Improve Phase Lean Six Sigma Improve Phase Tollgate Review.

Improve Phase Lean Six Sigma Improve Phase Tollgate Review

Lean Six Sigma DMAIC Tools and Activities
Review Project Charter Validate High-Level Value Stream Map and Scope Validate Voice of the Customer & Voice of the Business Validate Problem Statement and Goals Validate Financial Benefits Create Communication Plan Select and Launch Team Develop Project Schedule Complete Define Tollgate Value Stream Map Flow Identify Key Input, Process and Output Metrics Develop Operational Definitions Develop Data Collection Plan Validate Measurement System Collect Baseline Data Determine Process Capability Complete Measure Tollgate Identify Root Causes Reduce List of Potential Root Causes Confirm Root Cause to Output Relationship Estimate Impact of Root Causes on Key Outputs Prioritize Root Causes Value-Add Analysis Takt Rate Analysis Quick Wins Statistical Analysis Complete Analyze Tollgate Develop Potential Solutions Evaluate, Select, and Optimize Best Solutions Develop ‘To-Be’ Value Stream Map(s) Develop and Implement Pilot Solution Implement 5s Program Develop Full Scale Implementation Plan Cost/Benefit Analysis Benchmarking Complete Improve Tollgate Develop SOP’s, Training Plan & Process Controls Implement Solution and Ongoing Process Measurements Confirm Attainment of Project Goals Identify Project Replication Opportunities Training Complete Control Tollgate Transition Project to Process Owner Define Measure Analyze Improve Control Project Charter Voice of the Customer and Kano Analysis SIPOC Map Project Valuation/ROIC Analysis Tools RACI and Quad Charts Stakeholder Analysis Communication Plan Effective Meeting Tools Inquiry and Advocacy Skills Time Lines, Milestones, and Gantt Charting Pareto Analysis Value Stream Mapping Process Cycle Efficiency/Little’s Law Operational Definitions Data Collection Plan Statistical Sampling Measurement System Analysis (MSA) Gage R&R Kappa Studies Control Charts Spaghetti Diagrams Histograms Normality Test Process Capability Analysis Process Constraint ID and Takt Time Analysis Cause & Effect Analysis FMEA Hypothesis Tests/Conf. Intervals Simple & Multiple Regression ANOVA Components of Variation Conquering Product and Process Complexity Queuing Theory Replenishment Pull/Kanban Stocking Strategy Process Flow Improvement Process Balancing Analytical Batch Sizing Total Productive Maintenance Design of Experiments (DOE) Solution Selection Matrix Piloting and Simulation Work Control System Setup reduction Pugh Matrix Pull System Mistake-Proofing/ Zero Defects Standard Operating Procedures (SOP’s) Process Control Plans Visual Process Control Tools MGPP Statistical Process Controls (SPC) Solution Replication Visual Workplace Metrics Project Transition Model Team Feedback Session Kaizen Events Targeted in Measure to Accelerate Results International Standards for Lean Six Sigma

Enter Key Slide Take Away (Key Point) Here
Analyze Overview Hypothesis Tests Value-Add Analysis Root Cause / Effect Tools Used Root cause: Effect Data Analysis What potential KPIVs were identified? Show the key statistical and graphical tools which narrowed the potential KPIVs. Show regression models developed. How good is the model? Show ANOVA results. Show Hypothesis Test results. What have you learned? Do you see any important interactions between various parameters? Were there any special causes in the data? What did you do? Standard Deviation What effect would a lot of variation in the population have on our estimate of the population mean from a sample? How would this affect our ability to draw conclusions about the mean? What if there is very little variation in the population? Statistical Inferences and Confidence How much confidence do we have in our estimates? How close do you think the true mean, m, is to our estimate of the mean, x-bar? How certain do we want/need to be about conclusions we make from our estimates? If we want to be more confident about our sample estimate (i.e., we want a lower risk of being wrong), then we must relax our statement of how close we are to the true value. Three Factors drive Sample Sizes Three concepts affect the conclusions drawn from a single sample data set of (n) items: Variation in the underlying population (sigma) Risk of drawing the wrong conclusions (alpha, beta) How small a Difference is significant (delta) These 3 factors work together. Each affects the others. Variation: When there’s greater variation, a larger sample is needed to have the same level of confidence that the test will be valid. More variation diminishes our confidence level. Risk: If we want to be more confident that we are not going to make a decision error or miss a significant event, we must increase the sample size. Difference: If we want to be confident that we can identify a smaller difference between two test samples, the sample size must increase Process Balancing “Process Balancing” is a procedure whereby a set of process steps are “equalized” in terms of time required to accomplish them (note “effort” may not be the same!). Process balancing tools are used where the process is contained in a defined area. Examples include: Order Entry Department Mortgage Application Process Key tools used in process balancing are the time study and takt time chart, but other tools such as skill matrix, etc., may play a significant role in the analysis. The Process Balancing techniques are not exclusive to “one-piece flow” – small batches may be necessary between certain steps – but use of the process balancing tools is meant to drive the process to one-piece flow. Primary Issues in Typical Transactional Environments Excess “stuff in process” Poor space utilization Low employee efficiency Long/erratic cycle times Poor balance of labor content across process steps Conveyance, standby and motion waste Disorganized workspace and component/supply storage High variability of demand on multiple processing centers – e.g., call centers/customer arrivals High variability of task content (non-standard work/procedures) Define: What is the Goal of balancing the process? Capacity improvement without adding resources Productivity improvement without sacrificing quality Space reduction Day-to-Day scheduling Long-term resource planning Measure: What tools will be used to gather, present, and analyze data? Time Study and Task Times (breakdown of NVA, BVA, CVA) Historical: Exits, Productivity, Customer Demand, Staffing, etc. Layout and spaghetti flow Analyze: Task Time Chart with breakdown of NVA, BVA, CVA Time Traps and Constraints (if any) Variability of Demand Improve: What steps will be taken and in what order? 1. Reduce NVA of Constraints and Time Traps to meet Customer Demand General Rule is that Max Task Time (incl. NVA+BVA+CVA) of Time Trap should be no more than 90% of Takt Time for low variability 2. Reduce NVA of non-Time Traps General Rule is that Max Task Time of all other non-Time Traps should no more than 90% of Takt Time (customer demand) for highly predictable environments OR 80% of Takt Time for processes with variability 3. Reorder/Re-sort tasks to balance work content, alter staffing 4. Modify Layout to accommodate new staffing Implement work controls (generic pull) 5. Iterate on reducing NVA, then BVA, then CVA and rebalancing/re-staffing until goals are achieved. Cost targets, capacity requirements, etc. Control: Implement visual control tools to sustain the improvements Takt Boards for the Time Trap and overall process 5S & Issue Boards for problem resolution and process control Customer Value Add: A task or activity for which the customer would be willing to pay. Example: Electronic funds transfer via credit card Business Value Add: A task that is required to support the business but for which the customer is not willing to pay Example: Financial Services employee writing customer credit history on a credit application Non-Value Add: A task that is not required and should be eliminated because it is wasteful Example: Financial Services employee having to look for missing information needed to complete credit history Review Sources of Waste Transportation (moving items from one place to another) Inventory (items/paperwork/information waiting to be processed) Motion (excess movement and/or poor ergonomics) Waiting (delays caused by shortages, approvals, downtime) Overprocessing (adding more value than the customer is paying for) Overproduction Defects (rework & scrap – doing the same job more than once) Another waste is: People (untapped and/or misused resources) Hypothesis Testing: Allows us to determine statistically whether or not a value is cause for alarm (or is simply due to random variation) Tells us whether or not two sets of data are different Tells us whether or not a statistical parameter (mean, standard deviation, etc.) is statistically different from a test value of interest Allows us to assess the “strength” of our conclusion (our probability of being correct or wrong) Hypothesis Testing Enables Us to: Handle uncertainty using a commonly accepted approach Be more objective (2 persons will use the same techniques and come to similar conclusions almost all of the time) Confirm or disprove assumptions Control our risk of making wrong decisions or coming to wrong conclusions The null hypothesis is a statement you are testing in order to determine whether or not that statement is true. We assume the null hypothesis is true unless we have enough evidence to prove otherwise. If we can prove otherwise, then we reject the null hypothesis. The alternative hypothesis is a statement that represents reality if there is enough evidence to reject Ho. If we reject the null hypothesis then we accept the alternative hypothesis. This is analogous to being found “guilty” in a court of law. Assumptions - The Hypothesis Tests we have discussed make certain assumptions: Independence between and within samples Random samples Normally distributed data Unknown Variance In our example, we did not assume equal variances. This is the safe choice. However, if we had reason to believe equal variances, then we could have checked the “Assume equal variances” box in the dialogue box. Type I Error - I’ve discovered something that really isn’t here! Alpha Risk Producer Risk The risk of rejecting the null, and taking action, when none was necessary Type II Error - I’ve missed a significant effect Beta Risk Consumer Risk The risk of accepting the null when you should have rejected it. No action is taken when there should have been action. The Type I Error is determined up front. It is the alpha value you choose. The confidence level is one minus the alpha level. The Type II Error is determined from the circumstances of the situation. If alpha is made very small, then beta increases (all else being equal). Requiring overwhelming evidence to reject the null increases the chances of a type II error. To minimize beta, while holding alpha constant, requires increased sample sizes. One minus beta is the probability of rejecting the null hypothesis when it is false. This is referred to as the Power of the test. The p-Value If we reject the null hypothesis, the p-value is the probability of being wrong. In other words, if we reject the null hypothesis, the p-value is the probability of making a Type I error. It is the critical alpha value at which the null hypothesis is rejected. If we don’t want alpha to be more than 0.05, then we simply reject the null hypothesis when the p-value is 0.05 or less. Beta, Power, and Sample Size If two populations truly have different means, but only by a very small amount, then you are more likely to conclude they are the same. This means that the beta risk is greater. Beta only comes into play if the null hypothesis truly is false. The “more” false it is, the greater your chances of detecting it, and the lower your beta risk. The power of a hypothesis test is its ability to detect an effect of a given magnitude. Minitab will calculate beta for us for a given sample size, but first let’s show it graphically…. We have concentrated on 2-sided hypothesis tests. 2-Sided tests determine whether or not two items are equal or whether a parameter is equal to some value. Whether an item is less than or greater than another item or a value is not sought up front. A 2-sided test is a less specific test. The alternative hypothesis is “Not Equal”. Everything we have learned also applies to 1-sided tests. 1-Sided tests determine whether or not an item is less than (<) or greater than (>) another item or value. The alternative hypothesis is either (<) or (>). This makes for a more powerful test (lower beta at a given alpha and sample size). Value Add Analysis One-Way ANOVA Two-Way ANOVA Pareto Plots Simple Linear Regression Multiple Regression Test for Equal Variance Scatter Plots C&E Matrix Complexity Cause & Effect Diagram Kaizen/Quick Wins FMEA Control/Impact Chart T-Test Other Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

To-Be Process Map Enter Key Slide Take Away (Key Point) Here
Client Mgr Notify HR of employee exit date Places information into HR EXIT database Avg. Cycle time = 0 days Client HR Utilize web tool to submit a delete request to vendor Client Contact Avg. Cycle time = 1 day Access database daily Create Work Request Avg. Cycle time = 1 day NT Admin Compare this process map to the sample shown in the ANALYZE phase section to compare the before and after. This is just one option for process map format – others may be used You may find it easier to copy and paste the slide from MEASURE PHASE into this spot, then modify to show changes Benchmarking Another source of innovation is benchmarking. You may have benchmarked your competition to compare performance, or You may benchmark for ‘best practices’ to see how other organizations provide their services or products. Benchmarking can be very helpful to inject new ideas into the process and borrow the good ideas from other companies/industries Benchmarking – Potential Methods Mail Surveys Databases Phone Surveys Consortia In-Person Interviews Published Material Trade Magazines Company Tours Associates Trade Meetings Conversations Delete account Avg. Cycle time = 1 day Vendor Admin closes work request and manager notified Avg. Cycle time = 1 day Admin Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Quick Win Documentation Template
Process Name: __________________ Process Lead: ___________________ Process Owner: ______________________ Start Date: ______________ Process Area: ________________________ Stop Date: ______________ Root Cause: _________________________________________________ Obvious Solution: __________________________________________ Low or No Cost: __________________________________________ Low Risk: ________________________________________________ Implementation Plan: ______________________________________________ Stakeholder (s) Approval: ___________________________________________ 5s 4-Step Setup Reduction Inventory Reduction MSA Improvements Price reductions Reduced DOWNTIME (NVA steps or work) Pull System Kaizen events Other The primary difference is in the work required to implement the idea. - A ‘Quick Win’ is already a developed solution idea, i.e., it is in the Improve Phase already. The only determination left is ‘how to implement.’ There is still a requirement to complete Define and Measure, to clarify scope and to be able to measure a change, but there is no need to go through Analyze Phase. - A Kaizen Event is essentially an accelerated DMAIC. Focuses on specific improvement objective; Setup Reduction, 5S, Process Improvement, Line Balancing, etc. Although the Vision of the ‘Future State’ may be in place, there is still a requirement to go through the Analyze Phase to determine HOW to make it happen (as opposed to just ‘how to implement’ a developed idea, as in the case of the ‘Quick Win’). Benefits of Quick Improvement Provides momentum for the project Drives value ($) early, thus improving ROI Provides confidence to the broader organization that Lean Six Sigma is a viable approach to process improvement Reduces stress on project team to ‘Get Something Done!’ When we find these opportunities there is no need to wait months for implementation We should implement change as soon as possible to begin reaping the benefits. We by-pass the Analyze phase and move straight to Improve ‘Quick Win’ Improvement Criteria Minimal or no Capital Expenditure Low Risk Narrow scope Buy-in to solutions by all Stakeholders Certainty the change will generate a positive impact Improvements May be Implemented Quickly (within 1-2 weeks) The project team has the authority to implement the desired changes ‘Quick Win’ Examples Process Step Elimination Procedure Change Safety Stock Elimination (Just in Case Inventory) Communication Improvement Supplier Price Reduction Part Substitution Training on Best Practices Error Proof a Process Step Process Balancing / Layout Quick Wins Cautions Risk assessment must be an essential part of the ‘quick win’ decision process. What are the potential ‘quick win’ impacts on: Customers/Suppliers Other functional areas Cost/Benefit analysis Other teams efforts Quick Improvement Control Plans Quick Improvements, whether ‘Quick Wins’ or Kaizen improvements, must have implemented Control Plans in place before being considered complete. It is desirable to implement improvements as soon as possible but implementation without control can be worse than no implementation at all. See the Control Plan Module in Week 4 for Control Plan implementation and details. Benefits: __________________________________________________________ Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

FMEA Risk Analysis recommended actions (Key Speaking Points) Rating Index Total Current RPN Risk If an FMEA was used: Who helped develop the FMEA? What ranking did you use for Severity, Occurrence and Detection? Show the Pareto of high Risk Priority Numbers (RPN). What actions have you taken with inputs that have high RPNs? What is the plan for implementation of FMEA recommendations? - Stands for Failure Modes and Effects Analysis. - FMEA is a structured approach to: Identifying the areas and ways in which a process or system can fail (failure mode) Estimating risk associated with specific causes Identifying and prioritizing the actions that should be taken to reduce those risks Evaluating and documenting proposed process plans or current control plans FMEA is used to reduce risk, and therefore unintended consequences, in the implementation. When to Conduct an FMEA Early in the process design or improvement development. When new systems, products, and processes are being designed. When existing designs or processes are being changed. When carry-over designs are used in new applications. After system, product, or process functions are defined, but before beginning detailed final design. When the design concept has been decided. FMEA Procedure 1. For each process step (start with steps that give highest value) determine the ways in which the input to the step or the function of the step can go wrong (failure mode). 2. For each failure mode, determine effects. Select a severity rating for each effect (1-10 scale). 3. Identify potential causes of each failure mode. Select an occurrence rating for each cause (1-10 scale). 4. List current monitoring and controls for each cause. Select a detection rating for each cause (1-10 scale). 5. Calculate the ‘Risk Priority Number (RPN)’ by multiplying the three ratings by each other. 6. Develop recommended actions, assign responsible persons, and note actions taken. In general: Prioritize actions so the highest RPNs are attended to first, with the exception that Any failure with a severity rating of 10 is worked on first. 7. Implement solutions from the first round of actions, create a re-prioritized fmea and analyze for further necessary action. Severity Importance of the effect on customer requirements. Often can’t do anything about this without fundamentally changing the system or design. Occurrence Frequency with which a given cause occurs and creates failure modes (or probability it will occur). Detection The ability of the current monitoring and control method to detect before or after occurrence of a given cause Rating Scales and RPN Rating formats can be quantitative or qualitative. Two common scales used are 1-5 or 1-10. The 1-5 scale makes it easier for team members to decide on scores (fewer choices). The 1-10 scale allows for greater precision in estimates and provides for wider variation in team members’ perceptions (most commonly used). Typically: 1 = Not severe, not likely to occur or likely to detect 10 = Very severe, very likely to occur or not likely to detect RPN is a product of the severity, occurrence and detection ratings. (Severity) x (Occurrence) x (Detection) = RPN (maximum of 1000) By focusing on the “Meaningful Many”: - We use FMEA to ensure error-free execution in designing products and services as well as the processes and tasks necessary for producing/delivering them Anticipating errors to make processes “fail-safe” Allows for preventive actions to be a part of the process design - Creating alarm signals to catch defects as or before they occur Initiating individual accountability to “double-check” work before handing off to another step in the process An FMEA: Identifies the ways in which a product, service or process can fail Estimates the risk associated with specific causes Prioritizes the actions that should be taken to reduce risk Documents the actions taken Highlights where further actions would result in further risk reduction - FMEA is a team tool There are three different types of FMEAs System Design Process Inputs to the FMEA include several other Black Belt tools What is a Risk Standards Matrix? Simple but effective tool for identifying potential problems Prompts a BB to consider the ways in which the implementation could impact: Customers Cost Safety IT Environment Other Areas Why do an EMEA? To identify and prioritize parts of the product or process that need improvement To improve the quality, reliability and safety of products and services To increase customer satisfaction To document and track actions taken to reduce risk When to do an EMEA: When new products or services are being designed When a process is created, improved, or redesigned When existing products, services, or processes are used in new ways or in new environments To expose potential problems in the solution process Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Value Stream Map (VSM) Future State
Information Flow Sources of Value ? Supplier Customer <Step1> <Step3> <Step3> 1 2 1 Verify the Current State VSM Peer Review Use non-team members who know the process. Review process both internally and “at its edges” (the interfaces). Simulation Use Excel and a static format. Use simulation software (i.e., ProModel) and a dynamic approach. Piloting Pick a part of the organization that is a good representation of the rest. Committed upper management, enthusiastic operations personnel. Implement and observe the improvement. Be prepared to evaluate. The Future State - When to complete the ‘Future State’ map? Often done in Improve Phase for 3-5 DMAIC project Done much sooner in a Kaizen event (more on this later) - Map the Future State to Prioritize Improvement Opportunities: Utilize Takt calculations. Have a goal of continuous flow. Establish queue programs (utilizing Kanbans) where continuous flow is not possible. Find opportunities to shorten/reduce defects, downtime, setup time, value-add time. Don’t try to change service designs, technology, or facility locations on 1st iterations of your future state design. Questions About Future State What is the Takt Rate? Will I have a queue system or ship direct? Where can I utilize continuous flow? Where will I need replenishment pull systems? At what single point will I schedule services? How will I level the service mix at the Bottleneck/Constraint? What will be my project priority? Use of Future State Map Prioritize Opportunities “See” and Manage the Overall Material Flow Communication of “the Future” Create a Plan with Timeframes Effective Process and Value-Stream Maps - Initially, serve to clarify the problem and possible causes. - Gain agreement on current operations: Who are the current customers of the process, and by customer set? What is currently being delivered – what is value added, what is not? - Show relationships/interfaces between disparate elements – where are the disconnects in service or information flow? - Determine where process is most likely to give the most pertinent information: What do we need to know? Where are we going to get it? - Then, utilize map as a template for gathering data and showing data relationships. - Use as a skeleton to display relevant data. - Finally, maps assist the improvement discussions and implementation planning as well as the actual implementation. - Show results of “what if” exercises. Additionally, can use maps on long term basis to communicate the process’ performance to the organization Process/Value Stream Maps are valuable for describing the current situation and establishing requirements. Process/Value Stream Maps are the single MOST important deliverable for the Measure Phase. It is important to match the tool used (the type of Map) to the needs – there may even be multiple Maps used in one Project. Important to show both the flow of services as well as the flow of the data and information necessary for success. Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Business Impact State financial impact of future project leverage opportunities Separate “hard or Type 1” from “soft Type 2 or 3” dollars Annual Estimate Replicated Estimate Revenue Enhancement Type 1: ? Type 2: ? Type 3: ? Expenses Reduction Loss Reduction Cost Avoidance Total Savings Lean 6 Sigma Project Documentation General Guidance The project charter templates provided will document both the functional and financial goals to be realized. When the Project Charter portion of the project is documented sufficiently for a Black Belt to begin work, a copy of the documentation can be placed in the Project Hopper. When a Black Belt begins work on a particular project, that project’s Project Charter should be removed from the Project Hopper as it is no longer available to be worked. The financial portion of the Project Charter should initially be completed by the Project Sponsor and the Financial Representative to show projected savings. This portion should also be updated as the project progresses to clearly show true savings achieved. When the project is completed, the Financial Representative should validate that the project savings were achieved as recorded. The financial portion (now validated savings) should then be forwarded to Deployment Champion. ***************************************************************************************************** State financial impact of project Expenses Investments (inventory, capital, A/R) Budget Separate “hard” from “soft” dollars State financial impact of future project leverage opportunities Benefits – Will the project make a significant impact on the Business? Is the project driven by the Business strategy? What are the expected Business Benefits of the project? What are the critical assumptions in the benefit analysis? Does the Financial Manager endorse the Benefit calculation? Definitions Growth = Percentage Increase in Revenue Return on Invested Capital: If a shareholder invests a dollar, how much will be earned each year? Return = Profit After Tax (Net Operating Profit After Tax, NOPAT) Invested Capital = Working Capital + Plant, Property & Equip. (PP&E) Return on Invested Capital = Profit After Tax/Invested Capital Cost of Capital = How Much a Company Pays for Its Capital ~ 12% Compare the Cost of Capital to the Internal Rate of Return (IRR) of a project’s cash flows (more on this later) Finding the Financial Impact We must be able to satisfactorily demonstrate the impact of our improvement project activities Typically, there are at least four categories of impact: “Green” dollars positive dollars that exit or enter the organization, that appear on the profit and loss (P&L) statement (Measurable) Redeployment of resources – people or equipment no P&L impact, versus a baseline, but reduces cost needed to support business growth, realized immediately upon redeployment (Can be difficult to measure) Cost avoidance, reduces the need to add cost to support business growth, ex. capacity improvement. Realized when the business grows (Can be difficult to measure with certainty) Strategic. May be no “hard” financial impact, but the right thing to do in terms of the future of the business. (Very difficult to measure the true impact) Examples of Potential Revenue Enhancement: New sales of existing or new products Increased retention of profitable customers Examples of Potential Cost Reduction: Price increases Labor Cost – Reduced number of hand-offs Servicing Cost – Decreased number of quality related service calls Rework – Less defective work due to improving quality at the source of the defect Examples of Potential Capital Reduction Supplies – Decreased volume of inventory due to process improvements Cost of Capital – Decreased time of service to customer payment Occupancy – Decreased storage area due to quicker shipping times Direct Costs – These are costs that can be traced directly to providing a service. For example direct labor charges to include wage and benefit costs. Also, any cost associated with materials or service maintenance . One Time Costs – These are costs which are incurred only once. Examples include new equipment or facilities, initial training, initial software installation and configuration, etc. On-Going Costs – These are costs which will continuously be incurred. Examples included labor, on-going training, supplies and other operating costs. If you must prove the bottom line impact of a project, reduce the dollars that exit the organization or increase the Revenue entering the organization! Make sure that all stakeholders agree on the project’s impact and how it will be measured in financial terms! Regularly seek the advice and input of members of the financial community, especially on the assumptions to make and means of calculating the stream of financial benefits from an improvement project. Each project should have a financial rep (a person from outside the team) to assist and review financial benefits calculations. Economic Profit can be impacted in three ways: Revenue Growth Volume increases due to improved customer satisfaction, faster delivery, differentiated features, etc. Cost Reduction Purchase items and services Waste elimination Make vs. Buy Labor reduction Productivity improvements Scrap/Rework reductions Capital Reduction Inventory Accounts Receivables Assets While overall project benefits are frequently a combination of all three levels, it is important to understand the distinction. Lean Six Sigma Financial Principles Every step is taken to ensure the integrity and accuracy of the data. Processes developed to calculate and assess benefits must be simple and not overly complex. Benefits are measured using established financial, cost and investment methodologies/principles/practices/guidelines of the company as appropriate. Impacts on internal controls are proactively identified and communicated. The primary reporting metric for Lean Six Sigma projects is the impact on Economic Profit. All benefits and costs should be reported in $US dollars using the current year plan exchange rate. All organizations consistently define, quantify, measure and report Lean Six Sigma projects in the tracking system. Lean Six Sigma metrics complements, but does not replace, other critical business measures and analyses. Black Belt, Project Sponsor and Financial Representative need to form a partnership with the Financial Representative acting as a key consultant to the project team Roles and Responsibilities Black Belt/Project Sponsor Define current operational process and establish baseline with metrics and data Determine process improvement relative to baseline and metrics Define logic for benefits Determine type of benefits Calculate financial benefit outlook Support validation of benefits during realization Ensure benefits info is included in DMS by Measure tollgate Ensure Type 1 savings are tracked to BLI and customers are in agreement by Control Certifies savings Financial Representative Review and consult on expected benefit projections at Define phase Validate financial benefits before Control tollgate Validate actual project benefits during realization Expertise solicited only at critical points Available to advise Project Sponsor if needed during tollgate reviews Charter Benefits Review (before Launch): Financial Representative should be consulted with on the expected Benefits identified in the Project Charter Benefits Realization Schedule Review (before Implementation) Financial Representative validates the Tracking Methodology and Benefit Realization Schedule (the monthly Benefit projection) prior to implementation. Financial representatives review and consult on expected benefit projections at Define phase. BBs, ensure benefits info is included in Measure. This will be added to the measure tollgate checklist. FR Validate financial benefits before Control tollgate. Black/Green Belt Certification Review (after 2 months of realization) Financial Representative reviews the Benefits calculations made to-date by the Process Owner. PS ensure actual project benefits are identified during realization. FR Validate actual project benefits during realization. Project Validation Review (after 6 months of realization) Financial Rep reviews the Benefits calculations made to-date by the Process Owner. Realization Review (after 12 months of realization) Financial Rep reviews the final Benefits calculations made by the Process Owner. Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Business Impact Details
Type 1: Describe the chain of causality that shows how you determined the Type 1 savings. (tell the story with cause–effect relationships, on how the proposed change should create the desired financial result (savings) in your project ) Show the financial calculation savings and assumptions used. Assumption #1 (i.e. source of data, clear Operational Definitions?) Assumption #2 (i.e. hourly rate + incremental benefit cost + travel) Type 2: Describe the chain of causality that shows how you determined the Type 2 savings. (tell the story with cause–effect relationships, on how the proposed change should create the desired financial result (savings) in your project ) Assumption #1 (i.e. Labor rate used, period of time, etc…) Assumption #2 (i.e. contractor hrs or FTE, source of data, etc…) Describe the Type 3 Business Impact(s) areas and how these were measured Assumption #1 (i.e. project is driven by the Business strategy?) Assumption #2 (i.e. Customer service rating, employee moral, etc…) Other Questions Stakeholders agree on the project’s impact and how it will be measured in financial terms? What steps were taken to ensure the integrity & accuracy of the data? Has the project tracking worksheet been updated? Describe the chain of causality that shows how you determined the Type 1 savings. (tell the story on how you will capture these savings in your project) Show the Type 1 financial calculation savings and assumptions used. Assumption #1 (i.e. source of data, clear Operational Definitions?) Assumption #2 (i.e. hourly rate + incremental benefit cost + travel) Describe the chain of causality that shows how you determined the Type 2 savings. (tell the story on how you will capture these savings in your project) Show the Type 2 financial calculation savings and assumptions used. Assumption #1 (i.e. Labor rate used, period of time, etc…) Assumption #2 (i.e. contractor hrs or FTE, source of data, etc…) Describe the Type 3 Business Impact(s) areas and how these were measured Assumption #1 (i.e project is driven by the Business strategy?) Assumption #2 (i.e. Customer service rating, employee moral, etc…) Other Questions All stakeholders agree on the project’s impact and how it will be measured in financial terms? What steps were taken to ensure the integrity & accuracy of the data? Has the project tracking worksheet been updated? ************************************************************************** Validating financial benefit projections is one of the most important, but challenging, tasks to perform in validating the Project Charter Often the financial benefit projections written in the “Business Impact” section of the Project Charter are notional “rough order of magnitude (ROM)” or “back of the envelope” estimates without much analytical rigor applied in the calculations The “Future Reality Tree” is a tool we can use to analyze and document the “chain of causality” from the operationally-oriented “Goal Statement” to the financial dollar savings/benefits stated in the “Business Impact” section of the Project Charter The Future Reality Tree is a graphical approach to map out the cause–effect relationships which form the basis of the change you intend to make. It shows in clear, cause–effect relationships, how the proposed change should create the desired result, surfacing potential side effects along the way. In Lean Six Sigma, we use it to: Define the thinking behind our proposed project Confirm the logic of the project Assess the valuation of the project Surface risk issues *************************************************************************************************** Identify the basic improvements desired from the proposed project (intended to produce the desired result). Avoid identifying specific solutions; rather identify the nature of the improvement desired. Make sure that the cause–effect relationship is clear and self-evident. Avoid making “trans-Atlantic leaps” but rather take “baby steps”. If you find yourself thinking of effects that stretch far from the causes, insert intermediate steps Review with one or more knowledgeable associates to ensure clarity, correctness and completeness. Strive for clarity, correctness and completeness Use non-offensive wording Build shared understanding Make sure you are satisfied that the solutions really will produce the desired results (and the financial impact!) Welcome negative branches, then deal with them When objections are raised, try to determine the specific logic that is being challenged. ************************************************************************************ Valid Objections Clarity – I don’t understand what you mean Entity Existence – I don’t believe that “A” happens Cause Existence – I don’t believe that “A” causes “B” Additional Effect – But “A” also causes “D” Cause Insufficiency – But “A” won’t cause “B” unless “C” happens too Additional Cause – But “B” is also caused by “E” Circular Reasoning – How can “A” cause “B” if “B” causes “A” Comptrollers Role Provide input regarding project viability from a financial perspective What type of savings are expected? What effort will be required to capture them? Will investment be required? Review actual project savings claims as project approaches completion Are the savings numbers accurate? Can we capture them in a meaningful way? Audit actual results in the ‘Sustain’ stage Have the actual savings been realized? If no, what is the recovery plan? Types of Benefits Type I: Hard savings that can be readily identified in budget terms and can be used for recapitalization Type II: Resources that are freed up to move to value-added work TYPE III: Intangible benefits Type I benefits have a clear impact on the NAVSUP budget. The relationship between the project and the benefits are direct. Type I benefits result in an adjustment to the business plan and are permanent. Examples of Type I Benefits: Reduction in labor costs and billets Non-labor reductions (I.e., NMCI seats, supplies) Space reductions that result in termination of a lease Scrap or material reductions Contract cost reductions Type I reductions must be a primary goal in order for NAVSUP to deal with solvency concerns and accomplish required efficiencies Booking Manpower Savings Manpower savings will be booked in the fiscal year in which the savings are actually realized The booking of manpower savings must begin no later than the fiscal year after project completion Projects must focus on current savings; deferring manpower savings into the future defeats the purpose of Lean 6 Sigma Type II benefits do not have an immediate impact on available funds. Type II benefits are assets or resources that are freed up and may be re-utilized on value-added work. Type II benefits may result in future savings Examples of Type II Benefits: Floor space is reduced, but building is not vacated Allows reallocation of the space Future resource requirements are reduced in existing budget documentation Type III benefits are mainly intangible and cannot be captured in the budget or other documentation. Examples of Type III Benefits: Customer Satisfaction increases An expenditure that was not budgeted is avoided Employees are more satisfied Response time is improved ********************************************************************* Projects requiring investments No project requiring investment will be approved unless: Type I and II project savings will exceed investment cost within 1 year Projects that produce savings without requiring investment are preferred Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Current Status Key actions completed Issues Lessons learned Communication, team building, organizational activities Status Plan Weekly planning tool used to coordinate a work team’s activities. Limited look-ahead (usually 2 weeks), Black Belt/team can decide window Plan work with Black Belt and team – leverage and focus Shows activities, issues, and need-helps correlated to deliverables/timeline Separated into work planning, status, issues, need-helps Usually created at the end of each week. Typical scenario: Stream lead coordinates with client counter-part Thursday prior to departing account, after coordination with their team Stream lead provides status and requests to team in Friday Stat/plan meeting Standardize approach for identifying deliverables, tasks, etc. – need same “look and feel” across teams Proactively assign accountabilities and to-do’s as team reviews Teams have a propensity to use this tool as simply a reporting mechanism rather than a tool for leverage and planning In team meetings, select items that are meaningful to that team for review and planning Ensure tasks’ relevance to deliverables is clear Must be overlaid on environment of accountability Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Next Steps Key actions Planned Lean Six Sigma Tool use Questions to answer Barrier/risk mitigation activities Successful project management requires an understanding of: Individual Team Roles Basic Skills and Tools Project Budget Negotiation Skills Communications Forming and Leading High-Performing Teams Team Meetings Managing Conflict Time Management Skills Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Improve Summary Enter Key Slide Take Away (Key Point) Here
Solution Selection Criteria Pilot and Implementation Plan Choose solutions that will impact the root cause's) heavily, which will in turn reduce your problem. You do not want to implement a dozen solutions, each of which makes only a small difference in the bottom line. Note: Benefits realization will begin upon improvement implementation, unless approved by Financial Representatives Solution: What are the solutions for implementation? What solutions were considered in the Solution Selection Matrix? What were the criteria? What were the results of the Pugh matrix, if used? Has the process owner been involved in the review of recommended actions? What changes are recommended? What techniques were used to evaluate the risk of the chosen solutions? What changes were made? What efforts were made to optimize the solution and what were the results? What are the initial thoughts on a Control Plan? - Identify all opportunities for continuous improvement Reduction of effort Reduction of time Reduction of space Reduction of cost Reduction of mistakes Increasing customer satisfaction - Improve the process through a variety of Lean tools/techniques: Value Stream Mapping Time Trap Identification Heijunka/Leveling/Stability (S&OP) Kaizen/Continuous Improvement Kaikaku/Innovation Jidoka/Autonomation Kanban/Just In Time 5S Organization Stocking Strategy Generic & Replenishment Pull Systems MRP/Pull System integration Single Minute Exchange of Die (SMED) Visual Tools, Visual Processes Cellular Layouts & Line Balancing Standardized Work Total Productive Maintenance (TPM) Make vs Buy, Distribution Mgmt, Vert Integ Strategic Sourcing, Tactical Purchasing Faster feedback on process performance (increased learning cycles) Improved first pass yield (results in improved productivity) Improved process stability (results in improved throughput) Uncovers process deficiencies (forces problem resolution) Less in-process and buffer inventories (reduced risk) Improved customer satisfaction (flexibility and responsiveness) Check for the Ripple Effect and Unintended Consequences Even a small change in a business process can affect many other processes. During a pilot, the team may need to double-check for this “ripple” effect. Impact on Other Processes Make sure the new design has not somehow caused problems for your internal supplier and customer processes. People working in such support areas as planning, customer service, operations, and quality control need to know that you are doing things differently so they can adjust their work where necessary. Check administrative processes such as personnel, finance, or accounting. If one of your solutions, for example, is to cross-train people in several skills, the human resources department may need to revise job descriptions. The pilot plan should be designed to include steps to analyze the results. Root causes of performance gaps may need to be analyzed or redesigned. Summarizing Pilot Conclusions Once all the pilot data has been collected and the results verified, the team can determine the next steps toward solution implementation. Only after an objective and comprehensive assessment of the pilot can responsible “next step” decisions be made. Some questions a team should ask upon the completion of a pilot to help guide them toward identification of the proper next steps are: Did pilot have anticipated results? Was the plan for conducting the pilot effective? What improvements can we make to the solution? Can the solution be implemented “as-is”? Should it be? Can the solution remain in place at the pilot location? What lessons learned and best practices can we apply during solution implementation? Did the solution achieve the required design goals? Don’t skip the pilot! Define successful criteria before testing the pilot Agree on a list of critical parameters to continue Document all test results and control procedures Train all process participants How the solution was determined: What was the solution selection tool used? What project management tools were used? Cost/benefit analysis? Include any other tools or methods used ? Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Sign Off I concur that the Improve phase was successfully completed on MM/DD/YYYY I concur the project is ready to proceed to next phase: Analyze Enter Name Here Green Belt/Black Belt Enter Name Here Deployment Champion Enter Name Here Sponsor / Process Owner Enter Name Here Financial Representative Enter Name Here Master Black Belt Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Tollgate Reviews Backup Slides
Halt - Hold D M A I C Go Forward Wait - Go Back

Project Charter Problem/Goal Statement Financial Impact Team
State financial impact of project Expenses Investments (inventory, capital, A/R) Revenues Separate “hard” from “soft” dollars State financial impact of leverage opportunities (future projects) Problem: Describe problem in non-technical terms Statement should explain why project is important; why working on it is a priority Goal: Goals communicate “before” and “after” conditions Shift mean, variance, or both? Should impact cost, time, quality dimensions Express goals using SMART criteria Specific, Measurable, Attainable, Resource Requirements, Time Boundaries Explain leverage and strategic implications (if any) Team Tollgate Review Schedule PES Name Project Executive Sponsor (if different from PS) PS Name Project Sponsor/Process Owner DC Name Deployment Champion GB/BB Name Green Belt/Black Belt MBB Name Master Black Belt Core Team Role % Contrib. LSS Training Team Member 1 SME XX YB Team Member 2 TM XX GB Team Member 3 SME XX PS Extended Team Team Member 1 BFM XX Not Trained Team Member 2 IT XX Not Trained Tollgate Scheduled Revised Complete Define: XX/XX/XX - XX/XX/XX Measure: XX/XX/XX XX/XX/XX XX/XX/XX Analyze: XX/XX/XX XX/XX/XX XX/XX/XX Improve: XX/XX/XX XX/XX/XX XX/XX/XX Control: XX/XX/XX XX/XX/XX XX/XX/XX Readiness Checklist – Measure Project Charter – Confirm that the project will make a significant impact on the Business. How have you confirmed the key customers, the CCR's and KPOVs? What are the revised Business Benefits? Does Business strategy still drive the project? Review high-level schedule milestones here: Phase Completions Tollgate Reviews Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Measure Overview Process Capability Graphical Analysis CTQ: ? Unit (d) or Mean (c): ? Defect (d) or St. Dev. (c): ? PCE%: ? DPMO (d): ? Sigma (Short Term): ? Sigma (Long Term):? MSA Results: show the percentage result of the GR&R, AR&R or other MSA carried out in the project Root Cause / Quick Win Tools Used Root cause: Quick Win #1 Quick Win #2 Quick Win #3 Detailed process mapping MSA Value Stream Mapping Data Collection Planning Basic Statistics Process Capability Histograms Time Series Plot Probability Plot Pareto Analysis Operational Def. 5s Pull Control Charts Measurement System Analysis Confirm that the Measurement process will remain good enough to guide process improvement efforts and to meet customer needs. How do you know that the Measurement System of the KPOVs is still acceptable? Narrowing the list of Potential Root Causes – What was the process for identifying Potential Root Causes, ex. Brainstorming, data analysis, etc.? Has the list potential root causes been reduced? What was the process used to narrow the list of potential root causes? What were the results? Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Analyze Tollgate Checklist
Has the team examined the process and identified potential bottlenecks, disconnects and redundancies that could contribute to the problem statement? Has the team analyzed data about the process and its performance to help stratify the problem, understand reasons for variation in the process, and generate hypothesis as to the root causes of the current process performance? Has an evaluation been done to determine whether the problem can be solved without a fundamental recreation of the process? Has the decision been confirmed with the Project Sponsor? Has the team investigated and validated (or devalidated) the root cause hypotheses generated earlier, to gain confidence that the “vital few” root causes have been uncovered? Does the team understand why the problem (the Quality, Cycle Time or Cost Efficiency issue identified in the Problem Statement) is being seen? Has the team been able to identify any additional ‘Quick Wins’? Have learnings to-date required modification of the Project Charter? If so, have these changes been approved by the Project Sponsor and the Key Stakeholders? Have any new risks to project success been identified, added to the Risk Mitigation Plan, and a mitigation strategy put in place? Deliverables: List of Potential Root causes Prioritized List of Validated Root Causes Additional “Quick Wins”, if applicable Refined Charter, as necessary Updated Risk Mitigation Plan Deliverables Uploaded to Central Storage Location or Deployment Management System Tollgate Review Stop Has the team identified the key factors (critical X’s) that have the biggest impact on process performance? Have they validated the root causes? International Standards for Lean Six Sigma 17

Improve Tollgate Checklist
What techniques were used to generate ideas for potential solutions? What narrowing and screening techniques were used to further develop and qualify potential solutions? What evaluation criteria were used to select a recommended solution? Do proposed solutions address all the identified root causes, at least the most critical? Were the solutions verified with the Project Sponsor and Stakeholders? Has an approval been received to implement? Was a pilot run to test the solution? What was learned? What modifications made? Has the team seen evidence that the root causes of the initial problems have been addressed during the pilot? What are the expected benefits? Has the team considered potential problems and unintended consequences (FMEA) of the solution and developed preventive and contingency actions to address them? Has the proposed solution been documented, including process participants, job descriptions and if applicable, their estimated time commitment to support the process? Has the team developed an implementation plan? What is the status? Have changes been communicated to all the appropriate people? Has the team been able to identify any additional ‘Quick Wins’? Have ‘learning's’ to-date required modification of the Project Charter? If so, have these changes been approved by the Project Sponsor and the Key Stakeholders? Have any new risks to project success been identified and added to the Risk Mitigation Plan? Deliverables: Prioritized List of Solutions “To-Be” Value Stream Map(s) Pilot Plan & Results Approved Solution and Detailed Implementation Plan Additional “Quick Wins”, if applicable Refined Charter, as necessary Updated Risk Mitigation Plan Deliverables Uploaded to Central Storage Location or Deployment Management System Tollgate Review Stop Has the team developed improvement solutions for the critical X’s, piloted the solution and verified that the solution will solve the problem? International Standards for Lean Six Sigma 18

Control Tollgate Checklist
Has the team prepared all the essential documentation for the improved process, including revised/new Standard Operating Procedures (SOP’s), a training plan and a process control system? Has the necessary training for process owners/operators been performed? Have the right measures been selected, and documented as part of the Process Control System, to monitor performance of the process and the continued effectiveness of the solution? Has the metrics briefing plan/schedule been documented? Who owns the measures? Has the Process Owner’s job description been updated to reflect the new responsibilities? What happens if minimum performance is not achieved? Has the solution been effectively implemented? Has the team compiled results data confirming that the solution has achieved the goals defined in the Project Charter? Has the Benefits Realization Schedule been verified by the Financial Representative? Has the process been transitioned to the Process Owner, to take over responsibility for managing continuing operations? Do they concur with the control plan? Has a final Storyboard documenting the project work been developed? Has the team forwarded other issues/opportunities, which were not able to be addressed, to senior management? Have “lessons learned” been captured? Have replication opportunities been identified and communicated? Has the hard work and successful efforts of our team been celebrated? Deliverables: SOP’s Training Plan Process Control System Benefits Realization Schedule, validated by Financial Representative Validated Solution Replication/ Standardization Plan Lessons Learned Transitioned Project Project Risk Performance Deliverables Uploaded to Central Storage Location or Deployment Management System Tollgate Review Stop Has the team implemented the solution, and a control plan to insure the process is robust to change? International Standards for Lean Six Sigma 19

Lean Six Sigma DMAIC Improvement Process
Define Define the opportunity from both the customer and business perspective Tollgate Review Understand the baseline process performance Stop Measure Tollgate Review Identify the critical X factors and root causes impacting process performance Stop Analyze Tollgate Review Stop Develop solutions linked to critical x’s Improve Tollgate Review Stop Implement solutions & control plan Control Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Evaluating Solutions Against Criteria (Optional)
250 200 150 100 50 100% 80% 60% 40% 20% 0% Root Causes #1 #2 #3 #4 Example: Independent Solutions Solution A = a 32% reduction in defects (80% of 40%) Solution B = a 21% reduction in defects (20% of 25% + 80% of 20%)=(5%+16%) Solution C = a 17.5% reduction in defects (30% of 25% + 100% of 10%)=(7.5%+10%) Implementing Solutions A & B achieve a 53% reduction in defects. (Assumes no interaction effects of the solutions) Original goal is a 50% reduction. Solutions % Contribution of Root Cause to Process Deficiency Root Cause #1 40% Root Cause #2 25% Root Cause #3 20% Root Cause #4 10% Solution A 80% Solution B 20% 80% Solution C 30% 100% Solution D Solution E 20% 5% Choose solutions that will impact the root cause's) heavily, which will in turn reduce your problem. You do not want to implement a dozen solutions, each of which makes only a small difference in the bottom line. Solution: What are the solutions for implementation? What solutions were considered in the Solution Selection Matrix? What were the criteria? What were the results of the Pugh matrix, if used? Has the process owner been involved in the review of recommended actions? What changes are recommended? What techniques were used to evaluate the risk of the chosen solutions? What changes were made? What efforts were made to optimize the solution and what were the results? What are the initial thoughts on a Control Plan? - Identify all opportunities for continuous improvement Reduction of effort Reduction of time Reduction of space Reduction of cost Reduction of mistakes Increasing customer satisfaction - Improve the process through a variety of Lean tools/techniques: Value Stream Mapping Time Trap Identification Heijunka/Leveling/Stability (S&OP) Kaizen/Continuous Improvement Kaikaku/Innovation Jidoka/Autonomation Kanban/Just In Time 5S Organization Stocking Strategy Generic & Replenishment Pull Systems MRP/Pull System integration Single Minute Exchange of Die (SMED) Visual Tools, Visual Processes Cellular Layouts & Line Balancing Standardized Work Total Productive Maintenance (TPM) Make vs Buy, Distribution Mgmt, Vert Integ Strategic Sourcing, Tactical Purchasing Faster feedback on process performance (increased learning cycles) Improved first pass yield (results in improved productivity) Improved process stability (results in improved throughput) Uncovers process deficiencies (forces problem resolution) Less in-process and buffer inventories (reduced risk) Improved customer satisfaction (flexibility and responsiveness) Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Design of Experiments (DOE) Results (Optional)
The number of Employees is the biggest driver for Mean Time Late Employee is the only statistically significant factor for Mean besides the constant term. All other main effects & 2-way interactions have a p-value > 0.05. Ymean=f(x) equation is: Ymean = (Employee) Designed Experimentation – The manipulation of controllable factors (independent variables) at different levels to see their effect on some response (dependent variable) By manipulating inputs to see how the output changes, we can understand and model Y (a dependent variable) as a function of X (an independent variable). Methods of Experimentation Experimentation has been used for a long time. Some experiments have been good, some not so good Our early experiments can be grouped into the following general categories: 1. Trial and Error 2. One-Factor-at-a-Time (OFAT) 3. Full Factorial 4. Fractional Factorial 5. Others One-Factor-at-a-Time (OFAT) While OFAT is simple, the experimental efficiency given up is significant: Unnecessary experiments may be run Time to find causal factors is significant Don’t know the effects of changing one factor while other factors are changing (no model) Inability to detect or learn about how factors work together to drive the response Why Use DOE? The structured methodology provides a directed approach. Avoid time wasted with “hunt and peck.” Don’t need 30 years of experience to design the tests. The designed experiment gives a mathematical model relating the variables and responses. No more experiments where you can’t draw conclusions. The model is easily optimized, so you know when you’re done. The statistical significance of the results is known, so there is much greater confidence in the results. Can determine how multiple input variables interact to affect results. Full Factorials examine every possible combination of factors at the levels tested. The full factorial design is an experimental strategy that allows us to answer most questions completely. Full factorials enable us to: Determine the main effects that the factors being manipulated have on the response variable(s) Determine the effects of factor interactions on the response variables Estimate levels at which to set factors for best results Full Factorial Advantages Information about all main effects Information about all interactions Quantify Y=f(x) Limitations Amount of Resources needed Amount of Time needed 2 level designs are the most common because they provide a lot of information, but require the fewest tests. The general notation for a full factorial design of 2 levels is: 2k = # Runs 2 is the number of levels for each factor (i.e., High and Low) k is the number of factors to be investigated This is the minimum number of tests required for a full factorial Fractional Factorial Looks at only a fraction of all the possible combinations contained in a full factorial. If many factors are being investigated, information can be obtained with smaller investment. Resources necessary to complete a fractional factorial are manageable. Give up some interactions Inexperience in use Fear of statistics Benefits Economy Speed Fewer runs Fractional Factorial Notation The general notation to designate a fractional factorial design is: = 2 k-p = # Runs 2 is the number of levels for each factor 2-p is the size of the fraction (p = 1 ® 1/2 fraction, p = 2 ® 1/4 fraction, etc.) 2k-p is the number of runs R is the resolution Benefits of Experimental Design and Analysis Determine input settings which optimize results and minimize costs Quick screening for significant effects Obtain a mathematical model relating inputs and results Reduction in the number of tests required Verification of the statistical significance of results Identification of low-impact areas allows for increased flexibility/tolerances Standardized methodology provides a directed approach When Could I Use Design of Experiments? Identification of critical factors to improve performance Identification of unimportant factors to reduce costs Reduction in cycle time Reduction of scrap/rework Scientific method for setting tolerances Whenever you see repetitive testing Pareto Chart for Mean Time Late Number of Employees is the only significant factor for Mean - Time Late Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Pugh (Selection) Matrix (Optional)
It is best to exhaust all of the ideas that the team can produce. Often, the best potential solutions emerge toward the end of intense creativity efforts, when everybody has many details fresh in mind related to the problem at hand. Both the strengths and the number of potential solutions generated have a huge impact on the strength of the final improvement solution selected. The synthesis portion involves taking best characteristics from all the potential solutions to generate stronger solutions. The more potential solutions available to explore, the more opportunities for uncovering ideas for improvements. The selection portion involves deciding which solution improvements to implement. Dr. Stuart Pugh, a Scottish scientist, developed a method for concept selection, used in the early stages of conceptual design. More commonly known as the Pugh Matrix, it formalizes the decision-making process for solution selection. The Pugh Matrix uses evaluation criteria to compare different ideas. It quickly identifies strengths and weaknesses for each potential solution so that the strengths can be preserved and the weaknesses corrected or at least addressed or mitigated. The objective is to improve upon the initial ideas and eventually converge on an optimal solution. Pugh Matrix is a decision-making tool to compare multiple alternatives Develop potential solutions (Alternative Concepts) Define Evaluation Criteria Weight the Evaluation Criteria Select a “BASELINE” from the alternatives Rate each alternative better, same, or worse than baseline for each criteria Use multiple pluses or minuses, if necessary Select the best solution Customer Requirements (CTQs) Business Alignment with strategy Cost/Benefit impact Time required for full implementation Capital investment Operating cost Risk to implement Regulatory/Other Adherence to regulatory requirements Safety Environment Political constraints Don’t use too many criteria, as it tends to “water down” or decrease the importance of each criterion Weight the Evaluation Criteria based on importance. Using a numeric scale (often 1 to 5, but it doesn’t matter), rank the criteria in terms of relative importance. Strive to get a spread – don’t rank all criteria 4’s and 5’s (even though they are all important). Select a Baseline Select one of the alternatives as the Baseline. It shouldn’t matter which alternative you select as the Baseline, as it is a relative comparison. Conduct the First Run Compare each of the alternatives against the BASELINE using clearly better, clearly worse, or about the same, with indicators “+” “–” or “S”, respectively. Use multiple pluses (“++”) and minuses (“- -”) if the concept is significantly better or worse than the baseline. Enter comparisons into the Pugh Matrix. Sum the (+)’s, (-)’s, and (S)’s to compute the Total. Multiply the (+)’s, (-)’s, and (s)’s by the Importance Rating (Weights) and sum vertically to compute the Weighted Total for each Concept. Do not treat the numbers as absolute. They are intended as guides to further investigation. Analyze the First Run Analyze and synthesize alternatives to select and improve the strong solutions. Focus first on the alternative with the most pluses and the fewest minuses. Look for strengths and weaknesses. Attack the weaknesses. Examine the negatives. What is needed to reverse the negatives relative to the BASELINE? Does the change reverse any of the positives? Can strengths of other alternatives be incorporated to reverse the negatives? If another Alternative is “S” or “+”, perhaps that Alternative contains an idea (solution) that could improve the selected alternative. If a modified Solution emerges, enter it into the matrix. Eliminate truly weak concepts from matrix. Conduct Confirmation Run When One Alternative emerges as clearly the strongest, a second run should be performed to confirm its strength. Conduct a Second Run using the Strongest Alternative as the BASELINE. If the first run is not confirmed, continue to analyze and improve the alternatives until a Strong Alternative emerges. Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Benefit-Effort Matrix (Optional)
Highly Desirable Opportunities Projects in upper left are the most desirable projects. Potentially Desirable Opportunities Projects in the upper right are potentially desirable, but usually require more analysis to ensure good decision making. “Potential Quick Hits” Possibility for Kaizen event or small GB project Least Desirable Opportunities Projects in the lower right are the least desirable. 16 1 8 12 7 3 4 17 10 High Low Med High Low Med 9 13 6 14 11 15 2 5 Effort Low Low Med Med High High Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Stakeholder Analysis (Optional)
When the team is ready and able, have a discussion of how stakeholders currently view the change initiative. It can also be used throughout the project to strategize ways to bring on a new stakeholder who has just emerged. After this document is compiled, put an action plan in place to address any gaps in where stakeholders are compared to where they need to be. How To Steps: 1. Identify the key stakeholders to be charted. Remember that a key stakeholder is anyone who controls resources, who can block the change initiative by direct or indirect means, who must approve certain aspects of the change strategy, who shapes the thinking of other critical constituents, or who owns a key work process impacted by the change initiative. To avoid becoming bogged down in this analysis, it is wise to initially limit the list to no more than individuals. If the team's list is considerably longer, it probably contains individuals who are important to, but not essential to, launching the change effort (or, it means the team is working on a very large-scale initiative like implementing quick response across an entire business). 2. List each stakeholder along the left side of the chart and proceed to discuss where each is currently at with regard to the change initiative. In discussing each individual, examine both objective evidence of where the individual is (example: At the last staff meeting Pat clearly stated unwillingness to assign a member of the group to the team.), as well as subjective opinion (example: Chris is likely to be strongly supportive because of the unit's objectives in this area). It may be useful to first have each team member rate each stakeholder without discussion and then tally individual ratings and discuss obvious differences. While it probably isn’t critical to strive for complete consensus, it is usually worthwhile to take the time to generally agree on whether each stakeholder is against, neutral, or supportive. 3. When there is general agreement about where each stakeholder is currently, the discussion turns to where each stakeholder needs to be for the change initiative to be successful. Remember, some stakeholders need only be shifted from strongly against to neutral (meaning they will no longer be an active blocker), while others may only need to be moderately supportive. 4. Take a moment before concluding this exercise to look for logical relationships between and among these stakeholders in terms of who might assist the team in gaining support of others. For example, if a key stakeholder who is strongly supportive is also a thought leader for others on your list, it might be useful to enlist his/her support in shaping the thinking of others less supportive stakeholders. It may also be useful to use the TCP Analysis Template model to better understand the nature of the resistance for those key stakeholders who must be influenced to become more supportive. It is also important to use some technique to validate this assessment of support. At a minimum, check the team’s perceptions by seeking the input from individuals outside the team. In some cases, it may even be appropriate to talk with the key stakeholders themselves to validate the teams assessment of their level of commitment. 5. OPTION: Some teams have used this tool to assess the commitment and buy-in of individual members of the team itself. Though risky and probably inappropriate when a team is in the early stage of development, this can be a powerful team-building exercise for a mature team if well facilitated and all agree to be open and candid in their assessment and feedback. Tips: This tool can sometimes be seen and used as a grading chart for individuals that rates people as good (strongly supportive) or bad (strongly against). This is a very potentially destructive way to view a stakeholder analysis. It is Not about being good or bad, but rather about how key individuals view the merits of the change initiative. Someone may be strongly against a change initiative for what the stakeholder feels are very good reasons (just as each of us is either for, against, or neutral about proposals to improve government). Avoiding this tendency to see the rating as good or bad is critical to getting the most from this tool. If there is the tendency within the team to label people, it might be useful to forego the numerical rating and simply discuss key stakeholders as to whether they are for this initiative or against it. Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Influence Strategy (Optional)
Uses: Once the team knows who the key stakeholders are, the difficult task of figuring out a strategy to win their support begins. This simple planning tool can help the team assess the issues and concerns of each stakeholder who must be moved to a higher level of support for the project, and identify a strategy for doing so. Taking time to talk through the concerns important to each key stakeholder, and validating this with the individual involved, is time consuming but critical to the formulation of a strategy for influence. In this instance, an issue is something the stakeholder feels strongly about regardless of the change initiative (example: a Purchasing Manager will certainly have many issues around effective supplier management). likewise, each stakeholder will have one or more concerns regarding the change initiative itself (example: the same Purchasing Manager may be concerned that the change initiative not derail his own initiative that involves training employees in the new supplier management process). Once key stakeholders are known and their political attitudes have been discussed (and verified), the job turns to one of building an effective strategy for influencing them to strengthen, or at a minimum, maintain their level of support. The team’s task is to determine what their issues and concerns are, who can best influence each individual, and how they are best influenced (one-on-one, informally, demonstrations like site visits, etc.). How To Steps: 1. List the key stakeholders that need to be influenced. Remember that even if someone is already moderately or strongly supportive, they will have issues and concerns that need to be addressed by the team. 2. Discuss each stakeholders issues and concerns and agree on a method for validating these perceptions. 3. Identify "wins" for each stakeholder (example: continue to play a key role in organizational decision making, etc…) 4. When the team has validated their understanding of the stakeholders issues and concerns, it is time to proceed with developing an influence strategy. At this point, it is often useful to consider a number of aspects of the influence process which may not have been addressed before: A. What is this person's "style"? (Example: are they a statistical person who will be most likely to be swayed by data?) B. What history needs to be taken into account as we talk about this individual? or, Does she/he have an issue with any of the team members that might make it difficult to support the initiative?) C. Is there a part of the change initiative that, if we could give it to this person, would generate their support? 5. Be sure that assignments are made that will ensure that the influence strategy will be implemented appropriately and in a timely fashion. 5. OPTION: Some teams combine this discussion with the formulation of their communication campaign for change. Timing: Anytime the team is discussing a key stakeholder whose support must be one. Tips: This tool is very straightforward and easy to understand. The only trap some teams fall into is around the strategy itself. Careful thought needs to be given to who will have most impact on this individual, what is the nature of the message that needs to be delivered, and how and when should the influence process begin. Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Measurement Systems Analysis (MSA) (Optional)
Gage R&R %Contribution Source VarComp (of VarComp) Total Gage R&R Repeatability Reproducibility Operator Operator*Part Part-To-Part Total Variation Study Var %Study Var Source StdDev (SD) (6 * SD) (%SV) Total Gage R&R Repeatability Reproducibility Operator Operator*Part Part-To-Part Total Variation Number of Distinct Categories = 7 Measurement System Analysis (MSA) Is the Measurement process good enough to guide process improvement efforts and to meet customer needs? Is there a formal process for measuring the variable? How have you determined you do not have sampling problems (when, how, sample stability, sampling the sample jar, etc)? What is the design of the MSA experiment? What measurement or sampling issues were resolved? Were all problems communicated to all appropriate people (local and globally)? Is there a control plan in place which includes ownership, calibration, procedures, troubleshooting guide, SPC, etc)? How Would You Assess Your Measurement System Today? Talk to the individuals conducting the measurements? Have a few measurements taken and compare them? Have other individuals or “experts” verify our measurements? Hope your customers get the same measurements? Assume computers are always right? Conduct a Gage R&R study? Measurement Variation is broken down into two components: (The two R’s of Gage R&R) Reproducibility (Operator Variability) Different individuals get different measurements for the same thing. Repeatability (Equipment/Gage Variability) A given individual gets different measurements for the same thing when measured multiple times. The tool we use to determine the magnitude of these two sources of measurement system variation is called Gage R&R Reproducibility is the variation in the average of the measurements made by different operators using the same measuring instrument when measuring the identical characteristic on the same part. Repeatability is the variation between successive measurements of the same part, same characteristic, by the same person using the same equipment (gage). Also known as test /re-test error, used as an estimate of short-term variation Stability = If measurements do not change or drift over time, the instrument is considered to be stable. Bias is the difference between the observed average value of measurements and the master value. The master value is determined by precise measurement typically by calibration tools linked to an accepted, traceable reference standard. Average of measurements are different by a fixed amount. Bias effects include: Operator Bias – Different operators get detectable different averages for the same value, Instrument Bias – Different instruments get detectable different averages for the same measurement, and Other Bias – Day-to-day (environment), fixtures, customer and supplier (sites). Discrimination is the capability of detecting small changes in the characteristic being measured. The instrument may not be appropriate to identify process variation or quantify individual part characteristic values if the discrimination is unacceptable. If an instrument does not allow differentiation between common variation in the process and special cause variation, it is unsatisfactory. Acceptable Measurement Systems Properties that all acceptable measurement systems must have: The measurement system must be in control (only common cause variation; i.e., in statistical control). Variability of the measurement system must be small in relation to the process variation. Variability of the measurement system must be small compared with the specification limits. The increments of the measurement must be small relative to the smaller of: a) the process variability or b) the specification limits (Rule of thumb: increments are to be no greater than 1/10th of the smaller of: a) process variability or b) specification limits). AIAG Gage R&R Standards The Automotive Industry Action Group (AIAG) has two recognized standards for Gage R&R : Short Form – Five samples measured two times by two different individuals. Long Form – Ten samples measured three time each by three different individuals. For good insight into Gage R&R, go to [ Remember that the Measurement System is acceptable if the Gage R&R variability is small compared to the process variability or specification limits. Preparation for a Measurement System Study Plan the approach. Select number of appraisers, number of samples, and number of repeat measures. Use at least 2 appraisers and 5 samples, where each appraiser measures each sample at least twice (all using same device). Select appraisers who normally do the measurement. Select samples from the process that represent its entire operating range. Label each sample discretely so the label is not visible to the operator. Check that the instrument has a discrimination that is equal to or less than 1/10 of the expected process variability or specification limits. Setting Up the Measurement Study Assure that the gage/instrument has been maintained and calibrated to traceable standards. Parts are selected specifically to represent the full process variation Parts should come from both outside the specs (high side and low side) and from within the specification range Running the Measurement Study Each sample should be measured 2-3 times by each operator (2 times is the Short Test). Make sure the parts are marked for ease of data collection but remain “blind”(unidentifiable) to the operators. Be there for the study. Watch for unplanned influences. Randomize the parts continuously during the study to preclude operators influencing the test. The first time evaluating a given measurement process, let the process run as it would normally run. Because in many cases we are unsure of how noise can affect our measurement system, we recommend the following procedure: Have the first operator measure all the samples once in random order. Have the second operator measure all the samples once in random order. Continue until all operators have measured the samples once (this is Trial 1). Repeat steps for the required number of trials. Use a form to collect information. Analyze results. Determine follow-up action, if any. If Process Tolerance and Historical Sigma values are not used in Minitab, a critical assumption is then made that the sample parts chosen for the study, truthfully exhibit the true process variation. In this case, the acceptability of the measurement system is based upon comparison only to the part variation seen in the study. This can be a valid assumption if care is taken in selecting the study sample parts. AIAG states that “One element of criteria whether a measurement system is acceptable to analyze a process is the percentage of the part tolerance or the operational process variation that is consumed by measurement system variation” Remember that the guidelines are: Under 10 % – Acceptable. From 10 to 30 % – Marginal. May be acceptable based upon the risk of the application, cost of measurement device, cost of repair, etc. Over 30 % – Not Acceptable. Every effort should be made to improve the measurement system. Repeatability is checked by using a special Range Chart where the differences in the measurements by each operator on each part is charted. If the difference between the largest value of a measured part and the smallest value of the same part does not exceed the UCL, then that gage and operator are considered to be Repeatable Reproducibility is best determined analytically using the tabulation analysis in the Minitab Session (discussed in following slides) . Graphically it may be seen if there are significant differences in the operator patterns generated by each operator measuring the same samples. This tabulation from Minitab builds the % of Study Variation that each source contributes to a calculated potential Total Variation seen in the study. The 6.0 * SD is how statistically 99.73% of the Total Variation is calculated and this is assumed to equal 99.73% of the true process variation unless the Historical Sigma is input into Minitab. The %’s are used to grade the validity of the measurement system to perform measurement analysis using %’s already taught. If the process is performing well, the % Tolerance is then important. The sum of the %’s may add to more than 100% due to the math. The Number of Distinct Categories represents the number of non-overlapping measurement groups that this measurement system can reliably distinguish in the Study Variation. We would like that number to be 5 or higher. Four is marginal. Fewer than 4 implies that the measurement system can only work with attribute data - Most physical measurement systems use measurement devices that provide continuous data. For continuous data Measurement System Analysis we can use control charts or Gage R&R methods. - Attribute/ordinal measurement systems utilize accept/reject criteria or ratings (such as 1 - 5) to determine if an acceptable level of quality has been attained. Kappa techniques can be used to evaluate these Attribute and Ordinal Measurement Systems. Measurement system is acceptable with the Total % Contribution <10% Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Pull System (Optional)
1. Always pull stock from bin with GREEN card if it is there. 2. Store/supply room replaces stocked items and switches RED card to items just replaced. 3. The cards are attached to magnetic strip labels (for ease of movement for resizing). 2-Bin Mailbox Bin 1 Bin 1 Bin 2 Order Cards Bin 1 Bin 1 Bin 2 Bin 1 Bin 2 Bin 1 Bin 2 Bin 1 Bin 2 Bin 2 Pull means that real customer demand pulls products through the system Excess Inventory is waste Producing items that are not needed is waste (forecast) Part shortages and expediting reduced or eliminated Inventory reduced (better mix) - Process Flow is the distance that a product must travel and the time it takes to be completed - Process flow improvement seeks to eliminate waste due to: Excess motion Transportation Waiting - By moving resources closer together and eliminating non-value added time, movement, waiting, etc. Bin 1 Bin 2 Bin 1 Bin 1 Bin 1 Bin 2 Bin 1 Bin 2 Bin 1 Bin 2 Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Setup Reduction (Optional)
Definition Setup Time – The elapsed time from completion of one type of job/task to beginning of work on another type of job/task Changeover Time – The elapsed time between being productive on concurrent job/tasks Examples Prepare Utility truck for next job – equipment, material, etc. Change-over from placing one-time purchase orders to placing blanket purchase orders Setup time to switch between placing purchase orders to evaluating latest Policy Change Effectivity Dates Setup to perform finance month end close (trial balances) STEP 1 Document the Setup and separate events into Serial or Parallel STEP 2 Convert Serial to Parallel events STEP 3 Streamline Serial events (Simplify, Reduce, Eliminate) STEP 4 Eliminate adjustments Serial to the Changeover Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

PDCA (Optional) Plan: ? Do: Check: Act: ? Plan ? Do ? Check The plan–do–check–act cycle is a four-step model for carrying out change. Just as a circle has no end, the PDCA cycle should be repeated again and again for continuous improvement. When to Use: As a model for continuous improvement When starting a new improvement project When developing a new or improved design of a process, product or service When defining a repetitive work process When planning data collection and analysis in order to verify and prioritize problems or root causes When implementing any change Procedure: Plan: Recognize an opportunity and plan a change Do: Test the change Carry out a small-scale study Check: Review the test Analyze the results and identify what you’ve learned Act: Take action based on what you learned in the check step: If the change did not work, go through the cycle again with a different plan. If you were successful, incorporate what you learned from the test into wider changes. Use what you learned to plan new improvements, beginning the cycle again. ? Act Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

5s (Optional) Sort ? Set Order Shine Standardize Sustain 5S is a process and method for creating and maintaining an organized, clean, and high performance workplace 5S enables anyone to distinguish between normal and abnormal conditions at a glance 5S is the foundation for continuous improvement, zero defects, cost reduction, and a more productive work space 5S is a systematic way to improve the workplace, our processes and our products through employee involvement Sort Clearly distinguish needed items from unneeded items and eliminate the latter Set In Order (also known as Simplify) Keep needed items in the correct place to allow for easy and immediate retrieval Shine Keep the work space orderly and clean Standardize Standardized cleanup. This is the condition we support when we maintain the first three pillars Sustain (also known as Self-Discipline) Make a habit of maintaining established procedures Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Kaizen (Optional) Typical Kaizen Weekly Schedule Kaizen Facilitation Kit Will Cover: Kaizen Event Schedule and Approach Pre-Event Preparation Team Selection Pre-event Communications/Preparation Policies and Procedures Presentation Preparation Facilitation Tools Data Collection Mapping and Measurement Safety Awareness Logistical Support Checklist: Training/team room(s), Conference Room(s), Eating Areas – reserve Kaizen team room and rooms for team reviews/presentations, break/lunch/snack areas Equipment and supplies: overhead projector, video camera and tapes for setups, 2-3 flip charts per team with markers. Team member name tags, special access security cards. Rulers/Tape Measures Transparencies for presentation/PowerPoint file for LCD projector, copies of presentation Pens/Pencils, fine-point makers, erasers, multi-colored post-it notes, notepads, clipboards, ape (Masking, Floor/layout), Pre-printed kaizen forms Calculators, computer, printer, copier, laminating machine and supplies Safety and Cleaning Supplies – eye and hearing protection, clean suits, cleaning supplies Breaks/Lunches/Snacks/Drinks – coordinate team meals/snack when applicable and who will be responsible for coordinating these Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Benchmark Analysis (Optional)
Based on the information above, what is the performance objective*? Reduce defects by % Reduce long-term DPMO from to . Improve short-term Z from to . *If you do not benchmark, performance standards are based on: For a process with  3 sigma level, decrease % defects by 10x. For a process with > 3 sigma level, decrease % defects by 2x. Other….please explain (corporate mandate, compliance/legal, VOC data, etc) Benchmarking is simple as a concept but much more involved as a process. The ultimate payoff is that you can become the best of what you do, and continuously improve upon that superiority. Benchmarking is a means of identifying best practices and using this knowledge to continuously improve our products, services, and systems so that we increase our capability to provide total customer satisfaction. What does it mean to Define Performance Objectives? A performance objective is a statement of your project Y’s performance level that will satisfy the project CTQ(s). It is the projected reduction in defects you plan to achieve for your process or product. Typically, this is stated in terms of defects per million opportunities (DPMO) reduction and a corresponding target Z-value. In Step 4 you determined the current process performance. In Step 5 you will state what the end results of the Six Sigma project will be by statistically defining the goal of the project. In addition, an estimate of financial benefits is due in Analyze. Why is it important to Define Performance Objectives? It is important to identify your improvement goals in measurable terms in order to define the level of improvement you wish to achieve and provide a focused target toward which you can direct your efforts. Key for best results: Be creative and think out of the box Consider all organizations, not just corporations Review all sectors (Private, Public and Non-Profit Study domestic and International organizations Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Key Buying Factor Analysis (Optional)
Explanation: Yellow bars show relative importance of key buying factors to customers; Red line rates company performance against key buying factors; Other lines rate competitors’ performance against key buying factors Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Pilot Plan (Optional) Pilot Test Description Success Criteria Test Team Schedule Hand-Chek/ Hot-Chek Interface Test Sample Check-in Data entered in Hand-Chek device Sample Data Sets Transmitted to Hot-Chek System – All Hotel Floors, All Hotel Rooms Confirmation Data Received from Hot-Chek to Hand-Chek Device – All Hotel Floors &Rooms Data Set Entry Accuracy < 3.4 DPMO Data Time < 6 Sec Data Transmission/ Accuracy < 3.4 DPMO SB, plus Hot-Chek tech rep Start 3/1 Complete 3/3 Check-in Verification Test Sample Guest Data Entered in Hot-Chek System (variety of room requirements) “Guests” (Hotel Employees) Walked Through Check-in Process (90% Pre-Registered, 10% Non-Pre-Registered) Volume Stress Test – Simulated Arrival 20 Guests in a “Tour Bus” Process Measurements recorded via Observer (see Design Scorecard); “Guest” Observations Recorded. Data Set Entry Time < 6 Seconds Data Set Transmission/ Reception Accuracy < 3.4 DPMO Design Scorecard CCRs SB, + 6 Check-in Staff Start 3/6 Complete 3/7 Check-in Validation Test 25 Guests invited to experience hotel check-in Guests “pre-registered” with their room requirements in Hot-Chek system. Guests Walked Through Check-in Process (90% Pre-Registered, 10% Non-Pre-Registered) Process Measurements recorded via Observer (see Design Scorecard) Guests Debriefed Following Experience. Start 3/10 Complete 3/10 What Is a Pilot? - A pilot is a test of a proposed solution. This type of test has the following properties: Performed on a small scale Used to evaluate both the solution and the implementation of the solution Purpose is to make the full scale implementation more effective Gives data about expected results and exposes issues in the implementation plan - The pilot should test both if the process meets our design specifications and the customer expectations. In a hotel check-in process, the design specification is a target 2 minute check-in time. This corresponds with the customer’s need for “quick check-in.” Pilot Execute the pilot, analyze data, and modify the solution, if necessary. What were the goals of the pilot? How was the pilot executed? What data was collected? What did you learn from the pilot? Are there changes to the implementation strategy based on the results of the pilot? Pilot Examples Implementation at a single location Implementation for one work area Implementation for a select customer group Limited time offers Release in a test market Product/Service mock-ups or models Walkthroughs, dry runs, or dress rehearsals Early evaluation by end users Benefits of Piloting Improved solution Improved implementation plan Increased buy-in Get some of the benefits of the improvement quickly Reduced risk of failure or unknown complications Ability to confirm assumed cause-and-effect relationships Increased ability to quantify costs and benefits Overall benefit is a better solution with fewer surprises Piloting comes with many benefits, and only one negative which might be the slight delay in full-scale implementation while the pilot is being conducted. It is almost always worth paying this cost. However, it is most important to pilot in the following situations: Large changes Costly implementations Changes that cross many different groups or processes Changes that are difficult or costly to reverse Pilot Planning What – Needs to be piloted Where – Will the pilots be run Who – Will be involved When – (How long) will the pilots run How – Will the pilots be conducted Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Verify Pilot Results (Optional)
Measurement Plan: Plan Target Pilot Measure x s Comments CTQs Process time 1 minute 0.5 min. 0.05 min. CTQs Data Transmission Accuracy < 3.4 DPMO 100 DPMO Pilot Observations: 1) Data Reception Weak – 12th Floor, SW Rooms 2) Data Entry Sequence Confusing GAP Analysis/Root Causes: 1) Insufficient radio transceivers, 12th Floor 2) Order of questions confusing staff Follow-up Actions: 1) Add four more radio transceivers 2) Resequence guest questions Tips During the Pilot Make careful observation of all activities, effects, and interactions during the pilot. Actively manage your implementation plan. Manage expectations and perceptions. Customers Management Staff Continue the pilot long enough to establish reliable baseline performance data. Use applicable statistical tools to properly evaluate design predictions, process control, and capabilities. Celebrate success Communicate small victories Celebrations for initial successes Improve on the design if the pilot demonstrates any weaknesses. Often the pilot will show a few opportunities for improvement. The objectives of the pre-pilot review are: To ensure that all the elements of the design are complete To ensure that all the designed elements are well-integrated and that interfaces between different parts of the design are tight To identify possible failure points and areas of vulnerability to be tested in the pilot To review predicted design capability (e.g., sigma) To review the pilot and implementation plans Ensure completeness of design: Different elements of the design are usually the responsibility of different sub-teams, who may be working independently with their own individual requirements. The design review process should ensure that nothing remains incomplete. Integration of design elements: Completion does not always imply integration. For example, the design of the processes and the IT systems may be complete, but the IT systems may not completely support the processes. This is especially true when the design is made up of a mixture of new and existing technologies. The design review process should ensure that the elements are properly integrated. Failure points: FMEAs should have been completed on the critical aspects of the design. The results of these FMEAs should have identified areas where, despite the predicted results, testing using real data is necessary. These areas should be targeted in the pilot plan. Reviewing pilot and implementation plans: Making sure that adequate timing has been allowed for pilots, that systematic data collection and analysis methods have been developed, and that the implementation plan is structured to incorporate the findings of the pilot. Reviewing control plans: Making sure that the process control system is completely designed and that data collection, analysis, and intervention plans are in place. Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Summarizing Pilot Conclusions (Optional)
Once all the pilot data has been collected and the results verified, the team can determine the next steps toward solution implementation. Only after an objective and comprehensive assessment of the pilot can responsible “next step” decisions be made. Some questions a team should ask upon the completion of a pilot to help guide them toward identification of the proper next steps are: Did pilot have anticipated results? Was the plan for conducting the pilot effective? What improvements can we make to the solution? Can the solution be implemented “as-is”? Should it be? Can the solution remain in place at the pilot location? What lessons learned and best practices can we apply during solution implementation? Did the solution achieve the required design goals? Check for the Ripple Effect and Unintended Consequences Even a small change in a business process can affect many other processes. During a pilot, the team may need to double-check for this “ripple” effect. Impact on Other Processes Make sure the new design has not somehow caused problems for your internal supplier and customer processes. People working in such support areas as planning, customer service, operations, and quality control need to know that you are doing things differently so they can adjust their work where necessary. Check administrative processes such as personnel, finance, or accounting. If one of your solutions, for example, is to cross-train people in several skills, the human resources department may need to revise job descriptions. The pilot plan should be designed to include steps to analyze the results. Root causes of performance gaps may need to be analyzed or redesigned. Summarizing Pilot Conclusions Once all the pilot data has been collected and the results verified, the team can determine the next steps toward solution implementation. Only after an objective and comprehensive assessment of the pilot can responsible “next step” decisions be made. Some questions a team should ask upon the completion of a pilot to help guide them toward identification of the proper next steps are: Did pilot have anticipated results? Was the plan for conducting the pilot effective? What improvements can we make to the solution? Can the solution be implemented “as-is”? Should it be? Can the solution remain in place at the pilot location? What lessons learned and best practices can we apply during solution implementation? Did the solution achieve the required design goals? Don’t skip the pilot! Define successful criteria before testing the pilot Agree on a list of critical parameters to continue Document all test results and control procedures Train all process participants Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Kaizen Action Workout (Optional)
Planning Execution Before ? ? ? Root Causes / Quick Wins Graphical Analysis After Root cause: Quick Win #1 Quick Win #2 Quick Win #3 ? ? Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Technical-Political-Cultural TPC Analysis (Optional)
Seeks to identify, label and understand sources of resistance as either Technical (sunk costs, lack of skills, lack of critical resources, etc…), Political (issues of power and authority), or Cultural (norms, mindsets, habits, etc…). Building off the Key Constituents Map Template and Attitude Charting Template, This tool helps the team to more clearly understand the nature of the resistance they will likely face and begin to developed a strategy to eliminate or lessen it. Uses: We often assume that once we've discovered a given population relative to the attitude toward change they currently exhibit, we are ready to develop an effective strategy for winning their support. However, too often our analysis of the reason is shallow or inaccurate. This tool enables the team to thoroughly understand the nature of resistance and the specific strategy to use to influence and gain support. How To Steps: 1. Select one of the groups impacted by the change initiative from the pie chart analysis (see The Key Constituents Map Template) or the Attitude Charting Template. 2. Ask team members to list all of the reasons this population is resisting the change initiative and then proceed to contain each in one of the three source areas. 3. Assign a % to each of the three areas (example: a team might decide that only 20% of the resistance is truly technical and the remaining 80% is split 60% political and 20% cultural). This analysis should help the team strategize regarding how to apply influence pressure to win support (example: don't spend precious time trying to argue the virtues of the project on technical grounds if 60% of the resistance is stemming from company politics or Cultural norms). 4. At a minimum, the team should be able to agree on the nature of the resistance and what it will take to frame the need for change with this perspective in mind. 5. OPTION: Use this tool to understand the nature of the resistance the team is meeting from specific individuals within a population, and help the team develop customized pitches for the need for change identified for each individual based on his/her concerns or issues. In this case, the TPC Analysis will follow the Political Analysis for Change tool. Timing: Although usually used early on in the change initiative cycle, this tool can and should be used whenever a new source of resistance is identified. Even during the final stages, resistance should be expected. This tool can save the team valuable time in understanding the nature of the resistance. Tips: Teams sometimes have difficulty distinguishing between the three forms of resistance. It is important that the teams discuss each type of resistance before proceeding with the analysis so that all team members are using the same definition of what each type means. Then, gain a general agreement on which of the three categories of resistance is most likely to be driving the resistance the team is meeting which will help the team aim its resources and energy accordingly. Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Multi-Generational Project Plan (Optional)
What Is a Multi-Generation Project Plan? A vehicle to help focus the design team’s energies on a manageable project that can be completed relatively quickly. Since the future has been considered, the team will not make decisions that are incompatible with future generations. As the team’s work progresses, new ideas can be added to future generations of the process instead of increasing the development time for the first generation process. Helps manage “scope creep.” The organization can be working on new technologies that are needed for future generations while the first generation process is being implemented and benefits realized. The MGPP is usually not fully developed in the Define step. In Define you should describe all the elements for the first generation product/service as fully as possible and fill in as much information as you have for future generations. You will add information to the MGPP throughout the DFSS process. At the end of the first generation, you will be able to describe the second and third generation products and services in much greater detail because of what you have learned from your research and testing of the first generation product. The Multi-Generation Project Plan Will Help Initially establish a reasonable project scope – one that drives values with a reasonable completion date Capture good ideas that are surfaced during the project Proactively identify project replication opportunities for other parts of the business Establish the “big picture” – How does this project fit into the overall improvement scheme for the organization E.g., the objective is to reduce billing errors for all of our customers. The first generation will address problems with our top 20% customers. E.g., this project will streamline the process and reduce the number of errors. The next phase will be to implement an automated information system. Communicate with stakeholders “We’re focusing on this part of the process with this project, but recommend a follow-on project to address other parts of the process”. 1. Start with the vision. Describe the vision for the new product/service 3 years from now. Then back up and describe product/service stages that lead up to the longer-term vision. 2. Describe the concept and technologies/platforms for Generation 1 in as much detail as possible. 3. Fill in as much information for Generation 2 and 3 concepts, platforms and technologies as you can. You will be adding more information about these elements as you learn more during Generation 1 development Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Cost/Benefit Analysis (Optional)
Identify the various solution options Describe the Type 1 solution $ gained from the expected process improvement Calculate the total cost of ownership to fully implement the solution Cost Benefit Analysis Factors include: Sources of financial benefits Quantitative Qualitative Sources of costs Direct Indirect One Time Ongoing Enterprise perspective Financial analysis using company preferred measures such as Economic Profit (EP) Return on Invested Capitol (ROIC) Working Capital Type I, II & III Savings Timing of cost and benefits Sensitivity analysis of involved factors Enter Key Slide Take Away (Key Point) Here International Standards for Lean Six Sigma

Improve Phase Lean Six Sigma Improve Phase Tollgate Review.

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Improve Phase Lean Six Sigma Improve Phase Tollgate Review.

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