Week 06_Handout day 2

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Day Two
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Last session we covered
Copyright © Vox Datum LLC (2016-2017). All Rights Reserved. 1
Lean = giving customers exactly what they want, when they want it as efficiently as possible.
Customer Focus
•  Customers buy benefits – problems solved, a new opportunity, enhanced image
•  Your offerings deliver features – Reliability, Assurance, Tangibles, Empathy,
Responsiveness
Value Streams cross functional silos to deliver customer experience
•  The eight wastes erode productivity and quality
•  Value add analysis helps identify wasteful activities to eliminated or improve
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Session One Value Add Analysis

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How are we doing?
Name Company Expected Class Outcomes
Kyley Bonbite Weed out inefficiencies
Steph & Jocelyn Steph Mantis Design TBD
Trevor Underground Signs Efficiency, particularly for packaging and shipping
Ashley Luxholdups Scaling operations
Corrin Patina Studios Efficient processes
Kyiesha Hip Hop Closet Lower packaging and shipping costs (free service)
Akiko Atsuyo et Akiko Operational changes - Wholesale to Retail
Paul Made by Wood Move from one offs to multiple, smaller products
Owen VOM Carpentry Logistics – transport vs time on site
David & Kelly Stitch NYC Systems for Efficiency
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Simulation Recap – Round One Metrics
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Thinking about continuous flow…..

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Day Two Topics
Continuous Flow
Theory of Constraints
Cost of Poor Quality
Continuous Improvement / Six Sigma
By the end of this session you will:
•  know how to identify and relieve production
constraints
•  understand the cost of poor quality and the DMAIC
improvement framework
•  have learned facilitation and problem solving skills
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3. Continuous Flow
move as fast as value can be
added, no waiting.
Little’s Law
Theory of Constraints
Set-up Time Reduction
Takt Time
Kanban
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Measuring the Flow of Processes
with Little’s Law
Work in Progress
Output
Work in Progress / Output = Cycle-time
120 gallons / 60 gallons per minute = 2 minutes

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Continuous Flow
The Theory of Constraints
CB BA
•  Constraints produce the fewest outputs per unit of time.
Often they will have a stack of work in front of them
•  Constraints govern the output for the whole process – an
hour lost at the bottleneck is lost for the whole process.
•  Efficiency gains at any other location don’t improve
productivity of the process.
Managing the Constraint
1.  Identify it
2.  Exploit it
3.  Subordinate everything else
4.  Increase output of constraint
5.  Rinse and repeat
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Set-up Time
Reduction
https://vimeo.com/98796938
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Set-up Time Reduction
(Single Minute Exchange of Die)
1 Separate
Elements
Identify tasks that can be performed
during production and make them
“external” to the change over
2 Parallel
Work
Identify tasks performed
sequentially and, where possible,
complete them simultaneously
3 Convert
Elements
Review remaining internal elements
and ask what it would take to make
them external. Convert as many as
possible
4 Streamline Review all elements for
simplification to shorten both
external and change over time.

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Production Systems
Takt Time Example: Willow Run
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Flow, Takt Time and Cellular Design
1940 – A bomber per hour at Willow Run
34,500 Employees
488,000 Discrete parts
33,000 Components
24 Assemblies
1 B-24 per hour
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Production Systems
Kanban Overview
Copyright © Vox Datum LLC (2016-2017). All Rights Reserved. 34Source: http://logisticsglobal.blogspot.com/2011/10/kanban-system-parts-procurement-toyota.html

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Production Systems
Kanban Board Example: Hiring Process
1.  Define Value Stream
2.  Set Work in Process Limit
3.  Establish the Backlog
4.  Start Pulling Work
Application
Received Phone Screen
Manager
Interview
Interview
Complete Decision
G. Martin
Declined
M. Taylor
Offer
B. Miller
W. Jones
F. Brown
C. Williams
A Johnson
C. Smith
M. Jackson
3
M. Garcia
2 Rodriguez
AndersonJ. Davis
1
A. Thomas
Declined
Hernandez
Declined
T. Moore
Declined
D. Jones
No Go
R. Martinez
Offer
A. Richards
Start 15th
G. Wilson
4
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Simulation Round 3:
Continuous Flow
•  Owner is responsible for final decisions
•  Changes must be reversible
•  No changes that involve customers
•  No elimination of staff
•  Facilitator has final approval
•  Implement changes and train if necessary
Objective: identify and relieve constraints in the process.
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4. Perfection
produce exactly what the
customer wants…
•  Cost of Poor Quality
•  The Case for Continuous
Improvement
•  Simple Six Sigma
37Copyright © Vox Datum LLC (2016-2017). All Rights Reserved.

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The Cost of Poor Quality
Estimated Costs for American Companies
Non-conformance
“The cost of getting it wrong”
Conformance
“The cost of getting it right”
Internal Failures (20% to 40%) Controls (10% to 50%)
•  Scrap materials
•  Rework – doing work twice
•  Lost production time
•  Inspecting for errors, defects
•  Delays waiting for approval
External Failures (20% to 40%) Prevention (0% to 5%)
•  Fines, Penalties
•  Warranties, Concessions
•  Lost revenue
•  Measurement and tracking
•  Root cause analysis
•  Mitigation
Source: The Quality Engineer Primer by Bill Wortman, 1997
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The Limits of Inspection Controls
(and The Case for Continuous Improvement)
“Finished files are the result of years
of scientific study combined with the
functional experience offered by
many Financial Services experts.”

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Another Different Approach to Cost of Quality:
Continuous Improvement
Total Costs
Control / Inspection Costs
Non-conformance Costs
Quality
Cost
Prevention Costs
(Continuous Improvement)
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Conventional wisdom: “This is good enough.”
Six Sigma:
What is it? When is it useful?
Sigma Defects per Million % Good
6 3 99.99966%
5 233 99.977 %
4 6,210 99.4 %
3 66,807 93.3 %
2 308,537 69.2 %
Condition: 99% Good (4 sigma) 99.99966% Good (6 sigma)
High Risk 4 plane crashes per day 1 accident every 5 years
High Volume 2,800 lost packages per hour Less than 2 lost items per day
High Complexity 4,000 surgical mistakes per year Less than 2 mistakes per year
Three conditions when “good enough” isn’t:
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Continuous Improvement:
Will Six Sigma work for us?
“Too Complicated”
“Bureaucratic”
“It’s a Black Box”

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Six Sigma works for Dabbawallas
“There is a service called FedEx that is
similar to ours but they don’t deliver hot
lunches.”
Dhondu Kondaji Chowdhury
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How Dabba Deliveries Work
10C
VP
M
Collection Codes
VP Residential Location
(Vile Parle)
C Residential Railway Station
(Cooper Hospital)
Red Dabbawalla teams color
Destination Codes
10 Destination Railway Station
(Nariman Point)
9 Dabbawalla team number
M Building Identification
(Mittal Tower)
12 Floor number
“The unavoidable price of reliability is simplicity.”
C. Hoare
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Six Sigma
DMAIC Improvement Methodology
Process Optimization
(People Driven)
Process Characterization
(Fact Driven)
MEASURE
Record performance in a
measurement system
CONTROL
Ensure sustainability
IMPROVE
Agree and make required
changes
ANALYZE
Find the critical few
factors
DEFINE
Document issue, allocate
resources

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Define:
Tips for Starting an Improvement Project
Define the objective •  Articulate the compelling need for change
•  Define goals tied to business objectives
•  Get buy-in from the critical stakeholders
Build the right team •  Ensure stakeholder representation
•  Keep the team small and co-located where possible
•  Hold frequent, timely, informal communications
Freeze the target •  Set specific, measurable success metric(s)
•  Set stretch targets. When in doubt, 50% improvement
•  Make the metrics visible for all and the target hard to change
Invent offline •  Make the most of existing or proven technology
•  Use technical innovation only when it’s fully tested
Be time driven •  80% of target is a win, celebrate success and move on
•  Iterate often, plan multi-generation releases
•  Use parallel work streams where possible
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Measure:
Record Performance with Run Charts
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Analyze:
Find Critical Few Factors with Pareto Charts

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Analyze:
Using the Five Whys to Find Root Cause
Where the Failure Occurred - Process Gaps
1.  Understand what the customer expects
2.  Design the process to meet customer
expectations.
3.  Follow the process as designed
4.  All communications are consistent with
how the process operates
Why? A solid rocket booster exploded.
Why? Hot gasses escaped from the rocket booster.
Why? O-ring seals failed in at least one of the
booster’s joints.
Why? The shuttle launched when the air temperature
was below design specifications for the O-rings
Why? “…NASA’s structure permitted internal flight
safety problems to bypass key shuttle
managers.”
Rogers Commission Report
On January 28, 1986 the Space Shuttle Challenger disintegrated over the Atlantic Ocean 73
seconds into its flight, leading to the deaths of its seven crew members. What went wrong?
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Improve:
Better Quality with Error Proofing
Risk Priority Number = Severity * Occurrence * Detection
Shut down Lock out Warning
Severity Occurrence Detection
5 Harm a customer or employee
Trigger legal or regulatory action
5 Very High (greater than 10%) 5 No controls
4 Cause significant reputational or
financial risk
4 High (1% to 10%) 4 Low
QC/QA sampling
3 Result in a customer complaint 3 Moderate (1/10,000 to 1%) 3 Moderate
100% manual inspection
2 Minor effect on performance 2 Low (1/10,000 to 1/Million) 2 High
Statistical Process Control
1 Unnoticed by customer
Internal waste or rework
1 Very Low (less than 1/Million) 1 Very High
100% auto inspection
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Control:
Standard Work for Consistency
Elements of Standard Work
1.  Inventory – material types and
quantities required to keep the process
operating smoothly
2.  Work Sequence – order of tasks an
operator must perform within takt time
3.  Takt Time - the rate at which
components must be made to meet
customer demand
Prep. Time 15 min.

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Control:
Monitoring Key Metric(s) Over Time
Trend – Six consecutive data points in
either direction
Shift – Eight consecutive points on
one side of the median
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Process Optimization
Facilitation for Results
The problem is often about the process…
“85% of the reasons for failure to meet customer expectations
are related to deficiencies in systems and process…change
the process rather than badgering individuals to do better.”
Dr. W. Edwards Deming
…solutions are ALWAYS about people
Results = Solution * Acceptance
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Facilitation for
Results
55Copyright © Vox Datum LLC (2016-2017). All Rights Reserved.

61
Open: Idea Generation
Brain Writing
•  One idea per Post-it note
•  In order, each person
reads an idea and puts it
on a wall
•  Team uses what the hear
to modify or generate new
ideas
•  Keep going until ideas dry
up.
Assumption Busting
•  Identify rules or behaviors
that lead to the current
state
•  Surface assumptions
underlying rules or
behaviors (ask why 5x)
•  Challenge assumptions –
existing exceptions?
Premortem
•  Ask, “How can we ensure
the problem happens ALL
the time?”
•  Run like Brain Writing
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Narrow: Affinity Grouping Adds Clarity
Group
A
Others
Group
B
Group
C
Group
D
•  Go through the ideas to see where they can be
meaningfully grouped
•  Move the ideas that belong in the same group
together
•  Look for duplicate ideas. Get permission from each
idea author to consolidate duplicates so that they
overlap
•  Work with the group to define a title post-it that
succinctly describes each group
•  Place all single ideas under the title “Others”
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Narrow: n/3 to Focuses on Best Ideas
2
Group
A
5
4
31
1
1
Others
Group
B
Group
C
Group
D
2
11
•  Count the total number of ideas or groups
•  Divide this number by three
•  Each person on the team gets this number of votes
•  Each person puts dots on the ideas they think are
best
•  Count the number of votes per idea and rank them in
descending order

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Close: Payoff Matrix Drives Consensus and Actions
•  The group agrees precise definitions for Benefit and
Effort
•  Each person rates each idea on a scale of 1 to 5
against potential benefits and effort to implement
•  Check assumptions for ideas with big variation in
scores
•  Average the scores for each idea
•  Apply Post-its in corresponding location on the grid
•  Confirm groups commitment to the results
•  Agree deliverables, next steps, timing and
responsibilities
1
1
1
5
31
4
2
Effort
Benefit
Low
High
High
2
1
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Simulation Round 4:
Defect Reduction
•  Owner is responsible for final decisions
•  Changes must be reversible
•  No changes that involve customers
•  No elimination of staff
•  Facilitator has final approval
•  Implement changes and train if necessary
Objective: identify and mediate root causes of highest impact errors.

Week 06_Handout day 2

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