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PMI-MN Breakfast Meeting Tuesday, February 14th, 2006 Show Me The Business Value Discover Lean Six Sigma “Best Bets” for Tangible Improvements Presented by: Michelle Goodman 1 © 2005 trissential. All Rights Reserved. [email protected] 3 Part Series Agenda • What Exactly is Lean Six Sigma? • Corporate Deployments • Big is Not Always Better • Individual Execution – – – – – Project Selection and Scoping Resource Utilization Comprehensive Communication Metrics & Results Personal Corporate Citizenship Contributions 2 © 2005 trissential. All Rights Reserved. What Exactly is Lean Six Sigma? 3 © 2005 trissential. All Rights Reserved. Lean Six Sigma Is the Integration of Two Powerful Business Improvement Approaches... Six Sigma Culture+Quality Lean Speed+Low Cost • Goal – Reduce waste and increase process speed • Goal – Improve performance on Customer CTQs • Focus – Bias for action/ Implementing known solutions • Focus – Root Cause Analysis/ Developing Solutions • Method – Kaizen events • Method – Black Belts dedicated to projects Lean Speed Enables Six Sigma Quality Six Sigma Quality Enables Lean Speed (Faster Cycles of Experimentation/learning) (Fewer Defects Means Less Time Spent on Rework) 4 © 2005 trissential. All Rights Reserved. What is Six Sigma? – Methodology that helps companies reduce costs and accelerate growth through discipline and long-term culture change – Improves business processes companywide, by using tools to build process capability, by reducing variation, and improving quality – Focus is on delighting the customer (voice of the customer) & providing excellent service in all business functions, not just manufacturing 5 © 2005 trissential. All Rights Reserved. Statistically Speaking Sigma is the Greek letter that is a statistical unit of measurement used to define the standard deviation of a population. It measures the variability or spread of the data. Six Sigma is also a measure of variability. It is a name given to indicate how much of the data falls within the customers’ requirements. The higher the process sigma, the more of the process outputs, products and services, meet customers’ requirements – or, the fewer the defects. 6 © 2005 trissential. All Rights Reserved. Statistically Speaking Defects per Million Opportunities DPMO s 2 69.2% 308,537 3 93.32% 66,807 4 99.379% 6,210 5 99.977% 233 6 99.9997% 3.4 Yield 7 © 2005 trissential. All Rights Reserved. Defects per Million Opportunities DPMO s Yield 2 69.2% 308,537 3 93.32% 66,807 4 99.379% 6,210 5 99.977% 233 Baggage Handling 6 99.9997% 3.4 Postal System Everyday Occurrences Plane Landings Medical Services What are you willing to pay for? 8 © 2005 trissential. All Rights Reserved. What does Lean Add? • LEAN focuses on the elimination of waste. It pushes for faster, more efficient processes that require less effort, less inventory, less time, and less space while also being highly responsive to the voice of the customer 9 © 2005 trissential. All Rights Reserved. What is the Role of Project Management? • Work is completed in a Project Team – Led by a company’s employee who is a trained Lean Six Sigma expert. These project managers have titles related to their level of Lean Six Sigma training, such as Black Belt or Green Belt. – The team is populated with members who also have some basic Lean Six Sigma training, such as yellow or white belts. LSS projects have very specific charters, timelines, and goals and specifically target repeatable, established processes. 10 © 2005 trissential. All Rights Reserved. What is the Project Lifecycle? • The DMAIC (pronounced duh-May-ick) methodology is the cornerstone of Lean Six Sigma, providing discipline and structure to specific project teams. • DMAIC stands for Define - Measure Analyze - Improve - Control, which represent the major phases or gates of the project lifecycle. 11 © 2005 trissential. All Rights Reserved. How do the Lifecycles Work Together? PMI’s 5 Process Groups Standard project lifecycle DMAIC Six Sigma project lifecycle Initiating Define Monitoring Planning (includes initial charter creation by sponsor) Measure Executing Analyze Improve Closing Control Realization 12 © 2005 trissential. All Rights Reserved. In Total: Lean Six Sigma When Lean speed and Six Sigma quality are integrated, the result is a methodology that operates with these basic principles at its core: • Focus on the customers’ point of view • Solve problems in teams • Create and use data to drive decisions • Eliminate waste and increase speed • Reduce variation and increase quality • Replicate best practices • Maintain gains over time 13 © 2005 trissential. All Rights Reserved. Corporate Deployments What are the common characteristics? 14 © 2005 trissential. All Rights Reserved. History • Six Sigma Black Belt methodology began in late 80’s/early 90’s – Motorola popularized corporate use of methodology Next wave of companies to utilize Six Sigma: – GE – Allied Signal – Bombardier – Sony • Lean Methodologies made famous in Japan’s Automotive Industries over last 30 years • Current deployments in Six Sigma have added Lean component and have been broader in application and industry – – – – – Caterpillar – across enterprise and into dealer / supplier Xerox Home Depot Ecolab Thrivent 15 © 2005 trissential. All Rights Reserved. Why is LSS attractive? • Execution Capability • Resource Utilization – Project Selection & Prioritization • Cost Reduction • Revenue Growth – Customer Retention • Culture Change – Data-based Decision Making – Project Management Skills • Leadership Development 16 © 2005 trissential. All Rights Reserved. What’s the difference from past improvement initiatives? • • • • • • Infrastructure and System Burning Platform Executive Driven - Visibility Complete Company Involvement Full-time Resources (getting most attention) Project Management Methodology – Chartering and Scoping • Measurement and Tracking 17 © 2005 trissential. All Rights Reserved. Lean Six Sigma is a System DMAIC Methodology for Process Improvement Improvement Methodology Design/ Redesign Methodology Define & Measure Analyze Improve Control DFSS Methodology for Process/Product Design Deployment & Infrastructure Management Initiate & Define Design Optimize DMAIC improves existing processes, products, services, designs, plants, etc. DFSS generates new processes, products, services, plants, etc. Deployment & Infrastructure Management is the system that: Verify Prioritizes organizational action on the right things Drives effective action Ensures sustainability and consistency 18 © 2005 trissential. All Rights Reserved. Lean & Six Sigma Tools Define • • • • • • • • • Project ID Tools Project Definition Form Value of Cycle Time Net Present Value Analysis Internal Rate of Return Analysis Discounted Cash Flow Analysis PIP Management Process RACI Quad Charts Measure • • • • • • • • • • • • • • • Process Mapping Value Stream Mapping Process Cycle Efficiency Lean Six Sigma Metrics Process Sizing Kaizen Events Multi-Voting Techniques Pareto Charts C&E/Fishbone Diagrams FMEA Check Sheets Run Charts Control Charts Gage R&R Subjective Measurement Systems Analyze • • • • • • • • • • Cp & Cpk SupplyChainAccelerator Time Trap Analysis Analytical Batch Sizing Multi-Vari Box Plots Interaction Plots Regression ANOVA C&E Matrices FMEA Improve • SM • • • • • • • • • • • • • Control Brainstorming, Affinity Benchmarking Kaizen Events Pull Systems • Generic • Replenishment Part Stratification Setup Reduction TPM, 5S Process Flow Line Balancing DOE Hypothesis Testing Force Field Tree Diagrams Gantt Charts • • • • • • • • • Check Sheets Run Charts Histograms Scatter Diagrams Control Charts Visual Control Tools Poka-Yoke Pareto Charts Interactive Reviews Lean tools highlighted in red 19 © 2005 trissential. All Rights Reserved. Lean Six Sigma Commitment Required at Every Level Executives / BU Leadership • Owns vision, direct, integration, results • Leads change Project Team Members • Provide projectspecific support • Part time Master Black Belts • Trains and coaches Black Belts and Six Sigma Green Belts • Leads large/complex projects • Full time Deployment Champions • Leads business unit performance improvement All Employees • Understand vision • Apply concepts to their job and work area • Full time Project Sponsors • Project owner Black Belts Green Belts • Participate on Black Belts teams and/or lead small projects • Part time on projects • Implements solutions • Owns financial results • Part time as part of job • Leads and Facilitates problem solving • Trains and coaches Project Teams • Full-time 20 © 2005 trissential. All Rights Reserved. Deployment Must Haves 1. Full executive commitment (CEO and direct reports) 2. P&L/Business owners must be accountable for results and should own and commit resources – typically 1% of population as Black Belts 3. Select projects to support business needs (strategic, financial objectives, customers) 4. Broad-based training in Lean Six Sigma tools and team leadership skills 5. Actively manage PIP (Projects in Process) to keep project cycle times short and show results quickly 6. Rigorously measure and track results (projects and deployment) 7. Drive culture change from both top-down and bottom-up perspective – The Soft Stuff is the Hard Stuff 8. Use A -Team for deployment (consultants, program managers, 1st wave belts) 21 © 2005 trissential. All Rights Reserved. Big is not always Better! Why the Change in Focus? 22 © 2005 trissential. All Rights Reserved. Big is Not Always Better • Too many OOOPS in last couple of years • Trigger points for problems – Lack of Visible, Tangible, and Transparent Results • Enron, World Com, Collapse of Retirement Funds – Downplay of incremental business value and results in everyday transactions – Hype and promises of large implementations and execution strategies as silver bullet • CRM, ERP, Off-Shoring, (Lean Six Sigma?) 23 © 2005 trissential. All Rights Reserved. Criticism of Lean Six Sigma • Stringent deployment approach discounts other methodologies and takes on “life of its own” • Employee backlash against “elitist systems” – Exclusive versus inclusive due to selection process & – certification requirement • Turnover in executives or loss of active support can change deployment results as LSS is CEO driven • Works best when there is a Burning Platform for change 24 © 2005 trissential. All Rights Reserved. Big is Not Always Better • Today’s business results are mostly measured in quarterly increments – – – – – – Wall Street Earning Announcements Board Meetings Strategy and Budget Reviews Personnel Changes Market Fluctuations Competitor Activities • Low patience for promises of long-term improvement without incremental progress 25 © 2005 trissential. All Rights Reserved. Back to the Basics • Cyndi Lesher – President and CEO of Xcel Energy – If it’s too good to be true ….. it isn’t – Incremental, realistic, transparent business results – No room for “Pack Mentality” when it comes to personal and business ethics – Individual accountability and achievement 26 © 2005 trissential. All Rights Reserved. Back to the Basics • • • • • • Federal legislation - Sarbanes Oxley Corporate governance changes Push for empowerment at lower levels Individual accountability Education on business ethics Changes in performance reviews – looking at process and results including 360 degree component Ultimately – focus on and opportunity for individuals to perform and be recognized 27 © 2005 trissential. All Rights Reserved. Desirable Characteristics……. Not just for Black Belts • • • • • • • • Team Facilitation – Strong ability to lead effective teams Problem Solving – Proven orientation to be a problem solver Process Orientation – Demonstrated ability to understand and identify process vs. functions Change Facilitation – Demonstrated ability to drive change across functional boundaries Communication Skills – Ability to engage a wider audience through a variety of media, but including presentation Computer Knowledge – Ability to effectively utilize technology, including Microsoft Office applications, or applicable, and the web Financial Skills – Ability to understand basic financial documents (I.e Income statement and balance sheet) and develop project based cost/benefit analysis Program and Project Management – Ability to develop a workplan and actively lead a team through it’s completion 28 © 2005 trissential. All Rights Reserved. Sneak Peak • What Exactly is Lean Six Sigma? • Corporate Deployments • Big is Not Always Better • Individual Execution LSS “Best Bets” – – – – – Project Selection and Scoping Resource Utilization Comprehensive Communication Metrics & Results Personal Corporate Citizenship Contributions 29 © 2005 trissential. All Rights Reserved. Conclusion Michelle Goodman, MBA, PMP Senior Process Consultant O 952-595-7970 C 651-261-9422 [email protected] www.trissential.com 30 © 2005 trissential. All Rights Reserved.