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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Transcript 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.

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
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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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