The Center for Industrial Effectiveness School of Engineering and Applied Sciences Lean/Six Sigma Overview Al Hammonds for EAS 590, Spring 08 Why are we here? Why do.
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Slide 1
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 2
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 3
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 4
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 5
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 6
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 7
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 8
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 9
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 10
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 11
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 12
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 13
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 14
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 15
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 16
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 17
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 18
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 19
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 20
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 21
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 22
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 23
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 24
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 25
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 26
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 27
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 29
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 30
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 31
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 32
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 33
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 34
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 35
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 36
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 37
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 38
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 39
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 40
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 41
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 42
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 43
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 44
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 45
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 46
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 47
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 48
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 49
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 50
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 51
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 52
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 53
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 54
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 55
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 56
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 57
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 58
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 59
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 60
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 61
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 62
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 63
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 64
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 65
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 66
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 67
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 68
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 69
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 70
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 71
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 72
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 73
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 74
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 75
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 76
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 77
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 78
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 2
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 3
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 4
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 5
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 6
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 7
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 8
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 9
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 10
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 11
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 12
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 13
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 14
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 15
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 16
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 17
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 18
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 19
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 20
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 21
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 22
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 23
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 24
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 25
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 26
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 27
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 29
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 30
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 31
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 32
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 33
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 34
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 35
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 36
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 37
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 38
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 39
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 40
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 41
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 42
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 43
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 44
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 45
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 46
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 47
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 48
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 49
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 50
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 51
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 52
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 53
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 54
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 55
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 56
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 57
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 58
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 59
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 60
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 61
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 62
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 63
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 64
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 65
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 66
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 67
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 68
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 69
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 70
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 71
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 72
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 73
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 74
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 75
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 76
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 77
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
37
Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
38
The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
39
Six Sigma is About Leadership
20%
80%
Change Leadership
The Center for Industrial Effectiveness
Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
41
Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
42
Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
43
The Infrastructure
The Center for Industrial Effectiveness
44
Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
45
Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
46
Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
47
Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
48
Being Customer Driven
Voice of the
Customer
The Center for Industrial Effectiveness
Critical to Quality
Characteristics
Process
Capability
49
Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
51
Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
52
Team Work
The Strength of the Wolf is in the Pack.
The Center for Industrial Effectiveness
53
Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
54
Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
55
DMAIC Overview
The Center for Industrial Effectiveness
56
DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
57
What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
58
Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
59
A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
The Center for Industrial Effectiveness
Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
61
Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
The Center for Industrial Effectiveness
Financial
Metric(s)
62
Y=f(x)
The Center for Industrial Effectiveness
63
DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
64
Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
65
Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
66
The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
67
Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
68
What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
69
Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
70
Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
The Center for Industrial Effectiveness
6
7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
71
DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
72
DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
73
Design of Experiments
The Center for Industrial Effectiveness
74
DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
75
Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
77
Slide 78
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Lean/Six Sigma Overview
Al Hammonds
for EAS 590, Spring 08
Why are we here?
Why do Lean?
The Center for Industrial Effectiveness
1
Lean Thinking
Lean Production = Toyota Production
System (TPS)
Identified in a five year ($5 million) MIT
study of the worldwide automotive
industry
Found that the production system used
by Toyota was fundamentally different
than traditional mass production
The Center for Industrial Effectiveness
2
Lean Thinking Isn’t New
Has roots back to
Henry Ford’s
production system.
Lean thinking is more than lean production…
it is a business philosophy.
The Center for Industrial Effectiveness
3
Key Definitions
VALUE
Giving the customer what they want, when
they want it, and at the right price.
FLOW
Making product flow through production
without interruption.
The Center for Industrial Effectiveness
4
Key Definitions
PULL
A customer demand based method of
controlling flow of products or services by
replenishing in short intervals.
STRIVING FOR EXCELLENCE
A culture in which everyone is striving to
continually improve.
The Center for Industrial Effectiveness
5
Typical Mass Flow Process
Maximize Efficiency and Economies of Scale
Inventory
Process 2
Inputs
Inventory
Outputs
Process 1
Customer
Rework
(Hidden?)
Process 3
MEASURABLES
• Each independent entity maximizes their efficiency
• Batch Process – departments compete
The Center for Industrial Effectiveness
6
Lean Production Flow Process
Goal: Elimination of Waste
Inputs
Process 1
Process 2
Process 3
Outputs
Customer
MEASURABLES
• Performance is based on system effectiveness as a whole
• Single piece or continuous flow
The Center for Industrial Effectiveness
7
How do you provide
value to the
customer and make
a profit?
The Center for Industrial Effectiveness
8
Defining Value
Value Added Activity
An activity that
transforms or
shapes material or
information (for the
first time) to meet
customer
requirements.
The Center for Industrial Effectiveness
Non-Value Added
Activity
Those activities that
take time or
resources, but do
not add to the
customer
requirements.
9
Exercise
Identify examples
of Value Added
Activities and
Non-value Added
Activities
associated with
your work.
The Center for Industrial Effectiveness
10
8 Types of Waste
Waste of
Waiting
Waste of
Motion
Waste of
Inventory
Waste of
Correction
FLOW
Waste of
OverProduction
Waste of
Processing
Waste of
Waste of
Material
Intellect
Movement
The Center for Industrial Effectiveness
11
Traditional Approach
Output
Output
This is not Lean
Waste
Output
Cost Plus Mentality
Cost + Profit = Price
The Center for Industrial Effectiveness
12
Working Toward Lean
Waste
Output
Output
Output
Working Smarter…
Not Harder
Today’s Reality
Price – Cost = Profit
The Center for Industrial Effectiveness
13
Lean Thinking Tools
VALUE STREAM MAPPING
Identify and plot all steps required to do a process.
• Challenge every step by asking the “5 WHY’s”
NOTE!! If there doesn’t seem to be a valid reason
for any steps identified in the value stream,
consider eliminating the steps from the process.
The Center for Industrial Effectiveness
14
Lean Thinking Tools
5S’s - Practices that create a workplace
suited for visual control and lean
manufacturing:
1.
2.
3.
4.
Sort (Seiri) = Keep only what is needed
Straighten (Seiton) = Put everything in order
Sweep (Seiso) = Clean everything
Standardize (Seiketsu) = Make standards
obvious – everybody does it the same way
5. Sustain (Shitsuke) = Institutionalize and
continual improvement.
The Center for Industrial Effectiveness
15
Lean Thinking Tools
STANDARDIZED WORK
This tool ensures that the best method of
conducting each activity is identified and
steps are taken to ensure everyone does
it this way.
The right people
The right steps
The right sequence
Every time
The Center for Industrial Effectiveness
16
Lean Thinking Tools
MISTAKE PROOFING (Poka-Yoke)
Tools and techniques used to prevent
people from doing things incorrectly. It
can be a simple mechanical device or
technique.
Get it right the first time
Set people up for success, not failure
The Center for Industrial Effectiveness
17
Lean Thinking Tools
TOTAL PRODUCTIVE MAINTENANCE (TPM)
A series of methods to ensure that every
machine in the production process is
always able to perform its required tasks
without interruption.
Targets key equipment.
The Center for Industrial Effectiveness
18
Lean Thinking Tools
SET UP REDUCTION
• On Time Delivery – gives the customers what they want
when they want it.
• Flexibility – ability to run different types of products.
• Increased Capacity – provides more actual production
time.
• Cycle Time - reducing setup time allows lot size to be
reduced, which drives reduced cycle times.
• Costs - reducing Work In Process drives lower
operational costs (carrying costs, scrap, rework, space
utilization, etc.)
The Center for Industrial Effectiveness
19
Lean Thinking Tools
LEVEL SCHEDULING
The goal is to produce at the same pace
every day minimizing variation in the
workload.
The Center for Industrial Effectiveness
20
Lean Thinking Tools
CELLULAR FLOW
Machines or processes are side by side
with very little inventory between them.
The goal is efficient, continuous flow.
The Center for Industrial Effectiveness
21
Lean Thinking Tools
OPERATIONS BALANCING
Achieving the best arrangement of
people, material, and equipment.
The Center for Industrial Effectiveness
22
Lean Thinking Tools
TAKT TIME
Takt time sets the pace of production to
match the rate of customer demand
(sales) and is the heartbeat of the lean
system.
Takt Time =
The Center for Industrial Effectiveness
Effective Working Time
Customer Requirement
23
Who Should Implement Lean Thinking
Principles
Product Development Areas
Order Taking and Scheduling Processes
Manufacturing Operations
Logistics
Administrative Systems
Human Resources
************ EVERYONE! ************
The Center for Industrial Effectiveness
24
Lean Implementation Process
LEAN LEVEL
SCHEDULING
SET UP
REDUCTION
PULL/CELL/
STANDARDIZED WORK
VALUE STREAM
MAPPING
WASTE ELIMINATION
5-S/VISUAL CONTROLS
COMMUNICATE &
TRAIN
Leadership & Develop Strategy
The Center for Industrial Effectiveness
25
Why Do Lean ?
Companies implementing Lean Thinking report
the following improvements:
• Productivity increases 15%-70%
• Rejects (PPM) decrease 50%-250%
• Inventory turns increase 55% - 70%
• Space required decreases 35% - 70%
• Employee involvement increases 70% - 95%
• Annual savings per employee $1,200 - $3,500
The Center for Industrial Effectiveness
26
What Will Lean Mean?
You will attack waste in all its forms.
You will embrace and celebrate
continuous improvement.
The only constant is change.
The Center for Industrial Effectiveness
27
Lean is a never ending journey. It is a
systematic approach to the
identification and elimination of waste
and non-value added activities
through continual improvement in all
products and services.
The Center for Industrial Effectiveness
28
The Center for Industrial
Effectiveness
School of Engineering and Applied Sciences
Six Sigma
The History of Six Sigma
1987: Motorola initiates Six Sigma
1988: Some early successes and failures
1993: AlliedSignal embraces Six Sigma
1995: GE adopts Six Sigma (Jack Welch)
1996: Six Sigma starts to grow
2000: Six Sigma continues its evolution
The Center for Industrial Effectiveness
30
Cost of Poor Quality (COPQ)
What is COPQ ?
Quantify the size ($) of the problem in language
that will have impact on upper management
Why is COPQ Important ?
Identify major opportunities for cost reduction
Identify opportunities for reducing customer
dissatisfaction & associated threats to salability
Stimulate improvements through publication
Prioritize the opportunities
The Center for Industrial Effectiveness
31
Why Focus on COPQ?
Price Erosion
Profit
Total Cost to
manufacture
and deliver
products
Profit
Cost of
Poor Quality
COPQ
Cost of
Poor Quality
COPQ
Theoretical
Costs
Theoretical
Costs
Profit
COPQ
Theoretical
Costs
Which Feels Better??
The Center for Industrial Effectiveness
32
The Cost of Poor Quality “Iceberg”
Rejects
Inspection
Warranty
Scrap
Rework
Administration
Disposition
Concessions
Traditional Quality Costs
(tangible)
Additional Costs of Poor Quality
More Setups
Lost Opportunity
Expediting Costs
Late Delivery
Hidden Factory
Lost Sales
Lost Customer Loyalty
Long Cycle Times
Engineering Change Orders
(intangible)
(Difficult or impossible to measure)
Average COPQ approximately 15% of Sales
The Center for Industrial Effectiveness
33
What is Six Sigma?
A philosophy?
A problem solving methodology?
A set of tools?
A metric?
The Center for Industrial Effectiveness
34
Six Sigma Has Four Dimensions
Philosophy
Metric
Tools
Methodology
The Center for Industrial Effectiveness
35
Benefits of Six Sigma
Cost-of-Quality decreased
- from 30.1% before 1988
- to 7.4% after 1993
Aim for:
- 8% Revenue Growth per year
- 6% Productivity Improvement per year
forever
Gross Savings of $1,225M in 1998
The Center for Industrial Effectiveness
36
Some Companies Known to be Formally Applying the
Six Sigma Methodology
Motorola
Texas Instruments
AlliedSignal
General Electric
Sony
DuPont
Ford Motor Company
Polaroid
Dow Chemical
Lockheed Martin
Toshiba
Bombardier
Noranda/Falconbridge
CitiGroup
BMW
Xerox
Raytheon
Coca-Cola
ICI Explosives
The Center for Industrial Effectiveness
Dell Computers
Seton Medical Centers
American Express
Maytag
Pioneer Hi-Bred International
Seagate Technology
Millard Refrigerated Services
Canadian Marconi
Avery Dennison
BBA Group PLC
Crane
Korean Heavy Industries
Nokia
Pechiney
Siebe
Thermo King
GenCorp
IBM
Maple Leaf Foods
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Is 99% Good Enough?
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20k lost articles of mail per hour
Seven articles lost per hour
Unsafe drinking water for almost
15 minutes each day
One unsafe minute every seven
months
5,000 incorrect surgical
operations per week
1.7 incorrect surgical
operations per week
Two short or long landings at
most major airports each day
One short or long landing
every five years
200,000 wrong drug prescriptions
each year
68 wrong prescriptions per
year
No electricity for almost seven
hours each month
One hour without electricity
every 34 years
The Center for Industrial Effectiveness
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The Goals of Six Sigma
$
Customer
Satisfactio
n
Yield Improvement
Defect Reduction
The Center for Industrial Effectiveness
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Six Sigma is About Leadership
20%
80%
Change Leadership
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Technical Skills
40
Continual Improvement...
Performance
Ongoing efforts
Quantum
improvement
Incremental
improvement
Six Sigma Projects
Time
The Center for Industrial Effectiveness
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Performance Umbrella
A Performance
Organization
Change
management
Lean
manufacturing
ISO and
QS-9000
practices
Continuous
improvement
tools
Kaizen
Statistical
process
control
Preventive
maintenance
Safety
practices
TQM
Six Sigma
The Center for Industrial Effectiveness
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Six Sigma Levels
DFSS
------------------------------------
Black Belts
Lean
Green Belts
------------------------------------
White Belts
“Nike”
------------------------------------
Sweet Fruit
Design for Manufacturability
Process Entitlement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit
Simple Tools
Ground Fruit
Logic and Intuition
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
The Center for Industrial Effectiveness
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The Infrastructure
The Center for Industrial Effectiveness
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Roles
Executive
Champion
Process Owner
Master Black Belt
Black Belt
Green Belt
The Center for Industrial Effectiveness
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Exercise:
You are the GM of a very successful cinema with many
employees. You will be out of the country for three
months and have asked your staff to fax you a weekly
report each Monday morning. What information
(measures) would you like to see in that fax?
Hollywood Inc. Weekly Report
The Center for Industrial Effectiveness
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Exercise:
You are heading to the cinema with some friends . . .
The movie you would like to see is playing in several
cinemas in your area. All are about the same travel
time from your home, charge the same amount, have
the same stadium seating, and are showing movies
at the same time. What criteria do you use to
choose?
The Center for Industrial Effectiveness
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Critical to Who’s Satisfaction?
Supplier Perspective
(Theatre)
Management)
Customer Perspective
(Movie Goers)
Ticket Sales
Good Popcorn
Concession Sales
No Sticky Floors
Labor/Work Force Costs
Clean Restrooms
Profit Reports
Short Lines
Other...
Good, funny, entertaining movies
. . . So why do such differences
in perspective exist ?
The Center for Industrial Effectiveness
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Being Customer Driven
Voice of the
Customer
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Critical to Quality
Characteristics
Process
Capability
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Satisfying Customers
Delighters
(Increases consumer loyalty)
Performance
(Competitive differentiation)
Must Have’s
(Minimum requirements)
The Center for Industrial Effectiveness
(based on Kano principles)
50
Maximizing Customer Alignment
Delivery
Cycle Time
Price
Do
Need
Cost
Quality
Defects
The Center for Industrial Effectiveness
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Culture Change - Achieving Critical Mass
Team Members
Number of People
Green Belts
Black Belts
Master Black Belts
Implementation Time
Convert 30% and you’ve got a new organization!!
The Center for Industrial Effectiveness
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Team Work
The Strength of the Wolf is in the Pack.
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Advantages of Teams
Greater knowledge & experience base
Different perspectives
More total person power
Social bond, affiliation, identification
Willing to take more risks
Synergy – whole is greater than the sum of
its parts
The Center for Industrial Effectiveness
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Knowledge Sharing
Cross-functional Six Sigma
Project Teams
DPMO
1,000,000.00
100,000.00
Knowledge sharing
triggered by sigma
process benchmarks
10,000.00
1,000.00
100.00
10.00
1.00
0.10
0.01
6
6.
5
5
5.
5
4
4.
5
3
3.
5
2
2.
5
1
1.
5
0.
5
Si
gm
a
0.00
Intranet-enabled
best practices;
real-time process
metrics
The Center for Industrial Effectiveness
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DMAIC Overview
The Center for Industrial Effectiveness
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DMAIC Overview - Define
Define the Customer, they’re Critical to
Quality (CTQ) issues, and the Core
Business Process involved.
Define who customers are, what their
requirements are for products and services,
and what their expectations are
Define project boundaries the stop and start
of the process
Define the process to be improved by
mapping the process flow
The Center for Industrial Effectiveness
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What is a 6 Sigma Project
Hard $$
Fact based
Control plan
Systematic approach
(apply DMAIC)
The Center for Industrial Effectiveness
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Problem Solving Comparison
Nike (Just Do It
Projects)
Goal / issue /
outcome
Most likely nagging
issues, could be
cost or cycle time
Workout
Lean
Six Sigma
Cost or cycle time
Improve cycle
times, improve
VA/NVA ratio,
reduce waste
Cost reduction /
defect reduction
Less than $25,000
Less than $50,000
Less than $100,000
Greater than
$100,000
Immediate
1-3 days
1 week
1 to 5 months
Immediate
Days to less than 4
weeks
Days to less than 4
weeks
Weeks to months
Anyone
Anyone
Anyone
Upper management
Within department
Within or cross
departments
Cross departments
Cross departments
/ Executive staff
Departments
affected
One
One or more
One or more
One or more
Training
None
Low
Low / medium
High
Common tools*
Common tools*,
VSM, Flow, Pull,
Takt
Statistical
Cost savings*
Time from problem
identification to
solution
Time to implement
Project initiated by
Approvals
Tools utilized
Common tools*
This matrix represents a very broad approximation to the differences between these problem solving tools.
* Common
tools:for
Pareto,
Brainstorming,
Team Dynamics, C&E diagrams, Flow Diagrams
The Center
Industrial
Effectiveness
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A Project’s Evolution
Pre-Project
Management
Project
30,000
Champions
feet
20,000
feet
Define Phase
Black
Belt
10,000
feet
Team
Kick-Off
Meeting
Project
Team
Potential
Project Definition
Improvement
and Selection
Topics, Subjects,
Sessions
The Center for Ideas
Industrial Effectiveness
Refinement w/
Stakeholders and
diagnosis; enters
project in database
Landing
Launch/”start” of
project
60
s
4 Types of Project Focus
Process quality focus
Example:
Critical manufacturing processes
Critical transactional processes
Critical engineering processes
Improving these will save/make $$
Product focus
Example:
Product 1
Product 2
Product 3
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Project cost savings focus
Example:
Complete x projects to save $z
Problem focus
Example:
Biggest fire to address
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Defining Project Metrics
Primary
Metric
Secondary
Metric(s)
Business
Metric(s)
Consequential
Metric(s)
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Financial
Metric(s)
62
Y=f(x)
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DMAIC Overview - Measure
Measure the performance of the Core
Business Process involved.
Develop a data collection plan for the process.
Collect data from many sources to determine
types of defects and metrics.
Compare to customer survey results to
determine shortfall.
The Center for Industrial Effectiveness
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Input Variables to be Investigated
Process Map
C&E
C&EMatrix
Matrixand
andFMEA
FMEA
Gage R&R, Capability
Brainstorming, FMEA,
C&E, Process Map
Unknown
Measure
Analyze
4 Block Tools
Improve
Quality Systems
SPC, Control Plans
30 - 50
8 - 10
Screening DOE’s
DOE’s, RSM
10 - 15
Control
Output Variables (y)
some X’s listed.
Prioritized X’s
(Step 6)
4-8
Vital X’s
3-6
Key Leverage
X’s
Optimized Process
The Center for Industrial Effectiveness
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Variability is the Enemy
“Right the First Time” is
the most cost effective way
to achieve Customer Satisfaction
Variability
is the ENEMY
The Center for Industrial Effectiveness
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The Hidden Factory
Process Map (macro level)
Arrivalat
Horne
Mostmaterialsgo thisway
Storage
Dry
slag
Melt in
furnace
Skimslag
Prepare for
smelting
(crushing...)
Cool slag at
slag dump
Storage
Melt in
Reactor
Separate slag
fromcopper
bottom
Store copper
bottom
Hidden Factory !!!!!
The Center for Industrial Effectiveness
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Normal Distribution
µ
Point of Inflection
1s
-
+
68.26%
95.44%
99.74%
The Center for Industrial Effectiveness
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What is 6 Sigma?
USL =
s = 1.0
s
s
upper spec.
limit
s
s
s
s
16.0
10.0
Z = 6 sigmas
The Center for Industrial Effectiveness
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Practical Interpretation of Sigma Scale
Being without electricity for...
% Good
Prob. of Defect
2 Sigma
69%
31%
9 days/month
3 Sigma
93.4%
6.6%
2 days/month
3.8 Sigma
99.0%
1.0%
7 hours/month
4 Sigma
99.4%
0.62%
4.5 hours/month
5 Sigma
99.98%
0.023%
10 mins/month
6 Sigma
99.9997%
0.0003%
9 sec/month
The Center for Industrial Effectiveness
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Benchmarking Implications
IRS - Tax Advice
(phone-in)
(140,000 PPM)
PPM
1000000
Restaurant Bills
Doctor Prescription Writing
100000
Payroll Processing
•
10000
Average
Company
1000
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate
100
10
Best-in-Class
1
2
3
4
5
Sigma Scale of Measure
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7
Domestic Airline Flight
Fatality Rate
(0.43 PPM)
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DMAIC Overview - Analyze
Analyze the data collected and process map
to determine root causes of defects and
opportunities for improvement.
Identify gaps between current performance
and goal performance
Prioritize opportunities to improve
Identify sources of variation
The Center for Industrial Effectiveness
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DMAIC Overview - Improve
Improve the target process by designing
creative solutions to fix and prevent
problems.
Create innovate solutions using technology
and discipline.
Develop and deploy implementation plan.
The Center for Industrial Effectiveness
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Design of Experiments
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DMAIC Overview - Control
Control the improvements to keep the process
on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and
implementation of an ongoing monitoring plan
Institutionalize the improvements through the
modification of systems and structures
(staffing, training, incentives)
The Center for Industrial Effectiveness
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Six Sigma is a Tool Box
Define
Measure
Analyze
Improve
Control
Adult Learning
Model
Process
Mapping
Multi Vari
Variable DOE
EVOP
Project
Management
Cause & Effect
Matrix
Correlation
Fractional DOE
Response
Surface DOE
Computer
Tools
Fishbone
Diagram
Regression
Full and 2k
Factorial DOE
Multiple
Regression
Descriptive
Statistics
Statistical
Analysis
Hypothesis
Testing
Advanced DOE
Transition
Plans
Lean Tools
ANOVA
Logistic
Regression
Control Plans
MSA
FMEA
Capability
The Center for Industrial Effectiveness
SPC
Control
Methods
76
The Bottom Line
The Highest Quality Producer is the
Lowest Cost Producer…How is this possible?
The Center for Industrial Effectiveness
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