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Six Sigma: DMAIC; Y=f(x)
Is it a Goal, a Measure, a Process, a Tool or an expletive deleted? By Lee Olson Presentation to INFORMS
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Objectives Understand the Basics of the Six Sigma Program
Understand How Six Sigma Relates to Lean, TOC, TQM (Theory Of Constraints; Total Quality Management) Ability to Define a Strategy and Roadmap for Success Operational Excellence Training
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Define Is it a Goal, a Measure, a Process, a Tool or an expletive deleted? Yes Operational Excellence Training
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Define Six Sigma Is a management methodology Customer focused
Data driven decisions Breakthrough performance gains Validated bottom line results Operational Excellence Training
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Our Performance Compared to Competitors Importance to Customers
Customer Focused Our Performance Compared to Competitors Complete Quality OTD High Importance to Customers Training Moderate- to-’Low’ Price Shared Goals Complaints We’re Better They’re Better Operational Excellence Training
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To get results, should we focus our behavior on the Y or X ?
Data Driven Decisions f (X) Y= To get results, should we focus our behavior on the Y or X ? Y Dependent Output Effect Symptom Monitor Response X XN Independent Input-Process Cause Problem Control Factor Why should we test or inspect Y, if we know this relationship? Operational Excellence Training
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Breakthrough performance gains
(Distribution Shifted ± 1.5) PPM Process Capability Defects per Million Opportunities Sigma is a statistical unit of measure which reflects process capability. The sigma scale of measure is perfectly correlated to such characteristics as defects-per-unit, parts-per million defective, and the probability of a failure/error. Operational Excellence Training
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Validated bottom line results
Impact on Bottom Line Assuming a 10% change in the factor Factors Operational Excellence Training
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Define Methodology Define Measure Analyze Improve Control
Operational Excellence Training
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Roadmap Example Operational Excellence Training Define Measure Control
Next Project Define Customers, Value, Problem Statement Scope, Timeline, Team Primary/Secondary & OpEx Metrics Current Value Stream Map Voice Of Customer (QFD) Validate Project $ Celebrate Project $ Measure Assess specification / Demand Measurement Capability (Gage R&R) Correct the measurement system Process map, Spaghetti, Time obs. Measure OVs & IVs / Queues Control Document process (WIs, Std Work) Mistake proof, TT sheet, CI List Analyze change in metrics Value Stream Review Prepare final report Validate Project $ Validate Project $ Improve Optimize KPOVs & test the KPIVs Redesign process, set pacemaker 5S, Cell design, MRS Visual controls Value Stream Plan Analyze (and fix the obvious) Root Cause (Pareto, C&E, brainstorm) Find all KPOVs & KPIVs FMEA, DOE, critical Xs, VA/NVA Graphical Analysis, ANOVA Future Value Stream Map Validate Project $ Operational Excellence Training
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Operational Excellence Methodology
Crane Co. Op. Ex. Methodology Originated by MBBs; D. Braasch, J. Davis, R. Duggins, J. O’Callaghan, R. Underwood, I. Wilson Operational Excellence Methodology Based in part on Six Sigma Methodology developed by GE Medical Systems and Six Sigma Academy, Inc. Plan Execute DEFINE Identify Problem Strategic Link to Business Plan defined in Project Selection Process Defined Business Impact with Op Ex Champion support Structured Brainstorming at all organizational levels Cause and Effect Diagrams identifying critical factors Primary and Secondary Metrics defined and charted Multi-Level Pareto Charts to confirm project focus Practical Solutions Develop a focused Problem Statement and Objective Develop a Process Map and/or FMEA Develop a Current State Map Identify the response variable(s) and how to measure them Analyze measurement system capability Assess the specification (Is one in place? Is it the right one?) MEASURE Practical Problem ANALYZE Problem Definition Characterize the response, look at the raw data Abnormal? Other Clues? Mean or Variance problem? Time Observation • Spaghetti Diagram • Takt Time Future State Maps • Percent Loading Standard Work Combination Use Graphical Analysis, Multi-Vari, ANOVA and basic statistical tools to identify the likely families of variability PERFECTION IMPROVE Problem Solution Identify the likely X’s 5S • Set Up Time Reduction (SMED) Material Replenishment Systems Level Loading / Line Leveling Cell Design • Visual Controls Use Design of Experiments to find the critical few X’s Move the distribution; Shrink the spread; Confirm the results CONTROL Problem Control Mistake Proof the process (Poka-Yoke) Tolerance the process Measure the final capability Place appropriate process controls on the critical X’s Document the effort and results Standard Work • TPM What do you want to know? How do you want to see what it is that you need to know? What type of tool will generate what it is that you need to see? What type of data is required of the selected tool? Where can you get the required type of data? Problem Solving Execute Plan
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Define Key Items Customers, Value, Problem Statement
Scope, Timeline, Team Primary/Secondary & OpEx Metrics Current Value Stream Map Voice Of Customer (QFD) (Quality Function Deployment) Operational Excellence Training
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Project Selection Impact
Business Impact Revenue Growth Cost Reduction Capital Reduction Key Business Objectives On Time Delivery Lead Time Quality Customer Satisfaction Impact on Operational Excellence Metrics Operational Excellence Training
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Evaluate and Rank Suggestions Effort and Risk
Effort required People Resources Capital Resources Duration of Project Probability of success Technical Risk Data available Knowledge of process Management Risk Aligned with objectives Support by value stream manager Impact vs. Risk vs. Effort Assess ROI (Return On Investment) Assign priorities to projects Operational Excellence Training
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Evaluate and Rank Suggestions
Example tool to rank projects Project Rating.xls Operational Excellence Training
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Example chart to rank projects 0106-01 Project Rating.xls
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Measure Establish measurement capability Fix the measurement system
Validate the database (transactional) Gage R&R (Repeatability & Reproducibility) Calibration is not enough Many (or most) measurement systems are not capable How good is the data you are using to make decisions? Fix the measurement system Enables calculation of process capability Enables calculation of alpha & beta risks This step is often skipped Operational Excellence Training
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Analyze (and fix the obvious)
Find all KPOVs & KPIVs (Key Process Output Variables; Key Process Input Variables) FMEA, DOE, critical Xs, VA/NVA (Failure Modes Effects Analysis; Design Of Experiment) Graphical Analysis, ANOVA (Analysis Of Variance) Future Value Stream Map Operational Excellence Training
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Improve Optimize KPOVs & test the KPIVs
(Key Process Output Variables; Key Process Input Variables) Redesign process, set pacemaker 5S, Cell design, MRS (Material Replenishment System) Visual controls Value Stream Plan Operational Excellence Training
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Control Management of Change Measurement controls Visual Controls
Owned by project champion and value stream manager Critical to long term success of project Physical and cultural changes Measurement controls On-going metrics Visual Controls Enable workers to self-manage the process Operational Excellence Training
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Basic Implementation Roadmap
Identify Customer Requirements Identify Customer Requirements Understand and Define Entire Value Streams Vision (Strategic Business Plan) Deploy Key Business Objectives - Measure and target (metrics) - Align and involve all employees - Develop and motivate Continuous Improvement (DMAIC) Define, Measure, Analyze, Improve Identify root causes, prioritize, eliminate waste, make things flow and pulled by customers Control -Sustain Improvement -Drive Towards Perfection Operational Excellence Training
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Hoshin Operational Excellence Training
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Does it work?. The top companies in Customer Satisfaction grow MVA at
nearly twice the rate of their poor-performing counterparts. In Billions $ 1999 73 companies Ralston Purina Quaker Oats Hilton Hotels Coca-Cola Unilever etc. Companies with satisfied customers exhibit strong financial performance (positive correlation). In other words, knowing, and acting upon, customer requirements is profitable. The University of Michigan Business School’s National Quality Research Center has tracked the ACSI since ASCI does quarterly interviews with customers of over 200 companies in 35 industries. Customer Satisfaction scores are correlated positively with financial performance measures such as market value added, stock price, and ROI. Among the 73 companies surveyed, those that score in the top half of the ACSI score range generated about $42 bil in MVA, while companies in the bottom half totaled only $23 bil. Furthermore, in the companies surveyed with a mean capitalization of $27 bil, one point on the ASCI scale is worth on average $0.898 mil. in MVA and therefore a one point increase in customer satisfaction score translates into a 3% (0.9/27) increase in MVA. Sources: Claes Fornell, Harvard Business Review, 2001 and American Customer Satisfaction Index, University of Michigan. Source: American Customer Satisfaction Index, U Michigan, HBR, 2001 Operational Excellence Training
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What about Lean, TOC, TQM Six Sigma Lean TOC TQM
Remove defects, minimize variance Lean Remove waste, shorten the flow TOC Remove and manage constraints TQM Continuous Improvement Operational Excellence Training
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Value Stream Map - Current State
Customer Demand = 45 per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I Coils 5 days CT= 15 min Co=0 min. Uptime=100% CT= 67 min Co= 23 min FTY = 67% Shipping 81 202 122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift CT= 4 min Co=0 Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min
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Customer Data On-Time Delivery
Demand = 45/day Customer Demand = 45 per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I Coils 5 days CT= 15 min Co=0 min. Uptime=100% CT= 67 min Co= 23 min FTY = 67% Shipping 81 202 122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift CT= 4 min Co=0 Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min Takt Time = 18.2 min Competitive LT = 3 days
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Inventory MRP Raw = 5 days WIP = 12.1 days FG = 6.5 days Customer
Demand = 45 per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I Coils 5 days CT= 15 min Co=0 min. Uptime=100% CT= 67 min Co= 23 min FTY = 67% Shipping 81 202 122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift CT= 4 min Co=0 Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min WIP = 12.1 days FG = 6.5 days
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Flow of Value Lead Time MRP Lead Time = 23.6 days Touch Time = 89 min
Customer Demand = 45 per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I Coils 5 days CT= 15 min Co=0 min. Uptime=100% CT= 67 min Co= 23 min FTY = 67% Shipping 81 202 122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift CT= 4 min Co=0 Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min Touch Time = 89 min
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Constraints OTD, Lead Time
Max Wip = 7.6 days Customer Demand = 45 per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I Coils 5 days CT= 15 min Co=0 min. Uptime=100% CT= 67 min Co= 23 min FTY = 67% Shipping 81 202 122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift CT= 4 min Co=0 Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min CT (67) > Takt Time (18)
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Setup Times OP Margin, Lead Time
CO = 1 hour Customer Demand = 45 per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I Coils 5 days CT= 15 min Co=0 min. Uptime=100% CT= 67 min Co= 23 min FTY = 67% Shipping 81 202 122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift CT= 4 min Co=0 Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min CO = 23 min CO = Changeover
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Maintenance OTD, Lead Time
Uptime = 70% Customer Demand = 45 per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I Coils 5 days CT= 15 min Co=0 min. Uptime=100% CT= 67 min Co= 23 min FTY = 67% Shipping 81 202 122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift CT= 4 min Co=0 Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min
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Quality MRP FTY = 67% Customer Demand = 45 per day 2 shifts Stamping
342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I Coils 5 days CT= 15 min Co=0 min. Uptime=100% CT= 67 min Co= 23 min FTY = 67% Shipping 81 202 122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift CT= 4 min Co=0 Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min
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Flow of Value OTD, Lead Time
Who is setting the pace? Customer Demand = 45 per day 2 shifts Stamping 342 CT=1sec Co=1 hr. Uptime=85% S. Weld # 1 CT=3 min Co=10 min. Uptime=70% I Coils 5 days CT= 15 min Co=0 min. Uptime=100% CT= 67 min Co= 23 min FTY = 67% Shipping 81 202 122 Assembly Test 90 1X Daily 90/60/30 day Forecasts Order Entry Production Control MRP 6 WEEK Forecast Suppliers Weekly Fax WEEKLY SCHEDULE Lead Time - 34 Days 1 sec 7.6 days 3 min 1.8 days 15 min 2.7 days 67 min 4.5 days 4 min 2 days Lead Time =23.6 days 1 shift CT= 4 min Co=0 Competitive Lead Time = 3 Days Takt Time = 18.2 Minutes Orders/day = 36 Queue = 1.5 Days Touch Time = 89 min What is the pitch time?
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Where do you need to focus?
Making it happen Three major roles Implementer Learns the tools Works the process Solves day to day problems Manager Learns the methodology Manages a value stream Reviews project teams Leader Establishes the vision for the future Sets priorities Encourages Where do you need to focus? Operational Excellence Training
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