ET1622

1. ET1622 Define KPI Waste Project Presentation Template

2. Objectives After completing this section, participants should be able to: • Construct a process map, identifying key process steps, inputs, and outputs; • Understand when it is necessary to narrow the project focus; • Construct a top-down flowchart; • Construct a deployment flowchart; • Explain when each of these methods is most useful; • Understand how to use flowcharts to identify opportunities for improvement; • Have an appreciation for the value of process maps and flowcharts in the DMAIC structure.

3. Understanding the Process A team’s work in the DMAIC process typically begins with clearly defining the process. By creating a detailed description of how the process works we clarify the process activities that will be targeted, identify inputs and outputs, identify non-value added activities, and uncover many opportunities for improvement. In this section, we will discuss four tools for defining a process: Process maps, top-down flowcharts, and deployment flowcharts.

4. Understanding the Process As you get started, be sure to keep the following in mind: • Are the process boundaries clearly defined? • Is the purpose of the process understood by all members? • What level of detail is needed? Process boundaries are established to define the beginning and end of a process, and to help the team understand which activities to include as part of the ‘process’. The purpose of the process is defined to make sure that we understand the process from the perspective of the customer. • What are the customer’s requirements? • What is the customer’s definition of ‘quality’?

5. Understanding the Process Understanding what the customer requires helps the team evaluate which tasks add value to the process, and helps to ensure that the process is understood by all members. The level of detail required in defining the process is based on both the opportunities for improvement and the complexities of the process. • There should not be so much detail that the ‘big picture’ is lost, particularly early on. • On the other hand, there should not be so few details that major opportunities for improvement are missed.

6. Understanding the Process Finally, it is necessary for all team members to have an overall understanding of the process. Some members will be more familiar with the process than others, and even the most knowledgeable members may not be as ‘educated’ about the process as they would like to believe. The following activities are helpful: • Observe the process in action. • Interview associates and others involved in the process. • Interview internal suppliers and customers. • Review operating procedures or manuals.

7. Developing a Process Map What is a process map? A process map is a graphical representation of the process. It is a high level flowchart that represents how things are really being done (versus how we think they should be done). In developing a process map, the process is identified, and then the following steps are taken (not necessarily in this order): 1. Identify key steps in the process. 2. List inputs at each process step. 3. List critical outputs from each process step and the final output(s). 4. Identify the most critical inputs. 5. Add operating specifications and targets.

8. Developing a Process Map 1. Identify key process steps A simple flowchart can be used to display the major process steps. Here’s a simple method to construct a basic flowchart: 1. Establish the first and last steps. 2. Describe each major activity using a verb followed by a noun (if possible). 3. Write each step on a Post-ItTM note so it can be moved. 4. Once the correct order is determined, connect the steps with arrows to show the sequence of activities. Note: Don’t get lost in the details of the process at this point.

9. Developing a Process Map In this section, we will use the process of ‘making a piece of toast’ to illustrate the mechanics of making a process map. Although the process may seem overly simple, it provides a useful illustration. Below, we see the process map after the key process steps have been identified and after the correct order of activities has been determined.

10. Developing a Process Map 2. Identify process inputs for each process step Inputs are referred to as our ‘X’s. They can fall into one of the following categories: Materials, methods, machines, manpower, measures, and environment.

11. Developing a Process Map 3. Identify process outputs and CTQ’s (our ‘Y’s’) Intermediary process outputs should be identified, as well as final quality characteristics. Characteristics or measurements that are ‘critical to quality’ from the perspective of the customer are referred to as ‘CTQ’s’.

12. Developing a Process Map 4. Identify critical process inputs Identify inputs that your team feels have the most significant impact on the outputs. These are inputs that your team will investigate as you move into the Measure and Analyze Phases.

13. Developing a Process Map 5. Add operating specifications and process targets Identify both internal and customer targets and specifications.

14. Process Map: Making a Piece of Toast

15. Developing a Process Map If mapping the process seems frustrating or overwhelming, the process boundaries may be too wide. The team may need to narrow the focus of the process to a specific process step or group of steps. Ask the following questions to help narrow the focus: • Is a particular part of the process known to be most troublesome? • Where do most of the errors occur? • Will improvements to the initial steps of the process reduce the number of problems downstream?

16. Detailed Flowcharts The methods introduced in this section apply to both manufacturing and non-manufacturing processes. For example, we can easily develop a Process Map for the following processes: • Order fulfillment for a particular part, • Purchasing particular raw materials, or • Accounts Receivable for a specific customer. For these and other business processes, the steps demonstrated in the previous example can be followed to develop a process map and to identify initial opportunities for improvement.

17. Detailed Flowcharts However, since business processes are often poorly defined, and can involve numerous decision points and parallel activities, more detailed flowcharts may be required. Two useful types of flowcharts for describing the steps in a process are top-down flowcharts and deployment flowcharts. Top-down flowcharts show the few major steps of a process and list each of the sub-steps for each step. These charts are particularly useful when there are multiple sub-steps involved. Deployment flowcharts list the individuals, groups or areas involved in the process, show the flow of a process, and identify those involved at each step.

18. Detailed Flowcharts Below is a top-down flowchart for a finished product inspection operation. The operation consists of three primary steps, and a number of sub-steps:

19. Detailed Flowcharts Deployment flowcharts are effective with processes where materials and/or information pass through many different functional areas. Deployment flowcharts use a variety of symbols to describe the steps in a process. These symbols indicate the type of activity. The most commonly used symbols are given below:

20. Partial deployment flowchart of the food service process in a restaurant. The deployment flowchart on the following slide clearly identifies the areas of responsibility in a New Product Request process.

21. Opportunities for Improvement Defining a process provides an ideal opportunity to identify inefficiencies and sources of error. As you investigate the process, be on the lookout for the following inefficiencies: • Duplication - are identical activities being performed at different places in the process? • Unnecessary tasks, such as paperwork or approvals. • Illogical or inefficient sequencing of tasks, which causes delays and extra work. • Unclear lines of responsibility, which can result in delayed decisions . • Opportunities for errors - there are often many of these.

22. Opportunities for Improvement Inefficiencies (continued): • Inconsistencies - are different methods or procedures being used? • Non-value added activity - is work being done that does not add value? • Customer requirements - are they clearly defined and communicated? • Standards no longer used - do standard methods previously agreed upon still apply?

23. Summary The methods introduced in this section are effective in focusing our attention on the process. In the Define Phase, they are useful for many reasons, such as: • Defining how the work is done, and providing the team with an in-depth understanding of the process, • Helping to bound the scope of improvement projects, • Showing customer supplier relationships, • Identifying inefficiencies, gaps, bottlenecks and inconsistencies,, • Identifying critical process inputs , and • Providing information that can be used with other problem solving tools.

24. Defining the Process Exercise In this exercise, we will work in teams to develop a Process Map, a Top-Down Flowchart or a Deployment Flowchart for the process you will be studying in your project. Select the method that best suits your process. Note: For this exercise, use flip charts and post-it notes. Alternative: If your project needs to be re-defined, or if you are not familiar enough with your process to proceed, use the following process: ‘Barbecuing a hamburger on a charcoal grill’. You will have approximately 20 minutes. Be prepared to give a brief presentation of your results.

25. Six Sigma Improvement Process Project KPIs and Goals • The Project Charter • Project KPIs • Plotting the KPI • Scaling KPIs • Goal Statements • Project Scope and Boundaries • Refining Your Project Charter • Closing Comments

26. Objectives • After completing this section, participants should be able to: • Complete a project charter for their projects; • List characteristics of an effective Project KPI (Key Process Indicator); • Define an appropriate project-level KPI for their project; • Determine the time period that will be used in time-ordered plots of the Project KPI; • Determine whether their Project KPI should be scaled for time-ordered plots.

27. Introduction

28. Introduction • Prior to initiating a Lean6sigma project, there is the recognition that an opportunityexists. • The goals and objectives of the project are defined and a team is formed. • The project charter is a document that defines the project, its structure, and the team’s goals and timeline. • In a sense, the project charter is a contract detailing what is expected of the team relative to the given project. • During the define phase of a Lean6sigma project, the project charter and project goal are reviewed and clarified, the process is defined, and key process inputs and outputs are identified.

29. The Project Charter • A Lean6sigma project charter consists of: • The business case: Why the project was selected. • The opportunity statement: The potential opportunity. • The goal statement and KPI: The specific objectives of the team and baseline measurement. • The project scope: The boundaries of the project. • The team selected: The project team, the sponsor, the Expert assigned, and other resources. • A project plan: Key milestones.

30. Project KPIs • The Project Charter requires that the team defines a KPI and a goal in the Goal and KPI section. • The Goal and KPI statement consists of three, and only three, components: • The project-level KPI, • The current and desired level of performance, stated in terms of the KPI, and • A date by which the desired performance will be achieved. • In this section, we: • Describe characteristics of a good Project KPI, • Present examples of KPIs, • Explore KPI issues.

31. Project KPIs • The main characteristics of a desirable Project KPI are: • The KPI should be directly tied to the process and the characteristic that the team wants to improve; • It must be measurable; • It should be as fundamental (“low level”) a measure as possible; • There is usually, but not always, a single Project KPI – sometimes teams need to optimize more than one criterion. • The goal statement is a statement of the current level of the KPI and the desired level (or “goal”) for the KPI, along with a time period over which the improvement will occur.

32. The Project Charter Goal and KPI • Reduce the mean number of days to process Industrial NPRs, measured weekly, from 77 days to 14 days by December 31, 2002.

33. Project KPIs • The Project KPI is critical, as it drives the project! • The KPI should be closely tied to the process being studied and improved. • It is useful, in determining the KPI, to define the process which it is measuring. • Process maps, flow charts, and value stream maps are methods for describing the process of interest. • Teams sometimes find it useful to revisit their KPI after developing maps of the process. • The KPI must also be consistent with the project scope.

34. Project KPI Scope Process Project KPIs • The Project KPI, process of interest, and scope of the project, must be in alignment.

35. Project KPIs • Example: Scrap Reduction • A team is trying to reduce the amount of waste produced by a certain finishing operation. • Parts are run through the operation. Parts that are not properly finished can often be reworked (sent through the operation a second time). These are called defective parts. • A scrapped part is one that can not be reworked. • The process is run over three shifts. • The total number of parts run through the process can vary dramatically from day to day and shift to shift. • What is an appropriate Project KPI?

36. Project KPIs • Some possible KPIs: • Total cost of scrap • Number of parts that are scrapped • Percent of parts that are scrapped • Percent of parts scrapped by shift • Number of parts that are defective after the first pass • Percent of parts that are defective after the first pass

37. Project KPIs • Example: Meeting Specifications • A team is charged with reducing variation in OD (outside diameter) for a specific part. The team is to ensure that the OD meets its target value and specification limits. • The number of parts produced varies by day. • What is an appropriate Project KPI? • Percent of parts out of specification • Percent of parts off target • The OD measurement itself, from daily samples • A Cpk index before and after improvement • Other?

38. Project KPIs • Example: Engineering Design • A team is trying to improve the timeliness of an engineering design process. • The team is planning to focus on the process of delivering a design. • This process begins with the customer request and ends with delivery of the design to the customer. • The team does not see reducing labor costs as within its scope. • What is an appropriate Project KPI? • Remember that the Project KPI, the process of interest, and the scope of the project need to be in alignment!

39. Project KPIs • Some teams may find thatdata is not currently being collected on their KPI. • This is not unusual, and points to a situation where the sheer act of measuring the problem is of value. • Do not be daunted if data does not currently exist on your team’s Project KPI. • If this is the case, the team should: • Define the process of interest using a process map, flow chart or value stream map (these will be discussed later). • Use the map of the process to design a data collection plan. • Then, begin collecting data as soon as possible.

40. Project KPIs • Here are some examples of typical project KPIs: • Amount or percent scrap • Critical dimensional measurements • Cycle time (the time required to process a part) • Elapsed time (the number of days between a scheduled and an actual start date) • Time spent in a given activity (machine time, time spent setting up a machine, time spent on non-value added work) • Proportion of false positives (or negatives) in an inspection process • Quantity of raw materials consumed

41. Plotting the KPI • A Lean6sigma project always focuses on improving a process. • The KPI is always tied to that process. • Since a process is dynamic – it changes over time – the KPI must be monitored on a periodic basis. • Some KPIs are summarized and plotted daily, others weekly. • KPIs can be plotted on run charts or control charts. • A team hopes to see improvement reflected when plotting the KPI in this fashion.

42. Plotting the KPI • Example: Suppose that a project team is interested in reducing the proportion of defective parts produced by a process. • The goal might be to reduce this from an average of 12% per day to an average of 5% per day. • The team should track the daily proportion of defective parts, and plot the results on a control chart. • On the next slide, we see control charts of the daily proportion defective, covering the periods before and after implementation of the team’s solution.

43. Shows process level and daily variation prior to solution Solution Plotting the KPI

44. Goal Statements • A Project Goal is a statement of how much improvement is to be expected and by when. • The goal is defined in terms of the KPI. • Clear, understood, and agreed-upon team goals are important for the following reasons (among others): • They provide a focus for the team’s activities, • Goals help channel the team’s activities by pointing everyone in the same direction, • They provide a target, and • They provide a means to evaluate whether the team has been successful.

45. Goal Statements • Recall that goals should include information on what will be affected (the KPI), how will progress be measured, and when will the goal be achieved. • The followinggoal statement formatis recommended: • To improve (e.g. increase, decrease or eliminate) the (description of the KPI) from (current level of performance) to (desired level of performance) by (date). • For example: • To increase the on-time delivery rate from 82% to 95% by September 2002.

46. Goal Statements • Comment: A goal statement should absolutely not suggest, propose, or even hint at a solution. • Yet, consider the following, which are typical of goal statements that teams present: • Increase inventory turns by identifying sources that contribute to excess finished inventory and implement solutions to prevent future occurrences. • Reduce late deliveries by eliminating a machining step. • Reduce inventory by defining part numbers and location of misallocated inventory.

47. Goal Statements • Goal statements should also not include: • Elements of the project plan: • “We plan to define a process to….”, or • “We plan to analyze data from…” • A list of three or more KPIs: • There should be one or at most two measures that will reflect the overall success of the project – these are the Project KPIs; • If the team wants to track more than one or two measures, this should be indicated under the Project Plan.

48. Goal Statements • Remember that a goal statement consists of only three elements: • The KPI, • The current and desired level of the KPI, and • The date by which the desired level of performance will be achieved. • This first component of the statement should include verbiage that indicates how the KPI will be plotted as a baseline. • This would include the time period over which measurements will be summarized in order to plot a point on a run or control chart, as well as a clear description of how the plotted value is calculated.

49. Project Scope • The key question is whether everyone on the team has the same picture of what the team is there for. • We can never assume that everyone shares the same picture. • Understanding and agreeing upon the scope and boundaries of the project early on are critical to the success of the team. • Although the project charter will define the project scope, the team will have additional ideas and concerns, and will need some clarification from the sponsor. • Defining the project scope also allows us to determine if our project goals are reasonable, or if they need to be further refined.

50. Closing Thoughts • During initial meetings, Six Sigma teams review the project charter to make sure that all members understand the purpose and function of the team. • In general, members should be able to answer the following questions: • What is the opportunity or problem the team will be addressing? • What is the project goal? • Are there any potential issues or obstacles? • What are the project deadlines and key milestones? • How will the workload of the team be shared? • What additional resources are available to the team?