What is Process Improvement About?

1. What is Process Improvement About? • Our Approach • Sponsor Workshop • Process Excellence

2. Objectives • Introduce a framework of Process Excellence • Review our specific improvement methodologies • Explore and answer: • What is their purpose? • How are they different?

3. What is Process? • Process is everywhere…everything is a process • Process = a series of actions or steps taken in order to achieve a particular end

4. So What is Process Excellence? Improving the way that we create and deliver value It’s about what we do for the customers, not to them

5. Why Does Process Excellence Matter? • In our industry what we provide is not the differentiator • It’s what we do and how we do it • We must understand and deliver what our customers need better than our competitors • Process Excellence can help you achieve that

6. How Does It Help Us? • Process Excellence isn’t just about lower operating costs, it’s about aligning our organization to achieve success • That means… • Less Complexity • More Time • Improved Service • Increased Revenue • Better Lives • And Happier Customers Process= The work we do Excellence= The way we do it

7. Process Excellence Framework • What are the methodologies we use? • How are they different?

8. Three Improvement Tracks • Goal: Rapid Improvement Events Opportunity Identified Immediate Action Required Simple Problem ComplexProblem Kaizen Small Team Concentrated Effort 3-7 days of effort (1 week of training) Lean Six Sigma Cross-Functional Project Based 1-4 months of effort (2 weeks of training) JDI / A3 Small Team Just-Do-It 2-6 hours of effort (3-4 hours of training) • Three problem solving methods based upon complexity. • Today, 80% of our projects are likely to be JDI or Kaizen.

9. DMAIC Framework – The Common Overlay Define Measure Analyze Improve Control Action Plan & Follow-ups JDI Just Do It Team of 1-3 4-6 Hours Background / Current Situation Outcome / Goal Identification Root Cause & Recommendations Countermeasures Implemented 30 minutes 30 minutes 1-2 hours 2-3 hours 1+ hours Kaizen Simple Issue Team of 3-6 3-7 Days Sustainability & Measurement Current Process Map High Level Metrics / Value Stream Map Waste Identification & Improvement Plan Risk Analysis & Implementation ½ -1 day • ½ -1 day 1 day 1 day 1+ days Lean Six Sigma Complex Issue Team of 3-6 2-4 Months Control Plan & Measurement Requirements & Current Process Map Baseline Measurement Statistical Analysis & Solution Mapping Pilot & Implementation 1-2 weeks 2-3 weeks 1-2 weeks 2-3 weeks 1+ weeks

10. What is JDI (Just-Do-It) about ? • Foundational element of continuous improvement • A way to structure and develop improvement ideas • Standardized systematic thought process • Built on the DMAIC framework • A mindset / “way of thinking” • A communication tool to report issues and improvement suggestions to management • Used for any kind of situation in all parts of the business Thinking drives behaviors. Behaviors drive action. Action drives results.

11. A Systematic Thought Process

12. Template helps with Problem Solving • The one-page template on A3 sized paper is meant to identify and communicate the critical project information and to facilitate decision-making. • This information should fit on one page, makes it easy to communicate make decisions with team. • It is customized to the Team Leader and application at hand. • It can be characterized as a lean tool best suited for solving relatively short-duration improvement activities.

13. Thought Progression follows DMAIC…

14. And, addresses these High-level Questions “What is the Problem” “How Do We Fix It?” “Where Are We?” “Where Do We Need to Be?” “Did We Fix It?” “What’s Causing It?”

15. Form and Format - Example

16. What makes an A3 / JDI a Good One? • It tells a story • It contains objective facts, data • It “resolves” a situation • It engages and aligns the organization! A good JDI is a reflection of the dialogue that created it

17. A Way of Managing/Thinking How does this fit into what you do everyday? • Solving Problems (Progress is essential) • Ask others about their “improvement” efforts • Proposing improvements • Standardizing • Planning / Reporting • Reflection / post-mortem • Project Management • Change Management • Alignment / Agreement • Mentoring, coaching, developing people

18. What is Lean Thinking about? • Built from Henry Ford (circa 1900) - Lean concepts came from the Toyota Production System, translated through teachings of Ohno and Shingo (1955 – 1985) • The goal of Lean Thinking is to: • Eliminate waste (muda) such that you are only doing value added work • Value added is defined as: • Customer recognizes the value (willing to pay for it) • Changes the product in a desired manner • Processes that are done right the first time

19. Identify and Eliminate Waste • 8 common categories of waste: (Kaizen focus) • Defects - incorrect data entry, inspection • Over production - preparing extra reports, reports not acted upon, multiple copies in data storage • Waiting - processing monthly not as the work comes in (i. e. closings, billings, collections) • Non-utilized resources – not tapping into/ utilizing multi-skillsets • Transportation - extra steps in the process, distance traveled • Inventory - transactions not processed, M&R parts, UTR’s queued • Motion - extra steps, travel from office to office / desk to desk, extra data entry... • ExcessProcessing - multiple Billing sign-offs, inspection

20. Layout (distance) Insufficient maintenance Poor work methods Lack of training Poor supervisory skills Ineffective scheduling Incorrect final point of rest Counting inventory Multiple Signoffs No back-up/cross-training Excessive UTR’s No visual control Lack of workplace organization Too many outside trucks in the yard Examples of Waste The longer waste occurs, the more accepting you’ll become!

21. When to utilize Kaizen approach? • A Kaizen event (lean effort) is typically employed when obvious waste sources have been identified and/or when results are needed immediately • A Kaizen facilitator assembles a cross-functional team working in the process. • Additional members may include subject matter experts (SME) aimed at improving a process or problem identified within a specific area. • Project completion should be in a focused and compressed time period (typically 3-7 days of effort spread over a couple months)

22. Lean + Six Sigma Work Together • Along with the Kaizen (waste reduction) process, the concept of ‘Six Sigma’ is another structured team approach for improving process performance • Many times, they go together on a project • L6S methods (i.e. – Leanbelt; Greenbelt/ Blackbelt) emphasizes the importance of identifying key critical inputs that effect your key outputs (performance of quality) through statistical analysis • Six Sigma drives for perfection in those processes by reducing variation and/or moving the mean

23. What is Six Sigma about? • Sigma is a letter in the Greek Alphabet • Sigma is a symbol which shows the degree of variation in a process (calculated as standard deviation) • The goal of a Six Sigma capable process is to: • Minimize variation • Center the process • The degree of acceptable variation in a process depends on knowing the target. How close are you to meeting your target? Do you know where your target is?

24. Identify and Eliminate Variation • 2 common categories of Variation (Greenbelt focus) • Common cause • Is present in every process • Is produced by the process itself (the way we do business) • Special cause • Unpredictable • Caused by unique disturbances or a series of them

25. Prevention Costs Education and training Safety Controlling processes Appraisal Costs Incoming inspection Maintenance and calibration of equipment Process audits Failure Costs (Internal) Incorrect gate transactions Wrong boxes out gate Rework Re-inspection Late Start Times Digging for Containers Failure Costs (External) Processing customer inquiries Incurring penalties/claims Lost sales Examples of Variation (Cost of Poor Quality) The longer variation exists, the more accepting you’ll become!

26. When to utilize L6S approach (i.e. - Greenbelt) • A ‘Green belt’ (six sigma) effort is typically employed to determine sources of variation and reduce their impact • A Green belt project assembles a cross-functional team working in the process. • Additional members may include subject matter experts (SME) aimed at improving a process or problem identified within a specific area. • Project completion should be in a focused, “project managed” time period (Because of complexity - typically 10 to 40 days of effort spread over 4 to 6 months)

27. Reduce Variability for Process Performance 99% Good Quality (3.8σ) vs. • No electricity for almost seven hours per month • 1 misspelled word per 30 pages in a book • 11.8 million shares incorrectly traded on the NYSE everyday • 3 warranty claims for every new automobile • 48,000 to 96,000 deaths attributed to hospital errors each year • Cell Phone would be out-of-service (down) 54 hours a year 99.99966% Great Quality (6σ) • One hour without electricity every 34 years • 1 misspelled word in all the books in a medium sized library • 4,021 shares incorrectly traded on the NYSE everyday • 1 warranty claim for every 980 new automobiles • 17 to 34 deaths attributed to hospital errors each year • Cell Phone would be down less than 2 minutes a year

28. Oops!

29. Why Utilize JDI, Kaizen and L6S methods? • Simple: • Common Sense • Reduction of waste • Reduction of variation • Reduced operating costs • Complex: • Vision & strategic approach • Methodology that aligns improvements to strategic objectives & utilizes aggressive goal-setting to drive real bottom-line financial improvement • Tools for: customer focus, continuous improvement, people involvement, operational excellence

30. All Three Approaches Follow DMAIC • JDI -> Basic problem solving tool, formalizes thought process and documents (A3) how a problem was solved, minimal toolset (about culture change) • Kaizen -> Workshop based problem solving tool, team based, little more around toolset • L6S -> Project based problem solving tool, very team based, data driven, strong toolset

31. Our Overall Focus • Removal of waste to reduce time to execute processes • Improving performance by flawless execution • Achieving rapid breakthrough improvement • Applying advanced breakthrough tools that work • Making a positive and deep cultural change • Ultimately – “Getting Real Financial Results”

32. Review • Introduce a framework of Process Excellence • Review our specific improvement methodologies • Explore and answer: • What is their purpose? • How are they different?