for problem, and confirm ideas to process; improvement  identify key the “ vital remove root  Design the Set goals customer few “ causes controls, Form teams. requirements determinants  Design and implement , of the carry out and monitor.  Determine performance experiments,  Evaluate key product .  Optimize the financial and process  Validate process. impact of the characteristi hypothesis  Final project c. solutions profit thru quality
  31. 31. Six Sigma – Case Study Service OrganisationBackground M/s Alpha Inc. manages out bound cargo from a distribution centre to different stores. Deliveries made on trucks - owned and hired. Customers dissatisfied at delivery schedules. Leadership decision to deploy Six Sigma; Team of 1 Black Belt and 3 Green Belts formed Sponsor of the project – Distribution Manager profit thru quality
  32. 32. Define - Critical to Quality (CTQ)  Focus on customers generating annual revenue of USD 400,000/-. Customer needs Improved delivery performance Level 1 CTQ Timely delivery Level 2 CTQ On time delivery to schedule Level 3 CTQ Delivery within +/- 1 hour of scheduled delivery timeCurrent process sigma level - 2.43 or 175889 DPMO profit thru quality
  33. 33. Define - Goal Statement Reduce number of delayed deliveries by 50 % by 31st December Y 2002 to better meet customer requirement of timely delivery defined as within +/- 1 hour of scheduled delivery. profit thru quality
  34. 34. Define - Performance StandardsOutput unit A scheduled delivery of freightOutput characteristic Timely deliveryProject Y measure Process starts when an order is received Ends when goods are received & signed for at customers desk. Process measurement – Deviation from scheduled delivery time in minutes.Specification limits LSL = -60 minutes USL= +60 minutesTarget Scheduled time or zero minutes deviationDefect Delivery earlier or later than 1 hour.No. of defect 1 opportunity for a defect per scheduled delivery ofopportunities per unit freight. profit thru quality
  35. 35. Define - SIPOC DiagramSupplier Stores ManagerInput Stores OrderProcess Steps (high Receive orderlevel) Plan delivery Dispatch Driver with goods Deliver goods to stores Receive deliveryOutput Received freight with DocumentsCustomer Store Manager• Detailed process maps drawn profit thru quality
  36. 36. Measure and Analyze Driver and Distance identified as key factors influencing delivery performance. Driver selected for focus. Potential root causes as to why Driver influenced the time:  Size of the vehicle  Type of engine  Type of tyres  Fuel capacity profit thru quality
  37. 37. Improve Experiments designed and conducted using truck type and tyre size. Findings:  Larger tyres took longer time at certain routes where area was cramped and time lost in maneuvering.  High incidence of tyre failures since tight turns led to stress on tyres thus increasing number of flat tyres. Team modified planning of dispatch process by routing smaller trucks at more restrictive areas. profit thru quality
  38. 38. Control Test implementation. Process sigma level up from 2.43 or 175889 DPMO to 3.94 or 7353 DPMO. Performance still fell short of best in class 4.32 or 2400 DPMO. Improvement led to significant customer satisfaction. Process continually monitored and data on new cycle times, tyre failure collected as per defined methods and frequency, analysed and monitored. Customer satisfaction measured and monitored. profit thru quality
  39. 39. Key Lessons Learnt Define  Difficulty in identifying the right project and defining the scope;  Difficulty in applying statistical parameters to Voice of the Customers;  Trouble with setting the right goals; Measure  Inefficient data gathering;  Lack of measures;  Lack of speed in execution; profit thru quality
  40. 40. Key Lessons Learnt Analyse  Challenge of identifying best practices  Overuse of statistical tools/ under use of practical knowledge  Challenge of developing hypotheses Improve  Challenge of developing ideas to remove root causes  Difficulty of implementing solutions Control  Lack of follow up by Managers/ Process Owners  Lack of continuous Voice of the Customer feedback  Failure to institutionalize continuous improvement. profit thru quality
  41. 41. Key Lessons Learnt “ Define “ ranked most important step but gets the lowest resource allocation Project scoping and its definition is critical to its success/ failure; “Measure” is considered most difficult step and also gets the highest resources Source: Greenwich Associates Study Y 2002 profit thru quality
  42. 42. What Makes Six Sigma Different? Versatile Breakthrough improvements Financial results focus Process focus Structured & disciplined problem solving methodology using scientific tools and techniques Customer centered Involvement of leadership is mandatory. Training is mandatory; Action learning (25% class room, 75 % application) Creating a dedicated organisation for problem solving (85/50 Rule). profit thru quality
  43. 43. Benefits of Six Sigma Generates sustained success Sets performance goal for everyone Enhances value for customers; Accelerates rate of improvement; Promotes learning across boundaries; Executes strategic change profit thru quality
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  45. 45. Six Sigma & Kaizen- The Difference KAIZEN SIX SIGMA Quality Improvement YES YESContinuous Improvement YES YES Approach Improve Existing System Improve Existing System Human Based Statistical Method Improvement Framework- DMAIC Implementation Simpler and Low cost Difficult and High Cost RELIES UPON GROUP FIXED PLAN OF DYNAMICS IMPLEMENTATION profit thru quality
  46. 46.  Kaizen Six Sigma  Japanese Origin Western Origin  Culture Methodology (or Culture)  Kaizen Umbrella Road Maps  Continuous Improvement Immediate Perfection  Mistakes as Possibility for Improvement Reducing Variation and Defects  Long-term Results Short-term Results Possible  Every Possible Improvement Prioritising Projects  Providing Quality Ensuring Profitability  Participation of Every Single Employee Creation of Project Teams profit thru quality
  47. 47. Profit thru Quality