Combining Lean and Six Sigma

1. Combining Lean & Six Sigma
Prepared by Julian Kalac
Lean Six Sigma Master Black Belt
September 30, 2014
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2. Black Belt Training
What is Lean Six Sigma?
1)Lean Manufacturing focusses on reducing waste, Non-Value Add activity and “Speeding” up the Process cycle Times.
1)Six Sigma is defined as 3.4 DPM (Defective Parts- per Million), focusses on reducing defects and process variation
2)Lean Six Sigma = Six Sigma “Quality”+ Lean “Speed"
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3. Lean Six Sigma Seeks to improve the quality of manufacturing and business process by:
identifying and removing the causes of defects (errors) and variation.
Identifying and removing sources of waste within the process
Focusing on outputs that are critical to customers

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σUse data-driven, measurement-based, statistical methods to Solve problems, improve performance
σFocus: Surgical “inch-wide, mile-deep” investigation and resolution
σApproach:
σSolve problems at the system and root cause level
σImplement robust control plans for sustained improvements
What is “Six Sigma”? An Analytical Methodology that Focuses on Reducing Process Variation

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The systematic elimination of waste and re- alignment of resources to deliver value to the customer faster, better, & more consistently
Lean in Manufacturing:
◦Focus: Eliminate waste, non-value add steps, process constraints and bottle necks that cause problems in work throughput
◦Approach: Intuitive and broad - “inch-deep, mile wide”
Leading to
Leading to
Eliminate Waste
Reduced Cycle Times
Increased Capacity

6. •To help explain the Toyota Production System to employees and suppliers, the “House of Toyota” graphic was created by Taiichi Ohno and Eiji Toyoda.
•They chose the house shape because it was a familiar one – and also conveyed stability.
•The roof contains the primary goals of TPS: superior quality, cost and delivery through waste elimination

7. Value Added
Typically 95% of all lead time is non-value added
1.Overproduction
2.Waiting
3.Transportation
4.Non-Value Added Processing
5.Excess Inventory/Material
6.Defects
7.Excess Motion
8.Underutilized People
Non-Value Added
5%

8. Value Added Any activity that is adding value to the part and the customer is paying for. Example: any process where you are doing something to the part (cutting, welding, riveting, bending) Non-Value Added Any activity that does not add Value to the part. Example: moving parts from one area to another, reworking parts, set-up/change- overs, repairs

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Single Piece Flow
Just-In-Time
Eliminate Waste
•Process parts one-at-a- time or in small lots instead of in large batches or economies of scale
•Quick changeovers
•Balanced and continuous flows instead of stop and start processing
•Have just the right amount of inventory you need, when you need it, where you need it
•Optimize the amount of inventory required
•Ensure that your resources are ready to support the flow
•Never knowingly pass on a defect
•Improve the capability of your processes
•Fix failure modes when they occur
•Determine and resolve the deeper root causes
=
=
The Toyota Production System
Model by Michael Kukhta Reference: Senji Niwa, from the Shingijutsu Organization. Niwa-san also worked directly for Toyota’s Taiichi Ohno (TPS creator) for 18 years.
“Classic Lean” Strength
“Supply Chain Management” Strength
“Classic Six Sigma” Strength

10. INSANITY “Doing the same thing over and over again and expecting different results”
Albert Einstein
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11. Risk & Reward
Continuous Improvement
•Everyday culture of change in how and what we do
•Focus on maintaining & improving process precision, accuracy and discipline
•Often savings are not strictly monitored but just put back into the business
•Can support & narrow Breakthrough Innov.
Amount of Resources and Activity
Incremental Innovation
•Relatively small improvements that are faster, better cheaper,
•Savings show up in bottom & top line
Distinctive Innovation
•Significant advances and improvements by extending existing technologies/approaches
•Adapting “other industry/sector technologies/approaches
•Example: “Lean”/JIT/Single-piece- flow/Pull Systems in health care
Breakthrough & Disruptive Innovation
•Fundamentally new technologies/approaches
•Implementing things previously thought to be not possible
•Often a birthplace of Distinctive & Incremental Innovation
•Can fuel and clash with Conti. Impr. and process discipline

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L AA BB CC DD EE 1
L2
L3
Customer Customer
DA DB DC DD DE
Enterprise
Process
Department
Lean breaks a process down to understand the
steps and actions as they occur, the time and
resources needed to complete, as well as the
delay and wait time between process steps

13.  Six Sigma evaluates a process in terms of
performance, accuracy, and consistency
 Targeted for improvement
Time
s
LSL USL
6s
Standard
deviation

14. Shift Process Average
Reduce Process Variation
Robust Products and Processes
Six Sigma Objectives
Lean Objectives
Improve Process Flow
Reduce Process Complexity
Reduce:
Waste
Non-Value Added Work
Cycle Time
Lean Six Sigma Improves Quality, Cost, and Delivery
Improvement Objectives

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Lost managemant
time cost
Maintenance
cost
Lost opportunity
Lost assets cost
Rerun cost
Lost
business,
goodwill cost
Lost
credibility
cost
Prevention cost
appraisal cost
Project
rework cost
Litigation
SS Titanic
Management
Waste Costs:
Costs driven by problems and process steps that add no value
to products & services delivered to customers
Appraisal Costs:
Costs incurred to determine the degree
of conformance to customer needs
Prevention Costs:
Costs incurred to keep failure and
appraisal costs to a minimum
Failure Costs:
Costs directly incurred
due to defects internal
to the system or after
delivery to the
customer

16. Voice of Customer
Voice of Process
The Voice of the Process is independent of the Voice of the Customer
Sigma
Capability
Defects per Million Opportunities
% Yield
2
308,537
69.15%
3
66,807
93.32%
4
6,210
99.38%
5
233
99.98%
6
3.4
99.99966%

17. 99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
20,000 lost articles of mail per hour (based on 2,000,000/hr)
7 articles lost per hour
Unsafe drinking water for almost 15 minutes each day
1 unsafe minute every 7 months
5,000 incorrect surgical operations per week
1.7 incorrect operations per week
2 short or long landings daily at an airport with 200 flights/day
1 short or long landing every 5 years
2,000,000 wrong drug prescriptions each year
680 wrong prescriptions per year
No electricity for almost 7 hours each month
1 hour without electricity every 34 years

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99%
Good
99.99966%
Good
20,000
5,000
200,000
7 hr
per month
Lost articles of mail per hour
7
Incorrect surgeries per wk
1.7
Wrong prescriptions each yr
68
Hours without electricity
1 hr
per 34 years

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X1 = _____
Y1 = _____
X2 = _____
Y2 = _____
X1 = _______
Y1 = _______
X2 = _______
Y2 = _______
X3 = _______
Y3 = _______
SIPOC Diagrams can be characterized as a 3-step, high-level (“30,000-foot) Process Flow Diagram for a process
Critical to Customer Quality Requirements
(the “CTQ’s)
Key Inputs (Materials & Resources) and Key Process Input Variables
(KPIV’s)
Inputs Processes Outputs
Supplier Customer
Secondary Metric
(e.g. Field Returns)
Primary Metric
(e.g. Scrap $/Month

20. Cycle Time is the actual production rate – It is the time between two successive finished items coming out of your production cell.
Cycle Time is dictated by the slowest (longest) operation in the cell.
40 min
20 min
25 min
15 min
30 min
1
5
4
3
2
•What operation controls the cycle?
•What is the Critical Path?
•How can you relieve or shift the bottleneck?

21. THE PROCESS
PROCESS
OUTPUTS
CONTROLLED
VARIABLES
CUSTOMER
PROCESS
INPUTS
UNCONTROLLED
NOISE
VARIABLES
Process and Its Variables

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We know we must change Xs to create a change in Y…
 But how do we know which Xs to change
and how to change them?
y = f (x1, x2, …)
process output
is
key process and input factors
that cause variation in the output
a function of

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•Monitor processes to prevent
recurrence of variation, defects
and non-value work
•Maintain performance levels
•Find more creative ways to
improve
•Fix root causes
•Find/Implement Preventive
Fixes
•Deploy changes organization
•RESULT: Performance is more
predictable ; culture changing
•Plan and apply Improve Tools to fix
problems and reduce variation
•Implement improvement opportunities
•RESULT: Improve tools applied, changes
implemented and performance
improvement in place
DMAIC Improvement Model
A Road Map for guiding Improvement Projects
•Identify customer problems
•Identify performances standards
•Identify improvement objectives
•Link problem to the key performance metrics
•Find the right problems
•RESULT: Problem Statement & Project Charter
Define
Measure
Improve Analyze
Control
Results
•Map the process
•Validate the
measurement system
•Collect data
•Link your metrics
•RESULT: Process maps
and good quality data
collected by listening
to the process
•Identify sources of variation & failure
points
•Establish process capability
•Identify improvement opportunities
•Redefine and Re-prioritize
•RESULT: Determine performance, Identify
critical sources of variation and root
causes

25. Black Belt Training
First Pass Yield (FPY) Rolled Throughput Yield (RTY)
Receive Parts/information From your supplier
STEP #1
95.5% First Pass Yield (FPY1)
FOLLOWING RECEIPT INSPECTION AND FALLOUT
STEP #2
97.0% First Pass Yield (FPY2)
FROM INITIAL OPERATIONS
STEP#3
94.4% FPY3
AT FINAL STEPS OR ON FIRST TEST ATTEMPT
ONLY 87.4%
RIGHT FIRST TIME
45,000 ppm wasted
28,650 ppm wasted
52,350 ppm wasted
RTY = FPY1 X FPY2 X FPY3 = .955 X .970 X .944 = 87.4%

26. Black Belt Training
1)High-Level Process Map
2)Suppliers, Departments, Customers
3)Mid-Level Process Map
4)Specific Area ex Production
5)Detail-Level Process Map
6)Specific process/operation
7)(most commonly used)
Stop
Start
Stop
Start
Start
Stop
Stop
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27. Black Belt Training
VA/NVA Ratio= 46%
DPU = ____
RTYield = _____
SCORE CARD:
Building a Value Stream Map
I’m going to
have coffee
Fill c.
maker
with
water
Scoop
Coffee
into
c. maker
Get & place Filter in c. maker
Drink
coffee
Is
taste
OK
Brew
coffee
Pour c.
into cup
Add
cream &
sugar
Water Supply
Process
Shopping
Process
Electricity Supply Process
Eating
Equipment
Supply
Process
Tasting
Process
Housekeeping Processes
Transactional &
Support Processes
Process Data
& Information
NVA = Non-value Added Time VA = Value Added Time
VA Time
NVA Time
Temp of Water= ___
Quality of Water= ___
Pressure of Water= ___
Amount of Coffee= ___
Quality of Coffee= ___
Type of Coffee= ___
Defective Coffee= ___
60 sec
30 sec
60 sec
360 sec
10 sec
60 sec
10 sec
10 sec
5 sec
600 sec
30 sec

28. Accurate but not precise - On average, the shots are in the center of the target but there is a lot of variability
Precise but not accurate - The average is not on the center, but the variability is small
Source: iSixSigma

29. Statistical Analysis
0.000 0.005 0.010 0.015 0.020 0.025
7
6
5
4
3
2
1
0
New Machine
Frequency
0.000 0.005 0.010 0.015 0.020 0.025
30
20
10
0
Machine 6 mths
Frequency
 Is the factor really important?
 Do we understand the impact for
the factor?
 Has our improvement made an
impact
 What is the true impact?
Hypothesis Testing
Regression Analysis
5 15 25 35 45 55
60
50
40
30
20
10
0
X
Y
R-Sq = 86.0 %
Y = 2.19469 + 0.918549X
95% PI
Regression
Regression Plot
Apply statistics to validate actions & improvements

30. Is your error in the process or in the way you measure it?
Could it be that you actually are “good” but the error in the measurement system shows that you are not “good”?
Overall Variation
Occurrence-to- Occurrence ( or Piece- to-Piece) Variation
Measurement System Variation
Repeatability:
Variation due to gage or measurement tool
Reproducibility:
Variation due to people or operators who are measuring

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32. RESULTS FROM SIX SIGMA IMPLEMENTATIONS
Inferior
Below Average
Above Average
Excellent
TOTAL QUANTITY OF
IMPLEMENTATIONS
How Six Sigma is Implemented and Applied Will Determine the Results
Categorization of Results

33. Black Belt
Training
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What are the Methods and Tools?
“Lean” focuses on:
The systematic elimination of waste
and re-alignment of resources to
deliver value to the customer faster,
better, & more consistently
Supply Chain Management:
Mapping your processes
through the entire business
enterprise with standard elements
“Six Sigma” focuses on:
Use of analytical and methodical fact based
problem solving methods
Drastically reduce variation then control and
manage whatever variation is left over
Increase predictability, accuracy and precision
Product and Services
Cash/Funding
Information
Customer’s
Customer
Supplier’s
Supplier
Supplier Your Company Customer
Plan
Make Source Make / Deliver
Repair
Deliver Source Deliver Source Make Deliver Source
Return Return Return Return Return Return Return Return
Plan Plan
LSL Ẋ USL
Theory of
Constraints:
Find & eliminate
the bottle necks
Business
Process Re-engineering:
Start over
VA Time
NVA Time
FLOW

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