Six Sigma and Lean in Management Intelligent Business Models

Agenda Introduction Continuous Improvement Complimentary Approaches Lean Six Sigma Key Components Return on Investment

Rob Ketchabaw Senior Account Executive – MAXIMUS Certified Lean 6s Master Black Belt – 2009 MAXIMUS (HIBC) – 2008 Independent Consultant – 2003 GE Certified Black Belt – 2003 GE Certified Trainer – 2002 GE Six Sigma training 2000

Continuous Improvement (CI) Taylor – Time and motion studies Shewhart – Statistical Process Control Deming & Juran – Japanese Quality In 1911, Frederick Winslow Taylor published his work, “The Principles of Scientific Management”, in which he described how the application of the scientific method to the management of workers greatly could improve productivity. Scientific management methods called for optimizing the way that tasks were performed and simplifying the jobs enough so that workers could be trained to perform their specialized sequence of motions in the one "best" way.   Prior to scientific management, work was performed by skilled craftsmen who had learned their jobs in lengthy apprenticeships. They made their own decisions about how their job was to be performed. Scientific management took away much of this autonomy and converted skilled crafts into a series of simplified jobs that could be performed by unskilled workers who easily could be trained for the tasks. By the 1970s, U.S. industrial sectors such as automobiles and electronics had been broadsided by Japan’s high-quality competition. The U.S. response, emphasizing not only statistics but approaches that embraced the entire organization, became known as total quality management (TQM). Total Quality Management Motorola – Six Sigma Malcolm Baldrige Toyota Production System Just in Time Inventory Lean

Complimentary Approaches Six Sigma Focus on Defects Customer centric Externally measured Formalized rigor Perfect processes Lean Focus on Flow “Thing” centric Internally measured Organic flexibility Processes w/o waste Team based projects Empowered workers Leader development conduits

Impact of CI on the Company Happier Customers Stay longer Spend more Lower costs Employees Leadership opportunities Exposure Involvement Investment Impact of Continuous Improvement on the Company When a company truly commits to becoming world class and successful, all employees realize that this is it. If a change in culture has not already occurred, it will happen now.   When a company starts comparing itself to world class companies or to winners of awards (such as the Baldrige Award or even looking at the criteria of this type of award), the gaps can be enormous and may be quite deflating. If the gap can be viewed as guidance then the company can direct its efforts in a positive way. The success of the quality management approach is dependent on having well trained and motivated staff and ensuring that their efforts are focused towards improving the systems that produce the products. Staff must be involved and empowered. Involvement means that management actively encourages involvement in running the operation and improving the processes. Empowerment is something more. It means that management recognizes that when staff are given training and provided with the right information, they are in the best position to control their own work processes. This being the case, they should be empowered to do it.

Lean Approach

Six Sigma Approach Who are the customers? Measure their satisfaction Customer includes internal and external customers Every work group has a customer - the person who receives their output Measure their satisfaction Define quality from the customer’s perspective Measure the critical aspects (CTQs) Consider your value proposition in relation to the quality you provide… Value Proposition: Describes how an organization will differentiate itself to customers, and what particular set of values it will deliver. To develop a customer value proposition many organizations will choose one of three "disciplines" articulated by Treacy and Wiersema in "The Discipline of Market Leaders:" operational excellence, product leadership, or customer intimacy. Everyone has a customer. The external customer is the person who purchases the product or service. We also have to think of the internal customers. Internal customers are those who use what another group provides.   This has quite profound implications. It means that every work group has to think about providing value to the people who use their product. This involves finding out exactly what the user needs and wants, and ensuring that the process provides it. For instance, the internal customers of a supplier inspection group will want to receive timely reports on supplier performance, early warning of potential delivery delays and helpful assistance in resolving problems with suppliers. They will also want to be treated with courtesy.

Key Components Manage improvement initiatives Identify & develop leaders Remove defects Remove delays Remove waste Drive value creation

Return on Investment In 2000 GE’s gross annual benefit was $6.6 billion In 2008 Toyota became world’s largest auto manufacturer CEO Larry Bossidy brought AlliedSignal back from the verge of bankruptcy. Cumulative benefits $2 billion in direct savings Raytheon improved its cost of doing business by more than $1 billion annually in 2001