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IL7010 - Lean Manufacturing and Six Sigma

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Roles and Responsibilities

Overview

In any project, philosophy or program, decisions must be made along the way. However,

these decisions, more often than not, are diffused because of the project's, philosophy's, or

program's complexity. Therefore, the implication is that control and coordination must be

critical items of concern. Given that assumption then, three axioms are required for

successful implementation. They are:

People are the project's, philosophy's and/or program's most important asset.

The focus should be more on people than on techniques.

The project manager (black belt) is not the boss in the traditional sense-but rather a

facilitator and a coach.

To facilitate and optimize these axioms every organization defines the specific roles and

responsibilities for the specific project, philosophy or program implementation. For the six

sigma methodology, this definition of roles and responsibilities is also important. There are

several levels of roles in the methodology. However, none of them are mandatory and some

of them may be called by a different name in some organizations. (There is a difference

between functions and titles. The functions and responsibilities are always important,

whereas the titles may or may not be important.) Table 7.1 shows the variation in names.

Table 7.1: Different role names used in the six sigma methodology

Generic name Other name

Process owner Sponsor or champion

Team member Team member or green belt

Team leader Black belt or green belt or project manager

Coach Master black belt or shogun or black belt

Implementation leader Six sigma director, quality leader, master black belt

Sponsor Champion or process owner

Executive management Six sigma steering committee, quality council, leadership council

In the six sigma methodology, all the roles and responsibilities for all levels presuppose

several prerequisites. The specific prerequisites, of course, depend on the level. However,

there are some prerequisites that are common to all levels and they are:

Having process or product knowledge.

Being willing and able to learn mathematical concepts.

Knowing the organization.

Having communication skills.

Being a self-starter and being self-motivated.

Being open-minded.

Being eager to learn new ideas.

Having a desire to drive change.

Possessing project leadership skills.

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Being a team player.

Being respected by others.

Having a track record on results.

In conjunction with these prerequisites, there is also an implied responsibility that is of

paramount importance on the part of the executives. After all, it is the executives who are in

charge of the change. Therefore, it is important for them to accelerate the change process by

being a visible advocate of the six sigma methodology. Specifically, the executives must get

involved. That means that they have to work closely with the champions and the shoguns to

mobilize commitment and make change last. The commitment must be translated into the

following actions:

Identify and remove the barriers and roadblocks to achieving high performance with

six sigma.

Ensure that only the best are nominated to be black belts.

Ask the black belts many questions to ensure that they are focused appropriately.

Demand follow-up and monitoring activities.

Establish the six sigma scorecard. Make six sigma reviews a regular part of your

management process.

Align six sigma results and business strategic objectives.

Drive functional ownership and accountability.

Manage your attention. Be proactive to ensure that the change is documented and

verified.

Develop and demonstrate personal competence with the breakthrough strategy.

Celebrate successes and recognize accomplishments.

Now let us look at some traditional roles and their specific contribution to the six sigma

methodology.

Executives

The executives legitimize the changes about to happen because of the six sigma

implementation methodology through their actions to:

Establish the vision—why we are doing six sigma.

Articulate the business strategy—how six sigma supports the business strategy.

Provide resources.

Remove roadblocks and buffer conflicts.

Support the culture change by encouraging others to take the risk and make the

change.

Monitor the results by defining the scorecard for six sigma and holding others

accountable for the results.

Align the systems and structures with the changes taking place.

Participate with the black belts through project reviews and recognition of results.




Champions

The champions implement the changes as a result of the six sigma methodology by taking

action to:

Develop a vision for the organization.

Create and maintain passion.

Develop a model for a perfect organization.

Facilitate the identification and prioritization of projects.

Develop the strategic decisions in the deployment of six sigma around timing and

sequencing of manufacturing, transactional and new product focus.

Extend project benefits to additional areas.

Communicate and market the breakthrough strategy process and results.

Share best practices.

Establish and monitor a team process for optimum results.

Recruit, inspire and "free up" black belts—pick the best people.

Develop the reward and recognition program for black belts.

Remove barriers for black belts.

Coach and develop black belts.

Provide the drum beat for results by reviewing projects and keeping score through

metrics.

Develop a comprehensive training plan for implementing the breakthrough strategy.

Master black belt (shogun)

The master black belt (shogun) assists the champion and/or guides the black belt as needed

by taking action to:

Be the expert in the tools and concepts.

Develop and deliver training to various levels of the organization.

Certify the black belts.

Assist in the identification of projects.

Coach and support the black belts in project work.

Participate in project reviews to offer technical expertise.

Partner with the champions.

Demonstrate passion around six sigma.

Share best practices.

Take on leadership of major programs.

Develop new tools or modify old tools for application.

Understand the link between six sigma and the business strategy.

Black belt

The black belt serves as the project manager for the six sigma project. Fundamentally, the

black belt is the individual who receives the change and makes sure that the change is

institutionalized throughout the organization by taking some form of action in the following

categories:




Mentoring. Cultivate a network of experts in the factory and/or site.

Teaching. Provide formal training to local personnel in new strategies and tools.

Coaching. Provide one-on-one support to local personnel.

Transferring. Pass on new strategies and tools in the form of training, workshops,

case studies, local issues and so on.

Discovering. Finding application opportunities for breakthrough strategies and tools,

both internal and external.

Identifying. Surfacing business opportunities through partnerships with other

organizations.

Influencing. Selling the organization on the use of breakthrough strategies and tools.

On the other hand, because the black belt is so important to the process, it is imperative that

the individual who carries this title must have the following specific requirements and

knowledge to be able to:

Understand how to implement the breakthrough strategy application.

Prepare initial project assessment to validate benefits.

Lead and direct the team to execute projects.

Determine the most effective tools to apply.

Show the data.

Identify barriers.

Identify project resources.

Determine appropriate and applicable input from knowledgeable functional

experts/team leaders/coaches.

Report progress to appropriate leadership levels.

Present the final report.

Deliver results on time.

Solicit help from the champions when needed.

Influence without direct authority.

Be a breakthrough strategy enthusiast.

Stimulate champion thinking.

Teach and coach breakthrough strategy methods and tools.

Manage project risk.

Ensure the results are sustained.

Document learning.

Green belt

The green belt is the individual who assists black belts with completing projects and applies

the six sigma breakthrough strategy (DMAIC or DCOV) on the job. The specific details

regarding the deployment and the role of any green belt is determined by each organization.

Other roles

Team members. They are the people who provide the everyday requirements for execution

of the DMAIC and DCOV model. They also help spread the word about six sigma tools and

processes and ultimately they become part of the reservoir of human resources available for

future projects.




Process owner. This is the person who takes on a new, cross-functional responsibility to

manage all the steps that provide value to the internal as well as external customer. The

sponsor and the process owner may be the same person.

Chapter 3: The Six Sigma DMAIC Model

Every methodology has a conceptual approach to work with. Six sigma is no different and, in

fact, has two lines of approach. The first is to address existing problems, and the second, to

prevent problems from happening to begin with. The six sigma methodology has adopted the

old plan-do-study-(check)-act (PDS(C)A) approach, with some very subtle variations in that

breakthrough strategy. This approach is a functional one—it clearly shows the correct path to

follow once a project has been selected. In its entirety, the approach is the define, measure,

analyze, improve and control (DMAIC) approach.

The stages of the DMAIC model

Define

The first stage—define—serves as the platform for the team to get organized, determine the

roles and responsibilities of each member of the team, establish team goals and milestones

and review the process steps. The key points to be defined at this stage are the voice of the

customer, the scope of the project, the cause and effect prioritization (a list that the team

creates for pursuing the specific project based on cause and effect criteria) and project

planning. (aligning to the business strategy and the preliminary definition of the project).

Each of these points can be linked to the customer (some obviously and others not so), and it

is essential to appreciate and understand this link to the customer before and during this stage

of the model. The following are the steps to take to complete the define phase of the DMAIC

model:

Define the problem. The problem is based on available data, is measurable and

excludes any assumptions about possible causes or solutions. It must be specific and

attainable.

Identify the customer. This is more demanding as we systematically begin the process

of analysis. We must identify who is directly impacted by the problem and at what

cost. We begin by conducting a random sample analysis to identify the overall impact

and then we proceed with a detailed analysis of the cost of poor quality (COPQ). The

focus of the team here is to identify a large base of people affected by poor quality.

Identify critical to quality (CTQ) characteristics. By identifying CTQ characteristics,

the project team determines what is important to each customer from the customer's

point of view. Identification of CTQ characteristicts ascertains how these particular

features appear when meeting customer expectations. Typical questions here are:

What is "good condition?" and What is "on time?"

Map the process. Mapping of the process in this stage of the define phase of the six

sigma methodology is nothing more than a high level visual representation of the

current process steps leading up to fulfillment of the identified CTQ characteristics.

This "as is" process map will be useful throughout the process as:

o A method for segmenting complex processes into manageable portions.

o A way to identify process inputs and outputs.




o A technique to identify areas of rework.

o A way to identify bottlenecks, breakdowns and non-value-added steps.

o A benchmark against which future improvements can be compared with the

original process.

Any organization is a collection of processes, and these processes are the natural

business activities you perform that produce value, serve customers and generate

income. Managing these processes is the key to the success of the organization.

Process mapping is a simple yet powerful method of looking beyond functional

activities and rediscovering core processes. Process maps enable you to peel away the

complexity of your organizational structure and focus on the processes that are truly

the heart of your business. Armed with a thorough understanding of the inputs,

outputs and interrelationships of each process, you and your organization can

understand how processes interact in a system, evaluate which activities add value for

the customer and mobilize teams to streamline and improve processes in the "should

be" and "could be" categories. It should be noted that understanding the process is an

important objective of the process map. However, something that is just as important,

and usually undervalued from constructing a process map, is the benefit of the

alignment of the team to the process at hand. Once this alignment occurs, and

everyone in the team understands what is expected, the conclusion of a successful

project is a high probability.

Scoping the project. The last step of the define stage is scoping the project and if

necessary, updating the project charter. During this step the team members will

further specify project issues, develop a refined problem statement and brainstorm

suspected sources of variation. The focus of this step is to reduce the scope of the

project to a level that ensures the problem is within the team's area of control, that

data can be collected to show both the current and improved states and that

improvements can be made within the project's timeframe.

At the end of this stage, it is not uncommon to revisit the original problem statement and

refine it in such a way that the new problem statement is a highly defined description of the

problem. Beginning with the general problem statement and applying what has been learned

through further scoping, the team writes a refined problem statement that describes the

problem in narrow terms and indicates the entry point where the team will begin its work. In

addition, a considerable amount of time is taken at this step to identify the extent of the

problem and how it is measured.

Ultimately, the purpose of this stage is to set the foundations for the work ahead in solving a

problem. This means that an excellent understanding of the process must exist for all team

members, as well as complete understanding of the CTQ characteristics. After CTQ factors

are identified, everyone in the team must agree on developing an operational definition for

each CTQ aspect. Effective operational definitions:

Describe the critical to quality characteristics accurately.

Are specific so that the customer expectation is captured correctly.

Are always written to ensure consistent interpretation and measurement by multiple

people.




Whereas typical methods of identifying CTQ characteristics include but are not limited to

focus groups, surveys and interviews, the outputs are CTQ characteristics, operational

definitions and parameters for measuring.

Measure

The second stage of the DMAIC model—measure—is when the team establishes the

techniques for collecting data about current performance that highlights project opportunities

and provides a structure for monitoring subsequent improvements. Upon completing this

stage, we expect to have a plan for collecting data that specifies the data type and collection

technique, a validated measurement system that ensures accuracy and consistency, a

sufficient sample of data for analysis, a set of preliminary analysis results that provides

project direction and baseline measurements of current performance.

The focus of this stage is to develop a sound data collection plan, identify key process input

variables (KPIV), display variation using Pareto charts, histograms, run charts, and baseline

measures of process capability and process sigma level. The steps to carry through this stage

are:

Identify measurement and variation. The measure subsets establish the requirements

of measurement and variation, including: a) the types and sources of variation and the

impact of variation on process performance, b) the different types of measures for

variance and the criteria for establishing good process measures, and c) the different

types of data that can be collected and the important characteristics of each data type.

As part of this step the types of variation must be defined. There are two types of

causes of variation:

o Common causes. These are conditions in a process that generate variation

through the interaction of the 5Ms (machine, material, method, measurement,

manpower) and 1E (environment). Common causes affect everyone working

in the process, and affect all of the outcomes. They are always present and

thus are generally predictable. They are generally accepted sources of

variation and offer opportunities for process improvement.

o Special causes. These are items in a process that generate variation due to

extraordinary circumstances related to one of the 5Ms or 1E. Special causes

are not always present, do not affect everyone working in the process and do

not affect all of the outcomes. Special causes are not predictable.

Determine data type. In this step the team must be able to answer the question, "What

do we want to know?" Reviewing materials developed during the previous stage, the

team determines what process or product characteristics they need to learn more

about. A good start is the definition of the data type. This is determined by what is

measured. Two types of data can be collected by measuring:

o Attribute data. One way to collect data is to merely count the frequency of

occurrence for a given process characteristic (e.g. the number of times

something happens or fails to happen). Data collected in this manner is known

as attribute data. Attribute data cannot be meaningfully subdivided into more

precise increments and is discrete by nature. "Go/no go" and "pass/fail" data

are examples of this category.

o Variable data. A different way to look at data is to describe the process

characteristic in terms of its weight, voltage or size. Data collected in this

manner is known as variable data. With this type of data, the measurement




scale is continuous-it can be meaningfully divided into finer and finer

increments of precision.

Develop a data collection plan. In developing and documenting a data collection plan

the team should consider:

o What the team wants to know about the process.

o The potential sources of variation in the process (Xs).

o Whether there are cycles in the process and how long data must be collected to

obtain a true picture of the process.

o Who will collect the data.

o How the measurement system will be tested.

o Whether operational definitions contain enough detail.

o How data will be displayed once collected.

o Whether data is currently available, and what data collection tools will be used

if current data does not provide enough information.

o Where errors in data collection might occur and how errors can be avoided or

corrected.

Perform measurement system analysis. This step involves performing graphical

analysis and conducting baseline analysis. During this step, the team verifies the data

collection plan once it is complete and before the actual data is collected. This type of

analysis is called a measurement system analysis (MSA). A typical MSA indicates

whether the variation measured is from the process or the measurement tool. The

MSA should begin with the data collection plan and should end when a high level of

confidence is reached that the data collected will accurately depict the variation in the

process. By way of a definition, MSA is a quantitative evaluation of the tools and

processes used in making data observations. Perhaps the most important concept in

any MSA study is that if the measurement system fails to pass analysis before

collecting data, then further data should not be collected. Rather, the gauge should be

fixed, the measurement system should be fixed and the measurement takers should be

trained.

Collect the data. During this step, the team must make sure that the collected data is

appropriate, applicable and accurate, and that it provides enough information to

identify the potential root cause of the problem. It is not enough to plan carefully

before actually collecting the data and then assume that everything will go smoothly.

It is important to make sure that the data continues to be consistent and stable as it is

collected. The critical rules of data collection are:

o Be there as the data is collected.

o Do not turn over data collection to others.

o Plan for data collection, design data collection sheets and train data collectors.

o Stay involved throughout the data collection process.

The outcome of this step must be an adequate data set to carry into the analyze stage.

Analyze

The third stage—analyze—serves as an outcome of the measure stage. The team at this stage

should begin streamlining its focus on a distinct group of project issues and opportunities. In

other words, this stage allows the team to further target improvement opportunities by taking

a closer look at the data. We must remember that the measure, analyze and improve stages

quite frequently work hand in hand to target a particular improvement opportunity. For

example, the analyze stage might simply serve to confirm opportunities identified by




graphical analysis in the measurement stage. Conversely, the analyze stage might uncover a

gap in the data collection plan that requires the team to collect additional information.

Therefore, the team makes sure the appropriate recognition of data is given and applicable

utilization is functional, as well as correct. Yet another important aspect of this stage is the

introduction of the hypothesis testing for attribute data. On the other hand, in the case of

variable data we may want to use: analysis of means (1 sample t-test or 2 sample t-test),

analysis of variance for means, analysis of variance (F-test, homogeneity of variance),

correlation, regression and so on.

At the end of this stage the team should be able to answer the following questions:

What was the improvement opportunity?

What was the approach to analyzing the data?

What are the root causes contributing to the improvement opportunity?

How was the data analyzed to identify sources of variation?

Did analysis result in any changes to the problem statement or scope?

We are able to do this by performing the following specific sequence of tasks:

Perform capability analysis. This is a process for establishing the current performance

level of the process being. This baseline capability will be used to verify process

improvements through the improve and control phases. Capability is stated as a short-

term sigma value so that comparisons between processes can be made.

Select analysis tools. This step allows the team to look at the complete set of graphical

analysis tools to determine how each tool may be used to reveal details about process

performance and variation.

Apply graphical analysis tools. This refers to the technique of applying a set of basic

graphical analysis tools to data to produce a visual indication of performance,

Identify sources of variation. This refers to the process of identifying the sources of

variation in the process under study, using statistical techniques, so that significant

variation is identified and eliminated.

The analyze stage continues the process of streamlining and focusing that began with project

selection. The team will use the results produced by graphical analysis to target specific

sources of variation.

As an outcome of the analyze stage, the team should have a strong understanding of the

factors impacting their project including:

Key process input variables (the vital few Xs that impact the Y).

Sources of variation—where the greatest degree of variation exists.

Improve

The fourth stage—improve—aims to generate ideas; design, pilot and implement

improvements; and validate the improvements. Perhaps the most important items in this stage

are the process of brainstorming, the development of the "should be" process map, the review

and/or generation of the current FMEA (failure mode and effect analysis), a preliminary

cost/benefit analysis, a pilot of the recommended action and the preliminary implementation

process. Design of experiments (DOE) is an effective methodology that may be used in both




the analyze and improve stages. However, DOE can be a difficult tool to use outside a

manufacturing environment, where small adjustments can be made to input factors and output

can be monitored in real time. In non-manufacturing, other creative methods are frequently

required to discover and validate improvements.

The following steps should be taken at this stage:

Generate improvement alternatives. The emphasis here is to generate alternatives to

be tested as product or process improvements. The basic tools to be used here are

brainstorming and DOE. With either tool, a three-step process is followed:

1. Define improvement criteria—develop CTQ characteristics.

2. Generate possible improvements—the best potential improvements are best

evaluated based on the criteria matrix.

3. Evaluate improvements and make the best choice.

As a result of these steps, several alternatives may be found and posted in a matrix formation.

The matrix should have at least the following criteria: "must" criteria (the basic items without

which satisfaction will not occur) and "desirable" criteria (items that are beyond the basic

criteria and do contribute to performance improvement). Once these are identified a weight

for each is determined, either through historical or empirical knowledge, and appropriately

posted in the matrix. At that point each criteria is cross-multiplied by the weight and the

appropriate prioritization takes place. This is just one of many prioritization methods. Other

prioritization methods may be based on cost, frequency, effect on customer and other factors.

Create a "should be" process map. This map represents the best possible

improvement the project team is able to implement. It is possible that a number of

changes could be made to improve a process. The individual process map steps will

serve as the input function of the FMEA.

Conduct FMEA (failure mode and effect analysis). The FMEA is meant to be a

"before the failure" action, not an "after the fact" reaction. Perhaps the most important

factor in any FMEA is the fact that it is a living document and therefore it should be

continually updated as changes occur or more information is gained.

Perform a cost/benefit analysis. This analysis is a structured process for determining

the trade-off between implementation costs and anticipated benefits of potential

improvements.

Conduct a pilot implementation. This step is a trial implementation of a proposed

improvement, conducted on a small scale under close observation.

Validate improvement. One of the ways to validate the effectiveness of the changes

made is to compare the sigma values before and after the changes have been made.

Remember, this means to compare the same defects per million opportunity.

Control

The fifth stage—control—is to institutionalize process or product improvements and monitor

ongoing performance. This stage is the place where the transition from improvement to

controlling the process and ensuring that the new improvement takes place. Of course, the

transition is the transferring of the process from the project team to the original owner. The

success of this transfer depends upon an effective and very detailed control plan. The

objective of the control plan is to document all pertinent information regarding the following:




Who is responsible for monitoring and controlling the process.

What is being measured.

Performance parameters.

Corrective measures.

To make the control effective, several factors must be identified and addressed. Some of the

most critical are:

Mistake-proofing. This is to remove the opportunity for error before it happens.

Mistake-proofing is a way to detect and correct an error where it occurs and avoid

passing the error to the next worker or the next operation. This keeps the error from

becoming a defect in the process and potentially impacting the customer CTQ

characteristics.

Long-term MSA (measurement system analysis) plan. Similar to the original MSA

conducted in the measure stage, the long-term MSA looks at all aspects of data

collection relating to the ongoing measurement of the Xs and high level monitoring of

the Ys. Specifically, the long term MSA documents how process measurements will

be managed over time to maintain desired levels of performance.

Appropriate and applicable charts (statistical process control). A control is simply a

run chart with upper and lower control limit lines drawn on either side of the process

average. Another way to view the control chart is to see it as a graphical

representation of the behavior of a process over time.

Reaction plan. A reaction plan provides details on actions to be taken should control

charts indicate the revised process is no longer in control. Therefore, having a reaction

plan helps ensure that control issues are addressed quickly and that corrective actions

are taken.

The new or revised standard operating procedures (SOPs). Updating SOPs and

training plans is the practice of revising existing documentation to reflect the process

improvements.

At the end of the control stage, the process owner will understand performance expectations,

how to measure and monitor Xs to ensure performance of the Y, and what corrective actions

should be executed if measurements drop below the desired and anticipated levels.

Furthermore, the team is disbanded while the black belt begins the next project with a new

team.

DMAIC Tools

Typical tools and deliverables for each of the stages of the DMAIC model are shown in Table

3.1

Table 3.1: Typical tools/methodologies and deliverables for the DMAIC model

Stage Tools/methodologies Deliverables

Define Brainstorming

Cause and effect

diagram

Process mapping

The real customers

Data to verify customers' needs collected

Team charter—with emphasis on:

o problem statement

o project scope








Cause and effect

matrix

Current failure mode

and effect analysis

(FMEA)

Y/X diagram

CT matrix

o projected financial benefits

High-level process map—"as is"

Measure Process mapping

Cause and effect

FMEA

Gauge R&R

(repeatability and

reproducibility)

Graphical techniques

Key measurements identified

Rolled throughput yielded

Defects identified

Data collection plan completed

Measurement capability study completed

Baseline measures of process capability

Defect reduction goals established

Analyze Process mapping

Graphical techniques

Multi-vari studies

Hypothesis testing

Correlation

Regression

Detailed "as is" process map completed

The sources of variation and their

prioritization

SOPs reviewed

Identify the vital few factors KPIVs with

appropriate and applicable data to support

such KPIVs (Key process input variables)

Refined problem statement to the point

where the new understanding is evident

Estimates of the quantifiable opportunity

represented by the problem

Improve Process mapping

Design of experiments

Simulation

Optimization

Alternative improvements

Implementation of best alternative for

improving the process

"Should be" process map developed

Validation of the improvement—

especially for key behaviors required by

new process

Cost/benefit analysis for the proposed

solutions

Implementation plan developed—a

preliminary preparation for the transition

to the control stage

Communication plan established for any

changes

Control Control plans Control plan completed

Evidence that the process is in control






Statistical process

control

Gage control plan

Mistake-proofing

Preventive

maintenance

Documentation of the project

Translation opportunities identified

Systems and structures changes to

institutionalize the improvement

Audit plan completed

Balanced Scorecard (BSC)

The concept of a balanced scorecard became popular following research studies published in

the Harvard BusinessReview articles of Kaplan and Norton (1992, 1993), and ultimately led to

the 1996 publication of the standard business book on the subject, titled The Balanced Scorecard

(Kaplan and Norton, 1996). The authors define the balanced scorecard (BSC) as “organized

around four distinct performance perspectives –

financial,

customer,

internal, and

innovation and learning.

The name reflects the balance provided between short- and long-term objectives, between

financial and nonfinancial measures, between lagging and leading indicators, and between

external and internal performance perspectives.” As data are collected at various points

throughout the organization, the need to summarize many measures – so that top level leadership

can gain an effective idea of what is happening in the company – becomes critical. One of the

most popular and useful tools we can use to reach that high-level view is the BSC.

The BSC is a flexible tool for selecting and displaying “key indicator” measures about the

business in an easy-to-read format. Many organizations not involved in Six Sigma, including

many government agencies, are using the BSC to establish common performance measures and

keep a closer eye on the business.

A number of organizations that have embraced Six Sigma methodology as a key strategic

element in their business planning have also adopted the BSC, or something akin to it, for

tracking their rate of performance improvement. One of those companies is General Electric

(GE). In early 1996, Jack Welch, CEO of GE, announced to his top 500 managers his plans an

aspirations regarding a new business initiative known as Six Sigma (Slator, 2000). When the

program began, GE selected five criteria to measure progress toward an aggressive Six

Sigma goal. Table 4.12 compares the GE criteria with the four traditional BSC criteria. We have

ordered the four GE criteria so that they align with the corresponding traditional BSC measures.

The fifth GE criterion, “supplier quality,” can be considered as a second example of the BSC

“financial” criteria.




In today’s business climate, the term “balanced scorecard” can refer strictly to the

categories originally defined by Kaplan and Norton (1996), or it can refer to the more general

“family of measures” approach involving other categories. GE, for example, uses the BSC

approach but deviates from the four prescribed categories of the BSC when it is appropriate.

Godfrey (1999) makes no demands on the BSC categories other than that they track goals that

support the organization’s strategic plan. For an example of a BSC, the following BSC can be

obtained for an internal moulding process.

In Table 4.13, Zl and ZS are the long-term and short-term critical values of standard

normal distribution, respectively. Since the average DPMO of this moulding process is 812, the

sigma quality level is 4.65. Through this BSC, we can judge whether this process is satisfactory

or not.

SIX SIGMA BUSINESS SCORECARD

The business environment has changed a lot during the last decade. Several hundreds

of thousands of businesses worldwide implemented ISO 9000 quality management systems.

About a million copies of Baldrige Criteria are shipped to

businesses annually. Many businesses and their suppliers have implemented the Six Sigma

methodology. However, the challenge is to improve profitability significantly, to prevent

marketplace dynamics such as the dot-com meltdown of 2000. The value of performance

measures has become more important than ever. With the current and anticipated unsettling




business environment accelerating trends in technology, high expectations for performance,

eroding prices, and shrinking profitability margins—businesses need a performance measure

(or scorecard) that is robust and that addresses various aspects of a business including the

marketplace dynamic. Businesses need a tool that provides a framework and guidance,

creates challenges, and stimulates excitement. Businesses need performance measures that

continually renew and reenergize them, forcing them to discard the status quo and embrace

innovation

on a continual basis. Such a system must rely on the basics of a business. A business is a

collection of processes, including the leadership process. Each business process has inputs

that include suppliers, assets, resources (capital, material, people), and information. The

process also has a vision, measures, policies and procedures, and output that includes

products or services for customers. Every business has variances. The question is what to do

with them. Each business must have a process to handle excessive variances in the

organization. Typically, these variances are the leaks in profitability. To fine-tune

profitability, one must look at measures of all aspects of the organization the way it really

works in order to reverse any loss of profitability. The Six Sigma Business Scorecard has

been developed to look at measures of all aspects of the organization. It addresses the

concerns that executives express about current scor ecard systems, such as their

ineffectiveness at relating to the employees who do the work. Most scorecards are strategic in

intent and do not flow down to process measures.

For any scorecard to be implemented successfully, the scorecard must include sound

planning, operational excellence, and sustainable growth. With an understanding of the

Business Trilogy, process model, and dynamic economic environment, a Six Sigma Business

Scorecard was developed that personifies leadership and management; aligns purchases and

operations; drives customer service and sales; and promotes employee excellence, innovation,

and improvement. Such a scorecard should intuitively be persuasive to executives for

strategy as well as rewarding to employees for continual excellence through innovation. The

Six Sigma Business Scorecard, as shown in Figure 1-6, is driven by those responsible for

inspiration, planning, and profitability (i.e., the leadership); controlled by managers who

improve processes and reduce costs; improved by employees who develop innovative

solutions to meet customer needs; and steered by sales and customer service representatives

who acquire and maintain customers through high-quality relationships for revenue and

growth.




Lean Manufacturing and Six Sigma

(1) What is lean manufacturing?

Currently there are two premier approaches to improving manufacturing operations. One is lean

manufacturing (hereinafter referred to as “lean”) and the other is Six Sigma. Lean evaluates the

entire operation of a factory and restructures the manufacturing method to reduce wasteful

activities like waiting, transportation, material hand-offs, inventory, and over-production. It

reduces variation associated with manufacturing routings, material handling, storage,

lack of communication, batch production and so forth. Six Sigma tools, on the other hand,

commonly focus on specific part numbers and processes to reduce variation. The combination

of the two approaches represents a formidable opponent to variation in that it includes both layout

of the factory and a focus on specific part numbers and processes.

Lean and Six Sigma are promoted as different approaches and different thought processes. Yet,

upon close inspection, both approaches attack the same enemy and behave like two

links within a chain – that is, they are dependent on each other for success. They both battle

variation, but from two different points of view. The integration of Lean and Six Sigma takes

two powerful problem-solving techniques and bundles them into a powerful package. The two

approaches should be viewed as complements to each other rather than as equivalents of or

replacements for each other (Pyzdek, 2000).

In practice, manufacturers that have widely adopted lean practices record performance

metrics superior to those achieved by plants that have not adopted lean practices. Those practices

cited as lean in a recent industrial survey (Jusko, 1999) include

quick changeover techniques to reduce setup time;

adoption of manufacturing cells in which equipment and workstations are arranged

sequentially to facilitate small-lot, continuous-flow production;

just-in-time (JIT) continuous-flow production techniques to reduce lot sizes, setup

time, and cycle time; and,

JIT supplier delivery in which parts and materials are delivered to the shop floor on a

frequent and as-needed basis.

Differences between Lean and Six Sigma

There are some differences between Lean and Six Sigma as noted below.

Lean focuses on improving manufacturing operations in variation, quality and

productivity. However, Six Sigma focuses not only on manufacturing operations,

but also on all possible processes including R&D and service areas.

Generally speaking, a Lean approach attacks variation differently than a Six

Sigma system does (Denecke, 1998) as shown in Figure 5.4. Lean tackles the

most common form of process noise by aligning the organization in such a way

that it can begin working as a coherent whole instead of as separate units. Lean

seeks to co-locate, in sequential order, all the processes required to produce a

product. Instead of focusing on the part number, Lean focuses on product flow

and on the operator. Setup time, machine maintenance and routing of processes

are important measures in Lean. However, Six Sigma focus on defective rates and

costs of poor quality due to part variation and process variation based on

measured data.

The data-driven nature of Six Sigma problem-solving lends itself well to lean

standardization and the physical rearrangement of the factory. Lean provides a

solid foundation for Six Sigma problem-solving where the system is measured by

deviation from and improvements to the standard.

While Lean emphasizes standardization and productivity Six Sigma can be more

effective at tackling process noise and cost of poor quality.




Synergy effect

The author believes that Lean and Six Sigma, working together, represent a formidable

weapon in the fight against process variation. Six Sigma methodology uses problem-solving

techniques to determine how systems and processes operate and how to reduce variation in

processes. In a system that combines the two philosophies, Lean creates the standard and Six

Sigma investigates and resolves any variation from the standard. In addition, the techniques

of Six Sigma should be applied within an organization’s processes to reduce defects, which

can be a very important prerequisite to the success of a Lean project.

The Synergy of Lean and Six Sigma Why are companies improving at such a slow rate, even when there is such a huge emphasis

on improvement techniques like Six Sigma and Lean? What can they learn from GE or the Tier One

Auto supplier case study? Six Sigma does not directly address process speed and so the lack of

improvement in lead time in companies applying Six Sigma methods alone is understandable. These

companies also generally achieve only modest improvement in WIP and Finished Goods inventory

turns. But Lean methods alone aren’t the answer either: Many of the firms who have shown little

improvement in inventory turns have in fact attempted to apply Lean methods. It appears that, while

many of people at these companies understand Lean, they just aren’t effective in implementing it

across the corporation at a rapid rate. The companies achieves some remarkable successes… but only




in small areas. The data shows that improvement across the corporation as a whole remains slow

without the Six Sigma cultural infrastructure. An executive whose company is making rapid progress

now said they started with Six Sigma… then spent several months trying to reduce lead time, only to

realize they were reinventing Lean! In other words, no matter where you start—with Lean or with Six

Sigma—you’ll be driven to invent or learn the other half of the equation if you want to achieve high

quality, high speed, and low cost. When a company uses both Lean and Six Sigma simultaneously,

dramatic improvements across the corporation are achieved much more rapidly, and indeed we will

prove that this combination is in fact a pre-requisite for rapid rates of improvement.

So what is Lean Six Sigma?

Lean Six Sigma is a methodology that maximizes shareholder value by achieving the fastest

rate of improvement in customer satisfaction, cost, quality, process speed and invested capital.

The fusion of Lean and Six Sigma is required because:

Lean cannot bring a process under statistical control

Six Sigma alone cannot dramatically improve process speed or reduce invested

capital

Team Leadership

Team Leader/Facilitator Prework. The Six Sigma team leader/facilitator has the overall

responsibility of keeping his or her team on track toward completion of their appointed action

items through DMAIC. It is typical for a Six Sigma team to have 20 to 30 meetings over the

course of four to eight months. The Six Sigma team leader/facilitator is responsible for creating

the agendas for each of these meetings ahead of time. Successful team leaders/facilitators are

encouraged to meet weekly with their Six Sigma team Champion. The suggested agendas created

by the team leader/facilitator should be reviewed with the Champion. This both allows approval

of theagenda by the Champion if necessary and also allows the Champion to see where his team

is relative to DMAIC. Once these agendas are created and input has been provided by the

Champion, the Six Sigma team leader/facilitator is responsible for circulation of these agendas to

the entire team. As seen in Figure 3.8, the agenda should be specific, referencing desired

outcomes, the agreed-on decision-making method and assigned roles and responsibilities,and a

potential list of ground rules. In the example in Figure 3.8, the Six Sigma team is in the Analysis

phase of DMAIC. In a scheduled two-hour meeting they plan to brainstorm root causation for

either the data analysis or process analysis conducted previously and then narrow the larger list

down to the most probable causes. In addition to the creation, review, and circulation of the

agenda prior to the meeting, there is also additional prework done by the team leader/facilitator.

Verifying scheduling of the team’s work area is an often overlooked element of good prework.

Often, a Six Sigma team becomes inefficient when at the appointed meeting time someone else is

using their regular meeting place. Good prevention by the team leader/facilitator occurs when at

the onset of the creation of their team, a specified “War Room,” exclusively devoted to the work

of that specific team is established. There will be times over the course of a Six Sigma team that

adhoc members may need to be included for a specific Six Sigma team meeting. For example,

when the Six Sigma team is calculating cost opportunities for their project, it is helpful to invite a

member of the financial organization to participate. Finally, the last prework done by the team

leader/facilitator is coordinating arrival of the morning doughnuts if the meeting is in the

morning. Bonus points are awarded the team leader/facilitator who brings Krispy Kremes.




Team Leader/Facilitator Work during the Meeting. To a large degree, it is normally the

responsibility of the team leader/facilitator to coordinate the completion of the agenda. There are

two types of facilitators. The first is the up-front facilitator who has the “power of the flip chart

pen.” The other type of facilitator is the armchair facilitator who resembles a team member and

provides guidance while maintaining a role as a participator. Again, most facilitators will be the

team leader. Therefore, the vast majority of the time in Six Sigma situations, the facilitative type

of choice will be the up-front facilitator. A good facilitator will get the session started by

reviewing the agenda, asking for input to the ground rules, and reviewing with the group the

specific roles and responsibilities of that specific meeting.

During the meeting, it is the responsibility of the facilitator to keep the team on track

relative to the agenda. This includes role modelling and encouraging high energy levels (the

Krispy Kremes will help in the short run here), attempting to building consensus around the

agenda topics, and addressing dysfunctional behavior should it exhibit itself (dysfunctional

behavior will be addressed in later chapters).

For Six Sigma teams, there are additional responsibilities for a facilitator. Six Sigma team

leaders/facilitators must have a solid working knowledge of the DMAIC methodology and the

various quality tools. For example, a common tool used throughout the DMAIC methodology is

the Affinity Diagram. While this is not the only tool, it is important for the team leader/facilitator

to be skillful in the use of this tool, as well as all of the other tools.

Finally, a good team leader/facilitator must be aware of his or her limitations and plan

accordingly. For example, if the team leader/facilitator is not at a desired level of proficiency with

regard to a specific tool or technique, it is the responsibility of the team leader/facilitator to call in




someone to facilitate the meeting using that tool. The Master Black Belt is the internal consultant

who can do this since they are skilled in all aspects of Six Sigma tools and techniques.

In addition, Black Belts should have knowledge and experience in good facilitative

management. Sometimes a team leader/ facilitator may want to participate more as a team

member for a given element of the DMAIC methodology. For example, since team members are

chosen for their technical expertise, the team leader/facilitator may have special process expertise

that would require the team leader/facilitator’s deeper involvement. In these cases, it is better

for the Master Black Belt to take the “power of the pen” while the team leader becomes a team

member.

Team Leader/Facilitator Postwork. The team leader/facilitator’s job doesn’t end with the

conclusion of the meeting. Good team leader/facilitators ensure that all decisions made at the

conclusion of the meeting are circulated to all pertinent individuals. In addition, some Six Sigma

meetings are decision making meetings while others are status meetings. The status meeting is

where work is done in subgroups and the status of the work done between meetings by these

subgroups is shared with the entire team. This necessitates the team leader/facilitator to either

facilitate these smaller group meetings or ensure that the work gets done by other means that

would include monitoring the responsible party for the work of the smaller group.

Other Team Roles associated with team leader

The Scribe. A common problem with Six Sigma teams is ensuring that all work done either

between meetings or during meetings is “captured.” Therefore, a key role of the Six Sigma

team is the scribe who is responsible for taking detailed notes during the Six Sigma meeting. A

good team leader/facilitator saves a few moments at the end of each meeting for the scribe to give

a report on all key decisions made by the team during that meeting. In addition, much work done

by the Six Sigma team uses various quality tools like an Affinity Diagram or a Cause-Effect

diagram where the Six Sigma team posts their work on the walls. It should be

the responsibility of the scribe either to take notes on the final product on the wall or be

responsible for saving the work on the wall.

The Timekeeper. Many misconceptions center around the work of the timekeeper. As

referenced in our discussions of agendas, any good meeting will identify the allowed amount of

time to address each element on the agenda. It is the responsibility of thetimekeeper to provide

the Six Sigma team status on how much time remains for each element on the agenda. The

problem with most timekeepers is their passivity. They wait until the time for an agenda item is

completed and simply say “time’s up.” This is incorrect.

Good timekeepers are more proactive. This means giving periodic status on how much

time exists for a given item on the agenda. The following example illustrates a Six Sigma team’s timekeeper who provided good feedback to her team:

Team Leader/Facilitator: “All right team, now we are going to discuss the must and want

criteria for project solutions.” Team Timekeeper: “We have 60 minutes devoted to this topic.

” Later in the meeting, an emotional discussion ensues regarding criteria for solutions for this

project team. Initially, the team leader/ facilitator thought the activities associated with this topic

would take 45 to 60 minutes. Thirty minutes into the discussion, emotions were running high.

The timekeeper then intervened:

Team Timekeeper: “We now have spent 30 minutes on this topic and have 30 minutes left.”




The timekeeper has alerted the team that they are behind with regard to completion of the action

item on the agenda. He or she will again remind the group in 15 minutes that they have 15

minutes left for this item on the agenda. In this particular Six Sigma project team, the timekeeper

indicates they have expired the amount of time on the agenda originally

devoted to this item. It then becomes the decision of the team whether to continue this action

item, with the conscious decision to“borrow” time from another item on the agenda, or to

modify the agenda entirely to devote more time to the action item. Whatever decision

the team makes is acceptable. The problem is making sure that the timekeeper is neither passive

nor becomes too involved in dictating what happens relative to the agenda.

Sometimes, the timekeeper is seen as the “party-pooper,” who can halt the momentum

on a topic. However, a strong timekeeper needs to ensure that when a Six Sigma team goes

beyond their allotted time, a conscious decision is made to borrow from other agenda items or

defer the discussion to another meeting.

Ground Rule Enforcer. Most teams do not address how ground rules will be enforced. In

recent years, team leaders/facilitators have done two things to ensure ground rules are enforced.

First, they indicate to their Six Sigma team that ground rule enforcement should be

a shared responsibility. This means that when a ground rule is being broken, it is the

responsibility of the entire team to point out an infraction so that the norms of the team return to

the task at hand.

While this egalitarian model sounds the best, team members are sometimes so involved in

the agenda item in question that they do not “see” a ground rule being broken. Traditionally, it

then become the team leader/facilitator’s responsibility to identify a ground rule

being broken. In normal meetings, the facilitator typically takes on the role of ground rule

enforcement. However, this is an additional responsibility that adds unnecessarily to the Six

Sigma team leader’s workload. Given all the responsibilities of being a Black Belt or

Green Belt, it is understandable that a new role in the Six Sigma team needs to be established.

The ground rule enforcer is not a permanent position. It should be rotated from meeting to

meeting, where a team member will have for a given meeting the responsibility of noting

when a ground rule is being broken, whether it be a sidebar conversation or coming in late to the

meeting. It is still the responsibility of the entire team to deal with maladaptive behavior, which

in part is the focus of our next chapter.

Finding and Removing the Hidden Time Traps Finding Time Traps is not a matter for guesswork. You have to use data to identify the sources of

delays in a process. The key equation is captured in the First Law of Lean Six Sigma for Supply

Chain Acceleration:




You can find the derivation for this equation in Appendix 1; the key thing to remember is that you can

use data that is fairly simple to collect on a process step or workstation and determine if this

workstation is injecting long delay times into the process. These calculations can be performed easily

with a spreadsheet or specialized “supply chain accelerator” software, and the results tell you how

much delay time each workstation is injecting, and how much WIP and batch

size is really needed to satisfy customer demand. In this case, the company knows that the Press is the

Time Trap, so they then apply the appropriate Lean Six Sigma tool. The choice here is

obvious: it’s the long set-up time between parts that’s driving the operators to work in batches of

1000. To reduce set up time, they’d use the Four Step Rapid Setup method (described in detail in

Chapter 12).

This would allow them to reduce setup time by 90% with minor expenditure.

A faster set-up substantially reduces workstation turnover time. Using the First Law

equation, the operators know they can then reduce batch size from 1000 to 100 and

still meet the customer demand.

The delay time for the process drops from 28 hours to 2.8 hours…

Total WIP inventory drops from 2000 parts to 200 parts.

Naturally, this company wouldn’t stop once this station is improved.They’d then move on to

the next biggest Time Trap in some other part of the process, then the next largest one after than, and

so on, until they achieve a Cycle Efficiency of 25% or more. As discussed above, achieving this level

of efficiency means they can eliminate a lot of the non-value-add costs in Manufacturing Overhead

and Quality cost.

Conclusion: The cause of delay in a process is a Time Trap. You can’t just look for where

material piles up; rather, you must calculate how much time each workstation injects in a process

using the First Law of Lean Six Sigma.

Crucial Insight: Batch sizes must be calculated from Process Variables and the total

number of parts produced at a given workstation

The Press-to-Assembly operations reduced the process lead time from

28 hours to 2.8 hours by…

1. Finding the Time Trap

2. Applying the Lean Six Sigma improvement tool

3. Reducing the batch size

The last step is critical: If they had not reduced the batch size, the delay time would have been only

slightly improved and the WIP inventory would be nearly unchanged.

As the discussion above illustrated, batch size is related to the inflexibility: the more rapidly a

workstation can switch to producing a new part, the smaller the batch size required, and the quicker

the flow velocity. The inflexibility of most manufacturing processes has guaranteed that factories had

to produce in large batches to meet production demand. There’s more to the batch-size picture.

Traditionally batch sizes have been determined using formulas such as the EOQ formula or and those

found in MRP systems. The problem is that these formulas do not consider how many different parts

are produced at a workstation. Also, the batch sizes calculated from EOQ or most MRP systems are

wrong because they do not consider the flow to the customer. They are fixed and are never reduced.

This prevents improvement in the lead time and is a key contributor to the slow progress most

companies are making. Once you learn to appreciate the First Law of Lean Six Sigma, you understand that flow

velocity, batch size, and workstation turnover time are all intricately connected. Anything that affects

one of these factors affects the others. That means batch sizes should be determined based on process

variables—setup time, the processing time per unit, and most importantly the number of different

parts it produces, etc.—and should be changed as a process improves. Fortunately, modern

MRP/ERP/AP systems allow theses batch sizes to be externally input.(You’ll find more discussion of

batch sizes in Chapter 15.)




Velocity of any Process By reducing the WIP by 90%, we also reduced the overall delay time by 90%, yet still produced the

same number of products per hour. This follows Little’s Law, that states that

This is really just common sense. If I have 10 “things” to do on my desk, and it takes me an

average of 2 hours to complete each one, then I have a 20 hour lead time for any new task (unless an

expeditor interrupts me!).

In the Assembly described above, the materials traverse five workstations, and we can

calculate the number of workstations per hour that the product moves through, which describes the

velocity of the product through the process.

Third Law of Lean Six Sigma for Supply Chain Acceleration

Why do I say “things” in process? Because it doesn’t matter whether it is WIP in manufacturing or

Mortgage applications going down a chain of approvals; the velocity is inversely proportional to the

number of Things in process. This is of such importance it is referred to as the Third Law of Six

Sigma for Supply Chain Acceleration. Figure 3-7 shows schematically how remarkably velocity

increases as the number of “things” in process are reduced by improvement

methods as in the example above.




It should be noted that the Third Law equation represents average process performance; it can

tell you a lot about what is going on across a process consisting of several activities, but it can’t tell

you anything about a single activity, and hence cannot show the location of a time trap. For example,

in the Press example, the Third Law gives tells you the overall process velocity for the five

workstations, but if you applied it to just one workstation, it provides no information. As we’ve

already determine, the Assembly operates at a very slow velocity with lots of WIP backed up—but

this slow velocity is caused by the Press! But that slow velocity is meaningless; Assembly is not the

Time Trap.

Improvements at the Press are the only way to improve velocity. Nevertheless, the Third Law

provides a guide to understanding average velocities of processes which consist of many activities.

(Locating a Time Trap requires the detailed calculations of the First Law of Lean

Six Sigma discussed in Appendix 1 and in Part II.) Of course, instead of minimizing sources of delay,

you could adopt Henry Ford’s solution to a problem: have one Press for part A and a separate Press

for part B, etc. By having separate presses, Ford eliminated set up time and the resulting variation.

Since he never performed a setup, his batch size was infinite! Unfortunately, that only works when

you can produce vast quantities of a single product (like the Model T) to amortize the capital cost—

which, as history has shown, eventually failed when consumers started demanding variety in the

product. However, Ford accomplished so much in terms of showing the relationship between high

process cycle efficiency (>50% at the Rouge) and low cost that we must acknowledge his huge

contribution.

Knowing Who to Hit: the 80/20 Rule The achievements possible with Lean Six Sigma principles will have little impact if you apply

them to process steps that contribute little to delay time, costs, customer satisfaction, etc. As with




other improvement strategies, to get the most out of Lean Six Sigma methods, you have to know

where to focus your efforts, and how to determine priority order.

In many improvement methodologies, “focus” is largely a matter of making judgment calls

about what seems most important at the time. With Lean Six Sigma, focus jumps out at us because

of the Pareto Principle, which isn’t just a theory but rather an empirical observation supported by

years and years of data on actual factories: 80% percent. of lead time delay is caused by less than 20%

of the workstations (the Time Traps). We thus only have to find and improve 20% of the workstations

to effect an 80% reduction in lead time and greater than 99% on time delivery. This is always true of

processes in which the value add time is less than 5% of the total process lead time (i.e., have a

5% cycle efficiency).

The 80/20 rule is called the Second Law of Lean Six Sigma for Supply Chain

Acceleration, and it holds true whether the root cause of the delay is variation in times (arrival times,

service times), nonvalue- added delays such as machine downtime (or long set-up times, as seen in the

Press example above), or quality problems (scrap, rework).

Using a Value Stream Map to Find the 20% Waste In a Lean system, focus begins with a value stream map, which depicts all the process steps

(including rework) associated with turning a customer need into a delivered product or service, and

indicates how much value each of the steps add to the product. Any activity that

creates a form, feature or function of value to the customer is termed value-add; those that don’t are

called non-value-add. Value Stream Mapping provides a clear understanding of the current

process by:

__ Visualizing multiple process levels

__ Highlighting waste and its sources

__ Making “hidden” decision points apparent

With this knowledge, we can manage decision points, form a future Roadmap for

implementation, and identify opportunity areas. Value Stream Mapping also provides a

communication tool to stimulate ideas by capturing critical organization knowledge and identifying

locations for data gathering and process measurement. We have given many examples of non-value-add activities (the largest contributors to non-

value-add cost are Manufacturing Overhead and Quality Cost) and later in this book will create

classifications that are useful helping to determine what tools are needed to remove each type of waste

so cycle efficiency can increase from less than 5% to over 20%. The key insight is that a majority of non-value-add costs are in fact currently required to

move the product through the “molasses” flow. You can’t remove these costs until you remove the

underlying causes trying to do so will just create greater costs in the long run.

Creating a Value Stream Map A value stream map starts with a “pencil and paper” sketch of the process to understand the

flow of material and information needed to produce a product or service. (This sketch can be

supplemented with many flowcharting software tools.) The diagram gives a visual presentation of the

flow of a product from customer to supplier, and presents both the current state map and future state

vision.

This process only works if the Black Belt and his/her team are trained to define and solve these

problems:

What are the non-value-add steps (rework, move, count, etc.) that can be eliminated

What are the Time Traps in priority order

What improvement methods are required at each Time Trap

How much improvement is needed

The smaller batch size that can now be run

The shorter delay time at both the workstation and the whole process




Top Management Commitment The Need for Executive Engagement

Lean Six Sigma has the potential to rapidly increase intrinsic value in less than a year. But

this implicitly assumes that the criteria for success, defined by the Six Sigma culture, have been

achieved:

CEO and senior management engagement

Commitment of 1 to 3% of personnel full time to improvement projects

Infrastructure to prioritize, approve and track projects versus plan

Focus on return on investment of Lean Six Sigma

Failure is just the reverse…

CEO and top management not engaged

Commitment of part time resources, or significantly less than 1% of personnel full time

Black Belts are turned loose with no coaching or project prioritization

No infrastructure for project management or tracking vs. plan

Focus on cost of program, not returns or ROIC

Securing CEO/Executive Commitment Many people have looked for a holy grail of increasing share value, and attributed it to

leadership character, management vision, etc. Certainly the careers of Watson (IBM), Haggerty (TI),

Noyce (Intel), and Welch (GE), as well as Carnegie, Ford and Sloan all confirm the importance

of these leadership attributes.

A few years ago, however, a comparative study was made of 18 “visionary” companies that

were considered far superior to “non-visionary” companies in the same industry. In examining this

comparision, we were struck by an interesting insight: to the extent that public information was

available, superior performance was even better correlated to those firms who pursued a process of

management-led continuous improvement than to those with visionary leadership. Some non-

visionary companies actually outperformed their visionary counterparts when they focused on

continuous improvement (known by various names—Operational Excellence at Colgate-Palmolive;

Workout and then Six Sigma at GE; Value Based Six Sigma at ITT Industries). In each case, top

management was engaged, and had committed substantial resources to continuous improvement.

When a CEO shows passion and support, I have never seen Lean Six Sigma fail. If however,

the CEO does not show this passion, I have never seen it succeed. If he or she leaves the initiative up

to the divisions to decide to use Lean Six Sigma, it will generally fail to produce breakthrough results.

If he or she fails to enforce the commitment of full time Champion and Black Belt resources, it will

fail.

The CEO’s engagement is necessary for another reason: to make sure the benefits of Lean Six

Sigma impact the whole business. Isolated pockets of excellence cannot improve shareholder value,

and this is best illustrated by an example:

We were once engaged to improve a factory that produced industrial hand tools. The

company had a complicated product line of high volume, low volume and ultra low volume spare

parts. The products were shipped to a warehouse a hundred miles away, and from that point

sent to independent distributors upon demand. The factory made a lot of progress in reducing quality

defects, leadtime and inventory within the plant. For example, lead times of 80% of

the high volume products had been reduced from 4 months to less than 3 weeks. However, the

production “schedule” was generated from annual plan budgets and field sales forecasts, not actual

consumption by dealers, let alone ultimate customers. As much as 40% of production was not related

to immediate consumption, but was used to fill the warehouse to meet a forecast. (This external

scheduling process was really a historical response to a 4-month lead-time.) The result was that

a chaotic demand in terms of total volume and by SKU prevented the plant from eliminating the

Hidden Factory.




These problems can only be solved by Lean methods that reflect real consumption demand plus safety

stock on the factory production schedule. This requires an engaged CEO or Group president who has

the whole supply chain process within his purview, and who is leading the Lean Six Sigma initiative.

The problem, viewed from the shareholder’s perspective is that ROIC (= Profit After

Tax/Invested Capital) principally equates to value. The profit numerator is depressed by extra plant

cost, the lower gross profit due to lost sales, and the costs of maintaining a large warehouse. The

denominator is increased by the large inventory, the Plant Property and Equipment cost of the

Warehouse and the Factory. The combination means that only a small fraction of potential

shareholder value can be gained by “pockets of excellence” in just a portion of the supply chain.

This story has a happy ending. In the next implementation at that company, the entire billion-dollar

construction equipment division was the client, and the Group President was very much engaged. We

trained the President and his senior staff, obtained 25 full time resources who were given four weeks

of Black Belt training, and provided a few Increase of 92% and Labor Productivity Increase of 50%.

But of even greater importance was that the whole value stream was mapped, from supplier to

end user, and true demand and dealer inventory was placed on the line. Let’s look at the performance

of one division (see Figure 4-1).

Just look at the impact of on-time delivery on sales growth: Adding $21 million dollars to a

plant whose revenue had been $140 million would not have been accomplished without the

President’s engagement through the whole value stream. The ROIC was nearly doubled when the

incremental operating profit was added to the $7 million in labor productivity, and the invested capital

reduced by the inventory reduction. This occurred in a highly custom, low-volume business, far

different from the highly repetitive high volume Tier One auto supplier.

This is just the first testimony to the universality of Lean Six Sigma as a process improvement

tool. After working on the initial projects, the 25 trained Black Belts fanned out across the corporation

and were permanently assigned to continuous improvement projects. They were also actively involved

in operational due diligence for acquisitions. Remember, these two examples happened in the same

company, under the same CEO. The difference is that learning had taken place, and the need to

address quality and lead time issues across the whole value chain became manifestly evident.

Resource and Project Selection

Select projects and resources steps involved:

Select potential future leaders as Champions and Black Belts.

Create an NPV (net present value) mind set in Champions towards project selection.

Train Black Belts in both team leadership and Lean Six Sigma tools.

Six Sigma Organizational Architecture – Rewards and Recognition

Six Sigma is a quality methodology that can produce significant benefit to businesses and

organizations. Not much text, however, has been written about the structure needed to successfully

implement Six Sigma quality within your business or organization. The rewards and recognition

associated with a successful Six Sigma quality program.

Rewards and Recognition We all know that roles assignment is not enough to start and maintain a successful Six Sigma

quality program. Rewards and recognition must be part of the equation. So how do we reward the

different roles within the organization? Let’s start with the Green Belts and work our way back up the

organization.

Green Belts - Depending on the size of the project and the resulting benefits, gift certificates, cash

and stock options are all motivating factors. But don’t underestimate the motivating power of a public

congratulations in front of peers – it is many times even more effective than a monetary amount.




Depending on the progress of your program, you may want to tie their salary action to the results of

the project(s) they completed during the past year.

Black Belts and Master Black Belts - Their salary and bonus structure should be tied to the

number of projects and benefit of those projects to the business bottom line. Metrics including

productivity, loss reduction, improved quality, reduced overhead, etc. should all be factors in

determining the proper payout for performance. For under performing BBs and MBBs, the

performance appraisal meeting should serve as a fulcrum in modifying their behaviors and actions.

Process Owners - Here’s one of the key roles that needs to be defined properly. The Process

Owner’s compensation (salary and bonus) must be tied directly to quality efforts within their

organization. It’s not enough to allow quality to ‘work with us,’ but their metrics and efforts need to

be utilizing all of the quality tools appropriately. Why not make 25 percent of their bonus tied to

meeting their quality initiative goals and objectives? Then have them report on how they did before

you determine the bonus payout.

Quality Leader - Performance based compensation (salary and bonus). Leadership capabilities are

critical to this position, so not only should the quantitative aspects (savings, projects, training, etc.) be

measured, but so should the qualitative. The difficulty arises in defining and clearly identifying the

required behaviors.

CEO - The buck stops here. If the CEO is fully on board with the quality initiative, they will have no

problem tying the compensation of her/his direct reports to quality deliverables.

Do not be shy about asking to tie compensation to your Six Sigma quality initiative. It is the

only way you’ll truly have your entire organization focused around the customer and the quality of

your processes and deliverables.

The Advantages of Rewards In six sigma architecture, having a rewards and recognition policy

in place is equally important. In bringing about changes in the system smoothly, rewards and

recognition can play a very important role. If employees feel that their initiatives are being

recognized, they will come forward with suggestions for improvement.

If a person working on a particular process has some problems, and if they feel encouraged to make

suggestions, they will be interested in taking a change further. They would feel that the change is for

the better and that it will not be of any harm to their status in the organization.

If the person in question studies the process properly, comes up with a good idea and is

recognized for the effort, they will feel involved in the entire process and accept the new process

easily.

Rewards could be in the form of small gifts in front of colleagues or cash rewards to a certain

level. The other advantage of having a reward policy is that it will encourage others to participate in

the process as well.

However, it should not create a winner-and-loser scenario in the organization.

The Different Levels of Rewards

Certain achievements in the project or for a unique initiative. For Green Belts, depending

upon the size of the project and if it has been implemented perfectly, rewards such as gift certificates

or cash rewards can be very motivating.

Along with this, recognition of employees’ achievements in front of their peers is much more

effective than even a monetary amount. Efforts should be made to congratulate employees in team

meetings for the efforts that they make on a project.




Salaries and Bonuses for Black Belts For Black Belts and Master Black Belts, companies can tie their salary or bonus structure to

the various benefits that they have brought about from their various projects. Productivity, reduced

losses and improved quality can be factors to determine their rewards.

For one and all any reward, big or small, is motivating enough if handed over with

acknowledgement from management and colleagues. Even Quality leaders, Champions and CEOs

should be recognized for their efforts.

At the completion of the Six Sigma Project, having a luncheon celebration with all employees

will prove motivating to the team.

Six Sigma Team Involvement The involvement of team members and other employees in the planning and execution of a

program is very useful. To engage people in such efforts, a recognition program is in order. HR can

play a relevant role in this process. With the support of the HR department, teams can set up the

appropriate system for rewarding and recognizing their employees.

With their support, senior management can set up the structure for compensating or rewarding

employees with raises or bonuses. They can even help in developing a non-monetary reward system.

Reward and recognition is a very important and useful part of Six Sigma architecture. The

proper, careful and systematic use of the same can prove to be very motivating for the employees and

ultimately lead to success of the Six Sigma Project.

Selecting Lean Six Sigma Project

Lean Six Sigma is a powerful method for improving existing products, processes and

services. Six Sigma was developed by Motorola in 1987. Motorola’s Six Sigma yielded significant

financial results and became popular with many other companies, even though Six Sigma was

practiced without the benefit of the define, measure, analyze, improve and control (DMAIC) strategy,

Black Belts (BBs), or a defined project selection process.

In the mid-1990s, consultants introduced the method to Allied Signal and General Electric

(GE), tying improvement to bottom-line financial performance. GE and other organizations refined

the Six Sigma method and focused on identifying and selecting key projects, as well as adapting

operations-based Six Sigma to service and transactional processes.

One way to improve the deployment of lean Six Sigma is to improve how lean Six Sigma

projects are identified and selected. The typical approach to lean Six Sigma project identification and

selection is heavy on selection techniques but light on identification techniques. There are four

prerequisites to a well executed lean Six Sigma project identification and selection process.

Prerequisite One: Understand The Strategic Plan The first step in understanding how to identify and select lean Six Sigma projects is to ensure

you are completely familiar with your organization’s strategic plan. A typical strategic planning

process will involve the following steps:

Planning to plan: Create a roadmap to accomplish the strategic plan.

Values scan: Assess the interests of the stakeholders.

Mission formulation: Use the stakeholders’ input to formulate a mission statement.

Business modeling: Create a viable business model, including cultural considerations and

funding related to the restructuring or divestiture of existing business lines, as well as the

addition of new business lines.

Performance audit: Perform an assessment of the organization in terms of capabilities and

financial strength.

Gap analysis: Compare the current performance with the desired state to create a list of gaps.

Integrating action plans: Create and implement a detailed plan to accomplish the strategies of

the organization and close any gaps.




Contingency planning: Develop contingency plans to account for potential market changes,

competitive pressures and other scenarios that might affect the strategic plan and the

organization’s ability to execute it.

Implementation: Deploy the plan throughout the organization via cascaded goals, quantifiable

performance measures and clearly identified owners and timeframes.

As part of action planning, organizations should launch strategic thrusts to close perceived gaps.

Typically, strategic thrusts are initiatives with clear charters and budgets, led by senior executives and

involve clear accountability. Strategic thrusts might be broad or specific, depending on the perceived

gaps. Lean Six Sigma, Six Sigma, design for Six Sigma and their various permutations are all

strategic thrusts.

Prerequisite Two: Align, Improve Efforts with Strategy The second step is to understand how improvement activities should be aligned with the

action plans found in the strategic plan. As part of business modeling in the strategic planning step, an

analysis likely will have identified where the line of business (LOB) falls with respect to market

growth and competitive position. The intent is to determine an effective strategy for a particular LOB

based on the rate of market growth and the competitive position for the LOB.

For example, if a particular LOB has a strong competitive position in a fast growing market,

the management team for the LOB might emphasize product development over operations

improvement. On the other hand, a particular LOB with a weak competitive position in a slow market

might require extensive focus on improving the cost structure through lean Six Sigma. For other

scenarios, the im-provement strategy should be suited to the optimization of each specific LOB

relative to its strategic goals.

Prerequisite Three: Understand The Policy Deployment System The third step is to integrate the action plans into the policy deployment system. Policy

deployment is a general reference to goal based plans cascaded throughout the various levels of the

organization. Hoshin planning, management by objective and other terms are varied implementations

of policy deployment. Successful implementation of policy deployment involves:

Setting high-level goals, targets, timeframes and owners based on the action plans from the

strategic plan.

Setting functional and departmental goals, targets, timeframes and owners based on cascading

the high-level goals to the local level.

Integrating the local goals into performance plans for individuals and teams.

Doing regular performance re-views for high-level and local goal achievement.

Integrating performance to goals in the bonus structure for management.

Prerequisite Four: Understand Core Business Processes Every organization operates in some form as a system that converts inputs (transactions,

information or raw materials) into outputs desired by customers (a product or service). The

organization will attempt to define processes to create the desired outcome for customers and

ostensibly document those processes.

To clarify how to look at process performance for opportunities for improvement, the

following terms apply:

Level one (L1) process: A core business process that corresponds to a business function and

has accounting traceability.

Level two (L2) process: A subprocess of an L1 process that involves a distinctly related

sequence of process steps.

Work steps: A logical work unit of an L2 process that involves a sequence of work tasks and

is performed by a person or a small team.




Figure 1 shows an example of the use of the terms.

The typical approach to identifying opportunities for improvement is to first understand what

the key L1 processes are within the organization. Then the key L1 processes will be broken down so

key L2 processes can be identified. A typical lean Six Sigma project then will address a sequence of

work steps within one or more L2 processes.

Project Identification and Selection Process Champions, Master Black Belts (MBBs) and BBs can and should follow a structured method for

identifying, prioritizing and selecting lean Six Sigma projects. Initially, the responsibility of a

Champion in the project identification and selection process is to assist a trained MBB to execute the

following steps:

Review the strategic plan.

Understand the high-level goals and targets for the organization.

Compare desired performance with actual performance for the organization.

Understand the local or departmental goals and targets for all business functions.

Compare the desired performance with the actual performance for each business function.

Identify key L1 processes based on risk/return/goal analysis.

Understand key L2 processes based on risk/return/goal analysis.

Brainstorm all potential improvement opportunities.

Rank and prioritize all potential improvement opportunities based on risk/return/goals.

Communicate the results of the ranking activity and seek consensus.

Launch lean Six Sigma projects based on the priorities.

After becoming familiar with the process, the Champion is expected to lead these steps for the

organization on a regular basis.

Figure 1: Process Performance Decomposition Example


http://www.asq.org/img/qp/075606_figure1.gif





Champion’s Role Is Integral The role of a lean Six Sigma Cham-pion is varied and diverse depending on the size of the

organization and the scope of the lean Six Sigma deployment. The DMAIC method does not come

without the risk of failure, but it is a very successful and proven approach to solving problems and

optimizing process performance. The success of lean Six Sigma projects often hinges on the

Champion’s ability to resolve organizational issues and manage risks to the project, including:

Funding.

Time.

Staffing.

Customer relations.

Project size and complexity.

Overall structure.

External factors.

Dependencies among projects.

Most of these risks can be addressed—and possibly alleviated—by having a well-run project

identification process, communicating the priorities of the organization, communicating the potential

lean Six Sigma projects, and building consensus among the key stakeholders.

Champion responsibilities do not end after projects have been selected. The Champion is also

responsible for ensuring that each lean Six Sigma project has a solid plan, buy-in for the required

resources, and effective management. The Champion is also re-sponsible for running effective project

reviews at the end of each phase of the DMAIC process. Project reviews should not only look back at

preceding activities, but also look ahead for the successful execution of upcoming phases.

A well-trained MBB should assist the Champion before and during the project reviews. The

BB will be well versed in the technical tools, but it is the responsibility of the Champion to enable

sufficient resources and remove organizational roadblocks that might stall the project.

Lean Six Sigma Organizational Architecture Six Sigma is a quality methodology that can produce significant benefit to businesses and

organizations. Not much text, however, has been written about the structure needed to successfully

implement Six Sigma quality within your business or organization. This article will focus on roles and

responsibilities, as well as required rewards and recognition for a successful Six Sigma quality

program.

Roles and Responsibilities

Quality Leader/Manager (QL/QM) – The quality leader’s responsibility is to represent the

needs of the customer and to improve the operational effectiveness of the organization. The Quality

function is typically separated from the manufacturing or transactional processing functions in order

to maintain impartiality. The quality manager sits on the CEO/President’s staff, and has equal

authority to all other direct reports.

Master Black Belt (MBB) – Master Black Belts are typically assigned to a specific area or

function of a business or organization. It may be a functional area such as human resources or legal,

or process specific area such as billing or tube rolling. MBBs work with the owners of the process to

ensure that quality objectives and targets are set, plans are determined, progress is tracked, and

education is provided. In the best Six Sigma organizations, process owners and MBBs work very

closely and share information daily.




Process Owner (PO) – Process owners are exactly as the name sounds – they are the

responsible individuals for a specific process. For instance, in the legal department there is usually

one person in charge – maybe the VP of Legal – that’s the process owner. There may be a chief

marketing officer for your business – that’s the process owner for marketing. Depending on the size of

your business and core activities, you may have process owners at lower levels of your organizational

structure. If you are a credit card company with processes around billing, accounts receivable, audit,

billing fraud, etc., you wouldn’t just have the process owner be the chief financial officer, you would

want to go much deeper into the organization where the work is being accomplished and you can

make a big difference.

Black Belt (BB) – Black Belts are the heart and soul of the Six Sigma quality initiative. Their

main purpose is to lead quality projects and work full time until they are complete. Black Belts can

typically complete four to six projects per year with savings of approximately $230,000 per project.

Black Belts also coach Green Belts on their projects, and while coaching may seem innocuous, it can

require a significant amount of time and energy.

Green Belt (GB) – Green Belts are employees trained in Six Sigma who spend a portion of

their time completing projects, but maintain their regular work role and responsibilities. Depending on

their workload, they can spend anywhere from 10 percent to 50 percent of their time on their

project(s). As your Six Sigma quality program evolves, employees will begin to include the Six Sigma

methodology in their daily activities and it will no longer become a percentage of their time – it will

be the way their work is accomplished 100% of the time.




Six Sigma Deployment Planning

Anyone who has deployed Six Sigma, or has thought about deploying Six Sigma, is familiar with the

main stumbling blocks to a successful deployment – lack of senior leader support, lack of data,

longer-than-expected project cycle time, part-time Black Belt resources, and most important, poorly

defined projects. Since the first financial firm started deploying Six Sigma in 1996, quality

professionals still face the same common deployment challenges. Why? The answeris found in the

quality of the deployment planning process. To address these common issues in advance and mitigate

the risk of failure, deployment leaders, Champions and Master Black Belts should consider using two

key requirements of a good deployment planning process:

Six Sigma success equation

Readiness assessment for Six Sigma

Six Sigma Success Equation What is the Six Sigma success equation? Simply put, a successful Six Sigma deployment

requires the following components prior to the first wave of training – the right Belts, the right

projects and the right support system. Or, a variation of the formula

Y = f(x1, x2, x3):

Success = f (RBelts, RProjects, RSupport System)

1. The right Belts means all of them, from Yellow Belts up through Master Black Belts.

2. The right projects mean well-defined projects and should include a robust pipeline of projects

at a ratio of two projects per active Belt at any given time.

3. The right support means a complement of passionate Champions, involved senior leaders,

highly analytical and skilled data owners, excellent and available subject matter experts and

process owners, the right financial representatives, a robust financial management and

reporting system, an excellent human resources support system, good and available data, the

right metrics and validated measurement systems, and a good Six Sigma training vendor and

curriculum customized to the organization’s culture and needs.

These three critical x’s in the success equation drive the quality of a successful deployment.

Having the top quality in these areas, or best-in-class level, requires several key specifics to be

completed by the first day of training – Black Belts that are 100 percent dedicated, well-defined

projects in which their initial “cost of poor quality” is signed off by the finance department, and a

strong support infrastructure. Unfortunately, the common case deployment scenario is what many

organizations experience: Not all Black Belts have well-defined projects or are 100 percent dedicated,

the financial/customer benefits of projects are not easily identified, and the support system is too

weak. Fortunately, fewer organizations experience the worst case scenario: Poorly selected Black

Belts, poorly defined projects with little or no financial/customer benefits, almost no support system,

and attrition of Belts and Champions. What can assure the greatest chance for a company to have a

best-in-class scenario? The answer is the quality of the deployment planning.

Selecting the Right Belts Because Six Sigma is a project-based methodology, one deployment success factor is the

cycle time of Black Belt training projects. Now, what would be the best-in-class scenario in terms of

cycle time of Six Sigma projects? If a Black Belt starts a project the same day as starting DMAIC

training, then would it be perfect if at the end of the Control phase of the training, the project also

were at the Control phase? This represents a project completion time of four months.




While some firms achieve a best-in-class average of a four-month cycle time on training

projects, as shown in Figure 1, others spend more than three quarters – nine months – completing the

projects.

One of the most challenging and critical aspects of Six Sigma is selecting the best of the best

within the organization to be full-time Black Belts or part-time Green Belts. Successful Black Belts

are the kind of employees who overcome virtually all barriers to successful project completion – even

such basic problems as poor project selection, lack of Six Sigma infrastructure, poor Champion

support and lack of data. The process of selecting candidates for Black

Belt training must be thorough. It is important to allow enough time and devote enough effort

to the task. A company should start by looking for persons with a well-balanced set of leadership,

analytical and project management skills.

The process should include the following considerations:

Begin selecting the right Belts while building the pipeline of projects in order to match project

complexity with the skill sets and experience of Black Belts.

Transition the current responsibilities of Black Belt candidates to others in the company, so

that each Black Belt candidate is 100 percent dedicated to Six Sigma on the first day of

training. (See Figure 1.)

Selecting the Right Projects The selection process starts by defining and implementing a project pipeline strategy, followed by

several project selection workshops. A project pipeline strategy identifies items which are critical to

customers (CTCs) or critical to quality (CTQs). Next, CTCs are prioritized and Champions are

nominated and selected. Financial representatives, data owners and process owners are key players in

this process and should be nominated and trained at this point as well, since the prioritization process

often requires some data mining or process mapping. The end result is worthwhile as the cycle time of

the projects will be shortened. (See Figure 2.)

Project selection is a never-ending process in Six Sigma. It starts two or three months prior to

the first day of training, but has no end. Everyone in the company should be encouraged to suggest

project ideas. The success of the project selection process and project pipeline is measured by two

factors – the cycle time of projects and the number of projects per active

Belt that are in the pipeline.




Right Support System in Place

Even before building the project pipeline and simultaneously selecting the best of the best to

be Black Belt candidates, an organization must begin to develop an infrastructure to support its Six

Sigma deployment. This process can take anywhere from three to six months.

It begins with identifying a long- and short-term Six Sigma strategy for the organization. The strategy

underlines not only the goal, mission and vision of Six Sigma for the organization, but also the

required resources and the risks associated with a potential failure.

The support system must be comprised of the best Champions, subject matter experts,

financial representatives, human resources representatives, data owners and process owners within the

company. These key players must be trained prior to the Black Belts – usually a long process with

results that may be hard to measure immediately. However, a strong infrastructure will pay off in

supporting the project efforts. A well-understood financial system is needed to track, report, validate,

and book Six Sigma financial benefits holistically throughout the organization. Finally, the

organization’s human resources department needs policies and procedures to support the Six Sigma

deployment.

Lean Principles

The principles of Lean are pretty simple, whether you apply it to manufacturing, service, or

administration.

1. Determine value—what does the customer want? (Voice of the customer) Determining value, from

the customer’s point of view, can be a challenge for a number of reasons:

• Value is an effect of doing things right. The effects of improving speed, quality, and

cost leads to higher customer satisfaction, retention, and referrals. All of which lead

to growth and profitability.

• What has value in one situation may not have value in another. If I want a product or

service delivered on a Friday, it doesn’t matter to me if you can deliver it on any of

the weekdays before Friday. (I want it when I want it, not when you can deliver it.)

2. Use pull systems—to avoid overproduction. Big inventories of raw materials or finished goods hide.

problems and inefficiencies.




3. Institute one-piece flow—Make the work flow, so that there are no interruptions, wasted time, or

materials.

4. Level out the workload—(hejunka) to the rate of customer demand or pull.

5. Stop and fix problems—immediately to get quality right the first time.

6. Standardize—to support improvement.

7. Use visual controls—so that no problems remain hidden.

8. Use only reliable technology—that supports the people and the process.

9. Compete against perfection—not competitors.

Toyota worked with one supplier to reduce lead time by 46%, work-in-process (WIP)

inventory by 83%, finished goods inventory by 91%, overtime by 50% and increase productivity by

83%. (Source: The Toyota Way, Jeffrey Liker) Matsushita produces cell phones, fax machines, and

security cameras. In 2002 they had a loss of $3.7 billion; by March 2007 they’re expecting a profit of

$1.7 billion—an annual increase in profit of 23% on a 1% increase in sales. It was taking 60 hours for

a production run to deliver its first finished product (big batch sizes cause these delays). Using Lean,

Matsushita reduced the lead time to 40 minutes (99% of the time was delay; 1% production). It used

to take 3 days and multiple shifts to make 1500 phones; they now make 500 per shift. This has

reduced inventory costs because components spend one-third less time in the factory. An early Lean

change involved switching from production lines to work “cells.” They also right-sized their

machines. Faster robots on the assembly line were sitting idle waiting on slower robots. Matsushita

doubled up on slower robots to feed more quickly the faster ones and increase flow. Despite the faster

pace, defects are at an all time low. Matsushita serves 75 different markets and phones alone have

over 1500 design variations. With over 77 parts for each circuit board, change over from one cell

phone to another was taking too long. Matsushita designed a circuit board that needed far fewer

changes per model. As you can imagine, probably 80% of the parts were the same and 20% different.

If you can keep 80% of the board the same, it would reduce changeover time and costs. Matsushita

has seven plants worldwide producing 35 million products a year; so they test new production

concepts in the mother plant in Japan and replicate the changes in all of their other plants. Since no

two plants are of the same size or shape, it can take up to three months to adapt the changes to fit each

plant.

Lean Six Sigma Principles Learn the 5 Core Principles of Lean:

1) Specify value in the eyes of the customer

2) Identify value stream and eliminate waste

3) Make value flow at pull of the customer

4) Involve & empower employees

5) Continuously improve in pursuit of perfection

• Value - specify what creates value from the customer’s perspective.

• The value stream – identify all the steps along the process chain.

• Flow - make the value process flow.

• Pull - make only what is needed by the customer (short term response to the customer’s rate

of demand).

• Perfection - strive for perfection by continually attempting to produce exactly what the

customer wants.

Value

Any process that the customer would be prepared to pay for that adds value to the product.

The customer defines the value of product in a lean supply chain.




Value-adding activities transform the product closer to what the customer actually wants.

An activity that does not add value is considered to be waste

The Value Stream

• The value stream is the sequence of processes from raw material to the customer that create

value.

• The value stream can include the complete supply chain.

• Value stream mapping is an integral aspect of Lean.

Flow

• Using one piece flow by linking of all the activities and processes into the most efficient

combinations to maximize value-added content while minimizing waste.

• The waiting time of work in progress between processes is eliminated, hence adding value

more quickly.

Pull

• Pull = response to the customer’s rate of demand i.e. the actual customer demand that drives

the supply chain.

• Based on a supply chain view from downstream to upstream activities where nothing is

produced by the upstream supplier until the downstream customer signals a need.

Perfection

• The journey of continuous improvement.

• Producing exactly what the customer wants, exactly when, economically.

• Perfection is an aspiration, anything and everything is able to be improved.

Based on two philosophies: 1. Elimination of waste

2. Respect for people

Customer perceives value

Value Added Activity

An activity that changes the size, shape, fit, form, or function of material or

information (for the first time) to satisfy the customer.

Non-Value Added Activity

Those activities that consume time or resources, but do not add value in the eyes of

the customer.

Value Added

• Any activity or operation performed that helps transform a product or service from its raw state into

its finished form.

• Completed right the first time.

• Any activity customer is prepared to pay for. Activity required to ensure that a product or service is

delivered in conformance to specification.

Non-Value Added

• Any activity that doesn’t help to transform a product or service into its final form. Activity not

performed right. Activity customer not willing to pay for.

• This includes:

Unnecessary process steps

-work, corrections, etc.

times




Identify and reduce MUDA (Top 7 Wastes)

• Defects (repair, rework, scrap)

• Overproduction (inventory)

• Transportation (conveyance)

• Waiting (queue time)

• Inspection (reliance on mass inspection/ verification)

• Motion (parts, paper, people)

• Process, itself (over-processing, long cycles)




Lean Six Sigma – Value Stream Perspective

A value stream is all the actions (both value added and non-value added) currently required to

bring a product (or transaction) though the main flows essential for every product/ service: from raw

material/ (customer need), through all the required steps, then – back to the arms of the customer.

Taking a value stream perspective means working on the big picture, not just individual

processes, and improving the whole, not just optimizing the parts.




Why VSM?

To understand the current situation – The “big picture” point of view (To use as a tool to improve the

whole vs. optimizing the parts…)

• Exposes sources of waste - not just the waste • Shows linkage between information flow and

material flow

• Forms the blueprint to identify areas of Improvement. It helps visualize more than just the single-

process level, i.e. assembly, welding, etc., in production. You can see the whole flow.

• It helps to see more than waste. Mapping helps to see the sources of waste in your value stream.

• It provides a common language for talking about manufacturing (and transactional) processes.

• It makes decisions about the flow apparent, so you can discuss them. Otherwise, many details and

decisions in your area just happen by default.

• By adding data, it ties together lean concepts and six sigma techniques, which helps you avoid “pet

projects”.

Lean Six Sigma – Value Stream Map is an Essential Tool

It forms the basis of an implementation plan. By helping you design how the whole door-to-door flow

should operate - a missing piece in so many lean efforts - value stream maps become a blueprint for

improvement. Imagine trying to build a house without a blueprint!

• It shows the linkage between the information flow and the material flow. No other tool does this.

It enhances the quantitative tools and layout diagrams that produce a tally of non-value added steps,

lead time, distance traveled, the amount of inventory, and so on.

• Value stream mapping is a qualitative tool by which you describe in detail how your facility should

operate in order to create flow. Numbers are good for creating a sense of urgency or as before/ after

measures. Value stream mapping is good for describing what you are actually going to do to affect

those numbers.




Building Blocks of Lean Enterprise




Infrastructure Tools

Lean Manufacturing

Six Sigma

Total Quality Management

Business Process Re-engineering

Zero based Budgeting

Statistical Process Control

Quality Circles

Employee Empowerment

Methods and Standards

Institutionalizing Lean Six Sigma Introduction:

Lean Six Sigma can deliver increased operating margins and growth that will drive the intrinsic value

of the company. But the key to having the stock market recognize that value is to sustain the growth

in ROIC and revenue. And that means institutionalizing Lean Six Sigma so that the company can

continue to improve performance year in and year out. One of the biggest concerns heard is ―How

do we make sure that our people don’t think this new initiative is just the latest flavour of the month?‖

This telling comment reminds us that nearly every company will have tried to implement a change

program or two at some point in the past. In many cases, these programs faded away and the

initiatives became―flavours of the month. The experience tends to create an immunity in the

company to making change.

The approach that Caterpillar has taken is an example of an effective approach to

institutionalizing Lean Six Sigma. Caterpillar sees institutionalizing the process in four major phases:

Comply, Commit, Embed, and Encode.

-front process in which the executive team must be willing to make the

necessary investments and, to some degree, enforce their will on the company to give Lean Six Sigma

a try.

belief that all of this work is paying off, personally and

organizationally. This second stage in the process can come only as a response to seeing valuable

results from

Lean Six Sigma. That is why it is so critical to establish and publicize project successes as early as

possible and to reward those who established this success.

n Six Sigma must become embedded in everything the company does. The philosophy

must be embraced and the actions of the organization must reflect this. This includes ensuring that

Lean Six

Sigma is the process that drives improvement across the company, in manufacturing, in transactional

processes, in customer-facing processes, and in new product development. Embedding Lean Six

Sigma also includes driving the process beyond the four walls of the company into customers and

suppliers.

like to talk about making Lean Six Sigma part of the company DNA.

When Lean Six Sigma is in the DNA, you probably won’t even have to call it by name. It will just

become the way that the company thinks. Encoding takes time. Very few companies have made

Six Sigma part of the DNA in the company. GE and AlliedSignal (now part of Honeywell) are

probably the most notable.

Institutionalization

So, how can you lead an organization through these phases? Clearly, institutionalization will

take time and will meet with barriers along the way. I like to think about institutionalization in three

―steps, listed here in priority order:




A. Start the process on the right foot.

B. Build confidence that Lean Six Sigma is here to stay.

C. Extend and institutionalize Lean Six Sigma.

A. Start the Process on the Right Foot

If you don’t start off right, you put your company at a tremendous disadvantage and all of the effort

applied to the other elements of institutionalization will be diluted enormously. Here are three

essentials to starting off right:

1. Dedicate black belt and champion leadership positions full time. Deploying Lean Six Sigma

(especially in its infancy, the first one or two years) is not a part-time job—it requires highly

respected, highly talented, full-time leadership and management.

2. Select the best people for these roles. Employees will be watching closely to see if

management has the conviction to dedicate their best resources (who are most likely currently

in important roles).

3. Select the projects most important to the business. Utilize Net Present

4. Value justification; do not blindly manage to budget. If one dollar invested today returns two

dollars tomorrow, go to the P&L manager, get approval, and spend the dollar!

Each of these actions is an important test of up-front management conviction in the process. If

Lean Six Sigma is executed well, the rest of the organization will begin to believe.

B. Build Confidence That Lean Six Sigma Is Here to Stay

1. Leaders must articulate what Lean Six Sigma means clearly, simply, and frequently.

Communicate often, frankly, and with many different media to ensure key messages are

received by all potential audiences (both internally and externally):

2. Clearly and frequently communicate the need for the change. Why is change necessary and

urgent?

3. Clearly explain the need for change and the potential benefits (and risks) to those

constituencies that will be affected in the process of transition.

4. Describe what will change, how and when the changes will occur, and what individuals need

to do in order to succeed.

5. Involve employees in all aspects of transformational change.

6. Plan and enforce a focus on transactional processes. We recommend that at least 50% of all

improvement projects should be directed toward transactional processes. This will involve

many segments within an organization that might have been left out of improvement

processes in the past. This percentage may be high in manufacturing companies during the

first year, but manufacturing cycle efficiency can be improved to 25% only if the

transactional areas that surround manufacturing are streamlined.

7. Reinforce existing corporate values (e.g., integrity customer focus, teamwork) during

implementation. This reinforces that Lean Six Sigma is part of your existing value set, not

some independent short-term program.

C. Extend and Institutionalize Lean Six Sigma

As people in your company become more comfortable with Lean Six Sigma, look for ways to

extend its use:

1. Enforce a common language. Make terms such as DMAIC, metrics, dashboards Net Present

Value, Lean, variation, and cycle time part of your everyday language when discussing

existing operations or future improvements.

2. Integrate Lean Six Sigma plans with business plans. Ensure that Lean Six Sigma is

incorporated into existing strategic plans, operating plans, and budgets. In this way, Lean Six

Sigma projects will all directly align with existing business strategy and existing business

needs.




Planning for Each Business Unit Launch

Deployment isn’t finished until every business unit is using Lean Six Sigma. However, completion of

your deployment plans requires knowledge of the issues raised above and in all the intervening

chapters as well, such as

1. The resource and project selection processes.

2. Management team alignment and commitment to projects that get selected.

3. What it will take to develop a cadre of trained black belts and champions.

4. How to build toward true institutionalization.

It is important as well to exhibit management’s commitment to the program and to the

projects being undertaken, and to answer any questions or concerns that arise from the new course the

company is charting.

Additional training may be provided to team members and the management staff to broaden

the base of Lean Six Sigma knowledge and ensure alignment of individual perceptions with the

overall program goals.

The Executive Role

Everything starts with leadership, and leadership starts with the executive team. The

executives in your organization must lead the way. They must continually link their strategy’s

execution to Lean Six Sigma and continuous improvement; they must frame Lean Six Sigma

as―transformational change‖—something that requires hard work over the long haul, not a short-term

improvement effort. Lean Six Sigma should be presented as the way the business will be transformed

with large scale integration of fundamental changes throughout the organization—including

processes, culture, and customers— to achieve and sustain results.

The CEO and other leaders must also act in ways that support the importance of having the

best people fill black belt and champion positions. The experience of being a black belt or champion

provides a process view of the corporation that is a very valuable experience in the preparation of the

future leaders of the firm. For this reason, it is important that the black belts and champions be

selected with this in mind; hence they must be among the best and brightest. They will have an

experience of increasing operating profit, reducing lead times, etc., that will make Lean Six Sigma a

tool they will employ for life. If the next generation of P&L managers have this experience, the

institutionalization of the process and the sustainability of results are ensured. Thus the insistence of

the CEO on getting the best and brightest assigned as champions and black belts is the most

important aspect of institutionalization.

Emphasising the Ultimate Goal

One characteristic of successful Lean Six Sigma efforts is that the CEO and his or her P&L managers

think of Lean Six Sigma as a culture, a way of life, and ―the way us operate.‖ Lean Six Sigma is the

instrument of transformational change and, ultimately, all improvement efforts should fit under the

umbrella of Lean Six Sigma. In the nervous trials of rea1ity Lean Six Sigma should be looked on as a

resource that provides continuity of conception and organic development of strength and that can be

applied to solve any business problem. In summary:

Lean Six Sigma is a key enabler of corporate strategy.

Lean Six Sigma is driven by both business and customer needs.

Competitive pressures only increase with time, and Lean Six Sigma enables a competitive

advantage.

The ultimate goal is for Lean Six Sigma to become part of the ―warp and woof‖ of the

company. (In weaving, as you may know, ―warp‖ is the long threads that provide the structure and

―woof‖ is the crossing threads that provide design and colour.) You will know that you have reached

this goal when Lean Six Sigma is no longer referred to as a program. In fact, it may not even be

referred to by name. It will simply be the way that your organization solves problems and improves

processes, all the time.




5 S • The 5S‘s are simple but effective methods to organise the workplace.

• The methodology does however, go beyond this simple concept, and is concerned with

making orderly and standardized operations the norm, rather than the exception.

Posters bearing the 5S terms can be found on the walls of Japanese plants, and are a visual aid

to organisational management.

Seiri Sort

This requires the classifying of items into two categories, necessary and unnecessary, and

disregarding or removing the latter.

Seiton Straighten

Once Seiri has been carried out Seiton is implemented to classify by use, and arrange items to

minimise search time and effort. The items left should have a designated area, with specified

maximum levels of inventory for that area.

Seison Shine

Seison means cleaning the working environment. It can help in the spotting of potential

problems as well as reducing the risk of fire/injury by cleaning away the potential causes of accidents.

Seiketsu Systematise

Seiketsu means keeping one's person clean, by such means as wearing proper working

clothes, safety glasses, gloves and shoes, as well as maintaining a clean healthy working environment.

It can also be viewed as the continuation of the work carried out in Seiri, Seiton, and Seison.

Shitsuke Sustain

Shitsuke means self-discipline.

The 5 S‘s may be viewed as a philosophy, with employees following established and agreed

upon rules at each step. By the time they arrive at Shitsuke they will have developed the discipline to

follow the 5 S‘s in their daily work.


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