Download to read offline
More Related Content
![Six sigma[2]](https://cdn.slidesharecdn.com/ss_thumbnails/sixsigma2-191019145307-thumbnail.jpg?width=640&height=640&fit=bounds)
Six sigma
- 1. D efine Measure Analyze Improve Control Operational Excellence By LeeOlson Presentation to INFORMS Six Sigma Six Sigma: DMAIC; Y=f(x) Is it a Goal, a Measure, a Process, a Tool or an expletive deleted?
- 2. Operational Excellence D efine Measure Analyze Improve Control Objectives Understand the Basics of the Six Sigma Program Understand How Six Sigma Relates to Lean, TOC, TQM (Theory Of Constraints; Total Quality Management) Ability to Define a Strategy and Roadmap for Success
- 3. Operational Excellence D efine Measure Analyze Improve Control Define Is it a Goal, a Measure, a Process, a Tool or an expletive deleted? Yes
- 4. Operational Excellence D efine Measure Analyze Improve Control Define SixSigma Is a management methodology • Customer focused • Data driven decisions • Breakthrough performance gains • Validated bottom line results
- 5. Operational Excellence D efine Measure Analyze Improve Control CustomerFocused Our Performance Compared to Competitors ImportancetoCustomers We’re Better They’re Better High Moderate- to-’Low’ • Price • Complaints • OTD• Quality • Training • Complete • Shared Goals Top 5 Action Items Driver Action Description Status Status Description Owner Original Due Date Current Due Date Late Supplier Deliveries Monthly reporting to suppliers on delivery & quality metrics. On track Report Cards Implemented. Adam 5/21 5/21 Late Supplier Deliveries Arrange face to face meetings with top offenders. On track Meetings Complete with top 10 Suppliers. Beth 6/15 6/15 Late Supplier Deliveries Review and approve supplier's corrective action plan. Caution Corrective Action Plan in Place for 2 major Suppliers Carlos 7/15 9/15 xyz Cell Always Late Kaizen Event to focus on improving throughput by 40% and improve labor efficiency by 35% On track Event held 5/1. 25% throughput improvement in May. Labor Efficiency Increase of 30% Doreen 5/21 5/21 Unrealistic Promise Date Focus on custom products to provide realistic ATP based on inventory and leadtime of components. Problem Continued lack of progress. Re- structured and focused team. Developing detailed plan. Earnest 6/15 8/15 ON TIME DELIVERY (sample) The percentage of sales order line items that ship complete on or before the original customer promise date, for all line items shipped in the month. On-Time Delivery 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Target Pareto of Drivers 0% 25% 50% 75% 100% Late Supplier Deliveries xyzCell Always Late Unrealistic Promise Date Orderson CreditHold LowYield onpartabc Engineering Change Orders Reason %Impact
- 6. Operational Excellence D efine Measure Analyze Improve Control DataDriven Decisions Why should we test or inspect Y, if we know this relationship? • Y • Dependent • Output • Effect • Symptom • Monitor • Response • X1 . . . XN • Independent • Input-Process • Cause • Problem • Control • Factor To get results, should we focus our behavior on the Y or X ? f (X)f (X)Y=Y=
- 7. Operational Excellence D efine Measure Analyze Improve Control 2308,537 3 66,807 4 6,210 5 233 6 3.4 2 308,537 3 66,807 4 6,210 5 233 6 3.4 σσ PPMPPM Breakthrough performance gains Sigma is a statistical unit of measure which reflects process capability. The sigma scale of measure is perfectly correlated to such characteristics as defects-per-unit, parts-per million defective, and the probability of a failure/error. (Distribution Shifted ± 1.5σ) Process Capability Process Capability Defects per Million Opportunities Defects per Million Opportunities
- 8. Operational Excellence D efine Measure Analyze Improve Control Validatedbottom line results Price IncreaseM aterialCosts Volum e Inc.w ith LeverageM anufacturing SG &A Volum e Inc.No Leverage Taxes Labor W orking Capital G eneral-5% Price Reduction ImpactonBottomL Assuming a 10% change in the factor Factors
- 9. Operational Excellence D efine Measure Analyze Improve Control Define Methodology Define Measure Analyze Improve Control
- 10. Operational Excellence D efine Measure Analyze Improve Control Roadmap Example NextProject Define Customers, Value, Problem Statement Scope, Timeline, Team Primary/Secondary & OpEx Metrics Current Value Stream Map Voice Of Customer (QFD) Measure Assess specification / Demand Measurement Capability (Gage R&R) Correct the measurement system Process map, Spaghetti, Time obs. Measure OVs & IVs / Queues Analyze (and fix the obvious) Root Cause (Pareto, C&E, brainstorm) Find all KPOVs & KPIVs FMEA, DOE, critical Xs, VA/NVA Graphical Analysis, ANOVA Future Value Stream Map Improve Optimize KPOVs & test the KPIVs Redesign process, set pacemaker 5S, Cell design, MRS Visual controls Value Stream Plan Control Document process (WIs, Std Work) Mistake proof, TT sheet, CI List Analyze change in metrics Value Stream Review Prepare final report Validate Project $ Validate Project $ Validate Project $ Validate Project $ Celebrate Project $
- 11. • Develop afocused Problem Statement and Objective • Develop a Process Map and/or FMEA • Develop a Current State Map • Identify the response variable(s) and how to measure them • Analyze measurement system capability • Assess the specification (Is one in place? Is it the right one?) Practical Problem Problem Definition • Characterize the response, look at the raw data • Abnormal? Other Clues? Mean or Variance problem? • Time Observation • Spaghetti Diagram • Takt Time • Future State Maps • Percent Loading • Standard Work Combination • Use Graphical Analysis, Multi-Vari, ANOVA and basic statistical tools to identify the likely families of variability Problem Solution • Identify the likely X’s • 5S • Set Up Time Reduction (SMED) • Material Replenishment Systems • Level Loading / Line Leveling • Cell Design • Visual Controls • Use Design of Experiments to find the critical few X’s • Move the distribution; Shrink the spread; Confirm the results Problem Control • Mistake Proof the process (Poka- Yoke) • Tolerance the process • Measure the final capability • Place appropriate process controls on the critical X’s • Document the effort and results • Standard Work • TPM Identify Problem • Strategic Link to Business Plan defined in Project Selection Process • Defined Business Impact with Op Ex Champion support • Structured Brainstorming at all organizational levels • Cause and Effect Diagrams identifying critical factors • Primary and Secondary Metrics defined and charted • Multi-Level Pareto Charts to confirm project focus What do you want to know? How do you want to see what it is that you need to know? What type of tool will generate what it is that you need to see? What type of data is required of the selected tool? Where can you get the required type of data? Problem Solving Plan Execute Execute Plan Crane Co. Op. Ex. Methodology Originated by MBBs; D. Braasch, J. Davis, R. Duggins, J. O’Callaghan, R. Underwood, I. Wilson OperationalExcellenceMethodology Based in part on Six Sigma Methodology developed by GE Medical Systems and Six Sigma Academy, Inc.
- 12. Operational Excellence D efine Measure Analyze Improve Control Define KeyItems Customers, Value, Problem Statement Scope, Timeline, Team Primary/Secondary & OpEx Metrics Current Value Stream Map Voice Of Customer (QFD) (Quality Function Deployment)
- 13. Operational Excellence D efine Measure Analyze Improve Control ProjectSelection Impact Business Impact • Revenue Growth • Cost Reduction • Capital Reduction • Key Business Objectives • On Time Delivery • Lead Time • Quality • Customer Satisfaction Impact on Operational Excellence Metrics
- 14. Operational Excellence D efine Measure Analyze Improve Control Evaluateand Rank Suggestions Effort and Risk Effort required • People Resources • Capital Resources • Duration of Project Probability of success • Technical Risk • Data available • Knowledge of process • Management Risk • Aligned with objectives • Support by value stream manager Impact vs. Risk vs. Effort • Assess ROI (Return On Investment) • Assign priorities to projects
- 15. Operational Excellence D efine Measure Analyze Improve Control Evaluateand Rank Suggestions Example tool to rank projects 0106-01 Project Rating.xls
- 16. Project Ranking 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 1 2 34 5 Effort Impact Project Number Risk = Ball Size n Example chart to rank projects 0106-01 Project Rating.xls
- 17. Operational Excellence D efine Measure Analyze Improve Control Measure Establish measurement capability • Validate the database (transactional) • Gage R&R (Repeatability & Reproducibility) • Calibration is not enough • Many (or most) measurement systems are not capable • How good is the data you are using to make decisions? Fix the measurement system • Enables calculation of process capability • Enables calculation of alpha & beta risks • This step is often skipped
- 18. Operational Excellence D efine Measure Analyze Improve Control Analyze (andfix the obvious) Find all KPOVs & KPIVs (Key Process Output Variables; Key Process Input Variables) FMEA, DOE, critical Xs, VA/NVA (Failure Modes Effects Analysis; Design Of Experiment) Graphical Analysis, ANOVA (Analysis Of Variance) Future Value Stream Map
- 19. Operational Excellence D efine Measure Analyze Improve Control Improve Optimize KPOVs & test the KPIVs (Key Process Output Variables; Key Process Input Variables) Redesign process, set pacemaker 5S, Cell design, MRS (Material Replenishment System) Visual controls Value Stream Plan
- 20. Operational Excellence D efine Measure Analyze Improve Control Control Management of Change • Owned by project champion and value stream manager • Critical to long term success of project • Physical and cultural changes Measurement controls • On-going metrics Visual Controls • Enable workers to self-manage the process
- 21. Operational Excellence D efine Measure Analyze Improve Control BasicImplementation Roadmap Understand and Define Entire Value Streams Deploy Key Business Objectives - Measure and target (metrics) - Align and involve all employees - Develop and motivate Define, Measure, Analyze, Improve Identify root causes, prioritize, eliminate waste, make things flow and pulled by customers Control -Sustain Improvement -Drive Towards Perfection Identify Customer Requirements Vision (Strategic Business Plan) Continuous Improvement (DMAIC) Identify Customer Requirements
- 22. Operational Excellence D efine Measure Analyze Improve Control Hoshin Key:Impact Owner Support Type in --> 4 l m 1.2 6 1.1 5 3.2 4 3.1 3 2.2 2 2.1 1 3.0 2.0 1.0 1 2 3 4 5 6 7 8 Resource Implementleanconceptsintop3volumelines establishparetoofdriversforOTD IT Operations Quality Engineering Maintenance Marketing Leadershaveabilitytomapavaluestream Metricsmoduleinallappropriatetrainingsequences Trainingprojectsdemonstrateflowdownofmeticsto operationallevel Developcultureofteams ImproveCustomerFocus Educate/GetEveryoneInvolved ImprovetheMetrics Training Establish tracking of OTD in every cell Improve On Time Delivery to 98% Train workers in how our products are used by our major customers Complete1LeadershipLGBtrainingcourse Traineesparticipateincustomersurvey Complete3functionalLGBtrainingcourses Bringrepsfromtop10customersinforplanttours 100%CompletionofLGBProjects Conduct interviews with top 10 customers Train functional leaders as LGBs Train leadership team as Lean Green Belts (LGB) Your Annual Breakthrough Objectives YourManager's1-Year Breakthrough Objectives Indicator'sandGoals Benefits
- 23. Top 5 ActionItems Driver Action Description Status Status Description Owner Original Due Date Current Due Date Late Supplier Deliveries Monthly reporting to suppliers on delivery & quality metrics. On track Report Cards Implemented. Adam 5/21 5/21 Late Supplier Deliveries Arrange face to face meetings with top offenders. On track Meetings Complete with top 10 Suppliers. Beth 6/15 6/15 Late Supplier Deliveries Review and approve supplier's corrective action plan. Caution Corrective Action Plan in Place for 2 major Suppliers Carlos 7/15 9/15 xyz Cell Always Late Kaizen Event to focus on improving throughput by 40% and improve labor efficiency by 35% On track Event held 5/1. 25% throughput improvement in May. Labor Efficiency Increase of 30% Doreen 5/21 5/21 Unrealistic Promise Date Focus on custom products to provide realistic ATP based on inventory and leadtime of components. Problem Continued lack of progress. Re- structured and focused team. Developing detailed plan. Earnest 6/15 8/15 ON TIME DELIVERY (sample) The percentage of sales order line items that ship complete on or before the original customer promise date, for all line items shipped in the month. On-Time Delivery 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Target Pareto of Drivers 0% 25% 50% 75% 100% Late Supplier Deliveries xyzCell Always Late Unrealistic Promise Date Orderson CreditHold LowYield onpartabc Engineering Change Orders Reason %Impact
- 24. Operational Excellence D efine Measure Analyze Improve Control Doesit work?. Source: American Customer Satisfaction Index, U Michigan, HBR, 2001 1999 73 companies Ralston Purina Quaker Oats Hilton Hotels Coca-Cola Unilever etc. The top companies in Customer Satisfaction grow MVA at nearly twice the rate of their poor-performing counterparts. $23 $42 0 10 20 30 40 50 Low High Customer Satisfaction Index Score MarketValueAdded In Billions $
- 25. Operational Excellence D efine Measure Analyze Improve Control Whatabout Lean, TOC, TQM Six Sigma • Remove defects, minimize variance Lean • Remove waste, shorten the flow TOC • Remove and manage constraints TQM • Continuous Improvement
- 26. Value Stream Map- Current State Customer Demand = 45 per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I I I I Coils 5 days CT= 15 min Co=0 min. Uptime=100 %2 shifts CT= 67 min Co= 23 min FTY = 67% 2 shifts Shipping I I 81 202122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 5 days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift1 shift CT= 4 min Co=0 Uptime=100 %2 shifts Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min
- 27. Customer Demand = 45per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I I I I Coils 5 days CT= 15 min Co=0 min. Uptime=100 %2 shifts CT= 67 min Co= 23 min FTY = 67% 2 shifts Shipping I I 81 202122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 5 days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift1 shift CT= 4 min Co=0 Uptime=100 %2 shifts Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min Competitive LT = 3 days Takt Time = 18.2 min Customer Data On-Time Delivery Demand = 45/day
- 28. Customer Demand = 45per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I I I I Coils 5 days CT= 15 min Co=0 min. Uptime=100 %2 shifts CT= 67 min Co= 23 min FTY = 67% 2 shifts Shipping I I 81 202122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 5 days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift1 shift CT= 4 min Co=0 Uptime=100 %2 shifts Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min Raw = 5 days WIP = 12.1 days FG = 6.5 days Inventory
- 29. Customer Demand = 45per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I I I I Coils 5 days CT= 15 min Co=0 min. Uptime=100 %2 shifts CT= 67 min Co= 23 min FTY = 67% 2 shifts Shipping I I 81 202122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 5 days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift1 shift CT= 4 min Co=0 Uptime=100 %2 shifts Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min Touch Time = 89 min Flow of Value Lead Time Lead Time = 23.6 days
- 30. Customer Demand = 45per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I I I I Coils 5 days CT= 15 min Co=0 min. Uptime=100 %2 shifts CT= 67 min Co= 23 min FTY = 67% 2 shifts Shipping I I 81 202122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 5 days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift1 shift CT= 4 min Co=0 Uptime=100 %2 shifts Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min CT (67) > Takt Time (18) Constraints OTD, Lead Time Max Wip = 7.6 days
- 31. Customer Demand = 45per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I I I I Coils 5 days CT= 15 min Co=0 min. Uptime=100 %2 shifts CT= 67 min Co= 23 min FTY = 67% 2 shifts Shipping I I 81 202122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 5 days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift1 shift CT= 4 min Co=0 Uptime=100 %2 shifts Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min CO = 23 min CO = Changeover Setup Times OP Margin, Lead Time CO = 1 hour
- 32. Customer Demand = 45per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I I I I Coils 5 days CT= 15 min Co=0 min. Uptime=100 %2 shifts CT= 67 min Co= 23 min FTY = 67% 2 shifts Shipping I I 81 202122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 5 days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift1 shift CT= 4 min Co=0 Uptime=100 %2 shifts Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min Maintenance OTD, Lead Time Uptime = 70%
- 33. Customer Demand = 45per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I I I I Coils 5 days CT= 15 min Co=0 min. Uptime=100 %2 shifts CT= 67 min Co= 23 min FTY = 67% 2 shifts Shipping I I 81 202122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 5 days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift1 shift CT= 4 min Co=0 Uptime=100 %2 shifts Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min QualityFTY = 67%
- 34. Customer Demand = 45per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I I I I Coils 5 days CT= 15 min Co=0 min. Uptime=100 %2 shifts CT= 67 min Co= 23 min FTY = 67% 2 shifts Shipping I I 81 202122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 5 days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift1 shift CT= 4 min Co=0 Uptime=100 %2 shifts Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min What is the pitch time? Flow of Value OTD, Lead TimeWho is setting the pace?
- 35. Operational Excellence D efine Measure Analyze Improve Control Makingit happen Three major roles Implementer • Learns the tools • Works the process • Solves day to day problems Manager • Learns the methodology • Manages a value stream • Reviews project teams Leader • Establishes the vision for the future • Sets priorities • Encourages Where do you need to focus?
Editor's Notes
- #25 Companies with satisfied customers exhibit strong financial performance (positive correlation). In other words, knowing, and acting upon, customer requirements is profitable. The University of Michigan Business School’s National Quality Research Center has tracked the ACSI since 1994. ASCI does quarterly interviews with customers of over 200 companies in 35 industries. Customer Satisfaction scores are correlated positively with financial performance measures such as market value added, stock price, and ROI. Among the 73 companies surveyed, those that score in the top half of the ACSI score range generated about $42 bil in MVA, while companies in the bottom half totaled only $23 bil. Furthermore, in the companies surveyed with a mean capitalization of $27 bil, one point on the ASCI scale is worth on average $0.898 mil. in MVA and therefore a one point increase in customer satisfaction score translates into a 3% (0.9/27) increase in MVA. Sources: Claes Fornell, Harvard Business Review, 2001 and American Customer Satisfaction Index, University of Michigan.