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Six sigma
- 1. Six Sigma Six Sigma: DMAIC; Y=f(x) Is it a Goal, a Measure, a Process, a Tool or an expletive deleted? By Lee Olson Presentation to INFORMS
- 7. 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 ± 1.5 ) Process Capability Defects per Million Opportunities PPM
- 8. Validated bottom line results Impact on Bottom Line Assuming a 10% change in the factor Factors
- 21. Basic Implementation 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. Hoshin
- 24. Does it 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. In Billions $
- 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 81 202 122 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 shift 1 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 Data On-Time Delivery Competitive LT = 3 days Takt Time = 18.2 min Demand = 45/day 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 81 202 122 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 shift 1 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
- 28. Inventory Raw = 5 days WIP = 12.1 days FG = 6.5 days 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 81 202 122 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 shift 1 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
- 29. Flow of Value Lead Time Touch Time = 89 min Lead Time = 23.6 days 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 81 202 122 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 shift 1 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
- 30. Constraints OTD, Lead Time CT (67) > Takt Time (18) Max Wip = 7.6 days 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 81 202 122 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 shift 1 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
- 31. Setup Times OP Margin, Lead Time CO = 23 min CO = Changeover CO = 1 hour 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 81 202 122 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 shift 1 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
- 32. Maintenance OTD, Lead Time Uptime = 70% 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 81 202 122 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 shift 1 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
- 33. Quality FTY = 67% 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 81 202 122 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 shift 1 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
- 34. Flow of Value OTD, Lead Time What is the pitch time? Who is setting the pace? 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 81 202 122 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 shift 1 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
- 37. The Normal Curve and Capability Low Sigma High Sigma Units of Measure Units of Measure Units of Measure Units of Measure Performance Limit Probability of a Defect Area of Yield
Editor's Notes
- 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.