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Lean Six Sigma for companies
- 1. Imran AAbbasi MSc Supply Chain and Operations Management University of Strathclyde MBA Finance Bahria University Supply Chain Consultant Oracle Financials R12 Functional Consultant SAP (Supply Chain Management) Regulatory & Compliance, Anti Money Laundering Bank Officer Presentation on Lean Six Sigma for Entrepreneurs/Businesses 1
- 2. Want to know How Lean 6 Sigma Can Help ? Are you fed up of receiving calls from Unhappy Customers ? 2
- 3. By using Lean 6 Sigma Methodology you can efficiently and effectively resolve quality & process improvement issues within your company: I. Efficiently: To be effective at the least possible cost ( Focus of Lean). ii. Effectively: How effectively are we at meeting our valuable customers needs (The focus of 6 Sigma) ? The integration of Lean 6 Sigma gives organizations a broader set of tools. Remember there are no process with Zero Defects 3
- 4. Lean 6 Sigma Waste elimination Customer satisfaction Sustainable business advantage Business growth Costs savings Quality improvement So What Lean 6 Sigma Is & How it can Help You 4
- 5. Where Lean can be Used Everywhere: 1. Manufacturing 2. Pharmaceutical/Healthc- are 3. Defence 4. Construction 5. Call centre 6. Inventory management 7. Warehouse management 8. IT 9. Finance 10. Sales 11. Marketing 12. Human resources 13. Service operations/Banks 14. Logistics 15. R & D 5
- 6. Process Excellence is achievable when activities are in total alignment with the vision, mission, strategy and objectives of an organisation. Process Excellence can be as simple as efficiency and effectiveness in processes (Peter F Drucker). Process Excellence initiatives include Lean Production System and 6 Sigma. What is Process Excellence 6
- 7. Every Process is Different from Other? 1. Driven from the Top (Leadership). 2. Improvements are clearly linked to financial indicators. 3. Decisions are based on data. 4. Customer Driven . 5. Structured Training. 6. Project selection and execution focus. 7. Well Defined Methodologies. 8. Six Sigma. 9. Lean. 10. Design Excellence (Design for Six Sigma – DFSS). 11. LSS (Lean 6 Sigma). 12. DFLSS (Design for Lean 6 Sigma).7
- 8. What is Lean Thinking? “The endless transformation of waste into value from the customer’s perspective”. “Womack and Jones, Lean Thinking” Lean Thinking is about accelerating the velocity of any process by doing only the things that add customer value and eliminating other activities that don’t (Waste). Lean thinking is derived from Toyota and is developed by Japan. 8
- 9. Why Organizations Should Adopt Lean ? Lean Concept: It’s a system approach that focuses on identifying and eliminating non value added activities within a process. Improvement Initiatives: The concept is to involve everyone within the organization( taking into consideration internal customers as well as external customers). Identify waste in any form and eliminate it. 9
- 10. Lean Objectives 1. To redesign the existing system in a manufacturing concern or service sector. 2. Use less of Human effort (Highly skilled labour) 3. Less inventory( Taking into consideration lead time, buffer stock, logistics, market demand, etc…) 4. Less space ( carefully monitor the existing work flow and cut the non-essential production lines) 5. Less time to produce high quality goods and services, by efficiently utilizing the scarce resources available and manufacture economically as much as possible. 6. Highly responsive to customer needs and demands. 7. Use of modern technology available in the market, to be competitive over your rival firms and in international markets. 8. Invest in R & D 10
- 11. Categories of Waste-Focus on Reducing 8 Types of Wastes 1. Overproduction 2. Waiting time 3. Transportation of goods : Raw material, WIP, Semi-Finished goods, packaging transported over long distances. 1. Over processing: It is more efficient to complete a process correctly first time rather than repeat the process to correct errors. 5. High levels of inventory. 6. Unnecessary movement ( Operators, tools, equipment, documents that add no value ). 7. Defects : Repair, scrap, replacement, extra quality assurance and checking, sorting, downgrading, or returns. 8. Creativity: Not fully utilizing employees potential, brain power, creativity and experience. 11
- 12. Value should be defined from customer’s perspective. Identifying the value stream Once value has been identified, with non added steps removed, redesign the value creating steps flow. Pull to customer demand : Produce goods at the rate, as required by the customer, and no more over production. • Perfection to be achieved, by empowering employees with waste elimination tools and developing a culture of continuous improvement. 5 Principles of Lean 12
- 13. Learning Objectives of 5S 1. What is 5S 2. Why 5S ? 3. Origin of 5S 1. What is 5S: A method of creating a clean and orderly workplace, that exposes waste and makes abnormalities immediately visible. Origin of 5S: We refer to Japanese terms, but its Origin may not be Japanese afterall, it originated from Henry Ford’s CANDO Program, which stands for: C Leaning Up A Rranging N Eatness D Iscipline O Ngoing Improvement 13
- 14. Lean Tools - 5S Seiri Seiton SeisouSeiketsu Shitsuke Sort Straighten Sweep or ShineStandardized Sustain Or Self Discipline 14
- 15. 5S 1. Sort: We use Red Tag is a Communication Tool that I used to tag items that are not needed and are sent to a quarantine section or Red Tagged Items Storage place. It is done frequently during Kaizen events, but can be done at any time.(Full Explaination) 2. Straighten/Set in Order : Things that are kept are easily located, by labelling properly. 3. Shine: Maintaining clean & tidy space. 4. Standardized: Creating a consisten way of doing things. 5. Sustain : The behaviours become a habit by following these steps in the work place. 15
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- 20. Comparison of Traditional vs. Lean Production System Traditional : 1. Complex 2. Forecast Driven 3. Excessive Inventory 4. Speed Up Value-Added Work 5. Batch Production 6. Long Lead Time 7. Quality Inspected-in 8. Functional Departments Lean : 1. Simple and Visual 2. Demand Driven 3. Inventory as Needed 4. Reduce Non-Value-Added 5. Small Lot Size 6. Minimal Lead Time 7. Quality Built-in 8. Value Stream Managers 20
- 21. Lean Production 1. Minimizing waste 2. Just in time production(JIT) 3. Kaizen (continuous production) 4. Cell production 1. Reducing waste can improve profits 21
- 22. 7 Ways to reduce waste/costs 1. TIMWOOD: i. T ransport ii. I nventory iii. M otion iv. W aiting v. O verprocessing vi. O verproduction vii. D efects 2. Inventory/stock: i. Holding some stock is unavoidable but holding less stock reduces the waste. 3. Motion: i. Reduce unproductive movement to reduce costs. 22
- 23. 7 Ways to reduce costs (Contd..) 4. Waiting: Delay between stages of production means some workers are idle. 5. Over-processing: Use the right tools, not the most expensive ones. 6. Over-Production: Means producing more products than the market demand 7. Defects: Product defects lead to extra cost. 23
- 24. Tools of Lean 24 1.Standarized work 2. Andon 3. 5 S 4. Performance Management 5. Right first time 6. Problem Solving 7. Fishbone Diagram 8. Poka Yoke 1. JIT 2. 7 Wastes 3. Audits 4. TAKT Time 5. Kanban 6. Value streaming mapping 7. Bottlenecks analysis 8. Jidoka Customer Focus 1.Eliminate waste 2.Simplfy everything 3.Create a flow Continuous Improvement 1. Visual management 2. TPM 3. Autonomation 4. Kaizen
- 25. 25 Fishbone Diagram/Cause and Effect Diagram People Method Process, policy Machines Environment Materials Measurement Not fully trained Too much work Load Managers behaviour Procedures not properly written Too many people involved Old machines Frequent breakdown Not enough capacity Reward:Salary, commission Workplace not comfortable Excessive noise Poor management Limited suppliers for raw material Unstable tables Warehouse not properly defined No time sheet Progress not monitored Lack of accountability Missed deadline
- 26. Just in Time Production(JIT) It focuses on reducing waste This is achieved by reducing the stockholding/inventory JIT stock control and utilising production capacity. Products are produced JIT to meet orders, not to stock pile. Firms with min stock holding are more flexible, more capital available, space available. They can move more quickly to add value faced by the changing demand in the market as per customer(A). 26
- 27. Kaizen(Continuous Improvement) i. It means continuous improvement which is: Simple Fast Inexpensive It helps by improving your process and eliminating waste from the business. So you are competitive and have greater market share. i. All employees seek to continuously improve the product/process, not just the management. ii. Decentralized organization structure iii. Regular team meetings required 27
- 28. Cell Production i. Split operations into stages. ii. Each cell( team) takes responsibility for one stage. iii. Cells (teams) are internal customers/suppliers. For e.g each team is trying to add value for their internal customers. 28
- 29. A concept started by Motorola, inorder to reduce the defects or variation in a process. World class business benchmarks for organizations Gives a road map, by which these benchmarks can be achieved. Teams are made and process improvement is achieved project by project, using a highly skilled team in performance enhancement methodology. It’s structured process aimed at achieving standard near perfection. Success in 6 Sigma is only achievable, with the active participation of top management and mentoring. 6 Sigma 29
- 30. It does not require significant capital expenditure other than for investment in the training and development of the employees involved in the process. Long term commitment is required from the management in the ongoing process of continual improvement through active interest, support, review and allocation of appropriate resources. 6 Sigma Training Structure 30
- 31. Consider darts thrown at a target . . . Precise not accurate What is six sigma performance ? Accurate not precise Precise and Accurate Six Sigma Strategy Centres Processes & Reduces Variation Accuracy achieved by improving the process. 31
- 32. 1. Not a replacement for all other quality initiatives, or the solution for everything - it’s a framework for improving business performance 2. Not just about statistics and measurement programme - it’s a practical approach to improving business performance 3. Not just a training programme 4. Not just a tool for manufacturing - applies to every function and business 5. Not a brand new initiative - it combines the best techniques from previous quality initiatives with recent breakthroughs in management thinking and common sense. What is Six Sigma NOT? 32
- 33. It is all about reducing the defects per million in a process. Lower the defects, higher the efficiency and customer satisfaction. High level of revenues and profit margins for the organizations. Six Sigma 33
- 34. DMAIC Process Improvement Methodology: i. Define: What is the problem ii. Measure: How big is the Problem iii. Analyse: What causes the problem iv. Improve: Eliminate causes v. Causes: Securing the solution Six Sigma Tools 34
- 35. DMAIC In Defined phase, the following items are outlined: 1.What is the issue 2. How much improvement is desired 3. What kind of buyback it will bring. 4. When the improvement needs to be completed by the team. 5. Who are responsible and will reap the benefits ? In the Measure phase team looks at the Tool, Process, & Method to collect Data: 1. Data collection needs to be well defined to insure information collected is accurate. 2. Without knowing the issue and having accurate information, the team may not be able to work on the problem and resolve it. 3. Where Measurement Tools are used M.S.A ( Measurement, System, Analysis) needs to be carried out to ensure tool met the requirement. 4. The team then need to collect the data as per the defined method. This will be the data collected before the Improvement. 35
- 36. DMAIC In the Analysis phases team identifies the root cause of the problem. 1. Different Quality Tools can be used here to properly analyse and verify the root cause of the Problem. 2. Tools often used are: a. WHY – WHY (5 WHYS) b. 8 D Process c. Fault Tree Analysis (FTA) d. IS – IS NOT In the Improve Phase, team carried out the process to fix the root cause of the problem & Design a New Ideal Process. 1. Make sure quality tools are used to verify whether the new process reduced or eliminated the problem. 2. Design of Experiments (DOE) can be used if changes involve several parameters. 3. To verify improvements made are significant, results or processes are compared before and after the improvement. 4. Some of the Tools Used: a. T Test b. Regression Analysis c. B Vs C: Validation to determine reliability 36
- 37. DMAIC In the Control Phase, team plans for the deployment: 1. Providing training to the staff 2. Rewriting the SOP (Standard operating Procedures) 3. Update and Implement SPC 4. Collect performance to a compensation plan or a bonus. Competencies of Six Sigma 1. Yellow Belt 2. Green Belt 3. Black Belt 37
- 38. Process Sigma Yield DPMO (Defects per million opportunities) 2 69 % 308,537 3 93 % 66,807 4 99 % 6,210 5 99.977 % 233 6 99.9997 % 3.4 Comparison of Sigma Values 38
- 39. Both the methodologies are combined together inorder to achieve high level of performance by the organizations. Latest trend in EU and in Middle East, number of organizations are now adopting Lean Six Sigma, especially Middle East is a bigger market, where the market can be captured by adopting this methodology in the manufacturing sector or service/banking sector. Organizations need strong marketing departments to get orders from there, good money is involved. Lean Six Sigma 39
- 40. Industries implementing Six Sigma 1. Sony 2. Federal Express 3. Bank of America 4. American Express 5. Citi Bank 6. J P Morgan Chase 7. Red Cross Hospital 8. Dupont 9. The Gwent Health Care ( All hospitals in Gwent Trust/Wales, Cardiff ) 10. 3M 11. Bank of America 12. US Army 13. US Marine Corp 14. Dell 15. Boeing 16. Amazon.com 17. Wipro 18. WalMart stores 19. United Parcel Service 40
- 41. Please email : 1. imran.abbasi@hotmail.co.uk 2. Cell # +44 (0) 780 91 50 786 Any questions 41
Editor's Notes
- We can be effective but not efficient or we at the same time.can be efficient but not effective, but here, our goal is to achieve both. But let us Say, if we are not achieving it, assume we are a manufacturing company and we are not efficient, we have a very good product, but by the time we deliver it to the market, the cost is to high, or our competitors are more agile and have delivered a better product in the market before us and thus captured our market share. We give you set of tools, call it process improvement, it is just a broad set of tools with the methodology wrapped around it. Tools are just the same like TQM, etc, but the difference is, that in 6 Sigma, the focus is on adopting the methodology
- Lean seeks to maximize value for customer and eliminate waste. Where value refers to any action that a customer will be willing To Pay For. Waste means any part of the production Process that Does Not Adds Value to the Process.
- It can be used in every industry, whether commercial, defence, manufacturing, service sector, it will improve the efficiency and effectiveness, reduce waste and cut down the unnecessary cost and generate more revenues and profits for the company.
- There fore Lean Production
- The origin of 5S is not Japan. One of the purposes of 5S, is to identify abnormalities in the work place/production facility, in simple words, the place we work in, is in an unorganized mess, chances are we will rarely be spotting something irregular until a big mishap happends. But if things are neat, clean and tidy we are far better placed to identify anything wrong. Japanese studied the Ford methods shortly after the end of 2nd WW. But in this course, our 5S will be based on 5 Japanese words, known as
- Why 5S is so important at work place, 1) because of it impact on safety, there can be no second opinion that a cluttered and a chaotic work area is often an unsafe work area both for workers, tools and for the manufacturing process. 2nd reason it is o important, because it helps us to identify waste or MUDA( as we consume more Time and Motion), it is a human nature, thatwe are more productive when r work place is more organized, neat and clean and things are visible to us and are at there appropriate bays.(These people could be machine shop operator, or a banker in his office desk, sitting with loads of paper work or a Doctor who just needs his patients documents/records at the right place so he can retrieve them easily and all his surgical instruments properly arranged) 3rd reason it is benefial to companies, it is low cost with high impact. U don’t need to invest a lot of money to improve , infact, u can earn some money by selling the items which u don’t need. Next done correctly, it gets everyone in the company involved, doesn’t matter if u r the CEO or a clerk or a sweeper or in a suit, 5S treats every employees as one single team, a family, where everybody must respect each other and must perform tasks to help each other, in order to drive the company ahead and meet the expectations of the valuable customers and ofcourse Generating Higher Profits for The Company. Another factor 5S is so important, adherence to standards, is a KEY TO KAIZEN(Good Change), it is said if you can’t do 5s, than you can’t do LEAN. Infact 5S is the main building blocks of most of the Lean tools/concepts such as:
- Toyota’s former chief engineer (Taichii Ohno), pioneer of Lean thinking, identified 7 issues to reduce waste issues, a good way to remember the 7 waste is TIMWOOD. Kaizen: Literally means Good change-it fits in with the idea of continuous improvement. Kan Ban : In Japanese it means Sign or Sign Board – in terms of Lean or TPS it is giving the signal when to Produce or Move products. MUDA: It deals specifically with Time and Motion Jidoka: The automatic detection of errors or Defects in production – It has to do with the principal of Quality at the Source.
- Try to remember it by TIMWOOD: Transportation is also called as travel time, every time a product/material or in service sector a document is moved from one section to another, it stands the risk of being damaged, loss or delay, as transport itself doesn’t always adds value for customers. 3. Motion: This relates to unnecessary movement of work or as equipment, for e.g a worker constantly doing up and down the stairs/process is not doing anything productive, but is adding to the production cost
- 4. Sometimes an individual product life is spent waiting to be worked on in the process, no value is gained from this waiting time and it should be minimized. 5. It is also waste of resources. Take into account, how much machine would work, cost of production, cost of maintenance, spare parts, time for the delivery of spare parts, can the parts be manufactured locally ? Here we are looking which tool will do the best job cost effectively and efficiently, thus not compromising on the quality. 6. Forecasting should be accurate to the nearest number as much as possible, inorder to meet the existing orders. 7. When ever a product defects occur during the production or returns from customer, an extra cost is added inorder to fix it/ replace it, thus further adding to the waste .
- JIT: Second pillar of Toyota Production System, TPS is considered to be the world’s best production system, created to benefit its clients, employees and products. (A):As they don’t have to get rid of much stock, before switching to make new product.
- Kaizen is made up of two characters, first word is Kai, this means change. Zen means Good. ii. Thus empowering the managers and staff at operational level. Less bureaucratic hurdles to approve any change anticipated/it could be change in process or procedure for approving the documents. Sometimes workers should be given the power to hold the production, where the problem needs addressing. Workers should be given more training to be more analytical and think logically. The philosphy of Kaizen is often making small or simple changes to the processes/activities inorder to improve value, through improve quality.
- It is about looking at the production process as a series of separate but inter linked part, rather then one single process. Production process are grouped into teams or cells and each team is delegated particular task, for e.g in a paint company, one section responsible for the accurate forecasting, other for purchasing the right raw material on time, other responsible for mixing them, and so one
- Some call it D “MAC” or some call it D “MAKE”. It is a systematic approach in trouble shooting and implementing improvement. Other Acronyms used are DMADD: Define, Measure, Analyse, Develop, Deliver DMADV: Define, Measure, Analyse, Design, Verify DMAICL: Define, Measure, Analyse, Improve, Control, Leverage. DMALC: Define, Measure, Analyse, Lean, Control.
- We analyse the current state of the target process. Find out the Vital or items with Top priority within the elements.
- Improving a process becomes more difficult as the process sigma increases. There is a complete table with Six Sigma Values, and DPMO and is used for reference within the organizations. This one, with few values, I just used for reference and explaination.
- Just few examples.