six sigma deployment

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ASQ Section 1508 St. Petersburg / Tampa DINNER MEETING Monday

Bringing a Stalled Six Sigma Initiative Back to Lifeby Peter Peterka

Tampa DINNER MEETING Monday, March 9, 2009

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To receive a copy of the presentation send an email to [email protected]

Objectives

• Give a brief history of the Six Sigma methodology• Provide a summary of the principles for

implementing Six Sigma in a business• How to restart a stalled or inactive initiative• Getting engagement from organizational leaders by

implementing Business Process Charting

2 SixSigma.us March 2009

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• 71% of projects fail each year• They take 84% more time than planned • They cost 56% more money than planned• They achieve 93% of what they set out to

deliver (falling to 67% on projects that are delayed or over budget)

Project Failure Stats


delayed or over budget)• 0.5% of project managers admit to working on

failed projects

Why should Six Sigma be any different?- Peter Peterka

Common Mistakes• Thinking the key to Six Sigma is Statistics, Statistics,

Statistics - NO! IT IS A MANAGEMENT SYSTEM !!!• Overemphasis on Cost Reduction • Failure to address improvement as part of the job• Ignoring team dynamics as a cause of project failures• Overreliance on the Black Belt, Six Sigma equals projects


• Not understanding common cause vs. special cause variation

• Failure to apply the concept of the customer internally• Recognizing management’s involvement not just

commitment• Ignoring the management of change

Change is never easy but not always bad….


An Overview of Six Sigma – Why?• Six Sigma is a business strategy and methodology• Six Sigma creates Breakthrough Performance• Six Sigma saves money• Six Sigma improves a company’s value in the eye of

their customer:– Reduced Cost


– Improved Delivery– Faster and more on target New Products

• Six Sigma applies to all organizations and processes

“The problems we face cannot be solved with the same thinking that created them.”

-Albert Einstein

An Overview of Six Sigma – What?

• Breakthrough Improvement• Systematic and Focused Approach• Right Projects• Right People• Right Project Management• Methodology for Sustaining The Gains


• Methodology for Sustaining The Gains• Right Results• Process Thinking• Right Place / Right Time from Walmart MBB

A History Lesson

• Infancy– In 1984 Motorola developed the concept of Six Sigma

performance– They had major issues in Manufacturing and

Assembly with the focus on defect reduction– There was a lot of training on great tools but limited

insight on application


insight on application– Texas Instruments, Kodak, others tried later to

implement

A History Lesson

• Adolescence– In the mid-1990’s AlliedSignal and GE popularized the

method– A variety of roadmaps are developed with varying

tools to apply for process improvement– The focus changed from defect reduction to ROI

S ff t t t d t d li ti t D i


– Some efforts started towards application to Design and Service functions, especially in GE

– Ford, DuPont, 3M, Dow Chemical are other follow-ons in these efforts

A History Lesson

• Young Adulthood– Focus begins to change to focus on application to

major financial contributors to the business, not just for operations or individual functions

– Defined roadmaps are developed for development of new product offerings and servicesGE focuses majority of it’s efforts on Non


– GE focuses majority of it’s efforts on Non-Manufacturing / Services, Financial services

– Bank of America, JPMorgan Chase, American Express enter into the game

A History Lesson

• Adulthood– Focus changes to value generation for the entire

business – a corporate initiative, not just a ‘quality thing’

– Roadmaps are defined separately for Development efforts (DFSS) and Process Improvement (DMAIC)Integration of Lean practices and tools becomes more


– Integration of Lean practices and tools becomes more widely visible

– Applications to government, military, health care, hotels, and other businesses continues to rise

Why ‘do’ Six Sigma?• It should be identified as a business strategy for improvement

and value generation• It’s focus is on providing breakthrough performance• It can aid in saving money• It can improve a company’s value in the eye of their customers

and shareholders through:– Reduced cost– Improved delivery performance


Improved delivery performance– Reduced warranty claims and costs– Improved and on-target new offerings (products and

services)• The application to all processes in all organizations

Transforming Business Decisions

Issues Methods used to solve problems

1. Simple, non critical, easily reversed

2. Following trends, minor changes in processes, could be reversed if necessary

3. Differences between groups, major process h h diffi l

Feelings

Simple Problem Solving Tools

Process Analysis


changes, changes difficult to reverse

4. Major process changes or large capital expense, changes nearly impossible to reverse

Complex analysisDOE, Regression

Process AnalysisTools & Methodology

Change the methods used to make decisions from feelings to the use of data

The DMAIC Methodology

Define

Measure How are we doing?

What is important?


Analyze

Improve

Control How do we guarantee performance?

What needs to be done?

What is wrong?

Tools in the Funneling of X’sY = f (X1 X2 X3 X4 X5 X6 X7…Xn) Project Y

Process MapC&E Matrix

MSA

PM identifies process And potential savings

C&E prioritizes inputs

MSA on X’s assures can be controlled

Project Charter

Process Maps

Define

Measure

Analyze


Control PlansSPC

The Roadmap “funnels” down the Xs from the trivial many to a “vital few” - the Red Xs

Y = f (X5 , X22, X37)

DOE

Multi-VariFMEA FMEA reduces variation and

effects for “inputs gone wrong”

Multi-Vari identifies Noise variables and reduces the X’s for DOE

DOEs identify the Critical Xs and their relationship to the Y

Improve

ControlDevelop controls for Critical Xs to

maintain performance of the Y

Financial Control Model

12 Month Financial Control Period12 Month Financial Control Period2211 33 44 55 66 77 88 99 1010 1111 12124 4 -- 66332211 11 22 33 44 55 6611 22 33 4 4 -- 66 77 88 99 1010 1111 1212

?

Implement Implement ImprovementsImprovements


2 Month Financial Review

6 Month6 MonthFinancialFinancial

ReviewReview

Report Quick WinsReport Quick Wins

12 Month Financial Review12 Month Financial Review

Key Lessons for Leaders

First…1. A compelling reason for change must be articulated2. Leadership team must be trained, and must believe

that Lean Six Sigma is the solution, and drive projectsThen…

3. Select the best people to become Black Belts


p p4. Assign critical mass of Black Belts full time 5. Projects driven by strategy6. Institutionalize by transferring training and coaching

initiative from Consultant to internal organization

What is Crucial for Success?

• Demand for breakthrough improvement• A systematic and focused approach• Selection of the right projects• Training and holding accountable the right people• Management leadershipleadership for implementation of project

findings


• Project management to drive projects to completion• Controls and conformance for sustaining the gains• Driving for the right business results, financial or other• Acceptance of process thinking throughout the business

Six Sigma Success Factors• The bottom line focus and big dollar impact

– Encourages and maintains top management commitment• The emphasis on - and consistent use of - a unified and

quantitative approach to process improvement– The DMAIC methodology provides a common language so

that experiences and successes can be shared through the organizationC t th t d i i h ld b b d


– Creates awareness that decisions should be based on factual data

• The emphasis on understanding & satisfying customer needs– Creates focus on doing the right things right– Anecdotal information is replaced by factual data

• The combination of the right projects, the right people and the right tools– Careful selection of projects and people combined with

hands on training in using statistical tools in real projects

Deployment Principles That Always Work – Critical Success Factors

1. A Sense of Urgency for change must exist2.Strategically align and connect business metrics and Lean Six

Sigma metrics3.Senior organization leaders must be engaged in the process

Line organization owns resources & are accountable for project resultsLean Six Sigma should be integrated into the daily management


Lean Six Sigma should be integrated into the daily management practices of the organization

4.Business Leaders own resources & are accountable for project results

5.A strong and respected Command Deployment Champion should report to Senior Leadership

6.Deploy critical mass of key full-time resources (Black Belts, Deployment Directors)

Deployment Principles That Always Work – Critical Success Factors

7. Resources should be selected from “future leaders of the organization”

8. Establish a consistent process for Project Identification and Selection

9. Actively manage Projects-in-Process to reduce/control project lead times

Use Rapid Improvement Events for quick-hit projects


Use Rapid Improvement Events for quick-hit projects10.Track results rigorously: Lean Six Sigma results should “pay as

you go” and be confirmed by objective parties11.Black Belts/Green Belts must have team leadership skills12.Integrate with other initiatives where applicable

TWENTY KEY LESSONS LEARNED

1. The time is right.2. The enthusiastic commitment of top management is

critical.3. Develop an infrastructure.4. Commit top people.5 Invest in relevant hands-on training


Gerald J. Hahn, “20 Key Lessons Learned,” Six Sigma Forum Magazine, May 2002, pages 28-34.

5. Invest in relevant hands-on training.6. Select initial projects to build credibility quickly.7. Make it all pervasive, and involve everybody.8. Emphasize DFSS.9. Don’t forget design for reliability.10.Focus on the entire system.

TWENTY KEY LESSONS LEARNED

11.Emphasize customer CTQs (critical to quality).12. Include commercial quality improvement.13.Recognize all savings.14.Customize to meet business needs.15.Consider the variability as well as the mean.16.Plan to get the right data.


Gerald J. Hahn, “20 Key Lessons Learned,” Six Sigma Forum Magazine, May 2002, pages 28-34.

g g17.Beware of dogmatism.18.Avoid nonessential bureaucracy.19.Keep the tool box vital.20.Expect Six Sigma to become a more silent partner.

Secretariat 1973 Belmont Stakes "The Photo"


Business Process Charting

• A graphical and numerical analysis method for any type of business process data used for insight into understanding and improvement of business results.

• Based upon Statistical Thinking Theory


• Directed toward identifying opportunities for improving business results

• A way to engage business leaders!

Peter Peterka

Key Elements of Business Process Charts

1. Business Metric number with operational definition

2. Process Owner Labeled on Chart3. Business Data Plotted over time often monthly4. Business Goal Marker


5. Statistical Based Limits often based on Individual and Moving Range to start

Peter Peterka

Key Elements of Business Process Chart

Metric 1.42

1. Name and number of Business Metric:

2. Process Owner

5. Statistical Limits


3. Business Data Plot Overview time often monthly

4. Business Goal

How to: Determine the Proper Metrics

• Actual Process Map of Business Process• Cause and Effect Matrix approach relating metrics

to business goals• Affinity Brainstorming of Metrics• Have each business leader give their 10 “sweat”

t i


metrics• Traditional Financial Measures• Customer Measures• Indicators or Predictors of Performance (Xs)

Peter Peterka

Determine the Operational Definition for the Metric

• Definitions that will be interpreted the same way by different people in different situations.

• Same method of calculation• Same method of counting


Example of Business Measures:

• Customer Complaints

• Economic Profit• Order Fulfillment• Product Availability• Customer Credits

• % Waste• $$ Waste• Raw Material Costs• Cycle Time• Inventory Turns


Customer Credits• Inventory Levels• Delivery Costs• Number of New

Products/Sales $$• Safety

• Premium Freight• IMC Index• DSO• Market Share

All Great Six Sigma Projects!!

Metrics for Six Sigma Implementation

• Percent Projects Completed• Savings from Projects• Percent Projects in Company Database• Percent Course Attendance• Consultant work days


• Consultant work days• Instructor Scores• Percent Courses with Correct Material• Six Sigma Billing Errors

The Current Method of Business Analysis

• Summarize business results with a table of numbers.

• Compare to last period, same period last year or goal.

• React to big percent changes; ignore small percent


changes.• Focus attention on those portions that are getting

worse.

Three Methods of Analysis

The Goal Approach– Current values are judged to be either

acceptable or not based on comparison with the goal, target, budget limit, etc.

– Alternate between “doing okay” and “in trouble”

“ ”


• When “doing okay” ignore it• When “in trouble” take action• On-again, off-again approach is the complete

antithesis of continual improvement.• Goals are useful as a means to improvement,

but when they become the end, to the degree of disrupting improvement, they are a problem!


The Average Approach– Compare actual results to average results– Above vs. Below average is not a meaningful

“break point” in performance– Below average months are inevitable– Creates internal comparisons that may not be


Creates internal comparisons that may not be either fair or helpful

– Other variations on this approach include:• Best/worst result (there will always be one!)• Best/worst result in X months


The Business Process Chart Approach– Results are judged first on whether they

represent a real change in the underlying process (special cause) or not (common cause)The capability of the business process is


– The capability of the business process is compared to any goals, targets, etc.

“To Measure or Not to Measure”

Raw Monthly Number: $, Total, %Aggregate NumbersPercent to Sales or Similar Business RatioMix of Monthly and Year to DatePercent Change


g% Change vs. Same Month Last YearYear to Date Percent IncreaseTake Care with Accounting Accruals/Adjustments

Benefits of Business Process Charting

• Improve Business Results• Make better predictions, improve credibility• Detecting real trends not “phantom”• Learn more about processes• Ask more helpful questions


p q• Identify chronic opportunities for Six Sigma• Engage Champions more in Six Sigma

Statistical Thinking is ....

• A philosophy of learning and action based on the following fundamental principles:– All work occurs in a system of interconnected

processes,– Variation exists in all processes, and


– Understanding and reducing variation are keys to success.

• A Way of Thinking

Benefits of Statistical Thinking

• Strengthens the connection between improving the business and improving the business process

• Improve predictability and credibility• Defines the appropriate direction for action• Focuses scarce resources on the right issues

L f t b t


• Learn faster about processes• Engaging Champions more in Six Sigma

What Action is Appropriate?

Impo

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Last Period This Period

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It Depends!

What is happening to me? What happened to me?


Common-Cause and Special-Cause Variation

• From Common Causes– Systemic, Chronic, Built-in Variation

• From Special Causes– Sporadic, Exceptional, Atypical Variation


Sporadic, Exceptional, Atypical Variation

The Special and Common Cause Spectrum

MassiveSpecialCause

CommonCauses

Only

The Real World


Cause Only

It is important to know, at any point in time, which type of variation is dominant.

Appropriate Type of Action

• If special causes dominant– Isolate and address the special cause(s)– Don’t over-fix

• If common causes dominant– Make a permanent change to the


p gsystem

– Don’t tamper after at each data point

Business Metric with Special Cause

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Business Data versus Manufacturing Data

Business Manufacturingvsvsvsvsvs

FrequentOften monthly

Trends often desired

Often individual values

Lack operational definitions

By the hour or shiftNo trends desired

Individual and subgroups

Often clearly defined

Collected infrequently


Peter Peterka

vsvsvsvs

More difficult to experimentEasy to obtain measurement error

Lack operational definitionsDifficult to quantify error

Often time correlated data

Often clearly defined

Easy to experimentData can be corrected correlation

Becoming an “Statistical Thinker”

• Be able to explain to others the meaning of performance within the process limits

• Use data to understand the future rather than explain the past

• Get results by improving the process• Use thinking always with data

L h t l i th b f d t i it ti th t


• Learn how to apply in the absence of data in situations that call for judgment

• Control Chart your data• Avoid two point comparisons• Require and teach others to employ

Determine Business Goals

Obtain 24 Month History

Leadership 2 Day Statistical Thinking Workshop

Business Leaders Meet Quarterly to Select Improvement Projects Identified on

Roadmap to Implement Business Process Charts


Determine Key Business Metrics

Refine Operational Definitions

Thinking Workshop – Refine Metrics and Drill Downs

Process Owners with Improvement Specialists support establish initial limits

”Chronic” Common Cause Opportunities

Continue to Monitor Business Metrics in Chart Form – Make Sure to Identify Special Causes

Peter Peterka

Closing Thoughts

“Being committed to the truth is far more powerful than any technique”

Peter Senge

“The most important figures that one needs in management are unknown or unknowable, but successful management must nevertheless take account of them”.


Dr. W. Edwards Deming

“If we know how to manage with data, then we can learn how better to manage without data”

Heero Hacquebord

Contact Information

• Instructor Information– Phone:– Preferred Email:

• SixSigma.us General Information– Phone: + 1 817-886-4950 – Preferred Email: [email protected]


@ g

• SixSigma.us– Peter Peterka– Phone: + 1 512-415-3697– Preferred Email: [email protected]

To receive a copy of the presentation send an email to [email protected]

Time to Drive Work


Traditional Economic Model of Quality of Conformance

Total cost


Cost due to nonconformance

Cost of quality assurance

“optimal level” of quality100%