1. The University of Texas at Arlington
Lean Six Sigma
An Overview
January 8, 2004
Russ Aikman
The University of Texas at Arlington

2. Topics What is Lean Six Sigma? Why Lean Six Sigma? LSS Tools & Methods
Six Sigma vs. Lean
Roles & Responsibilities
Origins
DMAIC Process
Why Lean Six Sigma?
LSS Tools & Methods
LSS Examples & Exercise
Keys to Success
Lean Six Sigma Overview

3. Key to Success: FOCUS “Be aggressive.”
What is Lean Six Sigma?
“Be aggressive.”
Michael Jordan’s advice to an NBA rookie
“It’s hard to be aggressive when you don’t know who to hit.”
Vince Lombardi
Key to Success: FOCUS
Lean Six Sigma Overview

4. What is Lean Six Sigma?
Lean Six Sigma is a process improvement methodology that has proven successful in a variety of industries.
Lean and Six Sigma combined are the most powerful combination of improvement strategies and tools to achieve excellence across the enterprise.
Lean Six Sigma Overview

5. Lean Six Sigma Is the Integration of Two Powerful Business Improvement Approaches...
Lean Speed + Low Cost
Six Sigma Culture + Quality
Goal – Reduce waste and increase process speed
Focus – Use VSM to identify & eliminate waste (non value add activities and causes of delay)
Method – Kaizen events
Goal – Improve performance on Customer CTQs
Focus – Use DMAIC with TQM tools to eliminate variation
Method – Management engagement, 1% dedicated as Champions and Black Belts
Lean Speed Enables
Six Sigma Quality
(Faster Cycles of Learning)
Six Sigma Quality Enables
Lean Speed
(Fewer Defects Means
Less Time Spent on Rework)
Lean Six Sigma Overview

6. What is Six Sigma?
A statistical measure for determining process capability (Six Sigma equates to 3.4 defects per million opportunities)
A proven set of tools and tactics for reducing variation
A successful business strategy (in use by GE, Motorola, Texas Instruments and Allied Signal)
A comprehensive philosophy about operational excellence
A complementary discipline to existing tools
Lean Six Sigma Overview

7. Defects Per Million Opportunities
What is Six Sigma? s
Yield
DPMO 2 3 4 5 6
69.2%
93.3%
99.4%
99.97% %
308,537
66,807
6,210
233
3.4
Process Capability
Defects Per Million Opportunities
Lean Six Sigma Overview

8. Theme: Elimination of Variability
What is Six Sigma? Origins and History
Motorola was the first advocate in the 80’s
Many other companies have embraced Six Sigma, including GE, Allied Signal, Sony, 3M, Bank of America, First Data, et al
Involves use of statistical tools on projects that yield high ROI
Top-down program with Executive and Champion support
GE annual reports states that Six Sigma delivered:
$300 million to its operating income in 1997
$750 million to the bottom line in 1998
Theme: Elimination of Variability
Lean Six Sigma Overview

9. What is Six Sigma? The DMAIC Process
Define
Measure
Analyze
Improve
Control
Six Sigma projects are managed through five phases
At the end of each phase a meeting (Gate Review) is held to assess whether the project should continue
A project can be cancelled at any point in the DMAIC
The tools, methods, and goals of each phase are different
The final phase – Control – is used to ensure that project results are sustained
Lean Six Sigma Overview

10. What is Six Sigma? Roles & Responsibilities
Executive Management
Establish organization vision & goals
Make decisions on LSS infrastructure
Commission LSS deployment teams
Project Champions
Project selection & prioritization
Project management: Gate Reviews
Process Owners
Process support & expertise
Lean Six Sigma Overview

11. What is Six Sigma? Roles & Responsibilities
Black Belts
Change agent & Project Team Leader
100% dedicated to process improvement
Green Belts
Data collection & analysis, project support
Project team leader for smaller projects
Six Sigma Team
Data collection, process expertise, solution development, project support, implementation
Lean Six Sigma Overview

12. Black Belts are Change Agents for institutionalizing Lean Six Sigma
What is Six Sigma? The Role of Black Belts
Lead strategic, high impact process improvement projects
Master basic and advanced breakthrough lean and statistical tools & methods
Deploys techniques of Measurement, Analysis, Improvement and Control
Learns through intensive training program
Black Belts are Change Agents for institutionalizing Lean Six Sigma
Lean Six Sigma Overview

13. What is Six Sigma? Project Selection to Maximize ROIC
EP = Economic Profit
ROIC = Return on Invested Capital
WACC = Weighted Average Cost of Capital
ROIC = Profit After Tax/Invested Capital:
Drive Cost and Invested Capital down, revenue up
Invested Capital ~ Inventory + PP&E + A/R
Lean Six Sigma Overview

14. Theme: Elimination of Waste
What is Lean? Origins and History
Pioneered by Toyota ( ), based on ideas of Henry Ford
Discovered much later by Western companies
Known by many names:
Toyota Production System
Just-In-Time production
Flow production
Systems viewpoint
A system of local optimums does not yield an optimum system
Theme: Elimination of Waste
Lean Six Sigma Overview

15. 2. Identify the Value Stream 3. Flow 4. Pull 5. Perfection
What is Lean? The Basics
1. Specify Value
2. Identify the Value Stream
3. Flow
4. Pull
5. Perfection
Lean Six Sigma Overview

16. What is Lean? 1. Specify Value
Value addition is judged by the customer
Product / service value definition
Specific products or services
With specific capabilities / features
At specific prices
Through dialogue with specific customers
Lean Six Sigma Overview

17. What is Lean? 2. Identify the Value Stream
The value stream is all of the activities that are necessary to bring a specific product through three critical business tasks:
Problem solving
Information management
Physical transformation
Lean Six Sigma Overview

18. What is Lean? 3. Flow
The distance that a product must travel and the time it takes
In a pure lean environment, a product never stops moving, unless value-add work is being performed
Lean Six Sigma Overview

19. What is Lean? 4. Pull
Real customer demand pulls products / services through the system
Inventory is waste
Producing items / services that are not sold is waste
Remove excess capacity or increase the rate of customer pull
Lean Six Sigma Overview

20. What is Lean? 5. Perfection
Process waste is identified and eliminated
Reduction of effort
Reduction of wait time
Reduction of space
Reduction of cost
Reduction of mistakes
Increasing customer satisfaction
Lean Six Sigma Overview

21. Why Lean Six Sigma? The Synergy of Lean and Six Sigma
Where We
Need to Be...
Reduced Complexity
Timely Information
Doing It Right the First Time
Improved Systems
Satisfied Customers
Short Cycle Times
Consistent Processes
Today’s Environment…
Too Many Hand-Offs
Not Enough Information
Too Much Rework
Manually Intensive
Missing Customer CTQs
Long Cycle Times
Inconsistent Processes
Lean Six Sigma Overview

22. Why Lean Six Sigma? Is a 99% quality level good enough?
The “goodness level” of 99% equates to:
20,000 lost articles of mail per hour
Unsafe drinking water almost 15 minutes each day
5,000 incorrect surgical operations per week
2 short or long landings at major airports each day
200,000 wrong drug prescriptions each year
No electricity for almost 7 hours per month
Lean Six Sigma Overview

23. Why Lean Six Sigma? Typical Business Processes
Inconsistent product delivery and poor quality reduce sales and customer retention
Most processes: High Waste, Low Value-Add
In a value stream, material spends ~95% of its time waiting and in other non-value add activities
Poor quality increases process lead time
Capacity problems can be masked by slow cycle times
Lean tools accelerate lead time reduction
Six Sigma brings a process under control
Lean Six Sigma Overview

24. Why Lean Six Sigma? Overall Yield vs. Sigma 1 93.32% 99.379% 99.9767
(Distribution Shifted ±1.5s)
# of Steps
±3s
±4s
±5s
±6s 1
93.32%
99.379% % 7
61.63
95.733
99.839 10
50.08
93.96
99.768 20
25.08
88.29
99.536 40
6.29
77.94
99.074
Lean Six Sigma Drives Quality, Speed and Cost Simultaneously
Lean Reduces Non-Valued Add Steps
Six Sigma Improves Quality of Value Add Steps
Source: Six Sigma Research Institute, Motorola University, Motorola, Inc.
Lean Six Sigma Overview

25. Why Lean Six Sigma? The Synergy of Lean and Six Sigma
Combines the strategy and solution sets inherent in Lean with the cultural, organizational process and analytical tools of Six Sigma.
With the result that we …
respond to our customers better, faster with less waste
Lean
Six Sigma
Lean Six Sigma Overview

26. DMAIC Improvement Process Road Map
Activities
Analyze
Control
Improve
Measure
Define
Identify Problem
Complete Charter
Develop SIPOC Map
Map Business Process
Map Value Stream
Gather Voice of the Customer & Voice of the Business
Develop CCR’s & CBR’s
Finalize Project Focus
Propose Critical X’s
Prioritize Critical X’s
Conduct Root Cause Analysis on Critical X’s
Validate Critical X’s
Estimate the Impact of Each X on Y
Quantify the Opportunity
Prioritize Root Causes
Develop Potential Solutions
Develop Evaluation Criteria & Select Best Solutions
Evaluate Solution for Risk
Optimize Solution
Develop ‘To-Be’ Process Map(s) and High-Level Implementation Plan
Develop Pilot Plan & Pilot Solution
Develop SOP’s, Training Plan & Process Control System
Implement Process Changes and Controls
Monitor & Stabilize Process
Transition Project to Process Owner
Identify Project Replication Opportunities
Calculate Financial Benefits
Pareto Charts
Project Selection Tools
PIP Management Process
Value Stream Map
Various Financial Analysis
Charter Form
Stakeholder Analysis
Communication Plan
SIPOC Map
High-Level Process Map
Non-Value Added Analysis
VOC and Kano Analysis
RACI and Quad Charts
Operational Definitions
Data Collection Plan
Statistical Sampling
Measurement System Analysis (MSA), Gage R&R
Constraint Identification
Setup Reduction
Generic Pull
Kaizen
TPM
Control Charts
Process Capability, Cp & Cpk
C&E Matrix
C&E/Fishbone Diagrams
Brainstorming
Detailed ‘As-Is’ Process Maps
Basic Statistical Tools
SupplyChainAccelerator Analysis
Non Value-Added Analysis
Hypothesis Testing
FMEA
Box Plots
Interaction Plots
Simple & Multiple Regression
ANOVA
Benchmarking
Process Improvement Techniques
Line Balancing
Process Flow Improvement
Replenishment Pull
Purchasing and Sales Strategy
Poka-Yoke
Solution Selection Matrix
‘To-Be’ Process Maps
Piloting and Simulation
Standard Operating Procedures (SOP’s)
Training Plan
Implementation Plan
Visual Process Control
Process Control Plans
Project Commissioning
Project Replication
Plan-Do-Check-Act Cycle
Identify Key Input, Process and Output Metrics
Develop Operational Definitions
Develop Data Collection Plan
Validate Measurement System
Collect Baseline Data
Determine Process Performance/Capability
Validate Business Opportunity
Tools
Lean Six Sigma Overview

27. DMAIC Process Enables Project Focus
“Many Potential Projects”
Define
Single Project Selected
“Where are we now?”
Project Baseline Measured
Measure
“Many Potential
Root Causes”
Analyze
Root Causes Identified
And Verified
“What is the solution?”
Improve
Improvements Tested
and Measured
“How do we sustain
the gains”
Control
Self-Sustaining
Institutionalized
Process
Lean Six Sigma Overview

28. Lean Six Sigma Tools & Methods The Funnel Effect
Brainstorming
Pareto
Cause & Effect diagram
Gage R&R
C&E matrix
Control Charts
FMEA
Confidence Intervals
Components of Variation
Regression
ANOVA
Hypothesis tests
Two Factor ANOVA
Screening DOE
Characterization DOE
Full Factorial
Control Plan
SOP
Measure
KPIVs
KPIVs
Analyze
KPIVs
Improve
KPIVs 5-15
Control
KPIVs 3-5
Lean Six Sigma Overview

29. Lean Six Sigma Tools & Methods
Combination of Basic and Advanced LSS Tools are used, depending on the problem
‘Nothing new under the sun . . .’
Most tools have been in existence for decades
One key to success:
Knowing when to use a specific tool
Lean Six Sigma Overview

30. Lean Six Sigma Tools & Methods Basic Tools
Primarily involve:
Brainstorming & idea generation
Classification & prioritization
Decision making
Solving ‘easy’ problems
Intuitive in nature; easily taught, understood, and applied
Ideal for use with teams and user groups
Lean Six Sigma Overview

31. Lean Six Sigma Tools & Methods Basic Tools – Examples
Brainstorming
Check Sheets
Run Charts
Histograms
Box Plots
Scatter Diagrams
Pareto Analysis
C&E/Fishbone Diagrams
Nominal Group Technique
Force Field Analysis
Affinity Analysis
Process Mapping
Cause-and-Effect Matrix
Value Stream Mapping
Process Flow
Mistake Proofing
Setup Reduction / SMED
Visual controls
Kaizen Blitz 5S
Lean Six Sigma Overview

32. Lean Six Sigma Tools & Methods Advanced Tools
Statistical tools requiring more in-depth knowledge of statistical principles and analytical techniques.
Lean tools may involve multi-company, multi-functional, or senior management participation to formulate and implement.
Lean Six Sigma Overview

33. Lean Six Sigma Tools & Methods Advanced Tools – Examples
Measurement Systems Analysis
Cp & Cpk
Main Effects Plots
Interaction Plots
Regression Analysis
Analysis of Variance (ANOVA)
Failure Modes & Effects Analysis (FMEA)
Design of Experiments (DOE)
Control Charts
Hypothesis Testing
Quality Function Deployment
Confidence Intervals
Strategic Sourcing and Partnering
Sales & Operations Planning
Generic Pull Systems
Replenishment Pull Systems
Constraint Management
Line Balancing
Lean Six Sigma Overview

34. LSS Example
Inventory Accuracy Problem
Lean Six Sigma Overview

35. LSS Examples: Product Companies at Full Deployment
Lean Six Sigma Overview

36. LSS Examples: Services Companies at Full Deployment
Lean Six Sigma Overview

37. Keys to Success Deployment Principles That Always Work
Executive engagement (CEO and direct reports)
A strong and respected Corporate Deployment Champion should report to CEO
P&L owners own resources & are accountable for project results
Deploy critical mass of key resources full-time (Black Belts = 1%)
Resources should be selected from “future leaders of the company”
Lean Six Sigma Overview

38. Keys to Success Deployment Principles That Always Work
Establish a process for Value Based Project Identification and Selection within the business
Select Value Streams based on customer needs and value creation
Prioritize and staff critical projects in the Value Stream based on delay time
Actively reduce Projects in Process to reduce project cycle times
Track results rigorously: Lean Six Sigma results should “pay as you go” and be confirmed by objective parties
Black Belts must have team leadership skills
Provide a “performance improvement” platform that allows for future innovations
Lean Six Sigma Overview

39. Conclusion
Lean Six Sigma is a powerful process improvement methodology
Six Sigma Focus: Elimination of Variation
Lean Focus: Elimination of Waste
Lean and Six Sigma are complementary
Project Selection to Maximize ROIC is Critical
DMAIC Provides a Structured Approach to Project Management
Lean Six Sigma is being used in a variety of industries with success
Lean Six Sigma Overview

40. Questions & Answers ? ? ? ? ? ? ? ? ? ? ? ? ?
Lean Six Sigma Overview

41. For More Information... Russ Aikman (817) 307-0400
Mark Sessumes (817)
Lean Six Sigma Overview

42. Established in 1986, George Group pioneered the deployment of Lean methods in the United States. We have built our reputation deploying successful enterprise-wide performance improvement programs for nearly 15 years in over 100 manufacturing and service companies, including Caterpillar, ITT Industries, United Technologies, Flextronics, Johns Manville, GE and many others.
Today, we are the global leader in designing and implementing Lean Six Sigma programs. We design programs to meet specific goals of the CEO, and provide support to our clients in achieving and sustaining results. What distinguishes us, according to our clients, is the value of our intellectual capital and software, the depth of our resources and experience, the clear connections we make between performance improvement and value creation, the flexibility to customize a Lean Six Sigma program for each organization, our professional alliances, global coverage, and our proprietary software.
Above all, our clients value our unrelenting focus on delivering sustained improvements in operational performance and shareholder value.