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Lean Six Sigma - Introduction
- 1. Introduction to Lean Six Sigma Sir Bill Smith “ The Father of six sigma” 1
- 2. How To Get Started “We all tend to concentrate on taking corrective actions that we know how to take, not necessarily concentrating on the problems we should correct and the actions needed to correct (them).” - Eliyahu Goldratt 2
- 3. Agenda History of Lean Six Sigma (LSS) Lean Vs. Six Sigma Evolution of Quality Expanding Application of LSS & Examples of Companies using LSS Levels of Six Sigma LSS Methodology DMAIC Process Key Concepts of Lean Six Sigma Types of Activities COPQ Success Factors Change Management Effective Lean Six Sigma Applications in Manufacturing Case Study 1 - Samsung Case Study 2 – LGE3
- 4. The History of Lean Six Sigma A New Approach to Quality 4
- 5. History of Lean Six Sigma What is in a name? Lean -- Focuses on removing waste (muda) from processes Six Sigma – Focuses on understanding and reducing variation in processes Lean Six Sigma (LSS) – Combines both approaches What is the Concept behind LSS? As wasteful activities are removed overall process variation is reduced Lean Six Sigma is one of many methodologies developed through the Quality Revolution 5
- 6. Lean practitioners believe that waste comes from unnecessary steps in the production process that do not add value to the finished product, while Six Sigma proponents assert that waste results from variation within the process. Lean focuses on efficiency whereas six sigma emphasizes on Effectiveness of the process. Lean vs Six Sigma : Efficiency vs Effectiveness 6
- 7. Lean vs Six Sigma : Efficiency vs Effectiveness Efficiency : Doing Things Right Effectiveness : Doing Right Things Now combining efficiency and effectiveness Lean Sigma was borne. Where lean has more methodological approach. When We apply DMAIC or DMADV approach to Lean it’s called Lean Sigma.7
- 8. History—Evolution of Quality Craft Production Each item is unique Individual parts made to fit Quality through craftsmanship Mass Production High volume Interchangeable parts Quality through inspection Better Production Understanding of process variation Quality through process 8
- 9. Evolution of Quality--Timeline Interchangeable Parts Statistical Process Control Reconstructi on of Japan Toyota Production System Six Sigma Eli Whitney Walter Shewhart Deming & Juran Eiji Toyoda Motorola 1798 1920s 1950 1960 1980 9
- 10. Expanding Application of LSS Initially applied in production environments Manufacturing Supply Chain Maintenance Repair and Overhaul (MRO) Rapidly grew into transactional applications Financial Institutions Insurers Continued to expand to services Hospitals and Health Care 10
- 11. Examples of Companies who have used LSS: Manufacturing/Production: Allied Signal/Honeywell General Electric Motorola Delta Air Lines U.S. Military Samsung LGE Honeywell Sony Transactional Industries Bank of America American Express Service Applications T.S.A (Airport Security) There are 1000s of organizations. These are just a few well know entities. 11
- 12. Mumbai Dabbawala That's too with limited resources12
- 13. A Couple of Questions 1. What does “Six Sigma” mean? a) A process that has a six sigma level of quality experiences only three defects per one million opportunities. 2. Is it Important to have a six sigma level of quality? a) It depends on the customers perception of quality. If you are landing airplanes, it is critical to obtain at least a six sigma level of quality. If you are manufacturing coffee stirrers, lower levels of quality may be completely acceptable. Sigma Level DPMO 6 Sigma 3.4 5 Sigma 233 4 Sigma 6210 3 Sigma 66,810 2 Sigma 308,770 1 Sigma 697,672 13
- 14. Levels of Six Sigma 14
- 15. How Good is Good Enough? 11 Sigma Level Improvements 3 Sigma 93.3193% Accurate • 133,600 lost letters per hour • 33,400 incorrect surgical operations per week • 13 short or long landings at most major airports each day • 1,336,000 wrong prescriptions each year 4 Sigma 99.379% Accurate • 12,420 lost letters per hour • 3,100 incorrect surgical operations per week • 1 short or long landing at most major airports each day • 124,200 wrong prescriptions each year 5 Sigma 99.9767% Accurate • 466 lost letters per hour • 117 incorrect surgical operations per week • 17 short or long landings every year at most major airports • 4,660 wrong prescriptions each year 6 Sigma 99.99966% Accurate • 6.8 lost letters per hour • 1.7 incorrect surgical operations per week • 1 short or long landing every 5 years at most major airports • 68 wrong prescriptions each year 15
- 16. Lean Six Sigma Methodology What is Lean Six Sigma? 16
- 17. LSS Methodology DMAIC Process DMADV Product (To be Covered in Black Belt) Key Concepts Understanding Variation Voice of the Customer Voice of the Process LSS Organizational Roles Champion Master Black Belt Black Belt Green Belt Yellow Belt 17
- 18. DMAIC Process Define • What is the problem? • What is the goal? Measure • What is the current performance? • What is the defect rate? Analyze • What are the sources of process variation? • What are the root causes of defects? Improve • How do we change the process? • How do we verify our changes will improve the process? Contro l • Are the improvements to the process consistent over time? • How do we maintain the improvement into the future? 18
- 19. Key Concepts of LSS Understanding of Variation Two types of variation Controlled variation (Common Causes) Uncontrolled variation (Assignable/Special Causes) Improvement strategy based on type of variation Controlled variation = Change the process Uncontrolled variation = Deal with the special events Voice of the Customer (VOC) How does the customer describe quality What is the customers tolerance for defects VOC is often expressed as specification limits Goals should align with the voice 19
- 20. Key Concepts of LSS Voice of the Process (VOP) What is the current process capability How much variation is in the process How many defects does it produce What is the process average What process inputs are important to final quality Y=ƒ(x) Conceptual Summary of Lean Six Sigma The Output (Y) is a function (ƒ) of the inputs (x) 20
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- 22. Types of Activities Value-Added Brings product closer to it’s final form Changes the form, fit or function An activity the customer is willing to pay for Non-Value-Added Does not contribute to bringing the product to it’s final form Doesn’t improve the form, fit, or function of the product or service on the first pass through the process. An activity the customer is not willing to pay for Waste Separate non value added from value added22
- 23. 8 Types of Waste UNDER-UTILIZED SKILLS Steps are wasteful, people are valuable 23
- 24. Traditional Cost of Poor Quality (4-5% of Sales) When quality costs are initially determined, the categories included are the visible ones as depicted in the iceberg below. Waste Testing Costs Rework Customer Returns Inspection Costs Rejects Recalls 24
- 25. Cost of Poor Quality As an organization gains a broader definition of poor quality, the hidden portion of the iceberg becomes apparent. Late Paperwork High CostsPricing or Billing Errors Excessive Field Services Expenses Incorrectly Completed Sales OrderLack of Follow-up on Current ProgramsExcessive Employee Turnover Planning Delays Excess Inventory Excessive System CostsOverdue Receivables Complaint Handling Unused Capacity Time with Dissatisfied Customer Excessive Overtime Waste Testing Costs Rework Customer Returns Inspection Costs Rejects Recalls Development Cost of Failed Product Hidden COPQ: The costs incurred to deal with these chronic problems Premium Freight Costs Customer Allowances COPQ ranges from 15-25% of Sales 25
- 26. ROLE OF SIX SIGMA OBJECTIVES OF 6σ : Improve customer satisfaction Improve quality of product and service Reduce process cycle time Overall cost saving Development of Staff Skill Eliminating Waste or Defects WHERE 6σ IS USED Manufacturing and service industries Sales and marketing Accounting and financing 26
- 27. Deming believed that 85% of all defects are caused by process failures, not people failures. For that reason, he believed that it was unwise to badger workers over poor quality. Instead, he favored collecting data from the process to understand which of the inputs to that process were critical to quality. Final quality is achieved through controlling the variation in process inputs. Final inspection of the finished product does not prevent quality defects, it just prevents a portion of defected products from reaching the customer. 27
- 28. LSS Organizational Roles Champions Master Black Belts Black Belts Green Belts Yellow Belts 28
- 29. Lean Six Sigma Success Factors What are the building blocks for successful LSS programs? 29
- 30. Considerations for LSS Success Organizational Factors Commitment of Senior Management Clear organizational vision and goals Effective LSS training strategy LSS Team Factors Flexibility Practicality Focus on Customers (Internal and external) Strengths of LSS Methodology Data Based Scalable Structured30
- 31. Managing Change Force Field analysis Stakeholder analysis 31
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- 35. Here are some factors that make can created obstacles to continuous improvement. This list was compiled by Dr. Kaoru Ishikawa. Dr. Ishikawa traveled to many different companies, across diverse cultural backgrounds and products. He found these 10 obstacles to improvement were consistently exhibited in all companies to some extent and that success in improvement was directly proportional to how well the organizations dealt with these behaviors. 1. Passivity among top executives and managers; their avoidance of responsibility. 2. People who feel that everything is fine and that there are no problems at all. These people are satisfied with the status quo and do not understand the significant issues. 3. People who think that their own company is by far the best. 35
- 36. 4. People who think that the easiest and best ways for doing things are those which are familiar to them. They rely only on their own shallow experience. 5. People who think only of themselves or their own division. 6. People who have no regard for other people’s opinions. 7. People who scramble for distinction, always thinking about themselves. 8. Despair, jealousy and envy. 9. People who are oblivious to what is happening beyond their immediate surroundings. People who do not know anything about other divisions, other industries, or the outside world. 10. People who continue to live in the feudalistic past. They include “people who are engaged merely in36
- 37. Considerations for LSS Success LSS Challenges It is not a quick win approach to continuous improvement It requires an investment It requires a degree of organizational humility 37
- 38. Effective LSS Application In Manufacturing Case Studies: 1 - Samsung 2 - LGE 38
- 39. STRATEGY FOR TOTAL CHANGEWHY? Direction of problem- solving Problems Scientific & statistical approachesare necessary Elimination of waste elements Continuous learning 1.Big quality variation 2. Occurrence of same defects 1. High quality cost 2. Not enough provision of unified information 1. High quality cost 2.Not enough provision of unified information PRODUCT PROCESS PEOPLE The necessity of Six Sigma in Samsung
- 40. The problems were in the large quality variations in many products, repeated occurrences of the same defects, high quality costs(in particular, high failure costs), insufficient unified information for quality and productivity, manufacturing-oriented small group activities, and infrequent use of advanced scientific methods. The company concluded that the directions for solving these problems lay in scientific and statistical approaches for product quality, elimination of waste elements for process innovation, and continuous learning system for people. These directions in turn demanded a firm strategy for a complete overhauling a new paradigm fit to Six Sigma.. Samsung Made a contract with SBTI (Six Sigma Break- through Inc.) for Six Sigma consultation in 1999. It was a one- year, $3.4 million contract in which SBTI was supposed to help the company in every aspect of Six Sigma. Case Study 1
- 41. In early 1990s, for business reasons the company concentrated on cooperation of capital and labor, since there were numerous labor strikes in the late 1980s. After they overcame the labor problems, the price reduction movement became the major business issue for competitiveness in the international market. LGE-DA adopted the Six Sigma concept from 1996. From 2000 Six Sigma and e-business strategies became the major innovation activities for this company. As far as quality management is concerned, the AQL was approximately at the 3σ level until 1991. Owing to the 100PPM movement since 1992, the company became successful in enhancing its quality level to 4σ. In 1996 it adopted Six Sigma, challenging itself to achieving the goal of 6σ quality level in a 41 Case Study 2
- 42. GE Six Sigma Economics $0 $500 $1,000 $1,500 $2,000 $2,500 1996 1998 2000 2002 6 Sigma Projest Success Cost Benefit 42
- 44. How Does Six Sigma Solve Problems? Practical Problem (Define/Measure) Statistical Problem (Analyze) Practical Solution (Control) Statistical Solution (Improve) Y=f(x) 44
- 45. Improvement Process Road Map Analyze ControlImprove Define Activity • Main Focus –Y • Identify Problem • Complete Charter • Develop SIPOC Map • Finalize Project Focus Tools • Charter Form • Multi-Generational Plan • Stakeholder Analysis • Communication Plan • SIPOC Map • Voice of Customer (VOC) •Defect definition •Goal definition Analyze Activity • Main Focus – X • Propose Critical X’s • Prioritize Critical X’s • Conduct Root Cause Analysis on Critical X’s • Validate Critical X’s • Prioritize Root Causes Tools • Pareto Charts • Fishbone Diagrams • Brainstorming •5 Why’s • Non Value-Added Analysis • Scatter Diagram • FMEA,PFMEA,DFM EA • 2 Proportion • Chi-square • 2 Sample t • ANOVA Improve Activity • Main Focus – X • Develop Potential Solutions • Develop Evaluation Criteria & Select Best Solutions • Work with EBPM&C to create Develop ‘To-Be’ Process Map(s) • Develop High-Level Implementation Plan • Develop Pilot Plan & Pilot Solution Tools • Brainstorming • Creative Thinking • Pugh Matrix • NGT • Delphi • Multivoting • FMEA • 6 Thinking Hat • Solution Selection Matrix • ‘To-Be’ Process Maps Control Activity • Control X & Monitor Y • Develop SOP’s, Training Plan & Process Control System • Implement Process Changes and Controls • Monitor & Stabilize Process • Transition Project to Process Owner Tools • Control Charts (Np,P,C,U,I- mr,XbarR,XbarS) • Pokayoke • Standard Operating Procedures (SOP’s) • Communication Plan • Implementation Plan •Training Plan • Process Control Plans MeasureDefine Measure Activity • Main Focus – Y • Develop Operational Definitions • Develop Data Collection Plan • Collect Baseline Data • Determine Process Performance/Capability • Validate Business Opportunity • Review EBPM&C process maps to create ‘As-Is’ Process Map • Main Focus - X Tools • Operational Definitions • Data Collection Plan • Attribute Agreement Analysis • Z,Cp,Cpk,DPU,DPMO,Yiel d • Graphical Analysis •Pareto Chart •Histogram 45
- 46. Thank You 46