1. It’s All About the Customer Lean6
Jack Rouch
Acting Director for Internal Review
March 30, 2004 #

2. DFAS Lean6 Definition
Lean6 is our fact-based approach for improving our business processes and delivering best value to our customers.
Leadership Council - January 16, 2004
1/2/2019
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3. Value Chain Value Chain Customer Inputs, Raw Assets / Core Channels
Offering
Inputs, Raw
Assets / Core
Channels
Offering
Inputs, Raw
Inputs, Raw
Assets / Core
Assets / Core
Priorities
Priorities
Channels
Channels
Offering
Offering
Competencies
Priorities
Priorities
Material
Material
Material
Material
Competencies
Competencies
Competencies -
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4. Assets, Core Competencies
DFAS Value Chain Model
Individual
Inputs, Raw Materials
Customers
Channels
Offerings
Assets, Core Competencies
Organizational
Inputs, Raw Materials
Customers
Channels
Offerings
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5. Value Chain - Customers & Priorities
Individual
DFAS’ first-line payment recipients
Active Duty
Reserve/Guard
Retirees
Civilians
Annuitants/Survivors
Spouses/Families
Contractors
Garnishment Recipients
Their Priorities:
Timely & Accurate Payments and Payment Information
Organizational
Our partners in servicing our payment recipients
Field Level (Wing, Base, Unit, Dept., etc.)
Major Command
Unified Command
Pentagon/DoD (OSD, Comptroller, Services)
Other Federal Agencies (DOE, DOJ, OMB, GAO,
IG, VA, Treasury, etc.)
State Agencies
Congress
Services Program & Finance Offices & FMs
State & Local Tax Authorities
Their Priorities:
Everything Above, Plus:
Timely and Accurate Business Intelligence
Timely and Accurate Financial Statements
Delivery of all of the Above at a Reasonable Price
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6. Value Chain - Channels Individual Organizational Internet E-Mail
Telephone
Mail
Hard Copies
Face-to-Face
Hotlines
Newspaper/Media
Individual
Everything Above, Plus:
Finance & Accounting Systems
Client Executives/MSAs
FSOs
Dashboard
GAO/IG Reports
Contractors/Vendors
Congress
Organizational
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7. Value Chain - Offerings
Information & Payment
Disbursing
Collecting
Billing
Reporting
Competence
Communication (Notification, Feedback, Notice)
Individual
Everything Above, Plus:
Decisions
Auditable Products
Analysis
Competent Advice
Recovery/Accountability
Partnering to Deliver Needs/Requests
IT Solutions
Organizational
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8. Value Chain - Inputs Individual Organizational
Request for Payment/Reimbursement
Entitlement Data
Information
Communication
Contractor Support
Employees
Payment Events (Commitments, Obligations, Expenditures)
Individual
Feeder Systems/Data
Information Technology
Training
Policies/Procedures
Regulations/U.S. Code
External Requirement
Outside Knowledge
Strategic/Operational Plans
Business Enterprise Architecture
Intellectual Capital
Payment Events (Commitments, Obligations, Expenditures)
Organizational
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9. Value Chain - Assets/Core Competencies
Unique Capability
Intellectual Capital
Now
Future
Intellectual Capital
Business Intelligence
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10. DFAS Strategic Targets
Deliver Auditable Financial Statements for All Clients
Implement Electronic Commerce for All Commercial Payments Processing
Pay Service Members What They Are Entitled to by the Scheduled Pay Date
Develop Corporate Capability to Deliver Customer Unique Business Intelligence
Retain, Recruit and Train a Workforce Capable of Developing and Implementing DFAS Strategic Plan
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11. Customer Priorities Core Competencies Related Strategic Targets
Timely/Accurate Pay
Timely/Accurate F/S
Business Intelligence
Related Strategic Targets
Audited Financial Statements
Electronic Commerce
Service Pay Accurate/Timely
Capability to Provide Business Intelligence
Core Competencies
Business Intelligence
Intellectual Capital
Related Strategic Targets
Retain, Recruit, Train Employees
Capability to Provide Business Intelligence
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12. DFAS Lean6 Definition
Lean6 is our fact-based approach for improving our business processes and delivering best value to our customers.
Leadership Council - January 16, 2004
1/2/2019
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13. Lean
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14. Lean Principles of Lean Identify which features create VALUE.
Identify the sequence of activities to create the VALUE.
Make the activities FLOW.
Let the customers products or services through the process.
PERFECT the process to achieve standardization and reduce variation.
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15. Lean Definitions Value added Non-value added, but necessary
Is the customer willing to pay extra for this activity?
Does this activity add to our competitive advantage?
Non-value added, but necessary
Does regulation or law require this activity?
Are company measurements or reporting requirements supported by this activity?
Are risks, defects, and costs reduced by this activity?
Does a Value Added activity require this step?
Non-value added
The previous questions cannot be answered with ‘Yes’.
These activities are considered wasteful.
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16. Lean 7 Deadly Wastes - Muda Transportation Overproduction Inventory
Processing
Motion
Waiting
Defects
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17. Six Sigma
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18. Six Sigma
Six Sigma
Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects in a process.
Six Sigma seeks to :
Reduce variation/defects in a process
Statistical measurement: = 3.4 defects per million opportunities
UCL
LCL
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19. --Former GE chairman--
Six Sigma
Six Sigma
“Six Sigma quality is a disciplined method of eliminating virtually all defects from every one of the company’s products, processes, and transactions.”
John F Welch
--Former GE chairman--
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20. Six Sigma What is Six Sigma?
Six Sigma pertains equally to measuring the quality
of an accounting process as it does to measuring
a manufacturing process.
The quality associated with only 3.4 defects per million is the equivalent to % perfection
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21. Compare & Contrast Lean & Six Sigma
Theory
LEAN
Remove Waste
SIX SIGMA
Reduce Variation
Methodology
1. Identify Value
2. Identify Value Stream
3. Flow
4. Pull
5. Perfection
1. Define
2. Measure
3. Analyze
4. Improve
5. Control
Focus
Flow Focused
Problem Focused
Assumptions
1. Waste Removal with Improve Business Performance
2. Many Small Improvements are Better than Systems Analysis
1. A Problem Exists
2. Figures and Numbers are Valued
3. System Output Improves if Variation in all Processes is Reduced
Primary Effect
Reduced Flow Time
Uniform Process Output
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22. Six Sigma Compare & Contrast Lean & Six Sigma (cont) LEAN SIX SIGMA
Secondary Effects
LEAN
1. Less Variation
2. Uniform Output
3. Less Inventory
4. New Accounting System
5. Flow--Performance Measures for Managers
6. Improved Quality
SIX SIGMA
1. Less Waste
2. Fast Throughput
3. Less Inventory
4. Fluctuation--Performance Measures for Managers
5. Improved Quality
Criticisms
Statistical or System Analysis is not Valued
1. System Interaction not Considered
2. Processes Improved Independently
Ref: “How to Compare Six Sigma, Lean & Theory of Constraints”
(Quality Progress, March 2002)
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23. Development of DFAS Lean6
Six Sigma
Lean
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24. Specify value in the eyes of the customer
Lean6 Principles
Specify value in the eyes of the customer
Identify value stream; eliminate waste and variation
Make value flow at pull of customer
Involve, align & empower employees
Continuously improve knowledge in pursuit of perfection
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25. Actions to implement Lean6:
Implementation
Actions to implement Lean6:
Develop strategy & methodology
Develop position descriptions for Black Belts (301/501/510 series)
Recruit, hire & train Black Belts
Develop policies & procedures for initiative (Governance Manual)
Roles & responsibilities
Types of projects
Training plan
Project reporting & validation
Communications
Briefings
web/ePortal
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26. Integrating Lean6 into the DFAS Culture
How we Deliver Our Products and Services
People
Processes
Systems
Human Capital Strategy
Lean 6
Portfolio Management
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27. The Lean6 Process Identify Opportunities Achieve Prioritize Results
Options
Execute
Plan
Plan
Project
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28. Kaizen Event (Less than 1 week)
Types of Projects
Just Do It (1-2 days)
Quickly identify and eliminate obvious muda
Business Line controlled - no portfolio management
Get started now
Kaizen Event (Less than 1 week)
Short, intensive project
Small team - Greenbelts (Black Belt coached)
Guidance and training to come
Black Belt Led Project (Approximately 3 months)
Address more complex problems
Guided by a trained Blackbelt
Subject to Portfolio Management
Quality Council Review/Monitoring
1/2/2019
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29. Lean6 Roles All DFAS Employees Leadership Council Quality Council
Project Sponsors
Black Belts (Total 30)
100% to implement Lean6
Will receive Black Belt training, coaching, and project assignments to develop Black Belt credentials
Green Belts ( )
Will receive basic Lean6 training
Will work on improvement projects ‘as needed’ basis
Will remain in current positions
Master Black Belts (future)
Will manage the growing of the Lean6 program
1/2/2019
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30. Importance of understanding your organization’s Value Chain
Major Takeaways
Importance of understanding your organization’s Value Chain
Benefits of Combined Lean and Six Sigma Approach
Transforming the Culture
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