resourceone.info Laws Lean Six Sigma For Service Pdf

LEAN SIX SIGMA FOR SERVICE PDF

Tuesday, June 11, 2019


PDF | On May 1, , Na Li and others published How to Use Lean Six Sigma to Improve Service Processes in Higher Education: A Case. Why Services Are Full of Waste—and Ripe for Lean Six Sigma The Strategic companies find it helpful to use a project definition form (PDF), similar. The business improvement methodology known as Lean Six Sigma is rooted . Benefits of Six Sigma in Service Organizations (Antony, Kumar.


Lean Six Sigma For Service Pdf

Author:JULIANA STUKOWSKI
Language:English, Spanish, Arabic
Country:Bahrain
Genre:Personal Growth
Pages:139
Published (Last):27.01.2016
ISBN:272-5-44572-757-8
ePub File Size:20.89 MB
PDF File Size:17.87 MB
Distribution:Free* [*Regsitration Required]
Downloads:43681
Uploaded by: KATI

Part I: Using Lean Six Sigma for Strategic Advantage in Service Applying Lean Six Sigma to Services – It's Not Just for Manufacturing. Sigma Quality To Improve Services And Transactions By Michael L. George [PDF EBOOK EPUB KINDLE]. Read Lean Six Sigma For Service. Products - through quantum gains in product/service quality, customer Measuring Business Excellence 6,4 , pp. .. [Abstract] [Full Text] [PDF]. 6.

Six Sigma project can be undertaken to create an error-proof mechanism or improve the detectability of the process. This is for reducing or mitigating the rework in all the operational processes. In other words, defect prevention should be the target of a Six Sigma project. Customer Complaints: If Six Sigma project aims at minimizing the reasons for a customer complaint, then business units will be able to reduce the cost of customer complaints to the organization.

Customer complaints can affect the bottom line drastically in cases; where the product or service has some critical faults. Moreover; complaints can lead to the loss of repeat business from an existing client.

Six Sigma project is also aimed towards improving customer satisfaction score for a process, product, or service. Improve Efficiency or Timeliness Six Sigma projects help improve the efficiency of the overall process. Moreover; improving the timelines in delivering the process output or improving the on-time delivery of products or service every time can be the focus areas for Six Sigma projects.

To improve timeliness, Six Sigma projects can be targeted towards reducing the number of machine setups or set-up hours in a manufacturing process, improving the productivity of production or assembly lines, fully or partially automating the process wherever manual intervention in the process or function is higher than required and so on.

According to the industry the company is operating in, the terminology of process pain areas may change. Before undertaking any Six Sigma project, it is important to quantify or define all aspects of efficiency or timeliness. The defect in a process or product should be studied with the help of data, facts, figures, and information.

DPMO is a probabilistic measure of error rate or capability of a business or manufacturing process. As DPMO increases, sigma-level of the process goes down and vice versa. It is a systematic way to measure process accuracy as it aims to prevent the occurrence of defects. According to the Six Sigma methodology, the process which is in a state of statistical control is the stable process. There are different types of control charts; according to the type of data under consideration. The compliance can be internal as well as external.

Improve Customer Service The image of the company is created in large part by its interaction with customers. Any company would want this interaction to be as stable as possible. The reason being disappointed customers are vocal critics.

Six Sigma projects can help identify the number of variations customers are experiencing, what is driving that variation, and ultimately, how the number of dissatisfied customers can be minimized. Six Sigma projects can be undertaken for fully knowing customers and not just their issues or concerns. It had no setup time, no scrap, no downtime—each of which create delay in their own right and is a source of variation.

There, it was absolutely clear where the delay occurred, why it caused the Time Trap and where the company needed to apply DMAIC improvement activities to reduce variation. The obvious question is whether these same principles apply to processes that are more complex, and can you find Time Traps by intuition or looking at the plant as some claim they can?

Pop Quiz: So… how would you identify the Time Traps in your processes? Take a look at Figure In this process, the value-add-time per part is a few minutes, yet the total lead time of the process, including queue time, is 28 hours.

The low process cycle efficiency is a tip-off that this process has a lot of waste in it. Do you agree? Where Are the Time Traps? Where the Inventory Stacks Up? Most people would intuitively guess that Assembly is the Time Trap. The assembly station is not the real time trap. How do we know? Like all Lean Six Sigma efforts, we replace intuition with data and calculation. The press molds four different parts, A, B, C, and D, by cutting and stamping a roll of steel.

After a part is pressed out, it drops into a cleaning tank for about 30 seconds. The part is moved to a Prep station where it spends 30 seconds being prepared for paint… 4.

Using this process data we quickly see that the value-add time is just 4 minutes and 45 seconds—but the process lead time is 28 hours. The Press operators perform a setup by changing the dies and making adjustments, all of which takes 4 hours. Because of the long setup time, these operators cannot just press out one part A, perform another setup, and press part B—because then the production rate will be one part every four hours, and the demand is for 17 of ABCD per hour.

So instead, after a setup is complete, the operators press out a batch of of Part A at the rate of per hour, which takes 10 hours. They then perform another four hour setup, and press out a batch of Part B which takes another 10 hours, then C, then D. They are then ready to begin a setup for Part A and start the cycle again. The time taken for this cycle—called the Workstation Turnover Time in analogy to inventory turns —is 56 hours see Figure Timing Diagram Shows Inflexibility The hour workstation turnover time for the Press is a reflection of its inflexibility.

The WIP inventory of Part A is nearly after the batch is complete, and falls to near zero before the next batch of A is completed.

On average, therefore, there are about of each part in process at any one time, consumed at the rate of 17 per hour. Similarly, on average, there are about 28 hours of delay between the time a part is built and the time it flows out of Assembly. So where is the Time Trap in this process? You have to use data to identify the sources of delays in a process. Workstation Turnover Time Delay Time 2 Batch Size min u Customer Demand Rate 2 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.

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: 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. The cause of delay in a process is a Time Trap. 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.

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 inflexibility of most manufacturing processes has guaranteed that factories had to produce in large batches to meet production demand.

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.

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. 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.

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.

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.

Knowing Who to Hit: 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. Value Stream Mapping provides a clear understanding of the current process by: 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. 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. In addition to customer value add, the business may require you to perform some functions which add no value from the customers perspective.

Recognize that these costs are really non-value-add but you are currently forced to perform them. You need to try to eliminate or at least reduce their cost. Will the faster lead time and lower costs fill up existing facilities? This captures the operational value of higher cycle efficiency, but not the elimination of the Cost of Poor Quality.

In an improvement project, Non-Value-Add tasks typically make up the majority of the time spent on any given task and are thus attacked first. Here is an overview of the creation of a value stream map 1. Select a value stream product family, etc whose improvement will create the greatest impact on operating profit.

Lean Manufacturing and Six Sigma Definitions

Create a process map or download the MRP router information on that value stream. Input the MRP data into a spreadsheet or supply chain acceleration software to identify Time Traps details are in Appendix 1 and Chapter 9. Most teams will be surprised to find more non-value-add steps in the process than value add compare Figure , which includes non-value work, to Figure The team does a sanity check on MRP data such as setup times, etc.

Finding the Time Traps: The data is input into a spreadsheet or supply chain acceleration software. The Time Traps are then sorted on a spreadsheet or displayed in a bar graph. Figure shows the bar graph discussed in Chapter 1 for the Tier 1 auto supplier, which was the output from this step. The delay time at each Time Trap is calculated, and a recommendation for application of Lean Six Sigma tools is recommended. The Black Belt can input how much improvement can be effected, and the spreadsheet or software will recalculate the delay time.

Implementation of the improvement activities to address the Time Traps in priority order. You will also have a prioritized list of Lean Six Sigma targets and a means of eliminating the causes of delay. In other words, just a few quality problems can add an extraordinary amount of time to a process. As noted, most people are amazed that the non-value steps outnumber the value add steps!

As an aside, experience shows that the people who work on non-value- add activities are in fact a vital resource that should be redeployed to value-add opportunities in manufacturing, engineering, marketing and to staff the Lean Six Sigma effort. I have observed that rework is often performed by the most talented of workers; expediting is performed by people of the highest initiative.

We generally suggest that the improvement process not be a cause of any reductions of associated personnel, but that these highly talented people be reassigned. Any reductions should be to the company at large in response to inadequate shareholder returns, volume reductions, or lack of revenue growth. The Major Lean Improvement Tools While Value Stream Mapping is the key Measure tool of Lean, other methods and their associated tools are needed to achieve the full potential of improved speed.

Details of these tools are in Chapters 11 and 12; here are three of the most important: As discussed earlier in this chapter, process velocity and lead time are absolutely determined by the amount of the Work In Process. The Lean tool that accomplishes this goal is the Pull system, which puts a cap on WIP and thus keeps process lead time below a maximum level.

The setup time is defined as the interval between the last good part of one run of part numbers and the first good part of the next part number. Total Productive Maintenance can virtually eliminate the unscheduled portion of downtime, and management initiatives can attack scheduled downtime. When a machine is running at near capacity, variation in the arrival of parts or machine processing times similar to the hotel check-in example can increase queue times by 10 to 20 times.

Just look at the Figure By providing some backup capacity they reduced the comparable wait time to 7 minutes. While hotel guests complain and get results, WIP just sits their silently soaking up costs. By increasing the uptime of any workstation machine, clerk, etc. As Figure shows, this eliminates most of the queue time caused by variation.

High Variation Contributes To Longer Wait Times For those of you who like equations, the steep rise of the high variation curve can be predicted from the wait time equation: Any variation in supply or demand can drive the wait time goes to infinity The Hollywood Freeway A lot of Lean was developed in manufacturing principally because the data existed to examine process performance, and a lot of clever people had the power to change things. Have you ever been driving at 70 miles an hour on a freeway, and suddenly had to come to a complete stop?

It is just a matter of the freeway operating so close to capacity that any fluctuation will drive the wait time up the curve in Fig to infinity i. Lean Six Sigma gives you the tools to attack delay time in any application. The problem that most firms have is in implementation. They perform training, conduct some isolated improvement efforts, but in the end make little measurable impact on overall lead time or cost as we saw in the Preface. Lean Six Sigma provides an unambiguous road map to implementation by prioritizing Time Traps and applying improvement methods in that order.

Eliminating the causes of wasted time allows a process to improve cost, quality and responsiveness, characteristics that are critical to customers and shareholders. The speed and responsiveness of Lean can allow a company to increase revenue growth beyond its slower competitors. Finally, Lean methods apply to virtually all processes, from product development to order fulfillment. The increasing process speeds of Lean also enhance the power of Six Sigma tools such as Design of Experiment.

The next chapter will show how to bring Lean and Six Sigma together to create a powerful engine for value creation. Epilogue on Ford I began this chapter with a few quotations from Henry Ford.

It may seem that this chapter is a complete refutation of his methods. I suspect the culprit was hubris: Nevertheless, we must remember that when the President of Ford visited Toyota in and asked how they had developed their system, his Japanese hosts graciously replied: The actual calculation only counts value-add down the longest router, and subtracts process delays from heat treat, burn in etc.

The Value Proposition discussed in Chapter 1 is compelling: Implementation of Lean Six Sigma revolves around four major phases, each of which will be discussed in greater detail in Part II of this book.

Here is a quick overview: Initiation — Getting off to the critical good start. This involves… a. Creating the future vision and organizational infrastructure c. Select projects and resources a. Select potential future leaders as Champions and Black Belts b.

Create an NPV mindset in Champions towards project selection c. Implementing, Sustaining, Evolving a. Providing expert coaching on initial projects b.

Building Lean Six Sigma into everything the company does and building the capability for Lean Six Sigma to remain an ongoing focus of the company This process wraps the best of Lean value-based project selection, cycle time efficiency around a Six Sigma infrastructure and sets the roadmap for the long-term which overcomes hesitation and creates a sense of initiative in the organization.

But the most important element is something that neither method can promise: Fortunately, getting executives involved in implementation is relatively easy since the Lean Six Sigma tool set includes ways for linking potential projects to shareholder value creation.

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: In examining this comparison, we were struck by an interesting insight: In each case, top management was engaged, and had committed substantial resources to continuous improvement.

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. 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, lead- time and inventory within the plant.

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 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. 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. 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.

Just look at the impact of on-time delivery on sales growth: 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. I will give you a couple examples of what works in the words of several CEOs: So be clear. Yes, 6 Sigma is a continuous improvement strategy and discipline that provides specific methods to recreate our business processes so that defects never appear in the first place.

But even more important than that, it is a cultural change to enable all of us to achieve the highest quality products and services for our customers, investors and employees. And be consistent. For 6 Sigma you must operate as a team to ensure we get the global cultural change required. You must work together as a team with the same voice, the same methodology and the same metrics. We have the 6 Sigma recipe. You adapt that recipe to the local taste of your business unit.

We work together or fail apart. Quality is my passion. The process is proven. They failed for lack of will. I can assure you that will not happen at Caterpillar. I am committed. I have placed myself as the owner of the 6 Sigma critical success factor and have listed it as corporate critical success factor number one. I fully expect your undying enthusiasm and commitment. Good luck, and thanks in advance for the leadership you will provide the enterprise.

I know that it works. I know that it makes a difference in the organizations, and I know that it will continue to make a difference in our performance. One of the things we had noticed in our analysis was that while some people get a conglomerate discount, there are others like GE who get a conglomerate premium. And guess what? We went out and told the world that this is what we wanted to do.

We set what we considered to be significant, aggressive targets for ourselves. Even though we had set high targets, we also recognized that those were just interim targets.

We had to do a lot better.

Based upon my experience, I knew that the continuous improvement process would be important. It was the best way I knew of to change the way we did business. We were doing a lot of it in different parts of the company. We left it up to each company manager, each company president, to figure out how much effort and energy they put into this. There were a lot of different things being done, a lot of good work being done, but the results were spotty.

So we decided that something else needed to be done, and I brought everybody together and asked how are we going to do this? Should we have a corporate-wide program? Do we know enough to do it ourselves? Should I leave it up to each management company, to go out and figure out what to do? I knew if that happened everybody would pick some different solution that they liked. We wanted to be able to track what we were going to do, and that winds up in the software support tools.

We wanted to have Six Sigma tools. That was clear. Here again, based on our experience over the years, you can clean up a lot of processes, but what really makes change in a factory are some of the Lean tools — putting in a pull system, reducing batch sizes, significantly changing setup times. All of a sudden everything starts to flow. Those are the types of things that we saw over time that really made a difference in our factories, and so we said that has to be a part of this training.

He or she is providing the resources and infrastructure, and the personal leadership of the process. He visited China and commented on their Design of Experiment projects.

He lives the process and is passionate about the process because it is congruent with his goals. They should deliver presentations that show that Lean Six Sigma is integral to meeting their business plan objectives.

Clearly a CEO who is unacquainted with Lean Six Sigma will be wary of making such a commitment of his or her executive resources. Like any marriage, this step should not be taken for light or transient causes.

Winston Churchill once wrote that people who wish to initiate great projects are very ill advised to do so without the commitment of their Chief. His Prime Minister was a very hands-off manager, and was too weak to order the Army to coordinate his attack with the initial Naval barrage. The Army finally did attack six months after the Naval bombardment.

During the interval, the Turks had been prepared by their German allies, and a slaughter ensued. Churchill was blamed, losing his great office in , and apparently ending his career forever. Part II of this book is titled Implementation, and includes an entire chapter describing preparation for the Transforming event and another for creating the infrastructure for change. This may seem an inordinate amount of detail, but I assure you that it is the pre-requisite for shareholder value creation, and the difference between success and failure.

We want to measure ourselves based upon value creation. In contrast, Lean Six Sigma begins and ends with a simple proposition: The majority of Champions, Black Belts, and Quality Professionals do not have an MBA degree, and even those who do often do not connect their learning with project selection.

Prioritizing based on shareholder value in particular is an area of their knowledge that cannot be left to chance. We have found that we can drive home all the necessary concepts with just two graphs, as follows. Graph 1: To identify these value streams, Lean Six Sigma has borrowed a method developed by investors such as Warren Buffett and Phil Fisher to selection of projects: Lean Six Sigma applies it to prioritizing the investment of people and capital resources in projects that will create the highest ROIC Return on Invested Capital and growth rates.

Can we quantify potential gains in shareholder value based on ROIC and growth? Remember the stock price multiples chart from Chapter 1 reproduced in Figure ? No one really knew enough about the physics and chemistry of this process to compute the best combination of factors: As a result of these trials, the company was able to define which combination of these factors produced the best result highest quality with fewest defects , as shown in Figure Because Lean was implemented together with Six Sigma, the process velocity greatly increased.

That meant the company could run smaller lots for each part number about five times faster than the initial process, with no increase in cost. In terms of learning, the company could even complete additional experiments for each major product five times faster than before the improvements, and hopefully reduce variation five times as fast. But does a busy CEO need to be aware of such an arcane quality tool? Army and allied militaries all over the world. Producing Night Vision goggles is a very complex process…[T]en years ago there were four U.

Navigation menu

Today there are two. The other two have gone out of business, and the other one that still is in business has been losing money for years. I credit continuous process improvement for this success. Tools such as flowcharts, run charts, and Pareto charts help organizations pinpoint the true causes of a problem, which is the most important step on the road to finding effective solutions.

Two prerequisites for a successful Six Sigma effort are learning and communication. Numerous people need to receive both standard training, and customized education tailored to specific projects. These learning and communication needs are the same whether a company is located in a single building or has facilities worldwide.

Glossary, terms, history, people and definitions about Lean and Six Sigma

Training classes rely on electronic format rather than notebooks of overheads. This allows Black Belts to refresh their skills, and do research searches of tools applicable to a given project, and to electronically export slides for use by Green Belts.

Electronic media also help Black Belts navigate through a complex toolset to find tools appropriate to their projects. The Power of Culture e-Tracking systems also allow people throughout the infrastructure to monitor the effectiveness of Black Belt projects. Plan versus actual outputs of each Business Unit are available, and can be drilled down to the project level detail if so desired. Some are even using software to evaluate team strengths and weaknesses.

This allows the CEO to track improvements in Operating profit versus plan, as seen in the bar graph in Figure But other companies have been disappointed in trying to use the sigma level of the whole corporation as a valid metric. Do you count long lead time as one defect, or do you need to weight it by the thousands of products shipped late, or their cost to the client?

Or the lost revenue they entail in the future? Should excess inventory be counted as one defect, or should each dollar, penny or mil be a defect?

Should we not count a new product which has excessive cost or poor performance as a defect? Is it one defect or many? But is their importance really related to the number of defects per million opportunities, or to their value? These issues have not been addressed by many Six Sigma practitioners. Lean Six Sigma relates process improvement to specific income statement and balance sheet items rather than asserting that a company that achieves a higher sigma level will improve operating profit.

The best approach is to use the Sigma level as a process metric. Measure initial sigma capabilities for specific core processes as a baseline, then re-calculate them once you have improved those processes. The Power of Culture or any other source—should be weighted not on how often they occur, but on their importance to customers and impact on shareholder value at the enterprise level. This has the further merit that it ties the improvement process into metrics that the operating managers are trying to improve.

The Key is in the Culture We have talked a lot about the culture of Six Sigma, whereas most books put far more emphasis on the tools. It is my contention that the culture of Six Sigma is the reason for its success. Six Sigma provides the cultural framework to convert good strategy into good execution. Transcript available from George Group. Ordinarily, money put into inventory is thought of as live money, Time waste differs days which we thought from material waste because record breaking.

The sovereignty of the customer and the profusion of products to satisfy every need, require a process that can responsively deliver many different products with high velocity and high quality, and low cost and minimal invested capital. The goal of Lean is to quickly make-to-order a profusion of different products with the low cost first attained by Ford. These seeming contradictions—low cost combined with high quality and high speed—were first overcome by Toyota. As we mentioned before, Lean thinking is counter-intuitive, hence a sound understanding is necessary to build a roadmap to achieve these goals.

Lean remains a largely misunderstood improvement process. One of my principal goals in writing this book is to equip the diligent manager with a profound understanding of Lean, gained from more than a hundred implementations during the last dozen years. The natural place to start is by looking at what most people think of as Lean. Is This Lean? My friend Robert Martichenko of Transfreight, an expert in Lean Logistics, likes to explain Lean by describing an idealized plant tour inspired by actual experience.

This company has one of the simplest product lines imaginable: While he is there, he notices they are making green widgets all day long. How many customer orders do you have confirmed for green widgets? Why are you only manufacturing green widgets today?

On Tuesdays, do customers only use Green widgets? Why did you order a whole truckload of green widget handles?

The 6 amazing benefits of employing Six Sigma in your organization

As far as the truck load of green widget handles, well, the supplier gives such great volume discounts that John buys in truckload quantity. Is John really practicing Lean production? Unfortunately for his company, he is not enjoying the cost and process speed advantages of Lean. In contrast, the goal of Lean is to virtually eliminate wait time. Instead, every operation becomes so flexible that the actual usage by the customer creates a demand on the factory to build only the amount consumed by the customer, whether external or internal.

The Lean factory is flexible enough to efficiently build in small batches to replace consumption. Think of the factory as a water hose. If water is moving slowly, a larger diameter pipe is needed to deliver a given volume per minute, and lots of water Work In Process is effectively trapped in the pipe. Lean can increase the velocity by a factor of five, and we can reduce the cross section and hence the WIP by a factor of five. The Keys to the Kingdom of Lean are founded on two principles which are observed in every factory or process we have ever encountered: The rest of this chapter discusses how this process is implemented, with the details discussed in Chapters 15 and Cycle Efficiency Since speed is a key goal of lean, the natural questions are: How fast is fast?

How slow is slow? The answer comes by comparing the amount of value-add time work that a customer would recognize as necessary to create the product or service they are about to purchase by the total lead time how long the process takes from start to end. If the value-add time needed to manufacture a product down the critical path is hours of touch labor including machining, assembly, testing, etc.

These two figures come together to produce a metric called process cycle efficiency1 that we can use to gauge the potential for cost reduction: The answer is: The Tier 1 auto supplier described earlier in this book knew that there was less than 3 hours of value-add time in their process the time needed to machine, braze, assemble, and test a coupled hose fitting. However, the total lead time from release of raw material into the line to shipment was an average of 12 days.

Based on having an 8-hour work day at the plant, the ratio of these two measures gives us process cycle efficiency: Take some data on your own processes and calculate the cycle efficiency. I think you will be surprised. Any process with low cycle efficiency will have great opportunities for cost reduction.

The slowness of most processes—their low cycle efficiency— guarantees that there is a large amount of Work In Process or Projects In Process at any given time, either on the plant floor or finished goods in stock rooms. As a side benefit, the personnel associated with non-value-add work are often some of the most talented in the company, and sometimes the only people who really understand the whole process because they have had to cope with it.

Thus their redeployment into value-add assignments in Manufacturing, Engineering, Marketing or the Lean Six Sigma process allows them to be in a value creation role. Since most factories do not produce such physically large parts, the effect of Lean improvements is generally not as visually dramatic, but the same types of improvements can be made. This option was the one originally chosen but never executed because of the sales growth resulting from the dramatic reduction in lead time.

The reduction of cost is not just from reduced scrap and rework, or from having less money tied up in inventory. At a leading Defense electronics company, the lead time in Printed Circuit board production was cut from 6 weeks to 4 days. Several stockrooms were closed, and 17 expeditor positions were eliminated the people were moved to value-add jobs, not fired! The Manager of Systems, Frank Colantuono said: Processes move more quickly, so you have more opportunities to learn what is and is not working and to see the effects of changes.

By dramatically reducing overhead cost, managers are no longer tempted to overproduce to absorb overhead, a practice which merely clogs the factory with WIP and makes on-time delivery or lead time prediction impossible as well as irrelevant. Eliminating Time Traps is just as dramatic as watching a river flow after beaver dams have been removed, and it is one of those business experiences people never tire of recounting.

In , Lean was first applied to a factory that produced Army Radios. Eleven years later, in , the former controller and then-President of an Automotive unit recounted his amazement as he had watched lead times drop from a chaotic 8 weeks to a stable 2 weeks in just a few months.

In fact, even if you only wished to improve manufacturing cost, quality, and lead time, you would have to improve the velocity, responsiveness and quality of the associated transactional processes as well. The rework time spent on these modifications… 1 approached and often exceeded the total build time of the board, 2 greatly increased test time, and 3 had a much higher field failure rate.

Most of the variation in the process time and quality was induced by these problems. All the boards were built in- house, so the team could achieve the desired production lead time for new boards… if it had the Engineering Change Notice ECN and new artwork release from Product Development in time for the next production round. Unfortunately, no one person owned the ECN process. Rather, the Request For Engineering Change Notice required eight sign-offs before engineering would change the artwork—with the result that the ECN process normally took one to three months!

In creating a Process Map for the first time, the team found that of the eight people on the ECN review list, only three of them could add value that is, understand the technical purpose of the change enough to offer useful advice.

The other five needed to be informed of the change so they could work effectively, but they should not have had sign-off authority. Most of these five were fairly high level people with a lot on their plate, who frequently traveled.

The ECN forms often were lying on their desks, and nobody wanted to expedite them. To solve this process problem, the five managers agreed to be changed to an advise from a consent role. The ECN cycle time dropped to less than 2 weeks and allowed a major improvement on manufacturing quality and cost. This example is by no means atypical; just the reverse in fact!

The point is that the manufacturing process could not have been improved if the non-manufacturing processes had not been leaned out. Lean does not mean manufacturing, Lean means speed. Guests who are dissatisfied never return, but tell 8 to 12 friends about the experience. If a new guest arrives exactly every 7 minutes on the dot, how long would you wait in line? No time at all, there would never be a queue. How could this possibly happen?

How would you feel if you were one of the people who had to stand in line 10 minutes rather than 5 minutes? The root cause of the problem is variation in time: Many guests flash their preferred guest cards and register in 3 minutes or less. Yet another may claim to have a reservation which the clerk cannot locate.

As a result, most customers require between 3 and 7 minutes of clerk service, yet the mean is still 5 minutes. To complicate things, there is variation in arrivals. Customers arrive in bunches—sometimes every 4 minutes, other times not for 10 minutes, but the mean arrival time is 7 minutes. If you plug this data into special supply chain accelerator software used to identify Time Traps, you can predict and ultimately prevent the variability in span, as Jack Welch would call it.

What is going on here? When guests arrive every 10 minutes, the clerks have nothing to do. We say that these guests are caught in a Time Trap.

We can test the solution with software to make sure it works. The result is shown in Figure Reducing Variation Improves Customer Service These gains can be achieved without adding any full-time personnel; just changing the queue design and cross-training personnel provides additional peak capacity.

Thus the mean check-in time remained nearly the same and the variation in service was reduced despite great variation in customer arrivals. Now the same number of guests wait 7 minutes as formerly waited 11 minutes. In this example we assumed that it was the check in process itself that was the highest priority to illustrate the impact of variation on delay time. But often in situations like these it is upstream processes—such as information flows on the availability of clean rooms, the room cleaning process itself, the availability of maids, and linen queues in the laundry room—which in fact affect the check in time.

This hotel check-in example shows how variation in arrivals and processing time intrinsically causes delay, even in a process much simpler than most manufacturing processes. It had no setup time, no scrap, no downtime—each of which create delay in their own right and is a source of variation. There, it was absolutely clear where the delay occurred, why it caused the Time Trap and where the company needed to apply DMAIC improvement activities to reduce variation.

The obvious question is whether these same principles apply to processes that are more complex, and can you find Time Traps by intuition or looking at the plant as some claim they can? Pop Quiz: So… how would you identify the Time Traps in your processes?

Take a look at Figure In this process, the value-add-time per part is a few minutes, yet the total lead time of the process, including queue time, is 28 hours. The low process cycle efficiency is a tip-off that this process has a lot of waste in it. Do you agree? Where Are the Time Traps?

Where the Inventory Stacks Up? Most people would intuitively guess that Assembly is the Time Trap. The assembly station is not the real time trap.

How do we know? Like all Lean Six Sigma efforts, we replace intuition with data and calculation. The press molds four different parts, A, B, C, and D, by cutting and stamping a roll of steel. After a part is pressed out, it drops into a cleaning tank for about 30 seconds.

The part is moved to a Prep station where it spends 30 seconds being prepared for paint… 4. Using this process data we quickly see that the value-add time is just 4 minutes and 45 seconds—but the process lead time is 28 hours. The Press operators perform a setup by changing the dies and making adjustments, all of which takes 4 hours. Because of the long setup time, these operators cannot just press out one part A, perform another setup, and press part B—because then the production rate will be one part every four hours, and the demand is for 17 of ABCD per hour.

So instead, after a setup is complete, the operators press out a batch of of Part A at the rate of per hour, which takes 10 hours. They then perform another four hour setup, and press out a batch of Part B which takes another 10 hours, then C, then D. They are then ready to begin a setup for Part A and start the cycle again. The time taken for this cycle—called the Workstation Turnover Time in analogy to inventory turns —is 56 hours see Figure Timing Diagram Shows Inflexibility The hour workstation turnover time for the Press is a reflection of its inflexibility.

The WIP inventory of Part A is nearly after the batch is complete, and falls to near zero before the next batch of A is completed. On average, therefore, there are about of each part in process at any one time, consumed at the rate of 17 per hour.

Similarly, on average, there are about 28 hours of delay between the time a part is built and the time it flows out of Assembly. So where is the Time Trap in this process? You have to use data to identify the sources of delays in a process. Workstation Turnover Time Delay Time 2 Batch Size min u Customer Demand Rate 2 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.

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: 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. The cause of delay in a process is a Time Trap. 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.

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 inflexibility of most manufacturing processes has guaranteed that factories had to produce in large batches to meet production demand.

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. 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.

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.

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. 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.

Knowing Who to Hit: 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. Value Stream Mapping provides a clear understanding of the current process by: 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. 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.

In addition to customer value add, the business may require you to perform some functions which add no value from the customers perspective. Recognize that these costs are really non-value-add but you are currently forced to perform them. You need to try to eliminate or at least reduce their cost. Will the faster lead time and lower costs fill up existing facilities? This captures the operational value of higher cycle efficiency, but not the elimination of the Cost of Poor Quality.

In an improvement project, Non-Value-Add tasks typically make up the majority of the time spent on any given task and are thus attacked first. Here is an overview of the creation of a value stream map 1. Select a value stream product family, etc whose improvement will create the greatest impact on operating profit.

Create a process map or download the MRP router information on that value stream. Input the MRP data into a spreadsheet or supply chain acceleration software to identify Time Traps details are in Appendix 1 and Chapter 9.

Most teams will be surprised to find more non-value-add steps in the process than value add compare Figure , which includes non-value work, to Figure The team does a sanity check on MRP data such as setup times, etc.

Finding the Time Traps: The data is input into a spreadsheet or supply chain acceleration software. The Time Traps are then sorted on a spreadsheet or displayed in a bar graph. Figure shows the bar graph discussed in Chapter 1 for the Tier 1 auto supplier, which was the output from this step. The delay time at each Time Trap is calculated, and a recommendation for application of Lean Six Sigma tools is recommended. The Black Belt can input how much improvement can be effected, and the spreadsheet or software will recalculate the delay time.

Implementation of the improvement activities to address the Time Traps in priority order. You will also have a prioritized list of Lean Six Sigma targets and a means of eliminating the causes of delay. In other words, just a few quality problems can add an extraordinary amount of time to a process. As noted, most people are amazed that the non-value steps outnumber the value add steps!

As an aside, experience shows that the people who work on non-value- add activities are in fact a vital resource that should be redeployed to value-add opportunities in manufacturing, engineering, marketing and to staff the Lean Six Sigma effort.

I have observed that rework is often performed by the most talented of workers; expediting is performed by people of the highest initiative. We generally suggest that the improvement process not be a cause of any reductions of associated personnel, but that these highly talented people be reassigned. Any reductions should be to the company at large in response to inadequate shareholder returns, volume reductions, or lack of revenue growth.

The Major Lean Improvement Tools While Value Stream Mapping is the key Measure tool of Lean, other methods and their associated tools are needed to achieve the full potential of improved speed. Details of these tools are in Chapters 11 and 12; here are three of the most important: As discussed earlier in this chapter, process velocity and lead time are absolutely determined by the amount of the Work In Process. The Lean tool that accomplishes this goal is the Pull system, which puts a cap on WIP and thus keeps process lead time below a maximum level.

The setup time is defined as the interval between the last good part of one run of part numbers and the first good part of the next part number.Yusof b. This external scheduling process was really a historical response to a 4-month lead-time.

Finding the Time Traps: With most TQM programs, there was no clear way of prioritizing which quality projects should receive the highest priority; an almost religious fervor caused projects to be carried out regardless of cost to the corporation or value to the customer. Develops enthusiasm has passed. Need an account? There are no bad preferred roles, just preferences that need to be comprehended to make the Lean Six Sigma teams effective.