Profit thru Quality

6σ &Kaizen

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profit thru quality

KAIZEN-The Concept

Kaizen….means improvement Ongoing improvement Involves everyone

Both Managers & Workers

Kaizen Philosophy Our way of life need to be constantly improved

Working life, social life, home life

Kaizen embodies Productivity Improvement Total Quality Culture QC Circles Zero Defects …..etc.

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KAIZEN-The Concept

Masaki Imai

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KAIZEN-The Concept

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KAIZEN

INNOVATION

KAIZEN-The Concept

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Process Oriented Approach Leads to Improved Results

Focus on the process improvement without loosing sight of the expected results.

People Oriented Approach Focus on ….

Discipline Time Management Skill Development Participation and Involvement Morale Communication

KAIZEN-The Concept

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KAIZEN-The Practice

Management Group Individual

Tools Seven QC Tools

New Seven Tools

Professional Skills

Seven QC Tools

New Seven Tools

Common Sense

Seven QC Tools

Involves Managers and Professionals

QC Circles Everyone

Target Systems and Process Group Work area Individual work area

Implementation Cost

Small investment Mostly inexpensive Inexpensive

Results New System and Facility improvement

Improved work procedures

On the spot improvement

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Just In Time- Management Oriented Kaizen Exact number of required units brought to each successive stage

of production at the appropriate time The advantage of JIT

Shortened Lead Time Reduced time spent on non-process work Reduced inventory Better balance between processes Problem clarification

KAIZEN-The Practice

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Group Oriented Kaizen- SMALL GROUP ACTIVTIES Informal, voluntary small groups, organized within the company

Carry out specific improvement activities Many forms:-

QC circles, Suggestion Groups, Workers group……… QC Circles…the most famous

Emphasis on problem solving in the work area Advantages of QCC

Sense of teamwork Improved communication Improved morale Acquire new skills Labor-Management relationship improved

KAIZEN-The Practice

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Individual Oriented Kaizen- SUGGESTION SYSTEM Individual provides suggestion on how to improve his work area. Helps the individual to be Kaizen conscious. Also helps in….

Workers to speak out. Opportunity for management to help workers. An valuable opportunity for two way communication

Suggestions normally covers:- Savings in energy, material and other resources Improvement in working environment Improvements in machines, processes, jigs and tools Improvements in customer services

KAIZEN-The Practice

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KAIZEN- Implementation

Seven Conditions for Successful Implementation of Kaizen Strategy Top management commitment Top management commitment Top management commitment Setting up an organization dedicated to promote Kaizen Appointing the best available personnel to manage the Kaizen

process Conducting training and education Establishing a step-by-step process for Kaizen introduction.

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profit thru quality

Figure 2.2 Ideal pattern from innovation

Time

Figure 2.3 Actual pattern from innovation

Time

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INNOVATION plus KAIZEN

KAIZEN

KAIZEN

INNOVATION

INNOVATION

New Standard

New Standard

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KAIZEN and INNOVATION

KAIZEN INNOVATION1. Effect Long-term and business as

usualShort term and dramtic

2. Pace Small Steps Big Steps

3. Time frame Continuous and Incremental Intermittent and non-incremental

4. Change Gradual and constant Abrupt and volatile

5. Involvement Every-one Selected champions

6. Approach Collective group efforts, systems approach

Individual ideas and efforts

7. Mode Maintenance and Improvement Scrap and Rebuild

8. Effort Orientation People Technology

9. Practical Requirements Little investment but great efforts to maintain

Large investment but little effort to maintain

10. Advantage Works well in slow growth economy

Better suited in fast growth economy

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Another comparison of Innovation and KAIZEN

Innovation KAIZEN

Creativity

Individualism

Specialist-oriented

Attention to great leaps

Technology-oriented

Information: closed, proprietary

Functional (specialist) orientation

Seek new technology

Line + staff

Limited feedback

Adaptability

Teamwork (systems approach)

Generalist-oriented

Attention to details

people-oriented

Information: open, shared

Cross-functional orientation

Build on existing technology

Cross-functional organization

Comprehensive feedback

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profit thru quality

Six Sigma Was Developed at Motorola in the 1980’s As a Method to Improve Process Quality.

It Was First Used to Improve Manufacturing Process Capability and Then Migrated to Business Processes Capability

Companies That Have Deployed Six Sigma: Bank of America, Motorola, GE, IBM, Kodak and Many More

The Basic Premise Is, All Processes Have Variation. Variation Is the Enemy.

About Six Sigma

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Six Sigma Philosophy

Know What’s Importantto the Customer (CTQ)

Reduce Defects (DPMO)

Center Around Target (Mean)

Reduce Variation (Standard Deviation)

?

GE Company Proprietary

November 1998

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• Business Definition A break through strategy to significantly improve customer

satisfaction and shareholder value by reducing variability in every aspect of business.

• Technical Definition A statistical term signifying 3.4 defects per million opportunities.

SIX SIGMA-Definitions

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SIX SIGMA DEFINATIONS

If your yield is… Your DPMO is…. Your Sigma is…

30.9% 690 000 1σ

69.2% 308 000 2σ

93.3% 66 800 3σ

99.4% 6 210 4σ

99.98% 320 5σ

99.9997% 3.4 6σ

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SIX SIGMA-Definitions

In brief, Six Sigma is a process control method to improve the quality of products or services in a continuous manner.

This method uses six standard deviations of a normal distribution as the limits of customers’ acceptance of the system’s products.

This method is applicable to manufacturing as well as service industries.

With six sigmas, only 3.4 defects per million are allowed, or an acceptable level of 99.9997% is required

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Six Sigma Performance

With 99 % Quality With Six Sigma

Quality

For every 300000 letters delivered

3,000 misdeliveries 1 misdelivery

For every week of TV broadcasting per channel

1.68 hours of dead air 1.8 seconds of dead air

Out of every 500,000 computer restarts

4100 crashes Less than 2 crashes

Source: The Six Sigma Way by Peter Pande and Others

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Who is Implementing Six Sigma

At least 25% of the fortune 200 claim to have a serious six sigma program - Michael Hammer.

Financial - Bank of America, GE Capital, Electronics - Allied Signal, Samsung, Sony

Chemicals - Dupont, Dow Chemicals

Manufacturing - GE Plastics, Johnson and Johnson, Motorola, Nokia, Microsoft, Ford.

Airline - Singapore, Lufthansa, Bombardier

And hundreds of others in Americas, Europe, Sub Continent.

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Six Sigma Results

Company Annual Savings

General Electric $2.0+ billion

JP Morgan Chase *$1.5 billion (*since inception in 1998)

Motorola $ 16 billion (*since inception in 1980s)

Johnson & Johnson $500 million

Honeywell $600 million

Six Sigma Savings as % of revenue vary from 1.2 to 4.5 %

For $ 30 million/yr sales – Savings potential $ 360,000 to $ 1.35 million.

Investment: salary of in house experts, training, process redesign.

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Key Concepts of Six Sigma

At its core, Six Sigma revolves around a few key concepts. Critical to Quality: Attributes most important to the customer Defect: Failing to deliver what the customer wants Process Capability: What your process can deliver Variation: What the customer sees and feels Stable Operations: Ensuring consistent, predictable processes to

improve what the customer sees and feels Design for Six Sigma: Designing to meet customer needs and

process capability

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Dissecting Process Capability

Defects

Process Capability

Inadequate Design Margin

Inadequate Process

Capability

Unstable Parts & Materials

Defects Acceptable

Premise of 6 Sources of variation can be: Identified Quantified Eliminated or Controlled

LSL USL

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Define

Control

Improve Analyze

Measure

Define the problem and customerrequirements.

Measure defect rates and documentthe process in its current incarnation.

Analyze process data and determinethe capability of the process.

Improve the process and removedefect causes.

Control process performance andensure that defects do not recur.

“Common sense” doesn’t mean “commonly done” or when done, done well.

Six Sigma Methodology

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ControlControlDefineDefine MeasureMeasure AnalyzeAnalyze ImproveImprove

Establish standards to maintain process;

Design the controls, implement and monitor.

Evaluate financial impact of the project

Identify, evaluate and select projects for improvement

Set goalsForm

teams.

Collect data on size of the selected problem,

identify key customer requirements,

Determine key product and process characteristic.

Analyze data, establish and confirm the “ vital few “ determinants of the performance.

Validate hypothesis

Improvement strategy

Develop ideas to remove root causes

Design and carry out experiments,

Optimize the process.

Final solutions

Project Phases

Six Sigma Methodology

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Six Sigma – Case Study Service Organisation

Background

M/s Alpha Inc. manages out bound cargo from a distribution centre to different stores.

Deliveries made on trucks - owned and hired. Customers dissatisfied at delivery schedules. Leadership decision to deploy Six Sigma; Team of 1 Black Belt and 3 Green Belts formed Sponsor of the project – Distribution Manager

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Define - Critical to Quality (CTQ)

Focus on customers generating annual revenue of USD 400,000/-.

Customer needs Improved delivery performance

Level 1 CTQ Timely delivery

Level 2 CTQ On time delivery to schedule

Level 3 CTQ Delivery within +/- 1 hour of scheduled delivery time

Current process sigma level - 2.43 or 175889 DPMO

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Define - Goal Statement

Reduce number of delayed deliveries by 50 % by 31st December Y 2002 to better meet customer requirement of timely delivery defined as within +/- 1 hour of scheduled delivery.

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Define - Performance Standards

Output unit A scheduled delivery of freight

Output characteristic Timely delivery

Project Y measure Process starts when an order is received

Ends when goods are received & signed for at customers desk.

Process measurement – Deviation from scheduled delivery time in minutes.

Specification limits LSL = -60 minutes

USL= +60 minutes

Target Scheduled time or zero minutes deviation

Defect Delivery earlier or later than 1 hour.

No. of defect opportunities per unit

1 opportunity for a defect per scheduled delivery of freight.

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Define - SIPOC Diagram

Supplier Stores Manager

Input Stores Order

Process Steps (high level)

Receive order

Plan delivery

Dispatch Driver with goods

Deliver goods to stores

Receive delivery

Output Received freight with Documents

Customer Store Manager

• Detailed process maps drawn

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Measure and Analyze

Driver and Distance identified as key factors influencing delivery performance.

Driver selected for focus. Potential root causes as to why Driver influenced the

time: Size of the vehicle Type of engine Type of tyres Fuel capacity

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Experiments designed and conducted using truck type and tyre size.

Findings: Larger tyres took longer time at certain routes where area

was cramped and time lost in maneuvering. High incidence of tyre failures since tight turns led to stress

on tyres thus increasing number of flat tyres. Team modified planning of dispatch process by routing

smaller trucks at more restrictive areas.

Improve

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Test implementation. Process sigma level up from 2.43 or 175889 DPMO to 3.94

or 7353 DPMO. Performance still fell short of best in class 4.32 or 2400

DPMO. Improvement led to significant customer satisfaction. Process continually monitored and data on new cycle times,

tyre failure collected as per defined methods and frequency, analysed and monitored.

Customer satisfaction measured and monitored.

Control

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Key Lessons Learnt Define

Difficulty in identifying the right project and defining the scope;

Difficulty in applying statistical parameters to Voice of the Customers;

Trouble with setting the right goals; Measure

Inefficient data gathering; Lack of measures; Lack of speed in execution;

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Key Lessons Learnt Analyse

Challenge of identifying best practices Overuse of statistical tools/ under use of practical knowledge Challenge of developing hypotheses

Improve Challenge of developing ideas to remove root causes Difficulty of implementing solutions

Control Lack of follow up by Managers/ Process Owners Lack of continuous Voice of the Customer feedback Failure to institutionalize continuous improvement.

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Key Lessons Learnt

“ Define “ ranked most important step but gets the lowest resource allocation

Project scoping and its definition is critical to its success/ failure; “Measure” is considered most difficult step and also gets the highest

resources

Source: Greenwich Associates Study Y 2002

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Versatile Breakthrough improvements Financial results focus Process focus Structured & disciplined problem solving methodology using

scientific tools and techniques Customer centered Involvement of leadership is mandatory.

Training is mandatory;

Action learning (25% class room, 75 % application)

Creating a dedicated organisation for problem solving (85/50 Rule).

What Makes Six Sigma Different?

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Benefits of Six Sigma

Generates sustained success Sets performance goal for everyone Enhances value for customers; Accelerates rate of improvement; Promotes learning across boundaries; Executes strategic change

profit thru quality

profit thru quality

Six Sigma & Kaizen- The Difference

KAIZEN SIX SIGMA

Quality Improvement YES YES

Continuous Improvement YES YES

Approach Improve Existing System

Human Based

Improve Existing System

Statistical Method

Improvement Framework-DMAIC

Implementation Simpler and Low cost Difficult and High Cost

RELIES UPON GROUP DYNAMICS

FIXED PLAN OF IMPLEMENTATION

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Kaizen Six Sigma Japanese Origin Western Origin Culture Methodology (or Culture) Kaizen Umbrella Road Maps Continuous Improvement Immediate Perfection Mistakes as Possibility for Improvement Reducing Variation and

Defects Long-term Results Short-term

Results Possible Every Possible Improvement Prioritising

Projects Providing Quality Ensuring Profitability Participation of Every Single Employee Creation of Project

Teams

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