An_Executive_Introduction_to_Lean_Six_Si.pptx

definition

1. An Executive Introduction to Lean Six Sigma Saja Albliwi & Jiju Antony Department of DMEM University of Strathclyde

2. Lecture Contents

3. What is Lean Lean is derived from Toyota Production System coined by Taiichi Ohno ( Maleyeff , 2010) after the Second World War to cover shortage in capital and resources (Pepper and Spedding , 2010). Lean manufacturing became popular in 1990 through “The Machine That Changed the World: The Story of Lean Production” published by Womack and Jones ( Akbulut -Bailey et al., 2012) study of Toyota production system ( Timans et al., 2012). Lean Production System adopted by America in competition with industries in Japan (Pepper and Spedding , 2010). Womack et al., 1990 defined Lean concept as a “dynamic process of change, driven by a set of principles and best practises aimed at continuous improvement”. Most of Lean successes stories are in automotive and aerospace industries although it has now been widely accepted as a CI methodology in many service and public sector organisations.

4. Lean Aim & Tools Lean Production System (West) or Toyota production system (TPS) in Japan AIMS Eliminate non-value-added (NVA) activities ( Vinodh et al., 2012) and, The seven types of waste “ muda ” in industries : motion, over production, over processing, transport, inventory, waiting time and defects ( Chakravorty and Shah, 2012 ) Lean tools and techniques - Kanban system, 5S (Sort, Straighten, Shine, Standardise and Self-discipline), Cause and Effect analysis(C&E), Single Minute Exchange of Die (SMED), Value Stream Mapping(VSM), Poka -Yoke, Total Productive Maintenance (TPM), Cellular Manufacturing, Visual Management and more others

5. What is Six Sigma Six Sigma methodology was developed by an engineer Bill Smith at Motorola research centre in the US in the early 1980s ( Snee , 2010). This was Generation I Six Sigma approach. In 1988 Motorola won Baldrige National Quality Award ( Snee , 2010). Six Sigma became popular after the successful implementation in General Electric in the US to lead quality improvement programme ( Timans et al., 2012). This was Generation II. Today Six Sigma has proved to be successful in construction industry, service sector, healthcare services, financial services (Pepper and Spedding , 2010). Antony (2008) has defined Six Sigma as “a well-established approach that seeks to identify and eliminate defects, mistakes or failures in business processes or systems by focusing on those process performance characteristics that are of critical importance to customers”

6. Six Sigma Aim &Tools Six Sigma is a powerful methodology for tackling problems with unknown solutions through data driven approach. Reduce variation in the process ( Chakravorty and Shah, 2012), Reduce cost in manufacturing and services, demonstrate savings to the bottom line, increase customer satisfaction (Thomas et al., 2009), Measure defects, improve products quality, reduce defects to 3.4 parts per million opportunities (DPMO) in an organization(Lee and Wei, 2009) Six Sigma uses powerful analytical and statistical tools and techniques such as Quality Function Deployment (QFD), Failure Mode and Effect Analysis (FMEA), Statistical Process Control (SPC), Design of Experiment (DOE), ANOVA, Measurement System Analysis (MSA), Kano Model, etc.

7. What is LSS “Lean Six Sigma” combination and synergy between Lean management and Six Sigma methodology ( Vinodh et al., 2012) Lean Six Sigma is a business improvement methodology to maximize shareholder value by improving quality, speed, customer satisfaction and costs. Integrates tools and principles from both Lean and Six Sigma (George, 2003). A business strategy and methodology which increases process performance resulting in enhanced customer satisfaction and improved bottom line results” ( Snee , 2010).

8. Why LSS?

9. History of LSS Lean Production System (Toyota Production System in Japan) and Six Sigma (within Motorola research centre in USA) have been used for many years. However, theses approaches have integrated in the late 1990s and early 2000s. First integration of Lean and Six Sigma in the US by George group in 1986 (Salah et al., 2010) The term Lean Six Sigma was first introduced around 2000 ( Timans et al., 2012). Since then, a noticeable increase in the LSS popularity and deployment in the industrial world especially in large organizations in the West for instance Motorola, Honeywell, General Electric and many others ( Laureani and Antony, 2012) and in some small and medium size manufacturing enterprise (SMEs) (Kumar et al., 2006).

10. Benefits of LSS Benefits of lean six sigma in the industrial world (both manufacturing and service) include: Removing non-value adding activities (waste) Honeywell International Inc. in US, $1.2b gains in 2002 as a results of waste reduction (William and Willie, 2003) Reducing the incidence of defective products/transactions Compressor air foils factory in US achieved 94% reduction in product defect ( Hardeman and Goethals, 2011) Shortening cycle time and inventory Nuclear aircraft carrier manufacturing in US has reduced lead time from 180 days to 40 days and overtime was eliminated ( Kucner , 2009) Automobile Accessories Manufacturing in India has over $33 000 saving per year due to 25% reduction in process inventory (Kumar et al., 2006)

11. Benefits of LSS Increase customers satisfaction, attraction and loyalty Worldwide Military products manufacturing company experienced 82% reduction in customer return backlog ( Pickrell et al., 2005) Reduce cost of production/services Industrial Cleaning equipment manufacturing in US has $660, 000 reduction in production cost per year ( Franchetti and Yanik , 2011) Overcoming the limitation of each approach when implemented in isolation ( Corbett, 2011; Salah et al., 2010; Yi et al.,2012, Antony, 2010, Antony 2011, Antony et al., 2012)

12. Lean Six Sigma in Call Centres Operational Performance before and after implementation of Lean Six Sigma Performance Indicators Company A (Before ) Company A (After) Average number of calls per day 60 38 (nearly 40% reduction) Longest time to complete customer request (days) 54 30 (about 45% reduction) Average time to complete customer request (days) 39 23 (over 40% reduction) Percentage of failure demand 63 28 (over 50% reduction) Average number of policy holders as work-in-process 302 policies 130 policies (over 55% reduction) Benefits of Lean Six Sigma from a Financial Services Call Centre

13. Holistic View of Six Sigma DMAIC Methodology Improvement of Existing Process D efine Project and Identify Process Specify CTQ’s, Evaluate Measurement, Estimate Process Capability Develop Systems to maintain gains Determine Root Causes Of Defects Implement Changes to Improve Process Performance Define Measure Analyze Improve Control KEY DELIVERABLES CTQ’s, GR &R Baseline Capability Charter Critical X’s Identified Demonstrated Improvement Control Plan KEY TOOLS QFD GR & R C & E Charters Project Mgmt. Pr. Maps Control Ch. Cap. Study DoE FMEA Pilots Control Ch. Cap. Study Control Plan Multi-vari FMEA Pareto

14. Lean Six Sigma Process Improvement Cycle UCL LCL Avg VOICE OF CUSTOMER Gap Identified STRATEGIC PLAN BUSINESS OBJECTIVES BUSINESS MEASURES VALUE STREAM PROCESS FLOW PROCESS MEASURES PROCESS SCORECARD Y's X's UCL LCL Avg Improve Control Define Measure Analyze Tools & Methodology

15. Some guidelines in the use of tools and techniques within Six Sigma DMAIC (Service Sector) Tools/Techniques Define Measure Analyse Improve Control Process mapping Y Y N N N Brainstorming Y N Y Y N Cause and effect Analysis N N Y N N Hypothesis testing N N Y N N SIPOC Y Y N N N SERVQUAL N Y N Y N Benchmarking N Y N N N Control Charts N Y N N Y Service FMEA N N Y Y N Histograms N N Y N N

16. Some guidelines in the use of tools and techniques within Six Sigma DMAIC (Service Sector) Tools/Techniques Define Measure Analyse Improve Control Quality Costing N Y N N N Process Capability Analysis N Y N Y Y Regression Analysis N N Y N N Pareto Analysis N N Y N N QFD Y N N N N Kano Model Y Y N N N Non-parametric tests N N Y N N

17. Challenges Difficulties in teaching statistical methods for some of the team members ( Chakravorty and Shah, 2012). Time consuming for LSS project implementation (Richard, 2008, Antony, 2010). Internal resistance ( Timans et al., 2012). Availability of resources such as financial resources, people resources (Thomas et al., 2008). Changing business priorities ( Timans et al., 2012, Antony et al., 2011) Lack of leadership, management skills/employees skills , training etc. ( Breyfogle , 2008 ; Timans et al., 2012, Antony et al, 2010, Antony et al., 2008)

18. Challenges Poor selection of projects ( Timans et al., 2012, Antony, 2010) Unmanaged expectations (Thomas et al., 2008) Employee reaction towards a new business strategy ( Vinodh et al., 2012; Kumar et al., 2006). National regulation ( Maleyeff , 2012). Convincing the top management ( Vinodh et al., 2012; Kumar et al., 2006, Antony and Kumar 2005). Lack of awareness about LSS benefits in business ( Snee , 2010).

19. Limitations LSS has no globally accepted standard for certification ( Laureani and Antony, 2012; Breyfogle , 2008) No standard framework for LSS or its implementation exists (Antony 2010, 2012) There is no clear direction as to which strategy should be selected at the early stages of a project (Kumar et al. 2006). There is no theoretical underpinning or logical explanation for the choice of methods and techniques (pepper, 2010, Linderman , 2008, 2010).

20. Limitations The limited number of practical implications of LSS integration framework ( Vinodh et al., 2012; Chen and Lyu , 2009). Lack of real innovation in LSS projects (Thomas et al., 2008). The absence of accurate measurements for LSS implementation ( Chakravorty and Shah, 2012). Strong LSS curricula are needed in order to leverage learning in organisations (Salah et al, 2010)

21. LSS SWOT Analysis

22. LSS SWOT Analysis Strengths Customer focus – the aim of LSS is to build what the customers want as reflected by what is known as CTQ characteristics. LSS combines the right people, right tools and the right projects for its success Weaknesses High investment – a significant investment is required to train employees as Yellow Belts, Green Belts, Black Belts and Master Black Belts. Time consuming

23. LSS SWOT Analysis Opportunities LSS approach is applicable in all processes whether it is manufacturing, service or transactional. Implementation of LSS makes a highest quality producer as the lowest cost producer. Integration of LSS with innovation Threats Resistance to change Lack of management commitment could be one of the top reasons LSS not taking off in a big way

24. Case Study 1 A company in New Zealand produce approximately 350,000 tonnes/year of primary aluminium ingot, billet and block products. It has identified an opportunity to build niche market such as a high purity aluminium. The company has been using Baldrige Criteria for Performance Excellent (BCPE) since 2000, Six Sigma in 2002 and Lean in 2005. Why LSS? LSS represent a methodology engaging the entire workforce to use the best improving tools to target the aspects of business that need improving. To maximize organization ability to solve critical, complex and high value projects. Criteria Deliver LSS training to 6 Black Belts, 30 Green Belts.

25. Case Study 1 Key benefits Sales doubled between 2001 and 2007. Annual saving $28m from Six Sigma since 2002 and Lean since 2005 up to 2007. Won Business Excellent Award (BX). Manager application The company produces the highest purity aluminium in the world 60% of memory disk and 40% of the capacitor are made of its aluminium Improvement in cycle time, cost control, efficiency and effectiveness into work process design .

26. Case Study 2 Canisius Wilhelmina Hospital in Netherlands has 650 bed and a budget of 145m euros. In 2005, 3 significant problems in ER: 1- Patients complain about duration of entire treatment in ER. 2- Employees complain about limited place in the ER. 3- Employees experience a high work loud due to the over-crowding at peak times. The hospital unable to provide more employees nor more physical space due to tight budgeting system. Why LSS? Six Sigma can increase quality by reducing variation, defects and cost. While Lean add tools that increase process by eliminating waste. Hence, LSS is an excellent tools to tackle current challenges in healthcare.

27. Case Study 2 Criteria In 2005 they trained 2 teams of 20 people of Green Belts and Lean key principles. In 2006 one more group of GB trained, a training for 2 more groups was planned and 60 Yellow Belts trained Tools & Techniques DMAIC, SIPOC, Control Chart, Capability Analysis, Histogram, VSM, C&E Analysis, FMEA, ANOVA, SPC and Poka Yoke Key benefits 20% reduction in lead time Manager application Employees very enthusiastic about the training especially because given tools to solve long-term problems. We had two of our own, costly problems solved

28. Case Study 3 Burgers Ergon is one of the largest construction companies in the Netherlands . The company involved in the development of applicable installation techniques for construction, renovation, services and maintenance. This company believes that safety is an important aspect in construction work as it not only relates to health and therefore availability of employees but also to more efficient production and less property damage. Why LSS? Lean Six Sigma projects are dominated by increasing efficiency personnel, increasing revenue or reducing throughput times. Safety- related problems invoke a new dimension to LSS projects. Start LSS project to improve employee safety on construction sites.

29. Case Study 3 Criteria Apply LSS into two pilot projects. Tools & Techniques DMAIC and SIPOC Key benefits The average number of incidents dropped from 12 per month to 7.2 per month and the current target is 6 per month. Manager application The number of incidence was lower than ever in first 6 months. New safety regulation are applied in every project

30. Case Study & Discussion Insurance company in the Netherlands experienced a long-term problem. In the Netherlands, many employees transfer their pension provision to insurance companies. However, if the employees change jobs, the pension right may have to be transferred to other insurance companies. The process of transferring pension rights, called Pension Value Transfer (PVT) caused significant problems to the company. There are 6 teams processing PVTs in parallel. The throughput times are excessive (186 days) and the amount of time to process the PVT is high (56 min/file).

31. Go leaders You are the project leader and you have been asked to dedicate a project to reduce the throughput and processing times of the PVTs. Your task is to positively impact customer satisfaction and reduce the operational cost by decreasing the processing time. How are you going to tackle this problem? What approach would you prefer to use? And why? What set of tools and techniques you will be utilizing for this project? How do you decide your team formation? Explain the roles and responsibilities of team members?

32. Solution What approach would you prefer to use? And why? Lean and Six Sigma What set of tools and techniques you will be utilizing for this project? DMAIC, DOE, VSM, 5S, Process Mapping, SPC Who are the team members? BB, GB and Champion

33. Findings & Benefits Findings There appeared to be significant deference between the teams. PVTs process in one team takes 80 days and in other team takes 315 days. Official procedure is not followed in 75% of the cases. Employees has the liberty to choose how to process the PVTs Key Benefits The average throughput time has decreased to 78 days 130,000 euros annual saving.

34. LSS Training The training required to implement Six Sigma involves everyone in the organization. The basic training is one day and covers process mapping, and an overview of designed experiments, hypothesis testing, metrics, and process modeling. Green belt training is more extensive, including a week of statistical analysis, SPC, and measurement systems analysis. The black belt training requires about one month of training, including ANOVA, game theory, and multivariate regression.