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Lou Gorga Six Sigma Solutions, Inc. 6sigmasolutions@optonline.net (973) 359-0416. What Management Accountants might want to know about Lean Six Sigma. Agenda. Introductions and Focus Lean Six Sigma (and Change Management) Overview Key Tools and Technique Summary Value Proposition

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lou gorga six sigma solutions inc 6sigmasolutions@optonline net 973 359 0416
Lou Gorga

Six Sigma Solutions, Inc.

6sigmasolutions@optonline.net

(973) 359-0416

What Management Accountants might want to know about Lean Six Sigma

agenda
Agenda
  • Introductions and Focus
  • Lean Six Sigma (and Change Management) Overview
  • Key Tools and Technique Summary
  • Value Proposition
  • Questions/Discussion
drivers
Drivers
  • What do you believe is necessary to manage your business?
  • How do you measure success?
  • What do you look at?

Our motto:

If you cant Measure it…

You can’t Manage it.

Some Tools used to measure and change….

tools
Tools
  • Reengineering
  • PDCA
  • Best Practices
  • Change Management Initiatives
  • Lean processing
  • Six Sigma Initiatives
  • Lean Six Sigma Initiatives
  • Etc.

Focus on improving processes through measurement and evaluation

lean six sigma drivers
Lean Six Sigma Drivers
  • What comes to mind when you hear “Lean Six Sigma”?
  • What think of when you hear “Change Management”?
  • Is anyone here a Six Sigma Black/Green Belt or higher?

Lean Six Sigma Drivers

processes for improvement
Processes For Improvement

Lean Six Sigma provides a process based approach to improvement. It can be used to improve any business process.

6

what is lean six sigma
What is Lean Six Sigma?
  • Comprehensive Process tool for:
    • Achieving
    • Sustaining and
    • Maximizing business success.
  • Six Sigma is uniquely driven by:
    • Understanding customer needs
    • Disciplined use of facts and data
    • Statistical evaluation of “issues”
    • Attention to managing, improving and reinventing business process.

Where did it originate and how is it different?

history of change
History of Change
  • Ford’s Assembly Line
  • GE Western - Hawthorne –’(20s -’30s)
  • PDCA cycle originally conceived - Shewart (Western Electric -’30s -’40s)
  • PDCA Made famous by his assistant - Demming(The “Demming Wheel”) - became CQI model(40-50s)
  • Ohno / Toyoda’s - Toyota Processing System (TPS) was already taking shape (’40s-’50s)
  • Harry / Shroeder start the Six Sigma process initiative at Motorola(80s)
  • Womack’s “The Machine That Changed the World” Described Lean a.k.a. TPS(’90s)

What might be next?

drivers business and or improvement
Drivers: Business and/or Improvement

Bottom Line

Customer

All Customers and

We needto listen to their

Voices (VOC)

lean six sigma
Lean Six Sigma
  • Customer focused
  • Data Driven
  • Accurate
  • Creates a “Common Language”
  • Reduces waste
  • Reduces variation
  • Improves contribution

Distinguishes between

“the feel and the real”

example
Example

Roller Bearing Manufacturing

Diameter is a CTQ

(Critical To Quality Parameter)

Nominal diameter = 2.5mm

Minimum Spec = 2.25mm

Maximum Spec = 2.75mm

11

example cont

Lower Specification Limit

Upper Specification Limit

Nominal

Diameter

2.5mm

Customer is expecting 2.5 mm

But will allow some variation within the Spec range.

No Less Than

2.25mm

No More Than

2.75mm

Example (Cont.)

12

example cont3
Example (Cont.)

Let’s Look at Some Basic Statistics

Mean diameter = 2.50 mm

Standard Deviation = 0.125 mm

On Average it’s OK

It’s a Variation issue

15

example cont4
Example (Cont.)

Reducing Variation is Clearly the Key to Improving Process Capability

2s

16

example cont5
Example (Cont.)

Reducing Variation is Clearly the Key to Improving Process Capability

3s

17

example cont6
Example (Cont.)

Reducing Variation is Clearly the Key to Improving Process Capability

4s

18

example cont7
Example (Cont.)

Reducing Variation is Clearly the Key to Improving Process Capability

5s

19

example cont8
Example (Cont.)

Reducing Variation is Clearly the Key to Improving Process Capability

6s

20

how do others perform
How do Others Perform?

IRS Tax Advice

(phone in)

1,000,000

100,000

10,000

1,000

100

1

1% of Hospitalized Patients Injured by Negligence

Doctor Prescription Writing

Defects per Million

Airline Baggage Handling

Average Company

Deaths caused by anesthesia during surgery

Domestic Airline Fatality Rate

Best-in-Class

2

3

4

5

6

7

Sigma Scale of Measure

understanding six sigma

Sigma DPMO

2 308,537

3 66,807

4 6,210

5 233

6 3.4

STATISTICALLY

Six Sigma refers to a process that produces only 3.4 defects per million opportunities.

Most US Businesses

Goal

Understanding Six Sigma
six sigma method

DMAIC: To improve any existing product or process

Define

Measure

Analyze

Improve

Control

Who are the customers and what are their priorities?

What are the most important causes of the defects?

How can we maintain the improvements?

How is the process performing and how is it measured?

How do we remove the causes of the defects?

Six Sigma Method
customer needs vs customer ctq s
Customer Needs vs. Customer CTQ’s
  • Customer needs are the data collected from customers that gives information about what they need or want from your process. Customer needs are often high level, vague, and non-specific

“I need a quick response!”

“I need accurate information!”

  • CTQ’s are customer needs translated into critical process requirements that are specific and measurable. A fully developed CTQ has three elements: Y metric, target, specification/tolerance limits
getting to the ctq s
Getting to the CTQ’s

Translating a customer need into a fully developed CTQ

Time from inquiry to resolution (Y metric)

Example:

Quick Response

5 minutes or less

(Target)

CTQ

Not greater than 60 minutes

(specification / tolerance limit)

measure overview
Measure Overview

What is the Measure phase?

The Measure phase defines the defects, establishes improvement goals, determines that the system of measuring defects is repeatable and reproducible and gathers data about the process.

Why is the Measure phase important?

The Measure phase ensures that you specifically define the defects you are going to measure and that your measurement system is accurate before you begin to actually measure the process.

analyze phase
Analyze Phase

Purpose:

Identify the key sources of variation (vital X’s) by analyzing data and the process

  • Steps:
  • Define Performance Objectives
  • Identify Variation Sources
    • Graphical Tools
    • Hypothesis Testing
    • Regression Analysis

Primary Goal: Determine the vital few X’s

analyze
Analyze

Define Performance Objectives

State the improvement goal in statistical terms

slide32

Analyze: Graphical Tools

Find potential X’s using data analysis techniques on the data collected in Measure.

Examples of some of the data analysis tools are shown here:

improve phase
Improve Phase
  • Purpose:
    • To confirm that the proposed solution(s) will meet or exceed the quality improvement goals of the project
    • To identify the resources required for successful full-scale implementation of that solution
  • Steps:
    • Screen potential causes
    • Discover variable relationships
    • Process improvement techniques
improve general approach
Improve General Approach
  • Select improvement strategy
  • Critical Elements:
  • Process Improvement
  • Standard Operating Procedures
  • Best Practices
  • Brainstorming
  • Mistake Proofing
  • Cost / Benefit Analysis
  • Plan for Pilot
  • Run Pilot
  • Collect & Analyze Data
piloting the solution
Piloting the Solution

Plan and Prepare Pilot

Execute Pilot

Analyze Pilot

Document and Transition

Pilot: small scale, localized, high level of control, high level of scrutiny

Scale-up: gradual, highly monitored

Full-scale implementation: everyday hospital environment, monitoring plan

Pilot solution on a small scale or for a specific period of time in a real business environment. Verifies that process meets CTQ’s

improvement drive
Improvement Drive
  • You must Change to improve by definition
  • Change is hard and expensive
  • Change requires a collaborative plan

This approach is

not rocket science but

not always used.

control phase
Control Phase
  • Purpose:
    • Ensures that the solution is sustained
    • Share the lessons learned in the improvement project
  • Steps:
    • Determine process capability
    • Implement process control
  • Goal:
    • A solution that is fully implemented
    • Statistically confirmed process improvement
    • Sustained Improvement supported with a control plan to ensure continuity
statistical process control
Statistical Process Control

A key control and monitoring tool. Control charts are used to distinguish between common and special cause variation and use that understanding to control and improve processes.

transition
Transition

Process owner should understand the project, track key measurements and lead the effort to close any open transition items.

Recognize and celebrate the contributions that made the team’s achievements possible.

what does lean six sigma deliver
What Does Lean Six Sigma Deliver?
  • Improved problem solving skills
  • More focused project management
  • Common Business Language
    • Defect
    • Customer
    • Consistent Business metrics
  • Improved performance – more consistent deliverables
  • Improved contribution
potential focus areas
Potential Focus Areas
  • Marketing Sales
  • Call Centers
  • Strategic Sourcing/Purchasing
  • Operations
  • Distribution
  • Logistics
  • Finance
  • Billing
  • Etc.
sustaining improvements
Sustaining Improvements
  • Post-project metrics defining the success of the project
  • If you don’t:
    • It will cease to be important
    • You will Not sustain the gains
  • Metrics can/should be the new processes capability “Dashboards”
  • Common Language
  • Measurable and Sustainable Improvement

Measurable and Sustainable Improvement

ONLYIf You Keep Measuring

where can you go from here
Where can you go from here?
  • These tools allow you to build what you want:
    • Better trained work force
    • Focused attention to objectives/goals
  • It is about:
    • Measuring
    • Recognizing
    • Accountability
    • Achievement
what does the future hold
What does the future hold?

Training and certification programs available

thank you

Thank You

Questions?