1. COIT BPM
Week 9: Business Process Improvement Methodologies - Lean and Six Sigma

2. Objectives Differentiate between Lean & Six Sigma
On completion of this module you should be able to:
Differentiate between Lean & Six Sigma
Identify the phases in a Six Sigma Improvement Project
Identify the pillars and approaches of Lean
Distinguish between flow Kaizen and process Kaizen
Identify types of waste (wasteful activities)
Develop a value stream map
Develop a communication process management A3 page.
Understand and identify phases of a process redesign project
© Ritesh Chugh

3. Process Flow Problems
Both Lean and Six Sigma are methods for process change.
Lean is a name for a subset of the ideas derived from the Toyota Production System (TPS). It focusses on reducing time of activities and process waste.
Six Sigma is a movement that aims to make all employees aware of the value of process improvement and provides the organizational structure to support a continuous improvement effort. Its main emphasis is on reducing the number of errors in a process.
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4. Six Sigma (History)
Six Sigma approach was created at Motorola in the late 1980s.
Focus on measuring quality at each step of a process. Considered to be a systematic approach to process improvement.
In 1995, Jack Welch, the chief executive officer of GE, decided to use Six Sigma at GE.
Six Sigma originated as a set of statistical techniques that managers could use to measure process performance.
By using the techniques, a manager could then make changes in the process to see if it improved the process.
Once the process was as efficient as they could get it, managers then used the statistical techniques to maintain the process.
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5. Six Sigma (Contd..) Three types of process change efforts:
Process management - developing an overview of the company’s processes, linking it with corporate strategy, and using it to prioritize process interventions.
Process improvement - a set of techniques used to incrementally improve and maintain process quality.
Process redesign - major changes in a process.
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6. The Six Sigma Concept
Six Sigma is a name derived from concepts associated with a standard bell-shaped curve.
Almost anything varies if you measure with enough precision.
If the items being measured vary in a continuous manner, one finds that variation frequently follows the pattern described by the bell-shaped curve: 68.26% of the variation falls within two standard deviations.
In statistics, the Greek letter sigma ( σ ) is used to denote one standard deviation; 99.73% of all deviations fall within six standard deviations.
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7. The Six Sigma Concept (Contd..)
Three sigmas to the right of the mean.
Imagine that we subdivided the 0.13% of the curve out on the right and inserted three more sigmas.
We would have six sigmas to the right of the mean.
We would cover % of the deviation and only exclude 3.4 instances in a million.
Harmon, 2014, Pg. 297
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8. The Six Sigma Concept – Key Message
Six Sigma projects rely on formulas and tables to determine sigmas.
Start be defining a defect, and then create a process that is so consistent that only 3.4 defects will occur in the course of one million instances of the process.
Sounds like a rigorous goal?
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9. The Six Sigma Concept – A restaurant example
Deliver all meals as close to 15 min as possible.
Allow some variation however deliver under 30 mins.
The restaurant wanted to achieve Six Sigma and ensure that all meals, except 3.4 of a million, would be delivered in 30 min or less.
-The goal of most Six Sigma projects is to reduce the deviation from the mean.
-This will require efficient processes.
Harmon, 2014, Pg. 298
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10. The Six Sigma Approach To Process Improvement
Begin by helping a management team develop a process architecture.
If an architecture already exists, then identify projects that will benefit most from a process improvement effort.
Process improvement projects based on the Six Sigma method are usually short and typically range from 1 to 6 months.
Most Six Sigma projects focus on a subprocess or subsubprocess. Many focus on what would be regarded as a single activity.
Six Sigma always stresses that measures at any level should be tied back to higher level processes and eventually to strategic goals.
© Ritesh Chugh

11. Six Sigma Teams
Six Sigma projects chosen by steering committee or process sponsor or team sponsor or champion.
Six Sigma jargon:
Black Belt – A leader who has knowledge of Six Sigma projects.
Green Belt - If the leader is a manager who has full-time responsibilities elsewhere and is slightly less qualified.
Master black belt - an internal or external consultant who is a specialist in Six Sigma, and especially skilled in the use of the statistical tools that Six Sigma depends on.
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12. Phases in a Six Sigma Improvement Project
Most Six Sigma projects are organized around a process improvement approach that is referred to as the DMAIC process.
Harmon, 2014, Pg. 301
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13. 1. Define
Develop/give a draft charter, specifying process to be improved, who will do what, when and the expected results.
Identify SIPOC(Supplier, Input, Process, Output, and Customer.)
Harmon, 2014, Pg. 303
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14. 1. Define (Contd..)
List potential requirements on a chart called a CTQ (Critical-To-Quality) tree.
Pareto Analysis - 80 percent of problems may be caused by as few as 20 percent of causes.
Harmon, 2014, Pg. 304
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15. 2. Measure
Develop measures that tell you how well each key requirement is being satisfied.
Three measurement principles:
Measure only what is important to the customer.
Only measure process outputs that you can improve.
Do not measure an output for which you have no history of customer dissatisfaction.
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16. 2. Measure (Contd..)
Focus on determining how to measure process effectiveness and efficiency.
Measure:
Inputs
Processes
Outputs
Distinguish between output measures (features of the product or service you deliver) and service measures (refers to more subjective things having to do with how the customer expects to be treated).
© Ritesh Chugh

17. Cause-effect diagram (refer to week 7) can be developed.
3. Analyse
Analyze what might be causing the problem.
Consider how each activity adds value to the entire process.
A systematic analysis process:
Begin with a comprehensive look for possible causes.
Examine the possible causes in more detail, gather data as appropriate, and apply statistical tools.
Come back to the 80/20 rule.
Cause-effect diagram (refer to week 7) can be developed.
© Ritesh Chugh

18. 4. Improve Think of ways to improve the process.
Changes are evaluated and some are put into force.
Additional data are gathered to see if the changes result in a more consistent process.
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19. 5. Control
Maintain the gains and, sometimes, in new initiatives, to improve the process further.
Constantly sample and evaluate output.
Determine a reasonable compromise between excessive measurement and enough measurement to ensure that processes remain efficient and effective.
© Ritesh Chugh

20. Two key principles (pillars)
Lean
Derived from the process improvement approach developed at Toyota. Lean also referred to as the TPS or the Toyota Way(a comprehensive approach to managing and improving Toyota’s corporate efforts).
Two key principles (pillars)
Five basic approaches
Harmon, 2014, Pg. 316
© Ritesh Chugh

21. The Toyota Way
Challenge refers to the Toyota philosophy, or to long-term thinking.
Kaizen refers to the Toyota improvement method.
Respect and Teamwork both refer to interactions between managers and employees, and interactions of teams.
Genchi Genbutsu refers to going and seeing it for yourself on the ground.
© Ritesh Chugh

22. Flow Kaizen
Focuses on improving the flow of the high-level value stream. Flow Kaizen is the concern of senior management.
The chief tool of the Flow Kaizen practitioner is a high-level diagramming technique called value-stream mapping.
© Ritesh Chugh

23. A value-stream map The map provides a view of an entire value chain.
Begin at the upper right, with the customer(distribution) in this figure.
This value-stream map shows a complete product cycle, from order to delivery.
The bold boxes indicate the 8 subprocesses.
The bold boxes and the wide arrows track the flow of actual product.
The thin arrows and boxes track the flow of information.
The bold clear arrows indicate that the item is “pulled” by the upstream subprocess.
The bold, striped arrow indicates that the item is “pushed.”
© Ritesh Chugh
Harmon, 2014, Pg. 317

24. Process Kaizen
After the overall value stream is running smoothly, Lean team begin to drill down and look at specific processes.
Looking for the elimination of waste. Process Kaizen is the responsibility of the line workers.
Define activities as either value-adding or non–value-adding activities.
Eliminate non–value-adding activities.
© Ritesh Chugh

25. Types of waste (wasteful activities)
Overproduction
Waiting
Transport
Extra Processing
Inventory
Motion
Defects
Identify and streamline a process so that all work is done in the most efficient manner possible.
© Ritesh Chugh

26. Management, Teams, and A3 Pages
Employees are organized into teams that will take responsibility for their own work.
Learn from others.
Encourage and reward teamwork.
Mentor employees rather than “control” them.
A3 Page (Communication process management tool) layout
Title (Process to be improved)
Background (How big and how important is the problem?)
Current Conditions (How much? How many? How long?)
Goals/Targets (What would a solution look like?)
Analysis
Proposed Countermeasures (What should we do?)
Plan (How should we go about the solution?)
Follow-up (How should we follow up to ensure the solution works?)
© Ritesh Chugh

27. Sample A3 worksheet
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Harmon, 2014, Pg. 321

28. BPTrends Process Redesign Methodology
Harmon, 2014, Pg. 328
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29. Overview of Process Redesign
Harmon, 2014, Pg. 328
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30. Five phases of a process redesign project
Outcome
Understanding the project
Detailed project plan
Analyze business process
Documents and models describing the existing process, a draft plan for the redesign of the existing process, and the support of all key senior managers.
Redesign business process
New process documentation and proposed management structure
Implement redesigned process
Infrastructure and resource materials
Roll out the redesigned process
A new process
© Ritesh Chugh

31. In summary
Six Sigma focused on improving the quality and consistency of process outputs, whereas Lean focused on improving the flow of activities and reducing the cost of a process by reducing several forms of waste.
Both can be used to improve a process that is already worked in a satisfactory manner, as part of a continuous improvement effort.
A blend of Lean and Six Sigma has emerged – Lean Six Sigma!
Adopt a process redesign methodology.
© Ritesh Chugh

32. Lecture Content Source
Harmon, P 2014, Business process change: a business process management guide for managers and process professionals, 3rd edn, Morgan Kaufmann-Elsevier, Waltham, MA. (Chapters 12 & 13)
© Ritesh Chugh

33. Next Week
Business Process Software Tools & BPM Suites- Chapters 15(Software Tools for Business Process Analysis and Design) & 16 (Business Process Management Suites)