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Ten Principles for World Class Process Improvement
Merwan Mehta, Ph. D.
Professor
COLLEGE OF ENGINEERING & TECHNOLOGY
Institute of Industrial Engineers’ Webinar July 15th, 2014 2 © 2014
World-class companies
know what is value-
added and what is not
for their customers!
http://www.ecircle.com/blog/wp-content/uploads/2012/02/we-love-customers.jpg
http://www.followupsuccess.com/wp-content/uploads/2008/09/help-new-customers-wanted.jpg
Institute of Industrial Engineers’ Webinar July 15th, 2014 3 © 2014
Support Core Processes
Planning Purchasing
Suppliers
Expediting
Recv
Notice Receiving
Inspection
Materials Handling
Stores/ Kitting
Manufacturing
Indirect Labor
WIP
Supervision Robot
Automated Warehouse
Distribution
Customers
CAD System
Production Engineering
Accounting
Shop Floor Data
Collection
Management
START
Institute of Industrial Engineers’ Webinar July 15th, 2014 4 © 2014
Which would you buy?
Supplier A
• Basic cost: $499
• Other costs: None
• Total costs: $499
Supplier B
• Basic cost: $449
• Better processes: $90
• Total costs: $539
http://www.engadget.com/2010/01/29/apple-ipad-the-definitive-guide-so-far/
Institute of Industrial Engineers’ Webinar July 15th, 2014 5 © 2014
CUSTOMERS WANT
QUALITY
VALUE
RELIABILITY
PRICE SERVICE
Not one, but all!
Institute of Industrial Engineers’ Webinar July 15th, 2014 6 © 2014
We always want
the best value!
And so does everyone!
Always provide the best
value to customers!
KANO Principle
Institute of Industrial Engineers’ Webinar July 15th, 2014 7 © 2014
World-class companies
know that customers will
not support inefficiency &
incompetence!
Institute of Industrial Engineers’ Webinar July 15th, 2014 8 © 2014
Rise of Toyota
• Eiji Toyoda: passed away
recently at age 100
• Developed efficient, low-
defect manufacturing
processes
• Visited Ford plant in 1950
• Toyota was making 2,500
cars per year
Institute of Industrial Engineers’ Webinar July 15th, 2014 9 © 2014
Rise of Toyota
• Saw
Americans
were buying
European
cars!
• Was
convinced
that
Americans
will buy his
cars! http://www.graphixshare.com/uploads/posts/2012-10-
03/1349287994_5c3823fd6cf84d16e50552497f3cac7b.jpg
Institute of Industrial Engineers’ Webinar July 15th, 2014 10 © 2014
http://www.notjohnchow.com/save-america-buy-american/
http://www.ar15.com/archive/topic.html?b=7&f=91&t=905267
• Customers will not
support inefficiency!
• Customers do not
want to do charity!
• Slogans are futile!
Lesson
Institute of Industrial Engineers’ Webinar July 15th, 2014 11 © 2014
Only the best
will survive!
Institute of Industrial Engineers’ Webinar July 15th, 2014 12 © 2014
World-class companies
ensure that each moment of
every employee is used to
provide value to customers!
Institute of Industrial Engineers’ Webinar July 15th, 2014 13 © 2014
Why should we be competitive?
• All effort is paid by the
customer!
• Customers only want
to pay for work that
they think is value-
added!
http://jaypgreene.com/2012/01/11/the-value-add-map-is-not-the-teaching-
territory-but-youll-still-get-lost-without-it/
Institute of Industrial Engineers’ Webinar July 15th, 2014 14 © 2014
Develop Employees
http://panorama-consulting.com/wp-
content/uploads/2012/03/Lean-Six-
Sigma-300x235.png
http://www.toonpool.com/user/589/files/ethics_354305.jpg
http://2.bp.blogspot.com/-taPob-
SU3yk/TaLeTMQJcgI/AAAAAAAAJHs/xhXOAGJW2
OA/s1600/Baldrige_Award_Logo.gif
http://www.files.chem.vt.edu/chem-
dept/tissue/images/ethics180x120.pn
g
http://deepgreenpermaculture.files.wordpress
.com/2010/08/rightandwrongdecisions.jpg
Institute of Industrial Engineers’ Webinar July 15th, 2014 15 © 2014
World-class companies
invest in employees and treat
them as humans!
Institute of Industrial Engineers’ Webinar July 15th, 2014 16 © 2014
Encourage Balanced Employees!
http://4.bp.blogspot.com/-0ts09StEo70/ULY40-
7ZLXI/AAAAAAAABxc/6w70oa4fbIE/s1600/Work_Life_Balance+-+forn2220h.jpg http://timeontaskva.com/wp-content/uploads/2011/05/work-life-balance.jpg
Institute of Industrial Engineers’ Webinar July 15th, 2014 17 © 2014
Who touches your customers?
• CEO
• COO
• CFO
• President
• Vice-presidents
• General
managers
• Sales managers
• Marketing
managers
• Department
managers
• Supervisors
• Customer service
reps
• Sales people
Institute of Industrial Engineers’ Webinar July 15th, 2014 18 © 2014
Motivate employees who
meet and interact with
customers!
http://rlv.zcache.com/no_coffee_no_workee_customer_service_rep_postcard-
r10b9b7befefc4df2a200dd911593bdda_vgbaq_8byvr_324.jpg
http://pride-of-workmanship.com/images/package/pride1.gif
http://jazzpoly.com.au/images/badge.png
Institute of Industrial Engineers’ Webinar July 15th, 2014 19 © 2014
Insist to do it right the first time!
Institute of Industrial Engineers’ Webinar July 15th, 2014 20 © 2014
Customer
satisfaction is
directly
proportional to
employee
satisfaction!
Institute of Industrial Engineers’ Webinar July 15th, 2014 21 © 2014
World-class companies build
high performance teams!
Institute of Industrial Engineers’ Webinar July 15th, 2014 22 © 2014
High Performance Teams
What do high performance
teams have that others don’t?
Institute of Industrial Engineers’ Webinar July 15th, 2014 23 © 2014
In high performance teams,
each team member is
committed to make others the
best they can be?
Institute of Industrial Engineers’ Webinar July 15th, 2014 24 © 2014
World-class companies use
best practices in process
improvement!
Institute of Industrial Engineers’ Webinar July 15th, 2014 25 © 2014
Lean Six-sigma
• Lean is the continuous pursuit of
waste reduction
• Six-sigma is the relentless pursuit of
quality through variation control
• Lean Six-sigma process No wasteful activities
Only 7 rejects or errors in 2 million!
Institute of Industrial Engineers’ Webinar July 15th, 2014 26 © 2014
• No hidden knowledge!
• If you can't describe what you are doing
as a process, you don't know what
you're doing.”
W. Edwards Deming
Document all processes!
Institute of Industrial Engineers’ Webinar July 15th, 2014 27 © 2014
• Value stream: a process that
increasingly adds value to the output
from the customer’s point of view
Convert Processes into
Value Streams!
Activity A Activity C Activity B Input
Output Input
Input
Output
Institute of Industrial Engineers’ Webinar July 15th, 2014 28 © 2014
Processes are Baton Races!
• Treat process output as a baton in a relay race … customer is waiting for the baton!
http://www.aplcresearch.com/Baton%20passing.jpg
• Effort to move baton is only paid for!
• Eliminate delays between activities!
Institute of Industrial Engineers’ Webinar July 15th, 2014 29 © 2014
Activity 1
Activity 2
Activity 3
Activity 6
Activity 4
Activity 5 Activity 8
Activity 9
Activity 10
Activity 7
Clerk
Loan
Officer
Manager
Underwriter
Use Flow Charts!
Institute of Industrial Engineers’ Webinar July 15th, 2014 30 © 2014
Production
Control
Suppliers
Customers
SHIPPING
Staging
MOLDING
T/T = 85 secs
C/O = 2 – 8 hours
Yield = 85%
Multiple machines
People = 12 Shift = 1
Uptime = 85%
PAINT
T/T = 120 mins
C/O =
Yield = 60%
Multiple machines
People = 4 Shifts = 2
Buff Loop = 30% 20,000 R
20,000 L
ASSEMBLY
T/T = 45 secs
C/O =
Yield = 90%
Multiple stations
People = 8 Shifts = 2
Uptime = 85% 4,000 R
4,000 L
Curing &
Sequencing
BUFF
LOOP
Plastic
Pellets
INSPECT
T/T = 15 secs
C/O =
Yield = 100%
Single station
People = 1 Shifts = 2
Uptime = 85% 32,000 R
32,000 L
12 Week Forecast 3/6/9 Month Forecasts
Monthly Orders Daily Actual
Monthly
10.4 days
Daily Production Schedule
Weekly
5 days 5 days 1 day 8 days
85 secs 120 mins 45 secs 15 secs
20,000 R
20,000 L
Lead Time = 29.4 days
VA Time = 123 mins
No profits for 2 ½ years Defects = 27,000 PPM Scrap = 33% Fortune on transportation
Requirement =
8,000 mirrors / day
Rolled Throughput Yield (RTY) = 0.85 x 0.60 x 0.90 x 1.0 = 0.459 or 46%
Current State Map
Institute of Industrial Engineers’ Webinar July 15th, 2014 31 © 2014
Envisioned Future State Map
Production
Control Suppliers
Customers
SHIPPING
Staging
MOLDING
T/T = 85 secs
C/O = 20 mins
Yield = 95%
Multiple machines
People = 12 Shift = 1
Uptime = 95%
PAINT
T/T = 120 mins
C/O = 5 mins
Yield = 75 - 85%
Multiple machines
People = 4 Shifts = 2
Buff Loop = 30%
ASSEMBLY & INSPECT
T/T = 45 + 1 secs
C/O = 0 mins
Yield = 98%
Multiple stations
People = 8 Shifts = 2
Uptime = 90%
Resin
s 1
week
12 Week Forecast Monthly Forecast
Kanban Fax Daily / Weekly Actual Daily Actual Weekly
5 days
Daily
½ day 2 days 1.0 days
85 secs 120 mins 46 secs
Lead Time = 8.5 days
VA Time = 123 mins
Requirement =
8,000 mirrors / day
Batch
Purchased Parts
Supermarket
MOLDING
SCHEDULE
500 LH & RH
1 shift or 0.5 day
8 – Colors
200 – 500 Pieces
2 days
Shift
Schedule
Scrap & first
time yield
Schedule
Attainment 1,700
pieces
1-2 days
Red Light
Painted Parts
Supermarket
Rolled Throughput Yield (RTY) = 0.95 x 0.80 x 0.98 x 1.0 = 0.7448 or 75%
Institute of Industrial Engineers’ Webinar July 15th, 2014 32 © 2014
Know %VAT for Core Processes!
• VAT ratio = (sum of activity times) / (lead time)
• %VAT = (30 / 120 ) x 100 = 25%
• For all priority processes: %VAT = 100%
Activity A Activity C Activity B Start End
10 mins 5 mins 15 mins
Lead time = 120 mins
For most processes %VAT is below 5% !
Institute of Industrial Engineers’ Webinar July 15th, 2014 33 © 2014
Reduce Lead Time
• Define process start and end points
• Lead time = time between start & end points
• Lead time is what the customer sees!
• Reduce lead time first!
Activity A Activity C Activity B Start End
Lead Time
Institute of Industrial Engineers’ Webinar July 15th, 2014 34 © 2014
TIM WOOD
Helps Processes
Become Lean
T
Transportation
Waste
O
Over-
Production
W
Waiting Waste
I
Inventory/Sto
rage Waste
M
Motion Waste
D
Defects
Waste
O
Over-
Processing
People Talent
Waste
Institute of Industrial Engineers’ Webinar July 15th, 2014 35 © 2014
World-class companies:
Capture company knowledge
and improve company
information systems
Institute of Industrial Engineers’ Webinar July 15th, 2014 36 © 2014
• Create company knowledge
database
• Skill is the enemy of Lean!
• Not skills, but standard work and
checklists
No Hidden Knowledge!
Institute of Industrial Engineers’ Webinar July 15th, 2014 37 © 2014
• Due to problems in initial
implementation
• Unclear upfront goals
• Incompatible computer interfaces
• Lack of clarity
• Training
• Lack of local experts
Systems Decay …..
Institute of Industrial Engineers’ Webinar July 15th, 2014 38 © 2014
World-class companies:
Eliminate batch flow,
standardize processes and
use checklists
Institute of Industrial Engineers’ Webinar July 15th, 2014 39 © 2014
Discourage Batch Flow
• Activity time for each activity = 1 min per piece
• What will be the lead time to complete the batch?
Ash Bob Cal
Dan
Minutes 1 2 3 4 5 6 7 8 9 10 11 12
Ash 1 2 3 4
Bob 1 2 3 4
Cal 1 2 3 4
Institute of Industrial Engineers’ Webinar July 15th, 2014 40 © 2014
Encourage Continuous Flow
• Activity time for each activity = 1 min per piece
• What will be the lead time to complete the batch?
Ash Bob Cal
Minutes 1 2 3 4 5 6 7 8 9 10 11 12
Ash 1 2 3 4
Bob 1 2 3 4
Cal 1 2 3 4
Institute of Industrial Engineers’ Webinar July 15th, 2014 41 © 2014
= Queue time (Days) RFQ = Request for quote
RFQ
Quote
Lean Work Area
Hours
Hours
Minutes
Minute
s Customer Service
Engineering
Purchasing
Quoting
Customer
1
2
2
5
RFQ
Customer Service Purchasing
Engineering Quoting
Quote
Traditional Layout
Customer
Create Cellular Process Areas
Institute of Industrial Engineers’ Webinar July 15th, 2014 42 © 2014
Our Process Environment
• On the job training!
• Everyone is allowed
to work the way they
see fit!
• Everyone is unique
and so works
differently!
http://www.inlinguamalta.com/about-us/
Institute of Industrial Engineers’ Webinar July 15th, 2014 43 © 2014
Standardize Processes
• All do it one way!
• All take the same
time!
• All achieve the
same quality!
• Easy to control,
train and cross-
train! http://www.middleclasshandbook.co.uk/journal/201
1/11/1/stuck-in-the-middle-what-to-do-when-
people-start-talking-ove.html
Institute of Industrial Engineers’ Webinar July 15th, 2014 44 © 2014
Is Innovation Lost?
• Show innovation that
everyone agrees on!
• Standardize the process and
activities!
• Change requires everyone to
discuss and accept new
process!
Institute of Industrial Engineers’ Webinar July 15th, 2014 45 © 2014
Use Checklists
http://geoffmcdonald.com/atul-gawande-checklist-manifesto/
• Not a crutch, but aid for memory!
• Not extra skill, but standardize!
• What was the
weapon?
• 6000 drugs
• 4000 procedures
Institute of Industrial Engineers’ Webinar July 15th, 2014 46 © 2014
Quality is everyone’s job!
Quality in all you do …..
Products, processes,
workplace, organization
Institute of Industrial Engineers’ Webinar July 15th, 2014 47 © 2014
Messy People are Productive!
http://www.impactlab.net/2007/03/22/messy-people-are-
more-productive/
• I am messy but
my work is top
grade!
• I might be messy,
but I never make
mistakes!
• I can find things
easier this way!
Do you buy that?
Institute of Industrial Engineers’ Webinar July 15th, 2014 48 © 2014
Organize Your Work Space
• SORT
• SET IN ORDER
• SHINE
• STANDARDIZE:
• SUSTAIN:
5-S
Institute of Industrial Engineers’ Webinar July 15th, 2014 49 © 2014
The time to clean tables is
when the restaurant is empty!
Dave Thomas
Organize your
workspace!
Institute of Industrial Engineers’ Webinar July 15th, 2014 50 © 2014
First Pass Yield
• If 45 satisfied outputs resulted from
processing 60 at an activity station what
is the first pass yield?
• First Pass Yield (FPY) ratio = (# accepted)/(# handled) • FPY ratio = 45 /60 = 0.75 • %FPY = 75%
For
transactional
processes, use
percent
complete &
accurate: %C&A
Institute of Industrial Engineers’ Webinar July 15th, 2014 51 © 2014
Rolled Throughput Yield
• RTY ratio = 0.90 x 0.94 x 0.97 = 0.82
• %RTY = 0.82 x 100 = 82%
100 pcs 90 pcs 85 pcs 82 pcs
End Activity B
(FPY=.94)
Activity C
(FPY=0.97)
Activity A
(FPY=0.9) Start
• Yield for entire process
• FPYA = 90%, FPYB = 94%, and FPYC = 97%
Institute of Industrial Engineers’ Webinar July 15th, 2014 52 © 2014
Track quality of work:
in production and the office !
What is not measured,
is not important !
What is measured can only
be controlled !
Institute of Industrial Engineers’ Webinar July 15th, 2014 53 © 2014
Establish and Monitor
Key Metrics!
Track Center & Dispersion
Institute of Industrial Engineers’ Webinar July 15th, 2014 54 © 2014
People like to know
what the score is!
How many of
you will go to a
game where no
score is kept?
Institute of Industrial Engineers’ Webinar July 15th, 2014 55 © 2014
Which weapon is better? Weapon A Weapon B
Institute of Industrial Engineers’ Webinar July 15th, 2014 56 © 2014
Track Center & Dispersion
Average and range or
standard deviation
µ & σ
Institute of Industrial Engineers’ Webinar July 15th, 2014 57 © 2014
Closing Thoughts
• We are what we repeatedly do;
Excellence, then, is not an act but a habit!
Aristotle
• Live as if today is your last day;
Learn as if you are going to live forever!
Mahatma Gandhi
• It is not necessary to change;
Survival is not mandatory!
Edward Deming
Copyright © 2014 All rights reserved