Lean Six Sigma (IE Elective 2) - LSS 1-Overview PDF

LEAN SIX SIGMA IE Elective 2 TOPIC 1: OVERVIEW OUTLINE ▪ Brief History ▪ Overview of Lean Six Sigma ▪ DMAIC Methodology Overview ▪ Financial Benefits of Lean Six Sigma ▪ The Impact of Lean Six Sigma to the Organization ▪ The Lean Six Sigma Language...

LEAN SIX SIGMA IE Elective 2 TOPIC 1: OVERVIEW OUTLINE ▪ Brief History ▪ Overview of Lean Six Sigma ▪ DMAIC Methodology Overview ▪ Financial Benefits of Lean Six Sigma ▪ The Impact of Lean Six Sigma to the Organization ▪ The Lean Six Sigma Language 2  1. History Development of Lean Six Sigma Brief History ▪ Lean originated at Toyota in the 40’s. ▪ Motorola launched the Six Sigma program in the 1980s. ▪ Since then, tens of thousands of companies around the world have adopted Six Sigma. ▪ Six Sigma has replaced Total Quality Management (TQM) and Business Process Reengineering (BPR) as the key strategy for quality improvement ▪ Although Lean and Six Sigma are two different concepts, it’s now common to see the combination of both in order solve problems in the organization. 4  2. Overview of Lean Six Sigma What is Lean Six Sigma? What is Lean Six Sigma? Lean Six Sigma is a combination of two popular Continuous Improvement methods—Lean and Six Sigma—that pave the way for operational excellence using different problem solving tools such as: ▪ Kanban ▪ Value Stream Mapping (VSM) ▪ Kaizen ▪ Analysis of Variance (ANOVA) ▪ Statistical Process Control (SPC) ▪ Hypothesis Testing ▪ Just-in-Time Manufacturing ▪ Measurement Systems Analysis (MSA) ▪ 5S ▪ Design of Experiment (DOE) ▪ Visual management ▪ Design for Six Sigma (DFSS) ▪ Root Cause Analysis 6 Lean Lean manufacturing/production is primarily concerned with eliminating waste and optimizing flow by following the Lean principles. In eliminating waste from the manufacturing process, it results in improved efficiency, effectiveness, and profitability of the organization. Taiichi Ohno (Father of Lean Manufacturing) summarized lean by saying, “all we are trying to do is reduce the lead time”. When we reduce lead time in a process, we eliminate waste and create a more agile and flexible process. What is waste? 7  Waste is anything that doesn’t add value to the customer. According to research conducted Waste by the Lean Enterprise Research Centre (LERC), fully 60% of production activities in a typical manufacturing operation are waste – they add no value at all for the customer. 8 8 Wastes of Lean Manufacturing 9 ? How do we reduce or eliminate waste? 10 5S A five-step organization technique to create and maintain an intuitive workspace 11 (Seiri) (Seiton) 12 (Seiso) (Seiketsu) 13 (Shitsuke) 14 Lean Principles Determine what the customer is willing to pay for by using these qualitative and quantitative techniques 15 Lean Lean focuses on what is of value to the customer. Mapping the process (value stream mapping) can be used to determine non-value added and value added activities. Lean means creating more value for customers with fewer resources. A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste. What then is value? 16 Activity Which is the better airline ticket? Travelling to Groton, CT Ticket A Ticket B ▪ $500 round trip ▪ $650 round trip ▪ 6 hours ▪ 3 hours ▪ 3 layovers ▪ 1 layover ▪ Arriving in NYC ▪ Arriving in Groton/New London What does value mean to you? 17  According to Womack, value is defined by the ultimate customer (Voice of the Customer). It is expressed in terms of: A specific product A function or capability Value To determine value, ask: What does the customer want to buy? What would they pay extra for? Focus on what is of VALUE to the customer 18 Lean Principles Determine what the customer is willing to pay for by using these qualitative and quantitative techniques Use the customer’s value as a reference point and identify all the activities that contribute to these values 19 Types of Activities Value Added Activities Criteria: ▪ Work that the customer is willing to pay for ▪ Work that transforms the product (form, fit, or function) ▪ Work that is done right the first time (not rework) Non-Value Added Activities Consumes resources, but does not add value to the product or service Necessary Non-Value Added Activities Do not add value to the product or service, but are necessary 20  Total Leadtime - = 48 days Value added time = 315 secs 21  From: NAVSEA VSA Training Disassemble Wait Transport Transport Wait Set-up Machine Machine Re-Install Remove From Ship Start Time Finish Broken Repaired Component Component = Value Added Time = Non-Value-Added Time (WASTE) Value-Added time is typically only a small percentage of the total time 22 Lean Principles Determine what the customer is willing to pay for by using these qualitative and quantitative techniques Use the customer’s value Ensure that the flow of the as a reference point and remaining steps run identify all the activities smoothly without delays or that contribute to these interruptions values 23 Examples Valve Manufacturing ▪ Objective: Reduce time to produce valves ▪ Solution: Revise process – no temporary attachments (2) “Legs” Tapped Lifting holes for Blocks lifting “Feet” 24 Continuous Flow Traditional Thinking: Continuous Flow Thinking: Batch Production—like a meandering Pipeline with fast-flowing product stream with many stagnant pools, – no stops, piles, or back-ups waterfalls, and eddies Doubling production rate means Doubling production rate means halving the time waiting doubling resources “’Flow’ production was an even more valuable innovation of Henry Ford’s than his better-known ‘mass’ production model.” 25 Batch & Queue Processing Batch versus Continuous Flow Process Process Process A B C 10 Minutes 10 Minutes 10 Minutes 30+ Minutes for order of 10 Continuous Flow Process Process Process A B C 12 Minutes for order of 10 26  From: NAVSEA VSA Training Dept 1 Batch Continuous Flow Dept 2 DONE 4 3 IN OU T OU T IN IN Dept 3 1 2 Dept 4 OU IN IN T OU T DONE Batch processing has a direct impact on the total Work-in-Process 27  Make continuous process improvement Lean Principles a part of the organizational culture. Every employee should strive towards perfection while delivering products based on the customer needs. Just-in-time delivery and manufacturing Determine what the where products are customer is willing created at the time to pay for by using that they are needed these qualitative and and in just the quantitative quantities needed techniques (pull-based system) Use the customer’s value Ensure that the flow of the as a reference point and remaining steps run identify all the activities smoothly without delays or that contribute to these interruptions values 28 Six Sigma Six Sigma is a disciplined, statistical-based, data-driven approach and continuous improvement methodology for eliminating defects by reducing variations in a product, process or service using the DMAIC approach. In Six Sigma, the voice of the customer defines quality in terms of meeting customer expectations. Y = f(x) 29 Six Sigma Change in quality philosophies Traditional “Goalpost” Philosophy Taguchi Philosophy LSL USL LSL USL Loss Loss Loss Loss $$ $$ $$ $$ OK Loss Anything outside the specification limits Any deviation from the target represents quality losses causes losses to society 30 Sigma Sigma represents the population standard deviation, which is a measure of the variation in a data set collected about the process. A six sigma process has a process mean (average) that is six standard deviations from the nearest specification limit. This provides enough buffer between the process natural variation and the specification limits. 31 Example If a product must have a thickness between 10.32 and 10.38 inches to meet customer requirements, then the process mean should be around 10.35, with a standard deviation less than 0.005 (10.38 would be 6 standard deviations away from 10.35), assuming a normal distribution. 32 Six Sigma Six Sigma can also be thought of as a measure of process performance, with Six Sigma being the goal, based on the defects per million (DPMO). Once the current performance of the process is measured, the goal is to continually improve the sigma level striving towards 6 sigma. 33 How Does Six Sigma Solve Problems? Practical Problem Statistical Problem (Define/Measure) (Analyze) Practical Solution Statistical Solution (Control) (Improve) Y=f(x) Approved for Public Release ? What then is Lean Six Sigma? 35 Lean Six Sigma Lean primarily focuses on Increasing Outputs, for example, increasing process Speed while eliminating unnecessary Inventory and Waste. Lean Six Sigma Increased Quality Increased Speed with lowered with No Wasted Defects, Variation Effort and Cost Six Sigma primarily focuses on Improving Outcomes, for example, eliminating defects (DMAIC) and reducing unwanted variation (Process Management). 3 Lean Six Sigma 37 Lean Six Sigma 38 Lean Six Sigma Lean Six Sigma is a methodology and toolset that combines all the benefits of Six Sigma with those of Lean enterprise, so you can find the right tool for every job. Its aim is to identify and systematically remove defects and waste from every process within a company, organization or entity – in any industry, segment and business size. The result of using Lean Six Sigma is improved efficiency within the company and a higher quality product or service for the customer. 39 Lean Six Sigma A Lean Six Sigma approach to change provides defined organizational roles (Green Belts, Black Belts, Master Black Belts, Champions, sponsors, etc.) to create accountability. 40  Roles & Responsibilities 41 Lean Six Sigma Belt Levels White Belt – Overview, DMAIC, Define Phase Yellow Belt – White Belt + process mapping, data collection and charting, assisting with a project Green Belt – Yellow Belt + Project leader, core Six Sigma tools (Gage R&R, SPC, Capability, ANOVA, Regression), change management, hypothesis tests and more Black Belt – Green Belt + advanced statistical analysis and experiments, change management, nonnormal distributions Master Black Belt – Black Belt + Design for Six Sigma, more advanced statistical analysis, unique tools for specific industries and processes, working with leadership, implementing successful improvement programs 42  3. DMAIC Methodology Overview DMAIC Methodology DMAIC is the problem-solving approach that drives Lean Six Sigma. It is a five-step method for improving existing process problems with unknown causes. 44 DMAIC Methodology DMAIC methodology is a five-step method for improving existing process problems with unknown causes. 45  4. Financial Benefits of Lean Six Sigma Financial Benefits ▪ Increased Revenue – Lean Six Sigma eliminates variance and waste and helps processes run more efficiently. Organizations that employ Six Sigma principles are able to sell, manufacture and deliver more products and services of a higher quality while using fewer resources – the definition of enhanced productivity. ▪ Decreased Costs and increasing profit – Production costs drop when Lean Six Sigma is applied to inefficient processes. Six Sigma practices help reduce defects and errors in the production process and decrease rework that consumes time and company resources without adding value. Six Sigma techniques also help to remove unnecessary steps from the production process. 47 Examples ▪ At North Shore-Long Island Jewish Health System, a radiology throughput project not only helped meet the demands of patients, providers and physicians, but it also generated an additional $375,000 per year in revenue. ▪ Michael Cyger, founder and publisher of iSixSigma, discussed research conducted by his team in “Six Sigma Cost and Savings.” In that research, iSixSigma looked at the hard statistics recorded by Motorola, Allied Signal, GE and Honeywell and discovered that these companies experienced a year-on-year increase in savings and revenue growth, amounting to billions of dollars. ▪ Research by Arvind Rongala of Invensis Learning has also found that enterprises that adhere to the Lean Six Sigma process improvement methodology achieved 40 percent more return on investment, or ROI, than those that didn’t.1 48  5. The Impact of Lean Six Sigma to the Organization Impact of Lean Six Sigma Increased Customer Satisfaction – Customer satisfaction is at the heart of Lean Six Sigma. Connecting process improvement with customer satisfaction helps ensure that using Six Sigma principles will create customers who provide repeat business and generate positive word-of-mouth. These factors can increase sales and profitability dramatically. The upper and lower specification levels for every product or service that the customer receives are determined, so the company can determine how well it is performing. If a company is out of specification, they know exactly what to work on to improve their processes and delight the customer. Fewer customer complaints leads to fewer customer service inquiries, which leads to less rework to fix problems and bureaucracy to oversee the rework. It is well established that customer satisfaction leads to customer loyalty, which in turn influences the financial performance of the company. 50 Impact of Lean Six Sigma Employee Satisfaction and Transformation – Learning Lean Six Sigma helps employees see themselves as problem solvers and see defects as opportunities for improvement. Lean Six Sigma empowers every employee to make suggestions by teaching them how to collect and analyze data within their own process at work. Solving problems then develops confident employees who feel enabled to speak out, challenge the norm and enact real change for their customers and themselves. Training key employees in Six Sigma equips your organization with the knowledge and resources to constantly battle defects in the production process. Widespread Six Sigma training helps inoculate companies against product defects and quality errors. EXAMPLE At Black & Veatch Corp., a global engineering, consulting and construction company, human resource leaders found the causes of employee turnover and fixed their on- boarding process, reducing first-year voluntary turnover and eliminating $500,000 per year in costs. 51 Impact of Lean Six Sigma Decrease in Error – Lean Six Sigma simplifies processes by facilitating deep investigation and process understanding so that employee can root out the real issue that is causing customer- perceptible defects. Lean Six Sigma empowers your employees to take charge of improving their areas of expertise, and it gives them the skills to analyze data, identify problems and help to create effective solutions. 52 Examples 99% (≈3.8s) 99.99966% (6s) 20,000 lost articles of mail per hour 7 lost articles of mail per hour 15 minutes of unsafe drinking water 1 minute of unsafe drinking water per each day 7 month 5,000 incorrect surgical operations per 1.7 incorrect surgical operations per week week 2 short or long landings at most major 1 short or long landing every 5 years airports each day 11 hours of no electricity per month 1 hour of no electricity every 34 years 53 Impact of Lean Six Sigma Competitive Advantage – When Lean Six Sigma principles are working as they should, your organization can produce higher quality goods and services at a lower cost and quite possibly make you better at meeting your customer’s needs. These benefits of implementing Six Sigma can gradually accumulate to help your organization stand apart from the competition. Company Culture - Lean Six Sigma also has a follow-on effect as trained Green and Black Belts share their knowledge and reasoning with their colleagues in their current positions and as they rise up the ranks within their company and oversee their own teams. If implemented correctly, with an awareness of the needs that motivate individuals and teams, Lean Six Sigma optimizes individual and team performance, which manifests itself in a culture of continuous improvement throughout the company. 54  6. The Lean Six Sigma Language The Basics The Lean Six Sigma Language ▪ DMAIC: Define-Measure-Analyze-Improve-Control. This is used when you want to improve a product or service or system that is existing. ▪ 5S Tool: Stands for Sort-Set in Order/Straighten-Shine-Standardize-Sustain (English translation). This is a tool that is meant to help organize, get rid of waste, and increase performance as well as safety. ▪ 5 Whys Tool: This is the most basic root cause analysis technique, and it is used in the Analyze phase of the DMAIC template. After you narrow down what the cause of the problem is, you keep asking why and answering until you get down to the root of the issue. 56 The Lean Six Sigma Language ▪ 6 Ms: These are the elements that create variations in a process. Man- Machine-Material- Method-Measurement-Mother Nature (AKA environment). ▪ CTO: Critical to Quality. A component of a process or product that has a direct impact on whether the customer feels that the process or product is of acceptable quality. ▪ Customer CTO: All quality in all products or services is set by the requirements of the customer; 57 The Lean Six Sigma Language ▪ DPMO: Defects Per Million Opportunities. This is one of the common long-term measures of process performance. It is the ratio of the number of defects in a sample to the total number of defect opportunities multiplied by a million. in other words, the customer sets the standard. ▪ FIFO: First In First Out. This is a method of inventory rotation where the first items brought in are the first ones used. ▪ FMEA: Failure Modes Effects Analysis. This is a technique for increasing performance. 58  History: https://www.youtube.com/watch?v=lOqoFfWYbn8 Videos Lean Six Sigma: https://www.youtube.com/watch?v=s2HCrhNVfak 59 References General Dynamics Lean Six Sigma https://www.6sigma.us/ https://www.isixsigma.com/ https://goleansixsigma.com/ 60