LEAN in the Lab 5

8/9/2019 LEAN in the Lab 5

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CollegeofScience Department of

Statistics

CollaboratingAroundSix Sigma Innovation & Design

and

Department ofStatistics

SixSigmaInformation Technology:Averting Disaster in Washington, DC

Dr. RickEdgeman, Professor &Chair andSix Sigma BlackBeltTel. +1 208-885-4410 Fax. +1 208-885-7959 Email: [email protected]


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StatisticsSix Sigmais a highly structured strategy for acquiring, assessing, and applyingcustomer, competitor, and enterprise intelligence for the purposes of

product, system or enterprise innovation and design.

Innovation Algorithm

DMAIC (Define-Measure-Analyze-Improve-Control)

Design for Six Sigma Algorithm

DMADV(Define-Measure-Analyze-Design-Verify)

Makes Integrative Use Of:Various strategies and tools from Statistics, Quality, Business, Engineering

and ???


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StatisticsSix Sigma Organizations GE All 300,000+ GE employees mustbe Six Sigma certified. All new GEproducts developed using the Design forSix Sigma (DFSS) approach.

3M New CEO (from GE) requires all3M employees to become Six Sigmacertified.

Dupont AlliedSignal Sun Microsystems Raytheon Motorola

Boeing Lockheed-Martin Bank-of-America American Express HSBC SAS Institute

Rapidly Increasing Areas of Application.

Healthcare GE Heathcare - SLC

Financial,

Military NSWC, Pentagon, etc.

Fueled by: Strategic Contexts.

Notorious bottom-line orientation & results.

Adaptable to multiple bottom lines.

Process orientation: rigorous and systematic

approaches to innovation and design. Focus on the customer.

Successful track record elsewhere.

Industry Buzz.

While Six Sigma is new at, for example, 3M its benefits at others ofthese organizations is measured in the multi-billions of US dollars.


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Statistics

The Villain Cost of Poorly PerformingProcesses level DPMO CP3

2 308,537 NotApplicable

3 66,807 25%-40% of sales4 6,210 15%-25% of sales5 233 5%-15% of sales6 3.4 < 1% of sales

Each sigma shift provides a 10% net income improvement

Cost of Poorly PerformingProcesses (CP3)

Sigma ( ) is a measure of perfection relating to process

performance capability the bigger the better.

A process operating at a Six Sigma level produces only3.4 defects per million opportunities (DPMO) for a defect.Without dedication of significant and appropriate attention

to a process, most processes in leading U.S. companies

operate at a level between 3 and 4 sigma.

Why is Six Sigma Important?


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Statistics

and the Hero We dont know what we dont know.

We cant do what we dont know.

We wont know until we measure.

We dont measure what we dont value. We dont value what we dont measure.

Typical Results: companies that properly implementSix Sigma have seen profit margins grow 20% yearafter year for each sigma shift (up to about 4.8s to5.0s. Since most companies start at about 3s, virtually

each employee trained in Six Sigma will return onaverage $230,000 per project to the bottom line untilthe company reaches 4.7s. After that, the cost savingsare not as dramatic.

However, improved profit margins allow companiesto create products & services with added features and

functions that result in greater market share.

What Does Six Sigma Tell Us?


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StatisticsSix Sigma COPIS Model

Customers Suppliers

Outputs InputsProcess

Steps

The Voice of the Customer (VOC) is aggressively sought and rigorouslyevaluated and used to determine needed outputs and hence the optimalprocess configuration needed to yield those outputs and their necessary

inputs for which the best suppliers are identified and allied with.

From Concept to Market: the Voice of the Customer

How does Six Sigma Work?


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StatisticsDefine

Control

Improve Analyze

Measure

SixSigmaInnovation & theDMAICAlgorithm

Define the problem and customerrequirements.

Measure defect rates and documentthe process in its current incarnation.

Analyze process data and determinethe capability of the process.

Improve the process and removedefect causes.

Control process performance andensure that defects do not recur.

Common sense doesnt mean commonly done or when done, done well.

Six Sigma: How Do We Innovate?


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StatisticsDefine

Verify

Design Analyze

Measure

Design for SixSigma (DFSS)

All new products at GE are designed using a DFSS algorithm.

Define customer requirements andgoals for the process, product or service.

Measure and match performanceto customer requirements.

Analyze and assess the design forthe process, product or service.

Design and implement the array ofnew processes required for the new

process, product or service.

Verifyresults and maintainperformance.

Six Sigma: How Do We Design?


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StatisticsA Specific ExampleSix Sigma Innovation & Design for Information Technology:

Averting Disaster in Washington, DC

Dr. RickL. Edgeman, Professor & Chair, Department ofStatistics, University ofIdaho

Dr. David Bigio,Associate Professor ofMechanical Engineering, University ofMaryland

Thomas E. Ferleman, Information TechnologyConsultant,Office of the ChiefTechnologyOfficer, Government of the District ofColumbia


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Statistics

Magda l

enaForsber g

Sw

edish

Olymp

ian-2 0

02

waking up and beingable to simply do nothing.

Not having to train.

Jumping in the car anddriving to the country.

Making it through a whole daywithout feeling any pain.Goldfinger, January-February 2002, Scanorama, pp. 2

Imagine

Working toward an IT future at OCTO where


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StatisticsImagine what was once Unthinkable Imagine the potential implications of a well-timed and successful terroriststrike initiated by crippling or otherwise compromising the integrity of theinformation technology infrastructure of the government of Washington,DC tourist haven; within 100 kilometers of three major internationalairports; home of key defense, biotechnology, and information technologyfirms; host to diplomats; the military and political capitol of the free world.Truly the potential impact on the world order is staggering and likely well

beyond what the majority of us are reasonably able to guess.

Goal: to immunize / protect the IT infrastructure of the government of theDistrict of Columbia.

Means: Six Sigma Innovation and Design applied to critical IT functions.


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Statistics

Agencies of the District of Columbia provide services that

simply mustbe operational at some minimal level or having failed mustquickly recover.

The Office of the Chief Technology Officer (OCTO) is the primary providerof information technology (IT) services to all 68 agencies of the governmentof the District of Columbia (Washington, DC).

This includes, for example, police, fire and other emergency response,

public education, fire, public utilities, and Department of Motor Vehicles.

Service availability was promised to client agencies was well in excess ofOCTOs ability to deliver. Moreover, the harsh reality of September 11, 2001underscored the critical role of OCTO. Much of OCTOs funding comes fromthe United States Congress with a large amount of funding from the

Department of Homeland Security.


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StatisticsFive Critical Areas of Information Technology Service to OCTO

Client Agencies were examined and methods of improvement,

design, and integration explored. These areas were:

Service Level Management (SLM) Capacity Management (CaM) Availability Management (AM) IT Service Continuity, a.k.a., Disaster Recovery (SCM), and Financial Management (FM)

These are detailed on the following slide.


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StatisticsService Level Management (SLM) ensures that SLAs are met and that adverse impacts on service quality are minimized, assessing the impact of

changes on service quality and SLAs, both when changes are proposed and after their implementation. Key targets set in SLAs relate to service

availability thus requiring incident resolution within agreed periods. SLM is the hinge of service support and delivery and relies on the effective

and efficient working of underpinning support processes, without which an SLA is useless, since these are foundational to content agreement.

Capacity Management (CM) ensures constant availability of adequate capacity to meet agency business requirements. CM involves incident

resolution and problem identification for those difficulties related to capacity issues and generates requests for change (RFCs) that ensure

sufficient capacity. RFCs are subject to a change management process and implementation often affects hardware, software and documentation

and requires effective release management.

Availability Management (AM) concerns design, implementation, measurement and management of IT services to ensure that stated

availability requirements are met and requires IT service FMEA and the understanding the time taken to resume service. Incident management

and problem management provide key inputs ensuring that appropriate corrective actions occur. Availability targets specified in SLAs are

monitored as part of the AM process that also supports the SLM process by providing measurements and reporting to support service reviews.

IT Service Continuity Management (SCM) or Disaster Recovery manages an organizations ability to provide a pre-determined agreed

upon level of IT services to support minimum business requirements. Among the means used are resilient systems and recovery options such as

back-up facilities. Configuration management data is required to facilitate this prevention and planning. Infrastructure and business changesneed to be assessed for their potential impact on continuity plans, and IT and business plans are then subject to change management procedures.

Financial Management (FM) accounts for costs and returns of IT service investments and cost recovery from clients. FM requires interfaces

with CM, configuration management, and SLM to identify the true costs of service. FM works together with business relationship management

and the IT organization during the negotiation of IT budgets and client IT expenditures.

KEY: SLA = Service Level Agreement. FMEA = Failure Modes and Effects Analysis. RFC = Request for Change.

Definitions


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StatisticsApproach Description or Example Use 1ITIL Areas

Charter Purpose is to define the business case; project goals and limits; way of working together; and conflictresolution plan.

All

Brainstorming Uses included cause identification and solution generation. All

Affinity Diagram Uses included associations among OCTO needs (CTQs) All

Interrelationship Digraph Primarily used to explore causal relationships between enablers (hows) to capture correlations and formthe roof in the HOQ.

AM, CtM

Nominal Group Technique: NGTNominal Group Technique used as part of QFD / HOQ to prioritize OCTO needs. All

Matrix / Priority Matrix Diagrams Various uses including distribution of tasks to team members and relating OCTO needs (CTQs) to enablers(hows) in QFD.

All

SMART Goals Specific, Measurable, Attainable, Relevant, and Time-Bound goals and problem statements. All

Process Maps Included high-level COPIS maps and detailed process maps. Both before and after improvementversions were used.

All

VOC Tools Approaches included surveys, focus groups, customer complaints, and interviews. All

Drill Down TreesProcess-Product Drill Down Tree. All

FMEA Failure Modes & Effects Analysis. AM, CtM

HOQ / QFD House of Quality / Quality Function Deployment. Integrated use of Matrix Diagrams and NGT to assessinternal and external customer needs and deploy solutions.

AM

RESULTS Total Savings Estimated by Deputy Director = $2M to $3M from 2003-2007.

ITIL Areas A = Availability Management, CaM = Capacity Management , CtM = Continuity Management,FM = Financial Management, SLM = Service Level Management

Table 1. Examples of Approaches and Their Use in the OCTO DC Project


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StatisticsApproach Description or Example Use 1ITIL Areas

Pareto Chart Used to identify dominant issues / defect causes. All

Fishbone Diagram Also called Cause-and-Effect Diagrams display effects representing a problem or an opportunitywith the causes being real or potential drivers of the effect.

All

SWOT All ITIL areas were assessed for strengths, weaknesses, opportunities and threats with motivationsbeing improvement or leverage of strengths, diminution of weaknesses, welcoming opportunities, andcountermanding threats.

All

Benchmarking Benchmarking of South Dakota Bureau of Information Technology and private sector ISPs. CtM

Chi-Square Tests of homogeneity examined whether differing approaches yielded similar results and tests ofindependence explored CTQ-Enabler relationships.

AM, CaM, CtM,SLM

Correlation & Regression Used to explore, assess, characterize and exploit CTQ-Enabler relationships. SLM

Design of Experiments(DOE)

DOE approaches included experiments with operating parameters, critical elements, or both.Operating parameters are enablers (Xs) that vary in amount while critical elements are enablers (Xs)that differ in type or categorically. Screening and factorial designs were used.

AM, CtM, SLM

SPC Charts Statistical Process Control Charts recommended or used included p charts, I-MR charts, and X-barand R charts to (directly) control the Xs, hence indirectly the CTQs.

AM, CaM, CtM,SLM

RESULTS Total Savings Estimated by Deputy Director = $2M to $3M from 2003-2007.

ITIL Areas A = Availability Management, CaM = Capacity Management , CtM = Continuity Management,FM = Financial Management, SLM = Service Level Management

Table 1. Examples of Approaches and Their Use in the OCTO DC Project(continued)


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StatisticsReferences on Six Sigma at OCTO:Mission Critical: Six Sigma and Business Excellence for Information Technology.Rick L. Edgeman, David I. Bigio, and Thomas A. Ferleman (2005 expected)World Class Applications of Six Sigma: Case Studies from Manufacturing and Service IndustriesElsevier Science, Oxford, UK. Jiju Anthony & Mohammed Zairi, Editors. BOOK CHAPTER

Six Sigma or Business Excellence: Strategic and Tactical Examination of IT Service Level Management at theOffice of the Chief Technology Officer of Washington, DC. (Invited Contribution)Quality & Reliability Engineering International, Vol. 21, No. & pp. pending, 2005Rick L. Edgeman, David Bigio and Thomas Ferleman

Six Sigma Availability Management of Information Technology in the Office of the Chief Technology Officer ofWashington, DC. Total Quality Management, Vol. 15, No. 5/6, 2004.David Bigio, Rick L. Edgeman and Thomas Ferleman

General Six Sigma References:

Edgeman, R. and Bigio, D. (2004). Six Sigma as Metaphor: Heresy or Holy Writ? Quality Progress, Vol. 37, No. 1, 25-30.

Six Sigma in Communities of Care: Improved Care via Institutionalized GeniusBusiness Briefing: Global Healthcare 2002, Vol. 2, 46-49 (Invited Contribution)World Medical Association 53rd General Assembly. London, UK. Rick L. Edgeman BOOK CHAPTER

Klefsj, B., Wiklund, H., and Edgeman, R. (2001). Six Sigma Seen as a Methodology for Total Quality Management,Measuring Business Excellence, Vol. 5, No. 2, 31-35.

The Six Sigma Handbook Expanded and Revised. Thomas Pyzdek (2003). McGraw-Hill, New York.

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LEAN in the Lab 5