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Driving Customer Satisfaction with Lean Six Sigma
Bob BrooksGenesis Group
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What is Six Sigma?What is Lean?
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The Two Sides of Six Sigma
Six Sigma
Measure Philosophy
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Six Sigma Philosophy
Customer Focus
EmployeeEmpowerment
DataDriven
Decisions
ProcessOrientation
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σ6
The Six Sigma Stairway
Customer Requirements
Measurement
Employee Participation/Empowerment
Exploiting Technologies
Supplier Partnerships
CustomerSurvey
Total Cycle Time ReductionDefect Elimination
1
10
100
1000
10000
100000
1000000
2 3 4 5 6 7
100,000
10,000
1,000
100
10
0
Baseline
Entitlement
Benchmark
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enable dives
Strategy and Process
Processes
enables drives
Strategy
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σ6
The Process Perspective is:
• A disciplined method and approach to focus on business processes.
• A horizontal view of the business.• A means of improving customer satisfaction
Process Improvement
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σ6
Customers Drive Process
Input
• Defects• Timeliness• Cost
Processfor each step:• Defects• Cycle Time• Costs
Output
• Defects• Timeliness• Cost
CustomerSatisfaction
•5-Ups
MeasureAct
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σ6
Saving Big Blue
“I don’t know what ‘platform support’ is, but let me answer your question very simply. If there is a key customer requirement, do it. Whatever this thing is - ‘platform whatever’ - get it out of the way.”
Lou Gerstner
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σ6
Six Sigma as a Measure
3 Sigma 6 Sigma 3 SigmaProcess Process Process
X
LowerSpecification
Limit
Upper Specification
Limit
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σ6
Sigma as a Measurement of Defects
100K
10K
1K
100
10
1
2 3 4 5 6 7
(66,810 DPMO)
AverageCompany
Best inClass
Restaurant BillsDoctor Prescription WritingPayroll ProcessingOrder Write-upJournal VouchersWire TransfersAirline Baggage Handling
Domestic AirlineFlight Fatality
Rate
IRS Tax Advice (Phone In)
Sigma
Poor
(66,810 DPMO)
(233 DPMO)
(.43 DPMO)
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Six Sigma Improvement Model
The DMAIC” PROCESS
Define – Scope the problem
Measure – Gather Data
Analyze – Root Cause Data Analysis
Improve – Develop Solutions
Control – Maintain the Gain
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Improvement DisciplineImprovement Discipline
• Six sigma provides a systematic, logical approach to project management.
-Document-Response plan-Control Charts- Institution-alize
-Develop solutions-Select best solution-Pilot & Measure-Implement full scale
-Analyze data & process-Use graphical & statistics to verify root cause(s)
-ID key measures-Collect baseline data-Validate scope
-Charter-ID 5-Ups- Stake-holders-Map the process
ControlImproveAnalyzeMeasureDefine
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Six Sigma Steps and ToolsSix Sigma Steps and Tools
• Planning matrices• Fishbone• Pareto chart• Histogram• Run chart• Scatter diagram• Process capability measures• Sampling plan• Operational definition• data collection plan• Defect concentration diagram• Check sheet• Traveler sheets
• Process mapping• Decision matrices• Pugh’s method• Requirements analysis• How-how fishbones• FMEA• Error-proofing• Cellular design• Single piece flow systems• Pull systems• Process balancing• Process piloting• Force field analysis• Gantt charts
Define Measure Analyze Improve Control
• 5-ups• Molecule map• Stakeholder matrix• Communication plan• Flow charts• Process maps• Value stream mapping• Activity analysis
• Qualitative analysis• Graphical analysis• Data stratification• Estimation• Hypothesis testing• Analysis of variance• Regression analysis• Datatransformations• Multi-vari charts• Box plots•Cost/benefit analysis
• Statistical process control• Corrective action planning• Documented Procedures• Training
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What is Lean?What is Lean?
• A process improvement methodology• Based on principles developed at Toyota in the
50’s• Focuses on reducing cycle time by:
• Reducing the seven wastes• Using the “lean toolbox”
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Six Sigma and Lean – Six Sigma and Lean –
How They’re SimilarHow They’re Similar
• Both methodologies:• Emphasize focusing on the
customer• Involve empowering
employees• Stress continuous
improvement• Use basic “quality tools”
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Six Sigma and Lean –Six Sigma and Lean –
How They’re DifferentHow They’re Different
Six Sigma:• Focuses on defect
reduction• Emphasizes analysis• Is process focused Relies
heavily on statistics• Emphasizes
implementation infrastructure
• Is more client-centric
Lean:• Focuses on cycle time
reduction• Emphasizes solutions• Is value stream focused• Is more consultant
driven• Tends to be
implemented in phases by tool
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σ6
Lean ConceptsLean Concepts
• Pull Systems • Single Piece Flow • Continuous
Improvement • Muda • Value Stream
Customers and Outputs
Sales
Design
Ship
Prod
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The Seven WastesThe Seven Wastes
Over-production
Waiting
Moving objects
Moving people
Inventory
Over-processing
DefectsProduction
Inspection
Repair
Womack and Jones, Lean Thinking
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Value - Add ActivitiesValue - Add Activities
The answer to all 4 questions must be yes for a step to be value-add.
• Does the customer care?
• Does it change the thing?
• Is it done right the first time? • Is it required by law or regulation
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σ6
Common Lean ToolsCommon Lean Tools
Seiri (Organization) Seiton (Orderliness) Seiso (Cleanliness) Seiketsu (Standardized
cleanup) Shitsuke (Discipline)
X59 Pick Up slab
28%17%
12%0%6%37%
100%% Total241510053286Total
X910 Tape slab to w all section
X128 Tape Back Seam
X117 Tape Front Seam
X46 Cut tapeX55 Get new
sections
X104 Seam s Good?X53 Pick Up roof
section
X52 Pick up w all section
X201 Collect Pieces
Setup
Move
Control
Wait
Rework
Value-Added
Estimated Avg Secs
Process Step
Value Stream Mapping Kan-Ban
Work Cells
• Standard Work• Poka-Yoke• SMED • Kaizen Events
5SsVisual Controls
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σ6
Lean Tools Support Six SigmaLean Tools Support Six Sigma
D
M
A
I
C
L
E
A
N
Lean Tools • Value stream
analysis• The seven wastes• The five S’s• Cellular design• One piece flow• Pull systems• Error proofing• Visual controls
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σ6
Removing Non-Value Add StepsRemoving Non-Value Add StepsAlso Reduces DefectsAlso Reduces Defects
X
X
X
X
X
X
X
XX X
X
XX
XX
X
X
XXX
X
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σ6
Do It Right The First Time
Fix It Before It Gets Out
Fix It After It Comes Back
$10
$100
$1000
The Cost of Defects Escalates RapidlyThe Cost of Defects Escalates Rapidly
What happens to revenue as defects are reduced?
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Six Sigma Profit Model
EffectiveProcesses
Satisfied Customers
Profitability
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What is the pay-off?
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σ6
Higher Quality Leads to Higher ProfitsHigher Quality Leads to Higher Profits
Superior
Quality is
ProfitableROI%
Inferior Superior
30
25
15
5
0
29%
14%
Source: Quality Progress, April 1999.
On average, companies that deliver superior quality to customers, relative to companies that offer inferior quality, achieve much greater return on investments (ROI).
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Quality Award Winners Out-Perform Competition
100
90
80
70
60
50
40
30
20
10
0
Aver
age
perc
enta
ge o
f cha
nge
in p
erfo
rman
ce91%
43%
69%
79%
32%37%
23%
7% 8%0%
9% 6%
Award winnersControl firms
Operatingincome
Sales Totalassets
Employees Returnon sales
Returnon assets
Performance measure
100
90
80
70
60
50
40
30
20
10
0
Aver
age
perc
enta
ge o
f cha
nge
in p
erfo
rman
ce
63%
22%
39% 38%
25% 22%15%15%17%
7%10%
4%
Small firmsLarge firms
Operatingincome
Sales Totalassets
Employees Returnon sales
Returnon assets
Performance measure
100
90
80
70
60
50
40
30
20
10
0
Aver
age
perc
enta
ge o
f cha
nge
in p
erfo
rman
ce
65%
21%
39% 38%
25% 22%15%15%17%
7%10%
4%
Low capital intensityHigh capital intensity
Operatingincome
Sales Totalassets
Employees Returnon sales
Returnon assets
Performance measure
100908070605040302010
0
Sto
ck re
turn
s %
114%
80%76%
Awardwinners
S&P500
Portfolio ofall stocks
Stock portfolio
110120
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15
10
5
0
AverageAnnual %Improve-ment
Operating Indicators 20
15
10
5
0
AverageAnnual %Improve-ment
Empl. Sat. Attend. Suggestions
Employee Related Indicators
10
5
0Cust Satis. Reduced Cust. Retention Cust. Complaints
AverageAnnual %Improve-ment
CustomerSatisfaction
15
10
5
0
Financial Performance Indicators
Market $/Emp ROA ROSShare
AverageAnnual %Improve-ment
Reliability On Time Defects Lead Time Cost of Delivery Quality
Process Improvement and Improved Operating Results
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σ6
The Axis of Success, A Main Effects The Axis of Success, A Main Effects ModelModel
IncentivesEmployeeMotivation
WorkProcesses
Leadership
Customer Satisfaction
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Sample Results
60% loan origination cycle time
30% call center’s first-time call resolution
70% state tax filings cycle time & 50% error
30% credit card application accuracy
12% in the number of “very satisfied” customers
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σ6
Cultural Impact of Process ImprovementCultural Impact of Process Improvement
Common approach to problems
Common language
Common values• Teamwork• Customer focus• Process perspective• Decisions based on data• Bias toward action
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σ6
WIIFMWIIFM
What’s in it for employees?
• Improved growth and advancement opportunities• Jobs with increased variety and autonomy• Increased opportunities to use valued skills• Better opportunities to have a significant impact• Increased employability
Lean six sigma programslead to increased employee
satisfaction.
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σ6
Six Sigma-Based Continuous Process ImprovementSix Sigma-Based Continuous Process Improvement
The bottom line is the bottom line:• Increased sales to new customers
1. Positive word-of-mouth2. Improved effectiveness of sales and marketing
efforts
• Increased sales to current customers1. Improved responsiveness2. Reduced defects
• Higher margins• Employee motivation is improved
» Improved productivity» Reduced turnover
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σ6
How do you implementlean/six sigma
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σ6
Organizing for Lean/Six SigmaOrganizing for Lean/Six Sigma
Steering Committee Approach
Leadership Team
Steering CommitteeProcess
ImprovementLeader
MasterBlack Belt
Process Improvement
Teams
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σ6
StrategyD
esig
n
Tech
nolo
gy
Fina
nce
Mar
ketin
g
Man
ufac
turin
g
Hum
an R
esou
rces
IT Six
Sigm
a
Six sigma must be treated as an integralpart of corporate strategy.
Six Sigma and Business StrategySix Sigma and Business Strategy
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Strategic IssuesStrategic Issues
Where to start?
When to start?
How fast to go?
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When to Start?When to Start?
When should six sigma be implemented?• Before or after a reorganization.
• Before or after a downsizing.
• After a merger.
• In response to competition.
• To gain a competitive edge.
• Now.
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σ6
Where to Start?Where to Start?
Easy to do.
Large Payoff
Small Payoff
1. Here First
2. Next
3. Finally
4. Maybe Never
Hard to do.
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σ6
When Selecting Projects . . . When Selecting Projects . . .
Issues to consider:
• Customer impact
• Corporate strategy
• Operational impact
• Visibility
• Savings
“This is a must win game.”- any coach
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σ6
Businesses Are ProcessesBusinesses Are Processes
Inputs Outputs
YourCompany
Processes
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σ6
Process HierarchyProcess Hierarchy
Forecasting Staffing Program Delivery
ProgramPlanning
Build Calendarand
Format Data
Edit Customer/Forecast
Create andValidate
Forecasts
ConsensusMeeting
FinalizeForecast
CoreProcesses
Level 1
SubProcesses
Level 2
SubProcesses
Level 3(and below)
CreateAssumptions
and Scenarios
EvaluateScenarios
Select Scenario/
Create Forecast
RunScenarios
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How Fast Should Six Sigma be Rolled Out?How Fast Should Six Sigma be Rolled Out?
How ready is your organization?
How committed is top management?
What resources can you commit to the effort?
Too slow can be dangerous.
Too fast can be more dangerous.
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σ6
Introduction of Advanced ToolsIntroduction of Advanced Tools
2
5
OutlierUpper Control Limit
X Average
Lower Control Limit
Time
USL5152 53 54 55 565758 5960LSL
Variable 1
Variable 3
Variable 2
Design of Experiments
Control Charts
Histogram
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σ6
Change
A Basic Change Process ModelA Basic Change Process Model
Unfreeze Refreeze
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σ6
Socio-tech Perspective
Organization ChangeOrganization Change
The System
Socio
Tech
Work Processes
Values
Norms
Roles
CommunicationPatterns
Tools
Systems
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σ6
Diffusion of InnovationDiffusion of Innovation
%
20%5%
Unstoppable
Imbedded
Time
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σ6
Lessons LearnedLessons Learned
It’s all about managing change What does the data say? Top management leadership is essential Start where the organization is Build a beach head Involve everybody you can – create ownership Bake it into your culture Create metrics Reward success Carry the wounded – bury the dead
Properly improving your processes always pays
(Usually the hard way)
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σ6
Thank You!