1. LSS Process Improvement Benefits of Lean Six Sigma (LSS) for all Organizations Justin Anderson justin.anderson@bcbsnc.com

2. Central Thesis No individual can routinely make best decisions Complex world All stakeholders needed Lean Six Sigma (LSS) Focuses on Culture Too much attention given to use statistics Primary goal to provide: Collaborative culture of improvement Objective decision making framework Consistent approach to problem solving

3. Agenda My background Build credibility on subject Why LSS is needed History Lean & Toyota Six Sigma & Motorola Methodology Program Management DMAIC Summary For today, T-test free zone

7. People issues

8. System downs

10. Process mapping

11. Mentoring others

13. Chatting w/ co-workers

15. Weekly updates

16. Projects without resourcesLow Urgency High Low

18. Physiological limits to groups

19. Only ~150 relationship

20. Number re-occurs in real world

22. Layered Management

23. Problems?

24. One direction information flow

26. Toyota & Lean World War II left Toyota in bad shape Could not afford waste No managers who only managed No large inventories of parts / unsold products No large batch processing equipment Customer only got what they wanted Intensive focus on customer needs Ability to quickly change products Scarcity created self sustaining culture & mission Lean methodology was born Well what about recent issues??? Lean difficult if you can’t simplify (ex., electronics) (Toyota’s manufacturing system) != (All Toyota’s business processes) Some adoption, but growth allowed for waste Can’t discount overall success – industry was transformed

27. Motorola & Six Sigma Semiconductors are tough Difficult to directly observe what happens (Black Box) Numerous complex steps TI example Motorola developed Six Sigma Identify customer requirements in measurable terms (Y’s) Map process inputs to outcomes (X’s) Average output and variation Sub-process steps then broken into these terms Organization mirrors relationship Ownership driven down Reporting driven up Heavy focus on control and response Complexity created self sustaining culture & mission Six Sigma methodology was born

28. Implementation LSS Methodology

29. Lean – Applied Concepts Lean process maximizing value delivery and minimizing waste

30. Six Sigma – Defined Process Highly controlled process where variation has been minimized

31. LSS –Lean Concepts & Six Sigma Process Initial State Post Six Sigma Post Lean Customer Request Customer Request Customer Request Customer Fulfillment Customer Fulfillment Lean focus on shortening process to essential steps Six Sigma identifies opportunities within process Customer Fulfillment

32. LSS – Improvement Attitude Actual “Delivery” Actual “Improvement” Planned Improvement “Fix” “Fix” “Fix” Traditional Approach Project Efficiency Project Project Situation Changes Current Current Current Time Time Time Continuous Improvement You will never “Fix” a process Environment is NOT static Why strive for static efficiency? Goal: Incremental improvement Small change = fast change Adoptive efficiency has higher yields FS7 FS6 FS4 FS5 FS3 LSS Approach FS2 Efficiency FS1 Change Change Current Time

33. Key Point – Change Acceptance E Effectiveness = x Q Quality Improvement A Acceptance Success of cultural and process changes dependent on: How to do this? Clear mission Full engagement of organization Objective, data driven methodology (LSS) Effective change management

34. Four Methodologies of LSS

35. Staffing LSS Organization

36. The Quality Team Structure Business Team Quality Team Strategic Direction Strategic Planning Tactical Direction Tactical Alignment Overlap

37. Summary LSS focused on culture Best leaders can’t consistently make best decisions Ensure right people have right information Empowering people, Holding people accountable LSS methods and tools support the culture LSS provides problem solving framework Standard, data driven approach Ensures appropriate project prioritization Data driven selection Leaders provided with needed inform LSS strives for continuous Improvement Incremental, fast improvement vs. big “fixes” Goal of adaptive efficiency vs. static efficiency E = Q * A

38. Backup Slides Additional LSS Mechanics

39. Six Sigma Defined Understand what customer will and will not except Upper (UCL) and lower limits (LCL) Understand your process average Process Average Understand how much your process varies Process Standard Deviation Determine probability of producing outside of limits Center process & identify variation

40. Six Sigma Y’s and X’s – CTQ Tree & FMEA CTQ Tree Customers to Inputs FMEA Prioritize & Prevent Errors Ongoing improvement efforts Document Process Steps Identify failure modes Assign Severity, Failure Probability, & Detection Multiply #3 to create Risk Priority Number (RPN) Prioritize based on RPN Figuring out what went wrong Identify measurable response (Ys) Identify sub-process and/or drivers Identify measurable inputs (Xs) Prioritize either by creating FMEA or other methods

41. Bench Marking by Sigma Level 6 Sigma 3.4 Defects 5 Sigma 233 Defects 4 Sigma 6,210 Defects 3 Sigma 66,807 Defects 2 Sigma 308,537 Defects Defects per Million Parts

42. What it means to be @ Six Sigma Is 99% (3.8s) good enough? 99.99966% Good – At 6s 20,000 lost mails per hour 7 lost mails per hour Unsafe drinking water almost 15 minutes each day One minute of unsafe drinking water every seven months 5,000 incorrect surgical operations per week 1.7 incorrect surgical operations per week 2 short or long landings at most major airports daily One short or long landing at major airports every five years 200,000 wrong drug prescriptions each year 68 wrong drug prescriptions each year Example quoted from GE Book of Knowledge - copyright GE

44. To know the customers and their expectations

46. Methodology D Define Identify and state the practical problem M Measure Validate the practical problem by collecting data A Analyze Convert the practical problem to a statistical one, define statistical goal and identify potential statistical solution I Improve Confirm and test the statistical solution C Control Convert the statistical solution to a practical solution

47. D Define VoC - Who wants the project and why ? M Measure The scope of project / improvement A Analyze Key team members / resources for the project I Improve Critical milestones and stakeholder review C Control Budget allocation Define

49. What is the sampling strategy ?

50. Who will collect data and how will data get stored ?

51. What could the potential drivers of variation be ?I Improve C Control Collect data Measure

52. D Define Understand statistical problem M Measure Baseline current process capability A Analyze I Improve Define statistical improvement goal C Control Identify drivers of variation (significant factors) Analyze

57. D Define Map improved process M Measure A Analyze Pilot solution I Improve C Control Identify operating tolerance on significant factors Improve

58. D Define Ensure measurement system reliability for significant factors M Measure - Is tool used to measure the input / process variables flawed ? - Do all operators interpret the tool reading in the same way ? A Analyze Improved process capability I Improve Sustenance Plan C Control - Statistical Process Control - Mistake Proofing - Control Plan Control

60. What Statistical Process Control (SPC) tools will be used to monitor the process performance ?

61. Who will review the performance of the output variable and significant factors on closure of the project and how frequently ?

62. What is the corrective action or reaction plan if any of the factors were to be out of control ?Control – Sustenance Plan

63. Six Sigma Organization

65. Green Belt Projects

66. Participate in Black Belt Projects

68. Black Belt Projects

69. Change Agents

71. Run Strategic projects

72. More Strategic than tactical roleMaster Black Belt (MBB)