ICG 6 Sigma Transformation Performance improvement with Six Sigma

1. 2014
2014-08-20
INNOVATION CENTRIC GROUP
1
Performance Improvement
with Six Sigma

2. 2
as an operational philosophy
Customer centered means that projects start with, and are
measured by, meeting customer wants and needs.!
Systematic means that the Six Sigma tools are applied in
concert, which makes them vastly more powerful than they
are alone.!
Data driven means that facts and data are used for making
decisions.!
Six Sigma is a customer centered, systematic, data driven method
for doing things better and aiming to reduce the number of defects
of any given process.
What is Six Sigma?

3. 3
as an operational philosophy
It is a toolset which follows a well-structured
improvement methodology to reduce process
variability and drive out waste within a business
processes using effective application of statistical
tools and techniques. This converges on a
disciplined method that uses data and statistical
analysis to pinpoint the root causes of issues and
establish ways of minimizing and eliminating them.
The main goal of Six Sigma is to sustain
improvement over the long term.!
What is Six Sigma?

4. Accounting Design Distribution Finance
Information
Services
Logistics Oil & Gas Operations
Marketing
4
Six Sigma Applies to all areas

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“Responsible, proactive and innovative decision making can keep the focus on
sustaining achieved benefits. Continuous improvement must be diverse and
productive over time as conditions change.”
“Constant management commitment is the number one lever to enable delivery
of top-quartile performance via continuous performance improvement
projects from my experience. It is analogous to safety performance
improvement where lack of management commitment equates to substandard
safety performance.”
in the upstream oil and gas industry
Andy Brooks, CEO, Flint Transfield Services
Charlie Malone, Kurdistan Development Manager, Talisman Energy Inc.
”Performance management is crucial to any organization and valuable to not
only measure performance but establish governance, and ensure the right
outcomes are achieved through desired actions and behaviors"
Tristan Goodman, VP Strategy & Regulatory Development, Alberta Energy Regulator.
Examples of applied Six Sigma

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Are you consistently fulfilling customers’(internal/external) requirements ... or are there gaps in your performance?
Do your improvement efforts continue to repay your investment ... or have the financial benefits of these efforts
already been realized, with innovation and competitive gains now stalled?
Are you satisfied with how quickly you see measurable bottom-line results from improvement efforts ... or are
technological advances, competitors, and the market forcing you to demonstrate improvement results in months
rather than years?
Is your organization truly prepared to commit to continuous improvement as well as revenue growth ... or are
processes still out of alignment with dynamic market requirements –costing you business success?
Interested in driving cost reduction to led to lost opportunities?
Is your organization looking at cost reduction opportunities to mitigate headcount reduction?
Are you looking to become a low-cost leader in high-cost environment?
Are you looking to improve effectiveness and achieve efficiencies in your organization?
Performance Improvement with

7. Accounting
• Quick Closing
•Accurate Reports
•Accurate Journal
Entries
•Accurate Account
Reconciliation
• Cycle Time to
Close Books
•Number of Errors
•Number of
Inaccurate JE’s
•Reduce Cycle
Time to Close
Books (DMAIC)
•Reduce Errors on
Monthly
Reports(DMAIC)
•Reduce Number
of JE’s(DMAIC)
Billing(to&from)
• Accurate Invoices
•On-Time Invoices
•Easy to Under-
stand Invoices
• Receivables
Management
•Cycle time to
Invoice
•Invoice Error Rate
•Working Capital
Growth
•# Call Center
Complaints
•Reduce Number of
Invoice Errors
(DMAIC)
•Reduce Invoice
Cycle Time
(DMAIC)
•Reduce Invoice
Complaints
(DMAIC)
Auditing
• Accurate Audit
Reports
•Frequency of
Audits
•Short Audit Time
• Sigma of Audit
Reports
•Percent
Locations Audited
•Audit Cycle Time
CCRs
•Improve Audit
Report Process
(DMAIC)
•Improve Audit
Coverage(DMAIC)
•Improve Audit
Cycle Time
(DMAIC)
7
Example of Six Sigma Applications

8. Define “as is”
and “to be”
opportunity for
project.
Measure current
process
performance.
Analyze the
problem to find
out root causes.
Improve…
Identify potential
solutions and
begin to
implement them.
Control the
performance to
continue to
achieve higher
results.
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Improvement Process: DMAIC

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What makes DMAIC unique is that it
focuses on eliminating problems by
looking at the processes that create
them, not on assigning blame to people
or functions. DMAIC helps us research
and analyze our processes, which then
leads us to more effective and
permanent solutions.
How do we do it?

10. Define
Measure
Analyze
Improve
Control
10
The DMAIC process

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• Deliverable:
• Identify Customer(s)and project *CTQ’s
(Critical to Quality)
A. Identify Project
CTQs
• Deliverables:
• Develop business case
• Develop the Problem and Goal statements
• Determine the project scope
• Select team and define Roles
• Set project milestones
B. Develop Team
Charter
• Deliverable:
• High level process map
C. Define process
map
Define Phase
The DMAIC process

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• Deliverable:
• Identify Measurable CTQ that will be
improved
A. Select CTQ
Characteristics
• Deliverables:
• Determine and confirm Specification
limits for your Y
B. Define
performance
standards
• Deliverable:
• Measurement system adequate to
measure Y
C. Establish data
collection plan, validate
measurement System
and collect data
Tools:
QFD
Process Mapping
FMEA
Pareto
Cause and Effect Diagram
Tools:
Continuous Gage R&R
Test/Retest
Attribute Gage R&R
Measure Phase
The DMAIC process

13. 13
• Deliverable:
• Baseline Current Project
A. Establish
Process
Capability
• Deliverables:
• Statistically Define the goal of the
Project
B. Define
performance
objectives
• Deliverable:
• List of statistically Significant Xs,
Chosen based on Analysis of
Historical Data
C. Identify
Variation
Sources
Tools:
Basic Statistics
Graphical Analysis
Sampling
Continuous Zst, Zit
Normality
Discrete Zst, Zit
Tools:
Benchmarking
Tools:
Process Analysis
Graphical Analysis
Hypothesis Testing
Regression Analysis
GLM
Analyze Phase
The DMAIC process

14. 14
• Deliverable:
• Determine the Vital few Xs that are
causing changes in Y
A. Screen
potential
causes
• Deliverables:
• Develop business case
• Develop the Problem and Goal statements
• Determine the project scope
• Select team and define Roles
• Set project milestones
B. Develop
Team Charter
• Deliverable:
• High level process map
C. Define
process map
Improve Phase
The DMAIC process

15. 15
• Deliverable:"
• Identify Customer(s)and project CTQ’s"
A. Identify Project
CTQs "
• Deliverables:"
• Develop business case"
• Develop the Problem and Goal statements"
• Determine the project scope"
• Select team and define Roles"
• Set project milestones"
B. Develop Team
Charter"
• Deliverable:"
• High level process map"
C. Define process
map"
Control Phase
The DMAIC process

16. 16
From our experience leading purchasing transformation
initiatives with global clients, we have developed a framework
for maximizing purchasing’s impact on the enterprise value
creation.
Strategic
Sourcing
Transaction
Execution
Demand
Management
Supplier
Management
Inventory Management Engineering & Operations
Enterprise Process and organizational model
Enterprise Purchasing Strategy

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Some of the features available:!
• Aggregation of spend by supplier, manufacturer,
commodity, BU, buyer, location, etc.!
• Tracking of spend against Contract!
• Tracking of spend against Budget!
• Price vs. Actual in savings!
• Normalization of spend – mapping and cross-reference!
• Ad hoc reporting and queries – ability to find procurement
related information thought filters and selection
parameters.!
• Graphical representation for ease of understanding!
• Tools and methods to import purchase data from
transaction systems!
Spend Analysis
PO/ AP Component

18. 2014
2014-08-20
INNOVATION CENTRIC GROUP
18