Operational Excellence

Six Sigma

Six Sigma: DMAIC; Y=f(x)

Is it a Goal, a Measure, a Process, a Tool or an expletive deleted?

D efine
M easure A nalyze I mprove C ontrol

 D efine

Objectives

M A I C

easure nalyze mprove ontrol

Understand the Basics of the Six Sigma Program Understand How Six Sigma Relates to Lean, TOC, TQM
(Theory Of Constraints; Total Quality Management)

Ability to Define a Strategy and Roadmap for Success

Operational Excellence Training

 D efine

Define

M A I C

easure nalyze mprove ontrol

Is it a Goal, a Measure, a Process, a Tool or an expletive deleted?

Yes

Operational Excellence Training

 D efine

Define
Six Sigma Is a management methodology
Customer focused Data driven decisions Breakthrough performance gains Validated bottom line results

M A I C

easure nalyze mprove ontrol

Operational Excellence Training

 D efine

Customer Focused
Our Performance Compared to Competitors Importance to Customers Complete Quality OTD High

M A I C

easure nalyze mprove ontrol

Training Shared Goals Price Complaints Moderateto-Low

Were Better

Theyre Better

Operational Excellence Training

 D efine

Data Driven Decisions

M A I C

easure nalyze mprove ontrol

Y= f (X)
To get results, should we focus our behavior on the Y or X ?

Y Dependent Output Effect Symptom Monitor Response

X1 . . . XN Independent Input-Process Cause Problem Control Factor

Why should we test or inspect Y, if we know this relationship? Operational Excellence Training

 D efine

Breakthrough performance gains

(Distribution Shifted 1.5)

M A I C

easure nalyze mprove ontrol

2 3 4 5 6
Process Capability

PPM 308,537 66,807 6,210 233 3.4

Defects per Million Oppor tunities

Sigma is a statistical unit of measure which reflects process capability. The sigma scale of measure is perfectly correlated to such characteristics as defects-per-unit, parts-per million defective, and the probability of a failure/error.
Operational Excellence Training

 D efine

Validated bottom line results

Impact on Bottom Line

M A I C

easure nalyze mprove ontrol

Assuming a 10% change in the factor

Factors
Operational Excellence Training

 D efine

Define
Methodology Define Measure Analyze Improve Control

M A I C

easure nalyze mprove ontrol

Operational Excellence Training

Roadmap
Example
Next Project Celebrate Project $

D efine
M A I C
easure nalyze mprove ontrol

Define

Control
Document process (WIs, Std Work) Mistake proof, TT sheet, CI List

Customers, Value, Problem Statement Scope, Timeline, Team Primary/Secondary & OpEx Metrics Current Value Stream Map Voice Of Customer (QFD)

Validate Project $

Measure

Analyze change in metrics

Value Stream Review Prepare final report

Assess specification / Demand Measurement Capability (Gage R&R) Correct the measurement system Process map, Spaghetti, Time obs. Measure OVs & IVs / Queues

Validate Project $ Validate Project $

Improve

Analyze (and fix the obvious)

Optimize KPOVs & test the KPIVs Redesign process, set pacemaker 5S, Cell design, MRS Visual controls Value Stream Plan

Validate Project $

Root Cause (Pareto, C&E, brainstorm) Find all KPOVs & KPIVs FMEA, DOE, critical Xs, VA/NVA Graphical Analysis, ANOVA Future Value Stream Map

Operational Excellence Training

Operational Excellence Methodology

Plan

Execute

Identify Problem

Strategic Link to Business Plan defined in Project Selection Process Defined Business Impact with Op Ex Champion support Structured Brainstorming at all organizational levels Cause and Effect Diagrams identifying critical factors Primary and Secondary Metrics defined and charted Multi-Level Pareto Charts to confirm project focus Develop a focused Problem Statement and Objective Develop a Process Map and/or FMEA Develop a Current State Map Identify the response variable(s) and how to measure them Analyze measurement system capability Assess the specification (Is one in place? Is it the right one?)

Practical Problem

Problem Definition

Characterize the response, look at the raw data Abnormal? Other Clues? Mean or Variance problem? Time Observation Spaghetti Diagram Takt Time Future State Maps Percent Loading Standard Work Combination Use Graphical Analysis, Multi-Vari, ANOVA and basic

statistical tools to identify the likely families of variability

Problem Solution

Identify the likely Xs 5S Set Up Time Reduction (SMED) Material Replenishment Systems Level Loading / Line Leveling Cell Design Visual Controls Use Design of Experiments to find the critical few Xs Move the distribution; Shrink the spread; Confirm the results

Problem Control
Execute Plan

Mistake Proof the process (Poka-Yoke) Tolerance the process Measure the final capability Place appropriate process controls on the critical Xs Document the effort and results Standard Work TPM

Problem Solving
What do you want to know? How do you want to see what it is that you need
to know?

What type of tool will generate what it is that you

need to see?

What type of data is required of the selected tool? Where can you get the required type of data?
Crane Co. Op. Ex. Methodology Originated by MBBs; D. Braasch, J. Davis, R. Duggins, J. OCallaghan, R. Underwood, I. Wilson

Based in part on Six Sigma Methodology developed by GE Medical Systems and Six Sigma Academy, Inc.

Define
Key Items

D efine
M A I C
easure nalyze mprove ontrol

Customers, Value, Problem Statement Scope, Timeline, Team Primary/Secondary & OpEx Metrics Current Value Stream Map Voice Of Customer (QFD)
(Quality Function Deployment)

Operational Excellence Training

Project Selection
Impact

D efine
M A I C
easure nalyze mprove ontrol

Business Impact
Revenue Growth Cost Reduction Capital Reduction Key Business Objectives On Time Delivery Lead Time Quality Customer Satisfaction

Impact on Operational Excellence Metrics

Operational Excellence Training

Evaluate and Rank Suggestions

Effort and Risk

D efine
M A I C
easure nalyze mprove ontrol

Effort required
People Resources Capital Resources Duration of Project

Probability of success
Technical Risk
Data available Knowledge of process

Management Risk
Aligned with objectives Support by value stream manager

Impact vs. Risk vs. Effort

Assess ROI (Return On Investment) Assign priorities to projects
Operational Excellence Training

 D efine

Evaluate and Rank Suggestions

M A I C

easure nalyze mprove ontrol

Example tool to rank projects

0106-01 Project Rating.xls
Operational Excellence Training

Example chart to rank projects 0106-01 Project Rating.xls

 D efine

Measure

M A I C

easure nalyze mprove ontrol

Establish measurement capability

Validate the database (transactional) Gage R&R (Repeatability & Reproducibility) Calibration is not enough Many (or most) measurement systems are not capable How good is the data you are using to make decisions?

Fix the measurement system

Enables calculation of process capability Enables calculation of alpha & beta risks This step is often skipped

Operational Excellence Training

Analyze
(and fix the obvious)

D efine
M A I C
easure nalyze mprove ontrol

Find all KPOVs & KPIVs

(Key Process Output Variables; Key Process Input Variables)

FMEA, DOE, critical Xs, VA/NVA

(Failure Modes Effects Analysis; Design Of Experiment)

Graphical Analysis, ANOVA

(Analysis Of Variance)

Future Value Stream Map

Operational Excellence Training

 D efine

Improve

M A I C

easure nalyze mprove ontrol

Optimize KPOVs & test the KPIVs

(Key Process Output Variables; Key Process Input Variables)

Redesign process, set pacemaker 5S, Cell design, MRS

(Material Replenishment System)

Visual controls Value Stream Plan

Operational Excellence Training

 D efine

Control

M A I C

easure nalyze mprove ontrol

Management of Change
Owned by project champion and value stream manager Critical to long term success of project Physical and cultural changes

Measurement controls
On-going metrics

Visual Controls
Enable workers to self-manage the process

Operational Excellence Training

Basic Implementation
Roadmap
Identify Customer Requirements

D efine
M A I C
easure nalyze mprove ontrol

Understand and Define Entire Value Streams

Vision (Strategic Business Plan)

Deploy Key Business Objectives
- Measure and target (metrics)

- Align and involve all employees - Develop and motivate

Continuous Improvement (DMAIC)

Define, Measure, Analyze, Improve
Identify root causes, prioritize, eliminate waste, make things flow and pulled by customers

Control
-Sustain Improvement -Drive Towards Perfection

Operational Excellence Training

 D efine

Hoshin

M A I C

easure nalyze mprove ontrol

Operational Excellence Training

 D efine

Does it work?.
The top companies in Customer Satisfaction grow MVA at nearly twice the rate of their poor-performing counterparts.

M A I C

easure nalyze mprove ontrol

Market Value Added

50 40 30 20 10 0

In Billions $

$42 $23

1999 73 companies Ralston Purina Quaker Oats Hilton Hotels Coca-Cola Unilever etc.

Low

High

Customer Satisfaction Index Score

Source: American Customer Satisfaction Index, U Michigan, HBR, 2001

Operational Excellence Training

 D efine

What about Lean, TOC, TQM

M A I C

easure nalyze mprove ontrol

Six Sigma
Remove defects, minimize variance

Lean
Remove waste, shorten the flow

TOC
Remove and manage constraints

TQM
Continuous Improvement

Operational Excellence Training

Value Stream Map - Current State

6 WEEK Forecast
Suppliers

Production Control

90/60/30 day Forecasts

Customer

MRP

Order Entry Orders/day = 36 Queue = 1.5 Days Demand = 45 per day 2 shifts Takt Time = 18.2 Minutes Competitive Lead Time = 3 Days

Lead Time - 34 Days WEEKLY SCHEDULE

1X Daily I

Coils 5 days

Stamping

S. Weld # 1

Assembly I

Test I

Shipping I

342 CT=1sec Co=1 hr. Uptime=85% 1 shift 5 days 1 sec CT=3 min Co=10 min. Uptime=70% 1 shift 7.6 days 3 min

81 CT= 15 min Co=0 min. Uptime=100% 2 shifts 1.8 days 15 min

122 CT= 67 min Co= 23 min FTY = 67% 2 shifts

202 CT= 4 min Co=0 Uptime=100% 2 shifts

90 Lead Time =23.6 days Touch Time = 89 min 2 days 4 min

2.7 days 67 min

4.5 days

Demand = 45/day Takt Time = 18.2 min Competitive LT = 3 days

Suppliers

Customer Data On-Time Delivery

Production Control 90/60/30 day Forecasts Customer

6 WEEK Forecast

MRP

Order Entry Orders/day = 36 Queue = 1.5 Days Demand = 45 per day 2 shifts Takt Time = 18.2 Minutes Competitive Lead Time = 3 Days

Lead Time - 34 Days WEEKLY SCHEDULE

1X Daily I

Coils 5 days

Stamping

S. Weld # 1

Assembly I

Test I

Shipping I

342 CT=1sec Co=1 hr. Uptime=85% 1 shift 5 days 1 sec CT=3 min Co=10 min. Uptime=70% 1 shift 7.6 days 3 min

81 CT= 15 min Co=0 min. Uptime=100% 2 shifts 1.8 days 15 min

122 CT= 67 min Co= 23 min FTY = 67% 2 shifts

202 CT= 4 min Co=0 Uptime=100% 2 shifts

90 Lead Time =23.6 days Touch Time = 89 min 2 days 4 min

2.7 days 67 min

4.5 days

Raw = 5 days WIP = 12.1 days FG = 6.5 days

Suppliers

Inventory
6 WEEK Forecast Production Control 90/60/30 day Forecasts Customer

MRP

Order Entry Orders/day = 36 Queue = 1.5 Days Demand = 45 per day 2 shifts Takt Time = 18.2 Minutes Competitive Lead Time = 3 Days

Lead Time - 34 Days WEEKLY SCHEDULE

1X Daily I

Coils 5 days

Stamping

S. Weld # 1

Assembly I

Test I

Shipping I

342 CT=1sec Co=1 hr. Uptime=85% 1 shift 5 days 1 sec CT=3 min Co=10 min. Uptime=70% 1 shift 7.6 days 3 min

81 CT= 15 min Co=0 min. Uptime=100% 2 shifts 1.8 days 15 min

122 CT= 67 min Co= 23 min FTY = 67% 2 shifts

202 CT= 4 min Co=0 Uptime=100% 2 shifts

90 Lead Time =23.6 days Touch Time = 89 min 2 days 4 min

2.7 days 67 min

4.5 days

Lead Time = 23.6 days Touch Time = 89 min

6 WEEK Forecast
Suppliers

Flow of Value Lead Time

Production Control 90/60/30 day Forecasts Customer

MRP

Order Entry Orders/day = 36 Queue = 1.5 Days Demand = 45 per day 2 shifts Takt Time = 18.2 Minutes Competitive Lead Time = 3 Days

Lead Time - 34 Days WEEKLY SCHEDULE

1X Daily I

Coils 5 days

Stamping

S. Weld # 1

Assembly I

Test I

Shipping I

342 CT=1sec Co=1 hr. Uptime=85% 1 shift 5 days 1 sec CT=3 min Co=10 min. Uptime=70% 1 shift 7.6 days 3 min

81 CT= 15 min Co=0 min. Uptime=100% 2 shifts 1.8 days 15 min

122 CT= 67 min Co= 23 min FTY = 67% 2 shifts

202 CT= 4 min Co=0 Uptime=100% 2 shifts

90 Lead Time =23.6 days Touch Time = 89 min 2 days 4 min

2.7 days 67 min

4.5 days

Max Wip = 7.6 days CT (67) > Takt Time (18)

6 WEEK Forecast
Suppliers

Constraints OTD, Lead Time

Production Control 90/60/30 day Forecasts Customer

MRP

Order Entry Orders/day = 36 Queue = 1.5 Days Demand = 45 per day 2 shifts Takt Time = 18.2 Minutes Competitive Lead Time = 3 Days

Lead Time - 34 Days WEEKLY SCHEDULE

1X Daily I

Coils 5 days

Stamping

S. Weld # 1

Assembly I

Test I

Shipping I

342 CT=1sec Co=1 hr. Uptime=85% 1 shift 5 days 1 sec CT=3 min Co=10 min. Uptime=70% 1 shift 7.6 days 3 min

81 CT= 15 min Co=0 min. Uptime=100% 2 shifts 1.8 days 15 min

122 CT= 67 min Co= 23 min FTY = 67% 2 shifts

202 CT= 4 min Co=0 Uptime=100% 2 shifts

90 Lead Time =23.6 days Touch Time = 89 min 2 days 4 min

2.7 days 67 min

4.5 days

CO = 1 hour CO = 23 min CO =
Suppliers

Setup Times OP Margin, Lead Time

Production Control 90/60/30 day Forecasts Customer

6 WEEK Forecast Changeover

MRP

Order Entry Orders/day = 36 Queue = 1.5 Days Demand = 45 per day 2 shifts Takt Time = 18.2 Minutes Competitive Lead Time = 3 Days

Lead Time - 34 Days WEEKLY SCHEDULE

1X Daily I

Coils 5 days

Stamping

S. Weld # 1

Assembly I

Test I

Shipping I

342 CT=1sec Co=1 hr. Uptime=85% 1 shift 5 days 1 sec CT=3 min Co=10 min. Uptime=70% 1 shift 7.6 days 3 min

81 CT= 15 min Co=0 min. Uptime=100% 2 shifts 1.8 days 15 min

122 CT= 67 min Co= 23 min FTY = 67% 2 shifts

202 CT= 4 min Co=0 Uptime=100% 2 shifts

90 Lead Time =23.6 days Touch Time = 89 min 2 days 4 min

2.7 days 67 min

4.5 days

Uptime = 70%
6 WEEK Forecast
Suppliers

Maintenance OTD, Lead Time

Production Control 90/60/30 day Forecasts Customer

MRP

Order Entry Orders/day = 36 Queue = 1.5 Days Demand = 45 per day 2 shifts Takt Time = 18.2 Minutes Competitive Lead Time = 3 Days

Lead Time - 34 Days WEEKLY SCHEDULE

1X Daily I

Coils 5 days

Stamping

S. Weld # 1

Assembly I

Test I

Shipping I

342 CT=1sec Co=1 hr. Uptime=85% 1 shift 5 days 1 sec CT=3 min Co=10 min. Uptime=70% 1 shift 7.6 days 3 min

81 CT= 15 min Co=0 min. Uptime=100% 2 shifts 1.8 days 15 min

122 CT= 67 min Co= 23 min FTY = 67% 2 shifts

202 CT= 4 min Co=0 Uptime=100% 2 shifts

90 Lead Time =23.6 days Touch Time = 89 min 2 days 4 min

2.7 days 67 min

4.5 days

FTY = 67%
6 WEEK Forecast
Suppliers

Quality
Production Control 90/60/30 day Forecasts Customer

MRP

Order Entry Orders/day = 36 Queue = 1.5 Days Demand = 45 per day 2 shifts Takt Time = 18.2 Minutes Competitive Lead Time = 3 Days

Lead Time - 34 Days WEEKLY SCHEDULE

1X Daily I

Coils 5 days

Stamping

S. Weld # 1

Assembly I

Test I

Shipping I

342 CT=1sec Co=1 hr. Uptime=85% 1 shift 5 days 1 sec CT=3 min Co=10 min. Uptime=70% 1 shift 7.6 days 3 min

81 CT= 15 min Co=0 min. Uptime=100% 2 shifts 1.8 days 15 min

122 CT= 67 min Co= 23 min FTY = 67% 2 shifts

202 CT= 4 min Co=0 Uptime=100% 2 shifts

90 Lead Time =23.6 days Touch Time = 89 min 2 days 4 min

2.7 days 67 min

4.5 days

Who is setting the pace? What is the pitch time?

6 WEEK Forecast
Suppliers

Flow of Value OTD, Lead Time

Production Control 90/60/30 day Forecasts Customer

MRP

Order Entry Orders/day = 36 Queue = 1.5 Days Demand = 45 per day 2 shifts Takt Time = 18.2 Minutes Competitive Lead Time = 3 Days

Lead Time - 34 Days WEEKLY SCHEDULE

1X Daily I

Coils 5 days

Stamping

S. Weld # 1

Assembly I

Test I

Shipping I

342 CT=1sec Co=1 hr. Uptime=85% 1 shift 5 days 1 sec CT=3 min Co=10 min. Uptime=70% 1 shift 7.6 days 3 min

81 CT= 15 min Co=0 min. Uptime=100% 2 shifts 1.8 days 15 min

122 CT= 67 min Co= 23 min FTY = 67% 2 shifts

202 CT= 4 min Co=0 Uptime=100% 2 shifts

90 Lead Time =23.6 days Touch Time = 89 min 2 days 4 min

2.7 days 67 min

4.5 days

 D efine

Making it happen
Three major roles Implementer
Learns the tools Works the process Solves day to day problems

M A I C

easure nalyze mprove ontrol

Manager
Learns the methodology Manages a value stream Reviews project teams

Where do you need to focus?

Leader
Establishes the vision for the future Sets priorities Encourages

Operational Excellence Training