El Llc Six Sigma June 2011

D efineM easureA nalyzeI mproveC ontrol

Six Sigma

Six Sigma: DMAIC; Y=f(x)Is it a Goal, a Measure, a Process,

a Tool or an expletive deleted?


Operational Excellence Training

Objectives

Understand the Basics of the Six Sigma Program Understand How Six Sigma Relates to Lean, TOC, TQM

(Theory Of Constraints; Total Quality Management) Ability to Define a Strategy and Roadmap for Success



Define

Is it a Goal, a Measure, a Process, a Tool or an expletive deleted?

Yes



Define

Six Sigma Is a management methodology

• Customer focused• Data driven decisions• Breakthrough performance gains• Validated bottom line results



Customer Focused

Our Performance Compared to Competitors

Impo

rtan

ce t

o Cu

stom

ers

We’re Better They’re Better

High

Moderate-to-’Low’• Price

• Complaints

• OTD• Quality

• Training

• Complete

• Shared Goals

Top 5 Action Items

Driver Action Description Status Status Description Ow nerOriginal Due

DateCurrent

Due DateLate Supplier Deliveries Monthly reporting to suppliers on delivery &

quality metrics.On track

Report Cards Implemented. Adam 5/21 5/21

Late Supplier Deliveries Arrange face to face meetings with top offenders.

On track

Meetings Complete with top 10 Suppliers.

Beth 6/15 6/15

Late Supplier Deliveries Review and approve supplier's corrective action plan.

Caution Corrective Action Plan in Place for 2 major Suppliers

Carlos 7/15 9/15

xyz Cell Always Late Kaizen Event to focus on improving throughput by 40% and improve labor efficiency by 35%

On track

Event held 5/1. 25% throughput improvement in May. Labor Efficiency Increase of 30%

Doreen 5/21 5/21

Unrealistic Promise Date Focus on custom products to provide realistic ATP based on inventory and leadtime of components.

Problem Continued lack of progress. Re-structured and focused team. Developing detailed plan.

Earnest 6/15 8/15

ON TIME DELIVERY (sample)The percentage of sales order line items that ship complete on or before the original customer promise date, for

all line items shipped in the month.

On-Time Delivery

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Target

Pareto of Drivers

0%

25%

50%

75%

100%

Late

Sup

plie

rD

elive

ries

xyz

Cel

lA

lway

sLa

te

Unr

ealis

ticP

rom

ise

Dat

e

Ord

ers

onC

redi

t Hol

d

Low

Yie

ldon

par

t abc

Eng

inee

ring

Cha

nge

Ord

ers

Reason

% Im

pact



Data Driven Decisions

Why should we test or inspect Y, if we know this relationship?

• Y• Dependent• Output• Effect• Symptom• Monitor• Response

• X1 . . . XN• Independent• Input-Process• Cause• Problem• Control• Factor

To get results, should we focus our behavior on the Y or X ?

f (X)Y=



2 308,5373 66,8074 6,2105 2336 3.4

PPM

Breakthrough performance gains

Sigma is a statistical unit of measure which reflects process capability. The sigma scale of measure is perfectly correlated to such characteristics as defects-per-unit, parts-per million defective, and the probability of a failure/error.

(Distribution Shifted ± 1.5)

ProcessCapability

Defects per Million Opportunities



Validated bottom line results

Price In

crease

Material C

osts

Volume Inc.

with Leve

rage

Manufacturin

gSG&A

Volume Inc.

No Levera

geTaxes

Labor

Working C

apital

General-5% P

rice R

eduction

Impa

ct o

n B

otto

m L

ine

Assuming a 10% change in the factor

Factors



Define

Methodology Define Measure Analyze Improve Control



Roadmap Example

Next Project DefineCustomers, Value, Problem StatementScope, Timeline, TeamPrimary/Secondary & OpEx MetricsCurrent Value Stream MapVoice Of Customer (QFD) Measure

Assess specification / DemandMeasurement Capability (Gage R&R)Correct the measurement systemProcess map, Spaghetti, Time obs.Measure OVs & IVs / Queues

Analyze (and fix the obvious)Root Cause (Pareto, C&E, brainstorm)Find all KPOVs & KPIVsFMEA, DOE, critical Xs, VA/NVAGraphical Analysis, ANOVAFuture Value Stream Map

ImproveOptimize KPOVs & test the KPIVsRedesign process, set pacemaker5S, Cell design, MRSVisual controlsValue Stream Plan

ControlDocument process (WIs, Std Work)Mistake proof, TT sheet, CI ListAnalyze change in metricsValue Stream ReviewPrepare final report

Validate Project $

Validate Project $

Validate Project $

Validate Project $

Celebrate Project $


• Develop a focused Problem Statement and Objective• Develop a Process Map and/or FMEA• Develop a Current State Map• Identify the response variable(s) and how to measure them• Analyze measurement system capability• Assess the specification (Is one in place? Is it the right one?)

Practical Problem

ProblemDefinition

• Characterize the response, look at the raw data• Abnormal? Other Clues? Mean or Variance problem?

• Time Observation • Spaghetti Diagram • Takt Time• Future State Maps • Percent Loading • Standard Work Combination• Use Graphical Analysis, Multi-Vari, ANOVA and basic

statistical tools to identify the likely families of variability

ProblemSolution

• Identify the likely X’s• 5S • Set Up Time Reduction (SMED)• Material Replenishment Systems• Level Loading / Line Leveling• Cell Design • Visual Controls• Use Design of Experiments to find the critical few X’s• Move the distribution; Shrink the spread; Confirm the results

Problem Control

• Mistake Proof the process (Poka-Yoke)

• Tolerance the process• Measure the final capability• Place appropriate process controls on

the critical X’s• Document the effort and results• Standard Work • TPM

IdentifyProblem

• Strategic Link to Business Plan defined in Project Selection Process• Defined Business Impact with Op Ex Champion support• Structured Brainstorming at all organizational levels• Cause and Effect Diagrams identifying critical factors• Primary and Secondary Metrics defined and charted• Multi-Level Pareto Charts to confirm project focus

What do you want to know? How do you want to see what it is that you need

to know? What type of tool will generate what it is that you

need to see? What type of data is required of the selected tool? Where can you get the required type of data?

Problem Solving

Plan Execute

Execute PlanCrane Co. Op. Ex. Methodology Originated by MBBs; D. Braasch, J. Davis, R. Duggins, J. O’Callaghan, R. Underwood, I. Wilson

Ope

rati

onal

Exc

elle

nce

Met

hodo

logy

Based in part on Six Sigma Methodology developed by GE Medical Systems and Six Sigma Academy, Inc.



DefineKey Items

Customers, Value, Problem Statement Scope, Timeline, Team Primary/Secondary & OpEx Metrics Current Value Stream Map Voice Of Customer (QFD)

(Quality Function Deployment)



Project SelectionImpact

Business Impact• Revenue Growth• Cost Reduction• Capital Reduction• Key Business Objectives• On Time Delivery• Lead Time• Quality• Customer Satisfaction

Impact on Operational Excellence Metrics



Evaluate and Rank SuggestionsEffort and Risk

Effort required• People Resources• Capital Resources• Duration of Project

Probability of success• Technical Risk

• Data available• Knowledge of process

• Management Risk• Aligned with objectives• Support by value stream manager

Impact vs. Risk vs. Effort• Assess ROI (Return On Investment)• Assign priorities to projects



Evaluate and Rank Suggestions

Example tool to rank projects0106-01 Project Rating.xls

#

Mfg (M)or

Admin (A) Project Description

Rev

enue

Gro

wth

Cos

t Red

uctio

n

Cap

ital R

educ

tion

Key

Bus

ines

s O

bjec

tive

On

Tim

e D

eliv

ery

Lead

Tim

e

Qua

lity

Cus

tom

er

Satis

fact

ion

Tota

l Im

pact

Peop

le R

esou

rces

Cap

ital R

esou

rces

Dur

atio

n of

Pro

ject

Tota

l Effo

rt

Tech

nica

l Ris

k

Man

agem

ent R

isk

Tota

l Ris

k

Variable weightings 20% 15% 10% 15% 20% 5% 5% 10% 100% 50% 20% 30% 100% 40% 60% 100%1 A Customer Billing Errors 0 2 0 4 4 2 2 5 2.4 2 1 3 2.1 1 4 2.8

2 M Warrantyscrap warranty vs sales 0 2 0 1 1 0 3 3 1.1 4 4 5 4.3 4 2 2.8

3 A Vendor Delivery Performance 0 2 2 2 5 4 3 0 2.2 1 1 3 1.6 1 2 1.64 M On Time Shipping Performance 2 1 2 4 5 0 1 5 2.9 4 1 2 2.8 1 3 2.2

5 AHiring and Retention20% - 24% Turnover 0 3 0 2 1 0 3 2 1.3 3 2 4 3.1 1 4 2.8

6 ANew Product Development Cycle Time

3 4 2 5 3 3 4 5 3.6 5 3 5 4.6 5 5 5.0

7 M Manufacturing MaintenanceTooling Maintenance 0 3 0 1 2 3 1 0 1.2 1 4 1 1.6 1 1 1.0

8 A Day Sales Outstanding (DSO) 0 0 4 2 0 0 0 0 0.7 1 0 2 1.1 1 1 1.09 M FTY of 65% on product 123 4 4 2 5 4 4 5 5 4.1 2 1 1 1.5 2 1 1.4

RiskProject Information Impact Effort


Project Ranking

1

2

3

4

5

6

7

8

9

0

1

2

3

4

5

1 2 3 4 5

Effort

Impa

ctProjectNumber

Risk =Ball Size n

Example chart to rank projects 0106-01 Project Rating.xls



Measure

Establish measurement capability• Validate the database (transactional)• Gage R&R (Repeatability & Reproducibility)• Calibration is not enough• Many (or most) measurement systems are not capable• How good is the data you are using to make decisions?

Fix the measurement system• Enables calculation of process capability• Enables calculation of alpha & beta risks

• This step is often skipped



Analyze(and fix the obvious)

Find all KPOVs & KPIVs(Key Process Output Variables; Key Process Input Variables)

FMEA, DOE, critical Xs, VA/NVA(Failure Modes Effects Analysis; Design Of Experiment)

Graphical Analysis, ANOVA(Analysis Of Variance)

Future Value Stream Map



Improve

Optimize KPOVs & test the KPIVs(Key Process Output Variables; Key Process Input Variables)

Redesign process, set pacemaker 5S, Cell design, MRS

(Material Replenishment System) Visual controls Value Stream Plan



Control

Management of Change• Owned by project champion and value stream manager• Critical to long term success of project• Physical and cultural changes

Measurement controls• On-going metrics

Visual Controls• Enable workers to self-manage the process



Basic ImplementationRoadmap

Understand and DefineEntire Value Streams

Deploy Key Business Objectives- Measure and target (metrics)

- Align and involve all employees- Develop and motivate

Define, Measure, Analyze, ImproveIdentify root causes, prioritize, eliminate waste,

make things flow and pulled by customers

Control-Sustain Improvement

-Drive Towards Perfection

Identify Customer Requirements

Vision (Strategic Business Plan)

Continuous Improvement (DMAIC)

Identify Customer Requirements



Hoshin

Key: I mpact Owner SupportType in --> 4 l m

1.2 6 1.1 5

3.2 4 3.1 3

2.2 2 2.1 1

3.0

2.0

1.0

1

2

3

4

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6

7

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Resource

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top

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IT Ope

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Eng

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Mai

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Mar

ketin

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Lead

ers

have

abi

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to m

ap a

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ue s

tream

Met

rics

mod

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in a

ll ap

prop

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trai

ning

seq

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Trai

ning

pro

ject

s de

mon

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el

Dev

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eam

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Cust

omer

Foc

us

Educ

ate/

Get E

very

one

Invo

lved

Impr

ove

the

Met

rics

Trai

ning

Establish tracking of OTD in every cell

Improve On Time Delivery to 98%Train workers in how our products are used by our major customers

Com

plet

e 1

Lead

ersh

ip L

GB

trai

ning

cou

rse

Trai

nees

par

ticip

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in c

usto

mer

sur

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plet

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func

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B tr

aini

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es

Brin

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ps fr

om to

p 10

cus

tom

ers

in fo

r pla

nt to

urs

100%

Com

plet

ion

of L

GB

Pro

ject

s

Conduct interviews with top 10 customers

Train functional leaders as LGBs

Train leadership team as Lean Green Belts (LGB)

Your Annual BreakthroughObjectives

Your

Man

ager

's 1-

Year

Brea

kthr

ough

Obje

ctive

s

Indi

cato

r's a

nd G

oals

Benefi ts


Top 5 Action Items

Driver Action Description Status Status Description OwnerOriginal Due

DateCurrent Due Date

Late Supplier Deliveries Monthly reporting to suppliers on delivery & quality metrics.

On track

Report Cards Implemented. Adam 5/21 5/21

Late Supplier Deliveries Arrange face to face meetings with top offenders.

On track

Meetings Complete with top 10 Suppliers.

Beth 6/15 6/15

Late Supplier Deliveries Review and approve supplier's corrective action plan.

Caution Corrective Action Plan in Place for 2 major Suppliers

Carlos 7/15 9/15

xyz Cell Always Late Kaizen Event to focus on improving throughput by 40% and improve labor efficiency by 35%

On track

Event held 5/1. 25% throughput improvement in May. Labor Efficiency Increase of 30%

Doreen 5/21 5/21

Unrealistic Promise Date Focus on custom products to provide realistic ATP based on inventory and leadtime of components.

Problem Continued lack of progress. Re-structured and focused team. Developing detailed plan.

Earnest 6/15 8/15

ON TIME DELIVERY (sample)The percentage of sales order line items that ship complete on or before the original customer promise date, for

all line items shipped in the month.

On-Time Delivery

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Target

Pareto of Drivers

0%

25%

50%

75%

100%

Late

Sup

plie

rD

elive

ries

xyz

Cel

lA

lway

sLa

te

Unr

ealis

ticP

rom

ise

Dat

e

Ord

ers

onC

redi

t Hol

d

Low

Yie

ldon

par

t abc

Eng

inee

ring

Cha

nge

Ord

ers

Reason

% Im

pact



Does it work?.

Source: American Customer Satisfaction Index, U Michigan, HBR, 2001

199973

companies Ralston Purina

Quaker OatsHilton Hotels

Coca-ColaUnilever

etc.

The top companies in Customer Satisfaction grow MVA atnearly twice the rate of their poor-performing counterparts.

$23

$42

0

10

20

30

40

50

Low HighCustomer Satisfaction Index Score

Mar

ket V

alue

Add

ed

In Billions $



What about Lean, TOC, TQM

Six Sigma• Remove defects, minimize variance

Lean• Remove waste, shorten the flow

TOC• Remove and manage constraints

TQM• Continuous Improvement


Value Stream Map - Current State

Customer

Demand = 45 per day2 shifts

Stamping342

CT=1sec Co=1 hr.Uptime=85%

S. Weld # 1

CT=3 min Co=10 min.Uptime=70%

I

I

IICoils

5 days

CT= 15 min Co=0 min.Uptime=100%2 shifts

CT= 67 min Co= 23 min

FTY = 67%2 shifts

ShippingI

I81

202122

Assembly Test

90

1XDaily

90/60/30 dayForecasts

Order Entry

ProductionControl

MRP

6 WEEKForecast

Suppliers Weekly

Fax

WEEKLY SCHEDULELead Time - 34 Days

5 days

1 sec

7.6 days

3 min

1.8 days

15 min

2.7 days

67 min

4.5 days

4 min

2 days

Lead Time =23.6 days

1 shift1 shift

CT= 4 min Co=0

Uptime=100%2 shifts

Competitive Lead Time = 3 Days

Takt Time= 18.2 Minutes

Orders/day= 36

Queue = 1.5 Days

Touch Time = 89 min


Customer


Stamping342


S. Weld # 1


I

I

IICoils

5 days



FTY = 67%2 shifts

ShippingI

I81

202122

Assembly Test

90

1XDaily


Order Entry

ProductionControl

MRP

6 WEEKForecast

Suppliers Weekly

Fax


5 days

1 sec

7.6 days

3 min

1.8 days

15 min

2.7 days

67 min

4.5 days

4 min

2 days


1 shift1 shift

CT= 4 min Co=0

Uptime=100%2 shifts



Orders/day= 36

Queue = 1.5 Days

Touch Time = 89 min

Competitive LT = 3 days

Takt Time = 18.2 min

Customer DataOn-Time Delivery Demand = 45/day


Customer


Stamping342


S. Weld # 1


I

I

IICoils

5 days



FTY = 67%2 shifts

ShippingI

I81

202122

Assembly Test

90

1XDaily


Order Entry

ProductionControl

MRP

6 WEEKForecast

Suppliers Weekly

Fax


5 days

1 sec

7.6 days

3 min

1.8 days

15 min

2.7 days

67 min

4.5 days

4 min

2 days


1 shift1 shift

CT= 4 min Co=0

Uptime=100%2 shifts



Orders/day= 36

Queue = 1.5 Days

Touch Time = 89 min

Raw = 5 days

WIP = 12.1 days

FG = 6.5 days

Inventory


Customer


Stamping342


S. Weld # 1


I

I

IICoils

5 days



FTY = 67%2 shifts

ShippingI

I81

202122

Assembly Test

90

1XDaily


Order Entry

ProductionControl

MRP

6 WEEKForecast

Suppliers Weekly

Fax


5 days

1 sec

7.6 days

3 min

1.8 days

15 min

2.7 days

67 min

4.5 days

4 min

2 days


1 shift1 shift

CT= 4 min Co=0

Uptime=100%2 shifts



Orders/day= 36

Queue = 1.5 Days

Touch Time = 89 min

Touch Time = 89 min

Flow of ValueLead TimeLead Time = 23.6 days


Customer


Stamping342


S. Weld # 1


I

I

IICoils

5 days



FTY = 67%2 shifts

ShippingI

I81

202122

Assembly Test

90

1XDaily


Order Entry

ProductionControl

MRP

6 WEEKForecast

Suppliers Weekly

Fax


5 days

1 sec

7.6 days

3 min

1.8 days

15 min

2.7 days

67 min

4.5 days

4 min

2 days


1 shift1 shift

CT= 4 min Co=0

Uptime=100%2 shifts



Orders/day= 36

Queue = 1.5 Days

Touch Time = 89 min

CT (67) > Takt Time (18)

ConstraintsOTD, Lead TimeMax Wip = 7.6 days


Customer


Stamping342


S. Weld # 1


I

I

IICoils

5 days



FTY = 67%2 shifts

ShippingI

I81

202122

Assembly Test

90

1XDaily


Order Entry

ProductionControl

MRP

6 WEEKForecast

Suppliers Weekly

Fax


5 days

1 sec

7.6 days

3 min

1.8 days

15 min

2.7 days

67 min

4.5 days

4 min

2 days


1 shift1 shift

CT= 4 min Co=0

Uptime=100%2 shifts



Orders/day= 36

Queue = 1.5 Days

Touch Time = 89 min

CO = 23 min

CO = Changeover

Setup TimesOP Margin, Lead TimeCO = 1 hour


Customer


Stamping342


S. Weld # 1


I

I

IICoils

5 days



FTY = 67%2 shifts

ShippingI

I81

202122

Assembly Test

90

1XDaily


Order Entry

ProductionControl

MRP

6 WEEKForecast

Suppliers Weekly

Fax


5 days

1 sec

7.6 days

3 min

1.8 days

15 min

2.7 days

67 min

4.5 days

4 min

2 days


1 shift1 shift

CT= 4 min Co=0

Uptime=100%2 shifts



Orders/day= 36

Queue = 1.5 Days

Touch Time = 89 min

MaintenanceOTD, Lead TimeUptime = 70%


Customer


Stamping342


S. Weld # 1


I

I

IICoils

5 days



FTY = 67%2 shifts

ShippingI

I81

202122

Assembly Test

90

1XDaily


Order Entry

ProductionControl

MRP

6 WEEKForecast

Suppliers Weekly

Fax


5 days

1 sec

7.6 days

3 min

1.8 days

15 min

2.7 days

67 min

4.5 days

4 min

2 days


1 shift1 shift

CT= 4 min Co=0

Uptime=100%2 shifts



Orders/day= 36

Queue = 1.5 Days

Touch Time = 89 min

QualityFTY = 67%


Customer


Stamping342


S. Weld # 1


I

I

IICoils

5 days



FTY = 67%2 shifts

ShippingI

I81

202122

Assembly Test

90

1XDaily


Order Entry

ProductionControl

MRP

6 WEEKForecast

Suppliers Weekly

Fax


5 days

1 sec

7.6 days

3 min

1.8 days

15 min

2.7 days

67 min

4.5 days

4 min

2 days


1 shift1 shift

CT= 4 min Co=0

Uptime=100%2 shifts



Orders/day= 36

Queue = 1.5 Days

Touch Time = 89 min

What is the pitch time?

Flow of ValueOTD, Lead TimeWho is setting the pace?



Making it happen

Three major roles Implementer

• Learns the tools• Works the process• Solves day to day problems

Manager• Learns the methodology• Manages a value stream• Reviews project teams

Leader• Establishes the vision for the future• Sets priorities• Encourages

Where do you need to focus?