DM202 Sem2 Wk7 LeanSixSigma 2022 PDF

Manufacturing Management DM202 Semester 2 Lean & Six Sigma Colin Andrews: [email protected] Agenda • Six Sigma • Lean • Complementary approaches NOT alternatives © University of Strathclyde 2020 Introduction to Six Sigma What is Six Sigma? • Vision • Business Strategy • Goal •...

Manufacturing Management DM202 Semester 2 Lean & Six Sigma Colin Andrews: [email protected] Agenda • Six Sigma • Lean • Complementary approaches NOT alternatives © University of Strathclyde 2020 Introduction to Six Sigma What is Six Sigma? • Vision • Business Strategy • Goal • Metric “It is a proven methodology to identify and eliminate defects and reduce variation in processes resulting in financial savings and improved customer satisfaction.” • Benchmark • Philosophy • Vehicle for business excellence It is neither just a tool nor a technique!! © University of Strathclyde 2020 Six Sigma Origins • 1979: Art Sundry – ‘Our Quality stinks’ • Motorola was spending $700-800m correcting defects; 20% of revenue • Bill Smith : Correlation between a product’s field life and the number of times it was corrected during manufacturing • Popularised by Mikel Harry and Richard Schroeder • 1988: Motorola wins Malcolm Baldrige Award • 1995: GE adopts Six Sigma as ‘the’ strategic initiative © University of Strathclyde 2020 Key Elements (CSFs) 1. Focuses on Customers (VoC) 2. Integrates human & process aspects 3. Uses a disciplined approach to problem solving 4. Organisational project infrastructure 5. Active senior management leadership 6. Significant bottom line financial returns 7. Effective use of statistics 8. Data-driven methodology © University of Strathclyde 2020 The Aim of Six Sigma ● To reduce and control variation in processes ● This in turn will contribute to ● Reduced defects ● Increased yield ● Improved customer satisfaction ● Higher profits Lower Specification Variation Reduction Defects © University of Strathclyde 2020 Upper Specification Variation Reduction Defects What is Sigma ‘σ’ Standard Deviation A symbol traditionally used in statistics to represent the variation about the mean of a normal distribution © University of Strathclyde 2020 So what is Six Sigma ‘6σ’ Level of process performance equivalent to producing only 3.4 defects for every one million opportunities or operations. Six standard deviations represent virtual perfection © University of Strathclyde 2020 Golf Player (3 Sigma vs. 6 Sigma) If you played 100 rounds of golf per year and played at: 3 sigma quality level… you would miss 1 putt per round 4 sigma quality level… you would miss 1 putt every 9 rounds 5 sigma quality level… you would miss 1 putt every 2.3 years 6 sigma quality level… you would miss 1 putt every 163 years!!! © University of Strathclyde 2020 Achieving Six Sigma Performance Customer requirements Variation 6σ 1. Understanding Customer needs 2. Reducing variation 3. Simplifying processes Complexity © University of Strathclyde 2020 Voice of the customer (VoC) • Input from customers in their own terms • Capture and transform in quantifiable requirements Critical to Quality (CTQ) Number of rings before call is picked up Specification <= 3 rings is acceptable, > 3 is defect © University of Strathclyde 2020 “I want the phone to be answered quickly” Mechanisms to capture the VoC • One-one Interviews • Surveys • Focus Groups • Market Research • Sales Visits/ Calls • Benchmarking • Quality Scorecards • Customer Brainstorming • Customer Journey Maps © University of Strathclyde 2020 Understanding variation • Variation is natural! It occurs in all activities, in all processes, in all organisations… Mean-Based Mean-Based Measurement Measurement Process Av. Variance-Based Variance-Based Measurement Measurement Target 25 days Dissatisfied Customers? 30 days 15 20 25 30 35 45 50 Delivery Time (days) Delivery Time (Days) “We’re Good!” “We’re Not Good Enough!! The Customer Feels Variance - Not the Mean! © University of Strathclyde 2020 e.g. Travel time to work TIME TIME TIME TIME But they form a pattern that, if stable, can be described as a distribution TIME TIME TIME Distributions can differ in: LOCATION TIME SHAPE SPREAD TIME …Or any combination of these. © University of Strathclyde 2020 TIME Normal Distribution • a bell-shaped curve with a peak around an average value: 68.26% 95.44% 99.74% -3σ -2σ -1σ +1σ © University of Strathclyde 2020 +2σ +3σ Types of Variation s s e l n i s sua by the process itself u Is present in every process and is produced B u as • Common Cause (Noise) • • It can be mitigated but requires a fundamental change in the process • Special Cause (Signals) • • • Op Exists in most operations/processes po rt u im Caused by unique disturbances or a series of them pr for nity ov Can be removed/lessened by basic em process control and monitoring en t © University of Strathclyde 2020 Common cause vs. Special cause • If only common causes of variation are present, the output of a process forms a predictable (probable) and stable distribution over time • If special causes of variation are present, the output of a process is not stable over time (and not predictable) © University of Strathclyde 2020 Variation reduction = Defect reduction 6 Sigma Process x Sigma Process Lower Specification Upper Specification Variation Reduction Variation Reduction Defects Defects © University of Strathclyde 2020 What makes Six Sigma World Class? # of Defects per Million Opps (DPMO) Performance Level SIGMA A+ 6 99.99966 3.4 A 5 99.9767 233 B 4 99.3790 6,210 C C 33 93.3 D 2 69 F 1 % Yield 93.3 31 © University of Strathclyde 2020 66,807 66,807 308,537 691,462 Cost of Quality % <1% of sales 5 - 15% of sales 15 - 25% of sales 25 - 40% of sales Non-competitive Out of Business Who makes Six Sigma work? • Champion – • Black Belt Black Belt Black Belt Full Time Change Agents; Project Leader Green Belts – • Process Improvement Specialist, Coaching, Mentoring, etc. Black Belts – • Master Black Belt Master Black Belts – • Champion Monitoring the progress of Projects Part-time involvement Green Belt Green Belt Green Belt Green Belt Green Belt Yellow Belts – Part-time involvement Yellow Belt © University of Strathclyde 2020 Yellow Belt Yellow Belt Yellow Belt Vision & Strategy becomes transparent Vision Strategy What do we want to achieve? How do we achieve this? What do we need to achieve our targets? Critical success factors Key Performance Indicators Finance Customer Processes Employees Focus of Six Sigma © University of Strathclyde 2020 How do we measure our success? KPIs are linked to the strategy Setting Strategic Goals Six Sigma Summary    Six Sigma methods answer the question ‘How do we ensure nothing goes wrong in the hands of the customer?’ The approach can only work if:  customer requirements are translated into specifications  processes are stable / predictable  special cause variation is actively searched for The first steps are therefore  Understand customer value  Stabilise processes  Look for problems to solve Introduction to Lean What is Lean Thinking? “The endless transformation of waste into value from the customer’s perspective”. Womack and Jones, Lean Thinking Lean Thinking is about accelerating the velocity of any process by doing only the things that add customer value and eliminating other activities that don’t (Waste). © University of Strathclyde 2020 Lean Thinking Philosophy Business as Usual Customer Order Product / service delivery Waste Time Lean Manufacturing Customer Order Product / service delivery Waste Time (Shorter) © University of Strathclyde 2020 Lean is not… … about eliminating people!! It is about continuous process improvement, NOT cost reduction through headcount cutbacks! © University of Strathclyde 2020 Origins of Lean • Lean thinking began in post-war Japan with the renowned Toyota Production System which transformed the car manufacturing industry. Autonomy / no errors forward TPS Waste, overburden & unevenness Production levelling GOAL: Highest quality, Lowest Cost, Shortest Lead Time Just in Time High Quality Jidohka Minimum resources req Consistency Process Detect abnormalities What is needed! Right amount where & when needed Min input Max output Method Muda Mura Muri Stop & respond Effective autonomation Minimum Lead Time Heijunka Standardised Work Stability © University of Strathclyde 2020 Kaizen Continuous Improvement Lean Principles 1. Identify value 5. Pursue perfection 4. Establish pull 2. Map value stream 3. Create flow © University of Strathclyde 2020 Who can benefit from ‘Lean’ Industries where Lean has worked Lean tools and methods apply to anyone who…    Automotive  Ship-building  Pharmaceuticals  Electronics  Software development Is engaged in expediting reports, purchases, materials,  Public Services Does work in batches  Banking  ... Chases for information in order to complete a task Goes through multiple decision loops to get something done    Is constantly interrupted when trying to complete a task © University of Strathclyde 2020 Lean Metrics are ‘absolute’ Key examples • Throughput Yield & Rolled Throughput Yield • Work in Process • Lead time • Waste • Value Added / Non Value Added (Value added ratio) • Takt time © University of Strathclyde 2020 Throughput Yield (TPY) “Throughput Yield (TPY) is the number of acceptable units / transactions at the end of the end of a process divided by the number of starting units / transactions excluding scrap and rework”. 𝑛𝑜 . 𝑢𝑛𝑖𝑡𝑠/ 𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛𝑠 𝑟𝑖𝑔h𝑡 𝑓𝑖𝑟𝑠𝑡𝑡𝑖𝑚𝑒 𝑇𝑃𝑌 = 𝑡𝑜𝑡𝑎𝑙 𝑛𝑜 . 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 /𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛𝑠 © University of Strathclyde 2020 Rules for calculating TPY • The unit of measure must be the same for the numerator and denominator. • Rework should be considered in the TPY calculation. • TPY should only be used to measure a single process. • To calculate a number of processes the rolled throughput yield (RTY) needs to be calculated © University of Strathclyde 2020 Calculate the TPY for the following Process 1, 2 & 3 © University of Strathclyde 2020 Solution Process 1 TPY= 40 / 50 = 80.0% Process 2 TPY = 34 / 46 = 73.9% Process 3 TPY = 37/46 = 80.4% • Remember OEE! Rolled throughput yield (RTY) is the probability of the entire process producing zero defects…. RTY = Process 1 TPY * Process 2 TPY * Process 3 TPY RTY = 0.800 * 0.739 * 0.804 RTY = 47%! © University of Strathclyde 2020 WIP – Work in Process “Material that has entered the production process but is not yet a finished product. Work in process (WIP) therefore refers to all materials and partly finished products that are at various stages of the production process.” • Manufacturing slang?... Try number of “things in process”… e.g. how many “things” are sitting in your desk, awaiting in your inbox, or in a programme waiting for you to work on them? This is WIP! © University of Strathclyde 2020 Why such a big deal about WIP? “Service processes (transactional and manufacturing) are usually slow. Slow processes are expensive. Slow processes are prone to poor quality… which drives cost up…and drives down customer satisfaction…and hence reduce revenue Service processes are slow because there is too much WIP, often the result of unnecessary complexity in the service offering…” (M L George 2003) © University of Strathclyde 2020 Lead Time • Lead time is how long it takes to deliver a product or service once the order is triggered. © University of Strathclyde 2020 e.g. Dealing with online Information Requests • Usual turnaround 15-20 days. • Ideal waiting time for information is 3 days. • System records indicate that the administrative team can close 30 requests for information cases per day in average. • Aim is to a) attract the best students and b) to increase conversion rates for international students. 1. What is the WIP in the current process? 17.5 days * 30 requests per day = 525 requests for information in the system 2. What would be the WIP if you were to limit the amount of WIP into the system to meet the customer requirements? 3 days * 30 requests per day = 90 requests for information in the system 3. What alternatives do you have to decrease the lead-time? © University of Strathclyde 2020 Mapping the process (value stream) What is a process? “Sequence of interdependent and linked procedures which, at every stage, consume one or more resources to convert inputs into outputs. These outputs then serve as inputs for the next stage until a known goal or end result is reached.” INPUTS SUB PROCESS 1 PROCESS OUTPUTS SUB PROCESS 2 © University of Strathclyde 2020 SUB PROCESS 3 Breakfast example Eggs, milk, bread, butter, bacon, plates, utensils, cookware, potatoes PREPARE INGREDIENTS COOK BACON HEAT PAN POUR MIXTURE MAKE BREAKFAST COOK INGREDIENTS COOK EGGS STIR MIXTURE Scrambled eggs, toast, crisp bacon, pan-fried potatoes SERVE INGREDIENTS TOAST BREAD ADD PEPPER RECIPE (SOIs) FRY POTATOES REMOVE EGGS Jacka and Keller, 2009 © University of Strathclyde 2020 What is a process map? • A continuous improvement tool that enables the visual representation of a process Process flowchart Deployment flowchart © University of Strathclyde 2020 Spaghetti diagram Why process mapping? Making changes without truly understanding how the process works and why can lead to costly mistakes. Process maps help us to identify,… • Who does what • How tasks are done • What are the inputs and outputs • Where is the waste • Enhance the memory of businesses “Improve understanding with the purpose of eliminating non value adding activities.” © University of Strathclyde 2020 Ensuring success • Get to know your process a little bit before you start…. • Walk through the process…. Learn to see! © University of Strathclyde 2020 Process Mapping Techniques • There is a variety of process mapping techniques. • The most commonly used techniques. • High and low lever flow charts • IDEF family of methods • Deployment charts • Spaghetti diagrams • Post-It Technique • Work flow diagrams • Value stream mapping © University of Strathclyde 2020 Basic Steps to build a Process Map 1. Agree on a process to map (including start and end points) 2. Using post its map the process 3.  A single post it note per process activity  Dependencies between activities should be represented with arrows  Start high level and keep building on it When you have a detailed view of the process highlight areas of waste in the process 4. Think about potential opportunities to remove the waste © University of Strathclyde 2020 47 Value Stream Map Manufacturing © University of Strathclyde 2020 Waste in Lean (The 7 Wastes) Manufacturing Redefined for service • Transportation • Unnecessary Movement • Inventory • Incorrect inventory • Motion • Delay • Waiting • Duplication • Over processing • Unclear communication • Over production • Errors in the service transaction • Defects • Lost opportunity to retain/win customers Bicheno and Holweg 2009 © University of Strathclyde 2020 The distinguishing characteristics of services “As services are intangible, they cannot be subjected to precise specifications for uniform quality and measurement of performance. The inseparability and heterogeneity of services mean that there is less managerial control over quality, since the services cannot be tested and assured before delivery and standardised during the delivery. It is also difficult to predict, and hence influence, how the customer would perceive and evaluate the service quality. The final characteristic of perishability implies that service organisations need to retain excess capacity to meet the fluctuating demands of customers.” Woon, 2000 © University of Strathclyde 2020 What this means for Lean in Services • Customers – Typically greater involvement of customers in the process. Customers sometimes act as co-producers • Standardisation – Difficult to achieve as services are people-centric. • Quality – An experience, not just a measurement against specifications. The customer’s definition of quality is a perception. • Process visibility – Intangible information flows diminish process visibility • IT systems – They play a bigger role. They enable the process, but can also be a rigid constraint on the process. • WIP & Inventory - Often hidden and ignored, can have the same negative impacts as in a manufacturing environment © University of Strathclyde 2020 ‘Lean’ Summary    Lean methods answer the question ‘How do we quickly and efficiently meet the needs of the customer?’ The approach can only work if:  Customer value is understood and can be related to the actual work being carried out  Work is carried out in a consistent way  Wasteful activities are always challenged The first steps are therefore  Understand customer value  Stabilise processes  Look for waste to remove Lean vs Six Sigma Lean vs. Six Sigma Imp rov ed S Lean – focuses on dramatically improving flow in the value stream and eliminating waste Elimination of waste Identification of Value stream Achievement of flow Pacing by a pull pee d Pursuit of perfection d pee S ed r ov p Im Six Sigma – focuses on eliminating defects and reducing variation in processes Define Measure Analyse Improve © University of Strathclyde 2020 Red uce d Var iatio n Control t aria V d uce d e R ion Lean vs. Six Sigma - Similarities • Same Objective: Continuous and Sustainable Business Process Improvement • Focus on business needs defined by the customer (customer focus) • Requires active involvement of all interested! • Practical methods, proven to work • Both include a comprehensive tool box to improve any business process © University of Strathclyde 2020 Lean vs. Six Sigma - Differences Lean • Focused on ‘Flow’ Six Sigma • Focused on problems with unknown solution • Reduction of ‘Defects’ often through reduction of variation • Removal of ‘Waste’ • Technically simple • Technically more difficult • Low investment • More significant investment • Statistical tools typically used (Though not applicable • • Typically non-statistical tools to all cases) • © University of Strathclyde 2020 Lean & Six Sigma – Complementary approaches n of Faster creatio tomers value for cus t at a lower cos Low Cost PRODUCER VIEW POINT Lean Only Six Sigma Only High Cost Lean Six Sigma Low Value High Value CUSTOMER VIEW POINT © University of Strathclyde 2020