Six Sigma: DMAIC Y F (X)

Operational Excellence
Six Sigma
Six Sigma: DMAIC; Y=f(x)

Is it a Goal, a Measure, a Process, a Tool or an expletive deleted?
By Lee Olson Presentation to INFORMS
D efine Measure Analyze Improve Control
Objectives
Define Measure Analyze Improve Control
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
Define
efine D Measure Analyze Improve Control
Is it a Goal, a Measure, a Process, a Tool or an expletive deleted?
Yes
Define
Six Sigma Is a management methodology
Customer focused Data driven decisions Breakthrough performance gains Validated bottom line results
Customer Focused
ON TIME DELIVERY (sample)
The percentage of sales order line items that ship complete on or before the original customer promise date, for all line items shipped in the month.
Our Performance Compared to Competitors
On-Time Delivery
100% 90% 80% 70% 60%
Pareto of Drivers
100% % Impact 75% 50% 25% 0%
xyz Cell Always Late Orders on Credit Hold
Target
Importance to Customers
20% 10%
Quality
OTD High
0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Reason
Top 5 Action Items

Driver Action Description Status Status Description Ow ner Original Due Date Current Due Date
Late Supplier Deliveries
Monthly reporting to suppliers on delivery & quality metrics.
On track
Report Cards Implemented.
Adam
5/21
Engineering Change Orders 5/21 6/15 6/15 7/15 9/15 5/21 5/21 6/15 8/15
Unrealistic Promise Date
Arrange face to face meetings with top offenders. Review and approve supplier's corrective action plan. Kaizen Event to focus on improving throughput by 40% and improve labor efficiency by 35% Focus on custom products to provide realistic ATP based on inventory and leadtime of components.
On track
Meetings Complete with top 10 Suppliers.
Beth
Caution Corrective Action Plan in Place for 2 major Suppliers On track
Carlos
xyz Cell Always Late
Event held 5/1. 25% throughput Doreen improvement in May. Labor Efficiency Increase of 30% Earnest
Problem Continued lack of progress. Restructured and focused team. Developing detailed plan.
Training Shared Goals Price Complaints Moderateto-Low
Were Better
Theyre Better
Low Yield on part abc
Complete
50% 40% 30%
Data Driven Decisions
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
Breakthrough performance gains

(Distribution Shifted 1.5 )
2 2 3 3 4 4 5 5 6 6
Process Process Capability Capability
PPM PPM 30,53 08 37 38,57 66 07 6,87 6,80 6,20 ,21 6 10 23 33 23 3.4 .4 3

Defects per Million Defects per Million Opportunities Opportunities
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.
L m tt o B not ca p m o I P
ri c e In cr ea se Vo lu m e In c. w ith Le ve r ag e lC os ts ia at er M
M an uf ac tu rin g SG &A Le ve ra g e Ta
Vo lu m e In c. No

G en
Assuming a 10% change in the factor
Validated bottom line results
Factors
W er al -5 % La or ki n Pr ic e g Ca p Re d
xe
s bo r
ita uc tio
n
Define
Methodology Define Measure Analyze Improve Control
Roadmap
Next Project Celebrate Project $
Example
Define
Customers, Value, Problem Statement Scope, Timeline, Team Primary/Secondary & OpEx Metrics Current Value Stream Map Voice Of Customer (QFD)
Validate Project $
Measure
Assess specification / Demand Measurement Capability (Gage R&R) Correct the measurement system Process map, Spaghetti, Time obs. Measure OVs & IVs / Queues
Control
Document process (WIs, Std Work) Mistake proof, TT sheet, CI List Analyze change in metrics Value Stream Review Prepare final report
Validate Project $ Validate Project $
Improve
Optimize KPOVs & test the KPIVs Redesign process, set pacemaker 5S, Cell design, MRS Visual controls Value Stream Plan
Analyze (and fix the obvious)

Root Cause (Pareto, C&E, brainstorm)
Validate Project $
Find all KPOVs & KPIVs FMEA, DOE, critical Xs, VA/NVA Graphical Analysis, ANOVA Future Value Stream Map
Plan
Execute
Identify Problem
Operational Excellence Methodology
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 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 Solution
Problem Control
Plan
Execute
Mistake Proof the process (PokaYoke) Tolerance the process Measure the final capability Place appropriate process controls on the critical Xs Document the effort and results Standard Work TPM
Problem What do you want to know? Solvingwant to see what it is that you need How do you
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?
Based in part on Six Sigma Methodology developed by GE Medical Systems and Six Sigma Academy, Inc. Co. Op. Ex. Methodology Originated by MBBs; D. Braasch, J. Davis, R. Duggins, J. OCallaghan, R. Crane
Key Items

Define
Customers, Value, Problem Statement Scope, Timeline, Team Primary/Secondary & OpEx Metrics Current Value Stream Map Voice Of Customer (QFD) (Quality Function Deployment)
Project Selection
Impact
Business Impact
Revenue Growth Cost Reduction Capital Reduction Key Business Objectives On Time Delivery Lead Time Quality Customer Satisfaction
Impact on Operational Excellence Metrics
Evaluate and Rank Suggestions

Effort and Risk
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
Evaluate and Rank Suggestions
Example tool to rank projects 0106-01 Project Rating.xls

Project Ranking
5 4 3 2 1 0 1
3 7 8 9
Risk = Ball Size
Project Number
Impact
4 1
Effort
Example chart to rank projects 0106-01 Project Rating.xls
Measure
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
(and fix the obvious)
Analyze
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
Improve
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
Control
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
Basic Implementation
Roadmap
Identify Customer Requirements
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
3.0 3.1 3.2 2.0 2.1 2.2 1.0 1.1 1.2 8 7 6 5 4 3 2 1 1 2 3 4 5 6 Improve the Metrics Educate/Get Everyone Involved
Improve Customer Focus
Your Manager's 1-Year Breakthrough Objectives

Train functional leaders as LGBs Improve On Time Delivery to 98% Establish tracking of OTD in every cell
Conduct interviews with top 10 customers
Train leadership team as Lean Green Belts (LGB)
Train worke inh o r p u s are u d b o r m cu o ers rs ow u rod ct se y u ajor st m
Your Annual Breakthrough
Indicator's and Goals

Complete 1 Leadership LGB training course
Objectives
Benefits
100% Completion of LGB Projects Leaders have ability to map a value stream
Metrics module in all appropriate training sequences Training projects demonstrate flowdown of metics to operational level

Develop culture of teams
Trainees participate in customer survey
Type in
Key:
Complete 3 functional LGB training courses Bring reps from top 10 customers in for plant tours Implement lean concepts in top 3 volume lines establish pareto of drivers for OTD
--> 4
Impact
IT Operations Quality Engineering Maintenance Marketing Training
Hoshin
q Owner
l
r q r q r r r r q r q r r q r r r r r r q
Resource
r Support
m
ON TIME DELIVERY (sample)

The percentage of sales order line items that ship complete on or before the original customer promise date, for all line items shipped in the month.
On-Time Delivery
100% 90% 80% 70% 60% 50% 40%
Pareto of Drivers
100% % Impact 75% 50% 25% 0%
Target
20% 10% 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Reason
Top 5 Action Items

Driver Action Description Status Status Description Ow ner Original Due Date Current Due Date
Monthly reporting to suppliers on delivery & quality metrics.
On track
Report Cards Implemented.
Adam
5/21
Engineering Change Orders 5/21 6/15 6/15 7/15 9/15 5/21 5/21 6/15 8/15
Orders on Credit Hold
Arrange face to face meetings with top offenders. Review and approve supplier's corrective action plan. Kaizen Event to focus on improving throughput by 40% and improve labor efficiency by 35% Focus on custom products to provide realistic ATP based on inventory and leadtime of components.
On track
Meetings Complete with top 10 Suppliers.
Beth
Caution Corrective Action Plan in Place for 2 major Suppliers On track Event held 5/1. 25% throughput improvement in May. Labor Efficiency Increase of 30%
Carlos
Doreen
Problem Continued lack of progress. Restructured and focused team. Developing detailed plan.
Earnest
Low Yield on part abc
30%
Does it work?.
The top companies in Customer Satisfaction grow MVA at nearly twice the rate of their poor-performing counterparts.
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
What about Lean, TOC, TQM

Six Sigma
Remove defects, minimize variance
Lean
Remove waste, shorten the flow
TOC
Remove and manage constraints
TQM
Continuous Improvement
Value Stream Map - Current State

6 WEEK Forecast
Suppliers
Production Control
90/60/30 day Forecasts Order Entry Orders/day = 36 Queue = 1.5 Days
Customer
y ekl We ax F
MRP
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
342 CT=1sec Co=1 hr. Uptime=85% 1 shift CT=3 min Co=10 min. Uptime=70% 1 shift 7.6 days 1 sec 3 min
Assembly I
Test
Shipping I I
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
90 CT= 4 min Co=0 Uptime=100% 2 shifts Lead Time =23.6 days Touch Time = 89 min 2 days 4 min
5 days
2.7 days 67 min
4.5 days
Demand = 45/day Takt Time = 18.2 min Competitive LT = 3 days

Suppliers
On-Time Delivery
Production Control 90/60/30 day Forecasts Order Entry Orders/day = 36 Queue = 1.5 Days Customer
Customer Data
6 WEEK Forecast
y ekl We ax F
MRP
1X Daily I
Coils 5 days
Stamping
S. Weld # 1
Assembly I
Test
Shipping I I
202
5 days
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 Order Entry Orders/day = 36 Queue = 1.5 Days Customer
y ekl We ax F
MRP
1X Daily I
Coils 5 days
Stamping
S. Weld # 1
Assembly I
Test
Shipping I I
202
5 days
2.7 days 67 min
4.5 days
Lead Time = 23.6 days Touch Time = 89 min

y ekl We ax F
Flow of Value
Lead Time
Customer Production Control 90/60/30 day Forecasts Order Entry Orders/day = 36 Queue = 1.5 Days
6 WEEK Forecast
Suppliers
MRP
1X Daily I
Coils 5 days
Stamping
S. Weld # 1
Assembly I
Test
Shipping I I
202
5 days
2.7 days 67 min
4.5 days
Max Wip = 7.6 days CT (67) > Takt Time (18)

6 WEEK Forecast
y ekl We ax F
OTD, Lead Time

Constraints
Suppliers
MRP
1X Daily I
Coils 5 days
Stamping
S. Weld # 1
Assembly I
Test
Shipping I I
202
5 days
2.7 days 67 min
4.5 days
CO = 1 hour CO = 23 min CO =
Suppliers
OP Margin, Lead Time

Setup Times
6 WEEK Forecast Changeover

y ekl We ax F
MRP
1X Daily I
Coils 5 days
Stamping
S. Weld # 1
Assembly I
Test
Shipping I I
202
5 days
2.7 days 67 min
4.5 days
Uptime = 70%
6 WEEK Forecast
Suppliers
OTD, Lead Time

Maintenance
y ekl We ax F
MRP
1X Daily I
Coils 5 days
Stamping
S. Weld # 1
Assembly I
Test
Shipping I I
202
5 days
2.7 days 67 min
4.5 days
FTY = 67%
6 WEEK Forecast
Suppliers
Quality
y ekl We ax F
MRP
1X Daily I
Coils 5 days
Stamping
S. Weld # 1
Assembly I
Test
Shipping I I
202
5 days
2.7 days 67 min
4.5 days
Who is setting the pace? What is the pitch time?

6 WEEK Forecast
Suppliers
OTD, Lead Time

Flow of Value
y ekl We ax F
MRP
1X Daily I
Coils 5 days
Stamping
S. Weld # 1
Assembly I
Test
Shipping I I
202
5 days
2.7 days 67 min
4.5 days
Making it happen
Three major roles Implementer
Learns the tools Works the process Solves day to day problems Learns the methodology Manages a value stream Reviews project teams Establishes the vision for the future Sets priorities Encourages
Manager
Where do you need to focus?
Leader
What Is a Sigma?
A metric that indicates how well a process is performing.

Higher is better Measures the capability of the process to perform defect-free work Also known as z, it is based on standard deviation for continuous data For discrete data it is calculated from DPMO
The Normal Curve and Capability
Units of Measure
Area of Yield
Performance Limit
Probability of a Defect
Units of Measure
Units of Measure
P o Poe o r r c ss Cp b a a ility
V ryH h e ig P bb ro a ility o D fe ts f e c V ryH h e ig P bb ro a ility o D fe ts f e c V ryL w e o P bb ro a ility o D fe ts f e c
E c lle t xe n Po e r c ss Cp b a a ility
V ryL w e o P bb ro a ility o D fe ts f e c
LL S
UL S
LL S
UL S
Low Sigma Low Sigma Operational Excellence Training
High Sigma High Sigma

Six Sigma: DMAIC Y F (X)

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Operational Excellence

Six Sigma: DMAIC; Y=f(x)

D efine Measure Analyze Improve Control

Define Measure Analyze Improve Control

Operational Excellence Training

efine D Measure Analyze Improve Control

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

Operational Excellence Training

efine D Measure Analyze Improve Control

Operational Excellence Training

efine D Measure Analyze Improve Control

Our Performance Compared to Competitors

Top 5 Action Items

Late Supplier Deliveries

Monthly reporting to suppliers on delivery & quality metrics.

Report Cards Implemented.

Unrealistic Promise Date

Late Supplier Deliveries

Meetings Complete with top 10 Suppliers.

Late Supplier Deliveries

Caution Corrective Action Plan in Place for 2 major Suppliers On track

xyz Cell Always Late

Unrealistic Promise Date

Training Shared Goals Price Complaints Moderateto-Low

Operational Excellence Training

Low Yield on part abc

Late Supplier Deliveries

50% 40% 30%

Data Driven Decisions

efine D Measure Analyze Improve Control

Y Dependent Output Effect Symptom Monitor Response

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

Breakthrough performance gains

efine D Measure Analyze Improve Control

PPM PPM 30,53 08 37 38,57 66 07 6,87 6,80 6,20 ,21 6 10 23 33 23 3.4 .4 3

Operational Excellence Training

Assuming a 10% change in the factor

Validated bottom line results

efine D Measure Analyze Improve Control

Operational Excellence Training

efine D Measure Analyze Improve Control

Validate Project $ Validate Project $

Analyze (and fix the obvious)

Operational Excellence Training

Operational Excellence Methodology

What type of tool will generate what it is that you

efine D Measure Analyze Improve Control

Operational Excellence Training

efine D Measure Analyze Improve Control

Impact on Operational Excellence Metrics

Operational Excellence Training

Evaluate and Rank Suggestions

efine D Measure Analyze Improve Control

Impact vs. Risk vs. Effort

Evaluate and Rank Suggestions

Define Measure Analyze Improve Control

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

Risk = Ball Size

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

efine D Measure Analyze Improve Control

Establish measurement capability

Fix the measurement system

Operational Excellence Training