Process Improvement: Which Methodology is Best for Your Project? PMI Skyline Luncheon Sharon Valencia, PMP

Agenda Definitions Business Improvement Methodologies Methodology Comparison Process Management Process Mapping Enabling Project Success

Process Input Suppliers Customer Output SIPOC What is a Process? Any set of activities that when taken together, transform a series of inputs into an output, producing a result of value to a customer Input Suppliers Customer Output Process SIPOC

What is a Business Improvement Methodology? A documented set of procedures, guidelines, and tools intended to develop better processes Business improvement methodologies covered in this presentation: Kaizen Lean Six Sigma Lean Six Sigma Design for Six Sigma (DFSS)

Kaizen Defined: Philosophy of gradual, incremental, and orderly continuous improvement, creating more value and less waste; emphasis on process improvement and process control; Japanese word meaning “ongoing improvement” Objective: Small improvements by optimizing existing systems Requires: Taking action on obvious problems and deviations to maintain process control Establishing control through Standard Operating Procedures (SOPs) 1-10 days

Kaizen’s Deming/ Shewhart PDCA Cycle Plan Do Check Act Start with an idea for doing the job better; study the current situation; identify the problem and formulate a plan Conduct experiments to investigate the idea; implement the plan on a small scale Observe and evaluate results to determine if the idea produced the desired results If desired results were achieved, implement the change into the SOP * It is also acceptable to use the DMAIC framework for Kaizen events

Lean Defined: Focus on speed, efficiency, and elimination of waste Objective: Maximizing process speed (cycle time) by reducing waste Requires: Elimination of waste (muda): Defects, overproduction, inventories, unnecessary processing, unnecessary movement of people, unnecessary transport of goods, waiting, designing goods and services that don’t meet customers’ needs Value stream mapping: Map process and focus on elimination of non-value add activities Ask what activities the customer is willing to pay for Focus on process standardization

Lean’s 5s Approach Sort Sustain Straighten Scrub Systematize Determine what is necessary to perform the job; Eliminate unnecessary items from the workplace Arrange all essential items so that they are clearly marked and easily retrieved Keep clutter out of the workplace; Scrub all machines and the work environment to maintain cleanliness Make cleaning and organizing routine; promote an orderly work environment; perform work the same way every time (standardize) Sustain the other steps and continually improve the process

Six Sigma Defined: Data-driven methodology focusing on reducing defects and variability 6 σ = 3.4 defects per million (Motorola Shift) σ = Sigma = Standard deviation Objective: Reduce variability through continuous process improvement Requires: Processes must be in place The processes must be predictable (in statistical control with normal distribution) The processes must be improved by reducing variation (continuous improvement) Data availability Focus on understanding customer requirements

Six Sigma Distribution Lower Control Limit/ Specification Upper Control Limit/ Specification Normal, Bell-Shaped Curve/ Distribution of Values Defects Defects

The Importance of Six Sigma Traditional Quality (3 σ: 66,807 DPMO) 54,000 incorrect drug prescriptions per year 40,500 newborn babies dropped each year Unsafe drinking water two hours each month 6 σ Quality (No Motorola Shift) One incorrect drug prescription every 25 years 3 newborn babies dropped each century Unsafe drinking water one second every 16 years Source: Institute of Industrial Engineers

DMAIC Framework for Six Sigma Define Measure Analyze Improve Control Define the goals of the improvement activity; determine project’s business case; identify customer; map current & future state processes; determine scope Measure the existing system or process; determine metrics; define project success factors Analyze the system to eliminate gap between current system or process and the desired goal; determine and reduce obstacles to achievement Improve and implement the system or process; determine necessary activities to achieve goals Control the system or process, including risk, quality, cost, scope, change management; determine reporting needs

Lean Six Sigma Defined: Approach to eliminating waste and variation Objective: Increase quality and reduce defects/variation while increasing process speed and efficiency Requires: The combination of both Lean and Six Sigma methods and tools

DMAIC for Lean Six Sigma Define Measure Analyze Improve Control Integrate the methodologies and tools of both Lean and Six Sigma at each phase

Design For Six Sigma (DFSS) Defined: DFSS uses tools, training, and measurements to enable the design and development of products, services, and processes that meet customer expectations at Six Sigma quality levels Objective: Optimize the design and development processes to achieve Six Sigma quality levels from the beginning Requires: A new product, service, or process to design and develop

DMADV Framework for DFSS Define Measure Analyze Design Verify Define the goals of the design act; determine critical to quality (CTQ) characteristics and their relative importance Identify CTQs to be addressed; establish metrics for CTQs; determine how customer satisfaction will be measured Link CTQs to features & determine importance; perform process benchmarking; develop, evaluate, and select designs Detain selected design; simulate process; ensure design meets CTQs; develop implementation plan Standardize; establish control metrics; develop transition plan

Methodology Analogy Lean Six Sigma Six Sigma Lean Design For Six Sigma Kaizen

Methodology Comparison

Lean and Six Sigma Lean cannot bring a process under statistical control Six Sigma does not dramatically improve process speed or reduce invested resources Combining Lean and Six Sigma maximizes advantages and reduces the disadvantages of each individual approach

Which Methodology is Best? “Best” is depends by the needs and current state of your organization “Best” may be a combination of methodologies An organization ready for Six Sigma is also ready for Lean or other methodologies The name of methodology used doesn’t matter; what matters is leadership, commitment, vision, strategy, and follow-through from supplier to customer

Business Process Management The future of business processes lies not in one methodology, but in the integration of technologies and methodologies in order to facilitate execution of the process Customers are demanding customizations and total solutions Innovative business processes can lead to competitive advantage Business processes will drive IT

Changing Competitive Environment The only thing certain in business is change Industry boundaries are evaporating The entire value chain is involved in providing total solutions to customers: Competition Collaboration Partners may also be competitors

Process Mapping Regardless of the methodology, start with mapping the current processes Identifies current state, opportunities for improvement, process time Allows identification of all process steps in order to determine which steps are value added or bottlenecks Knowing current state will assist in identifying improvement opportunities As-is vs. future process time, number of steps, handoffs, etc. Determine steps which add value

Benefits of Process Mapping Gain understanding of the process and process objectives Answers who (including suppliers and customers), what, when, where, how, and duration Identifies the information or data used in the process, decisions, bottlenecks Identify sources of waste Improve supplier and customer relations Provides a common language for talking about the process

Sample Process Map

Indications of Process Improvement Opportunities Internal Non-compliance to Industry Standards Scrap Rework Short Cuts to Beat the System Excess Inventory Capacity Constraints Low Efficiency/ Productivity/Yields Employee Symptoms Shared Responsibility External Benchmarking Company vs. World Class Performers Market Share Drop Negative Publicity Pricing Inflexibility Warranty Costs

Enabling Project Success Management buy in is required from the start Align goals with the strategic direction of the organization Combine project ownership and accountability Manage change – do it early, do it often Allocate appropriate staff and time Train staff in applicable techniques Eliminate process variation

Computer Sciences Corporation Experience. Results. Sharon Valencia, PMP Principal Computer Sciences Corporation svalencia@csc.com