MISHRM 2014 Annual Conference HR Amplified: Driven to be…

Lean/Six Sigma Approaches for the white collar workplace Paul Boehms – Clark Hill PLC

What is Lean / Six Sigma?

Why is Lean / Six Sigma Important to You Trend for many employers to implement process improvement techniques in the workplace Need to understand concepts in order to properly hire appropriate talent Build appropriate competency models for trained professionals in your organization HR’s role in implementing / enforcing the company’s culture (change management and communication) Toolkit to run your department more efficiently Lean / Six Sigma is not just for the shop floor! Best used for repetitive processes

So What? I am in HR! Hiring Cycle Time: The hiring cycle time is too long causing work-arounds, misclassifications, rework, and organizational frustration Analysis revealed that batch processing and undefined critical fields were causing most of the delays Data Integrity The employee information contained in the HR System of record (e.g. personal and personal and job related information) differs from Payroll information Results in the inability to properly account for department headcount and the associated employee costs causing excessive rework to both Payroll and HR systems

So What? I am in HR! Employee turnover rate Job satisfaction issues (surveys) Management satisfaction Policy deployment Health care costs Safety and compliance issues Employee exit analysis University relations

What is Lean / Six Sigma? Lean Six Sigma Originally created at Toyota in the 1950’s (as Lean manufacturing) Focus is the elimination of waste in every area of production including customer relations, product design, supplier networks and factory management. Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible Use of quality improvement tools to solve difficult problems A rigorous and a systematic methodology that utilizes information (management by facts) and statistical analysis to measure and improve a company’s operational performance, practices and systems by identifying and preventing defects and service-related processes in order to anticipate and exceed expectations of all stakeholders to accomplish effectiveness

When to use Lean vs. Six Sigma Lean tends to be used for shorter, less complex problems. Often time driven. Focus is on eliminating wasteful steps and practices. Six Sigma is a bigger more analytical approach – often quality driven – it tends to have a statistical approach. Focus on optimizing the important steps – reducing defects. Some argue Lean moves the mean, Six Sigma moves the variance. But they are often used together and should not be viewed as having different objectives. Waste elimination eliminates an opportunity to make a defect Less rework means faster cycle times Six Sigma training might be specialized to the “quality” department, but everyone in the organization should be trained in Lean

Lean

In any process: Define value and everything else becomes waste! Principles of Lean Focus on effectively delivering value to your customer Respect and engage the people Eliminating all types of waste Maintain flow Pull through the system Strive for perfection In any process: Define value and everything else becomes waste!

Lean Methodology

Sample Tools Using Lean Thinking Sort, Set in Order, Shine, Standardize, and Sustain Just-In-Time (JIT) Pull through based on customer demand instead of pushing parts through production based on projected demand Kaizen A strategy where employees work together proactively to achieve regular, incremental improvements in the manufacturing process Kanban A method of regulating the flow of goods both within the company and with outside suppliers and customers Value Stream Mapping A tool used to visually map the flow of production. Shows the current and future state of processes in a way that highlights opportunities for improvement

Sample Tools Using Lean Thinking Bottleneck Analysis Identify which part of the process limits the overall throughput and improve the performance of that part of the process KPIs: Key Performance Indicators Metrics designed to track and encourage progress towards critical goals of the organization Root Cause Analysis (5 Whys) A problem solving methodology that focuses on resolving the underlying problem instead of applying quick fixes that only treat immediate symptoms of the problem.

Lean Thinking Customer is 1st Empower people to “think” Create a workplace that are more human, and encourage people to think This is the ultimate forum for “team building” Thoughts to consider: Every time work stops we use resources that add costs and generate no value Overproduction is the worst form of waste The real benchmark is zero waste, not just better than your competition

Benefits to Involving the Team Improves morale Finds barriers that thwart creativity Clearly defines objectives and goals for all Improves processes and procedures Improves productivity Identifies teams strengths and weaknesses Improves ability to problem solve

Overview of Six Sigma

Reactive Quality: Taking defects out of what is produced What is Six Sigma Reactive Quality: Taking defects out of what is produced Proactive Quality: Create a process that will create less or no defects

History of Six Sigma Coined by Bill Smith of Motorola Motorola started using problem solving through statistical analysis in the 1970s Motorola officially started a six sigma program in 1987 GE launched a six sigma program in 1996 1998/1999 Green Belt certifications became the criteria for management promotions

What is Six Sigma

Defects Per Million Opportunities What is Six Sigma Sigma Level Defects Per Million Opportunities 1 690,000 2 308,537 3 66,807 4 6,210 5 233 6 3.4

What is Good Enough? 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

What Makes a Good Six Sigma Project? There is no known solution The root cause is not known The problem is complex and needs statistical analysis The problem is part of a process The process is repeatable A defect can be defined There is data available

DMAIC Define who the customers are and what are their expectations Define project boundaries ­ Define the process to be improved by mapping the process flow Measure Develop a data collection plan for the process Collect data from many sources to determine types of defects and metrics Compare to customer survey results to determine shortfall Analyze Identify gaps between current performance and goal performance Prioritize opportunities to improve Identify sources of variation Improve Create innovate solutions using technology and discipline Develop and deploy implementation plan Control Prevent reverting back to the “old way” Require the development, documentation and implementation of an monitoring plan Institutionalize the improvements

Six Sigma Phases: Define Define Customers and Requirements (CTQs) Develop Problem Statement, Goals and Benefits Identify Champion, Process Owner and Team Define Resources Evaluate Key Organizational Support Develop Project Plan and Milestones Develop High Level Process Map Define

Define Define Measure Analyze Improve Control Deliverables Fully trained team is formed, supported, and committed to work on improvement project. Team charter developed, customers identified and high impact characteristics (CTQs) defined, business process mapped.

Six Sigma Phases: Measure Define Defect, Opportunity, Unit and Metrics Detailed Process Map of Appropriate Areas Develop Data Collection Plan Validate the Measurement System Collect the Data Begin Developing Y=f(x) Relationship Determine Process Capability and Sigma Baseline Measure

Measure Define Measure Analyze Improve Control Deliverables Key measures identified, data collection planned and executed, process variation displayed and communicated, performance baselined, sigma level calculated

Six Sigma Phases: Analyze Define Performance Objectives Identify Value/Non-Value Added Process Steps Identify Sources of Variation Determine Root Cause(s) Determine Vital Few x's, Y=f(x) Relationship Analyze

Analyze Define Measure Analyze Improve Control Deliverables Data and process analysis, root cause analysis, quantifying the gap/opportunity

Six Sigma Phases: Improve Perform Design of Experiments Develop Potential Solutions Define Operating Tolerances of Potential System Assess Failure Modes of Potential Solutions Validate Potential Improvement by Pilot Studies Correct/Re-Evaluate Potential Solution Improve

Improve Define Measure Analyze Improve Control Deliverables Generate (and test) possible solutions, select the best solutions, design implementation plan

Six Sigma Phases: Control Define and Validate Monitoring and Control System Develop Standards and Procedures Implement Statistical Process Control Determine Process Capability Develop Transfer Plan, Handoff to Process Owner Verify Benefits, Cost Savings/Avoidance, Profit Growth Close Project, Finalize Documentation Communicate to Business, Celebrate Control

Improve Define Measure Analyze Improve Control Deliverables Documented and implemented monitoring plan, standardized process, documented procedures, response plan established and deployed, transfer of ownership (project closure)

Sample Tools Using Six Sigma Process Mapping Creating flowcharts of the step in a process – operations, decision points, delays, movements, handoffs, rework, loops, and controls or inspections Hypothesis Testing Investigating a theory about the suspected cause (s) of a particular effect in a process to determine if it is correct. It’s a compass that points you directly to the vital few factors that are most affecting your process. Failure Mode Effect Analysis The manner in which a part or process can fail to meet a specification, creating a defect or non-conformance, and the impact on the customer if that failure mode is not prevented or corrected Control Plan A detailed assessment and guide for maintaining all the positive changes you have made. It ensures that all your analysis and efforts stay in effect and that you have information at your disposal to prevent backsliding or a return to less than optimal performance standard. Process Capability Tool Process capability tool is the measure of a process being able to meet specification requirements and fulfill customer CTQ needs on a long term basis.

Key Roles for Six Sigma Includes CEO and other key top management team members. They are responsible for setting up a vision for Six Sigma implementation. Executive Leadership Are responsible for the Six Sigma implementation across the organization in an integrated manner. Champions also act as mentor to Black Belts. Champions

Key Roles for Six Sigma Identified by champions, act as in-house expert coach for the organization on Six Sigma. They devote 100% of their time to Six Sigma. Master Black Belts Operate under Master Black Belts to apply Six Sigma methodology to specific projects. They primarily focus on Six Sigma project execution. Black Belts

Key Roles for Six Sigma Are the employees who take up Six Sigma implementation along with their other job responsibilities. They operate under the guidance of Black Belts and support them in achieving the overall results. Green Belts

Paul W. Boehms 313.965.8358 pboehms@clarkhill.com