Achieving Operational Excellence by Six Sigma

Six Sigma Methodology

Goals and Objectives:
  

Understand the difference between a sporadic and a chronic quality problems. Enumerate the different phases of the six-sigma methodology and understand their purpose. Comprehend some basic qualitative tools that complement the six-sigma methodology.

You may start with Sporadic vs. Chronic Problems

Sporadic problems: adverse changes that are sudden and that can be restored in the short term. Chronic problems: need to be addressed with a longer term perspective. They can be very costly for the organizations. A structured and project approach is needed to address chronic problems.

Generic Project Tasks
  

 

Verifying the project need and mission. Diagnosing the causes. Providing a remedy (make the case of its effectiveness). Dealing with resistance to change. Instituting controls to hold the gains.

Six-Sigma Methodology

Statistical foundation: the process variations, given the product specifications, allows only 3.4 defects by millions of parts. The six-sigma methodology is related to projects that aim to improve processes through disciplined and data driven analysis.

There are two Six Sigma Methodologies

 

DMAIC to improve existing processes DMADV to develop new processes

DMAIC
   

Define Measure Analyze Improve Control Performance

Process Power: DMAIC—Five Step Process
Define

Control

Measure

Improve

Analyze

Six Sigma - The Process

Define Measure Analyze Improve Control

• At GE, the DMAIC process is utilized for quality improvement of existing products and processes. • A modified version of the process (DMADV) is utilized in new product and process design.

6 DMAIC Process
Institutionalize Improvement Control Deployment Quantify Financial Results Present Final Project Results and Lessons Learned Close Project Develop Charter and Business Case Map Existing Process Collect Voice of the Customer Specify CTQs / Requirements

Control

Define

Select Solution (Including Trade Studies, Cost/Benefit Analysis)

Improve Analyze

Measure

Measure CTQs / Requirements Determine Process Stability Determine Process Capability Calculate Baseline Sigma

Design Solution
Pilot Solution Implement Solution Identify Root Causes Quantify Root Causes Verify Root Causes

Refine Problem Statement

DMAIC = Define, Measure, Analyze, Improve and Control

“Strategy”

“Cookbook” —the steps
• • • Define the problem Select cross-functional team Define team charter

“Tools & Concepts”

Define Measure
Product

1 Select CTQ Characteristics 2 Define Performance Standards 3 Validate Measurement System 4 Establish Product Capability 5 Define Performance Objectives 6 Identify Variation Sources 7 Screen Potential Causes 8 Discover Variable Relationships 9 Establish Operating Tolerances 10 Validate Measurement System 11 Determine Process Capability 12 Implement Process Controls

QFD Process Mapping Measurement Systems Benchmarking/Baselining Yield & Sigma Basic Quality Tools

Analyze
or

Improve
Service

Design of Experiments Brainstorm & Workout

Control

Control Charts Procedures Training

DMAIC—each step has a question

Define  What is important? Measure  How are we doing? Analyze  What is wrong? Improve  Fix what’s wrong Control  Ensure gains are maintained to guarantee performance

Define:


 

Clearly identify the problem Utilize numerical definition Focus on process that creates the problem not on the outcome

Define—doing it with excellence
       

Identify our internal and external customers Determine what our customers want Identify our suppliers Determine what we need from our suppliers Identify problems Identify the process that contributes to the problems Identify improvement opportunities Scope the improvement project


Select the right players
Set goals and objectives

Measure:


Benchmark Capability of a given process Focus on CTQ

Measure—doing it with excellence
  

Review the current process Identify key inputs and outputs Develop baseline and entitlement metrics  Performance  Cost Collect and organize data Evaluate the performance of the process  Defects  Cycle time Assess the amount of variation  In the process  In the measurement system

 

Analyze:
 

Current process results What is possible compared to what the competition is doing

Analyze—doing a great job here

 

Identify issues that occur at each step in the process
Assess customer impact of problems Prioritize most critical inputs


  

Assess the effect on outputs or performance
Determine root causes Generate solutions Select most likely solutions

Improve:

 

Implement changes Be creative to find new ways to do things better, cheaper, or faster

Improve—this is most critical!
 

Develop Action Items Prioritize improvements


Test solutions
Determine best combination of inputs and controls

  

Refine solutions Document solutions Implement solutions

Control:

 

Lock in successes Implement measures to keep variables within the new operating limits

Control—sustaining your gains
      

Measure progress Capture and quantify benefits of the process improvements Document the project Communicate for organizational learning Recognize the team’s efforts and success Monitor and manage to hold gains Adjust for continuous improvement

Recall Evolution of QA Methods…

Six Sigma…
Quality Mgmt Systems
Taguchi

DOE
SPC Inspection 1930 1940 … 1975 1985 1990 1995 2000

Six Sigma DMAIC Model is most systematic!
1.
IDENTIFY OPPORTUNITIES

2.

FORM TEAM & SCOPE PROJECT
Establish Process Boundaries

3.

ANALYZE CURRENT PROCESS
Process Flow Analysis

4.

Process Flow Analysis

Identify Customers and Requirements Benchmarking

DEFINE DESIRED OUTCOMES FOR IMPROVED PROCESS

Define Performance Measures Agree on Goals Analyze Available Data Check Sheet
GOAL

Pareto Analysis A B C D

SURVEY
YES NO

Tree Diagram

HISTORY REPORT

CHECK SHEET

9.

ACKNOWLEDGE TEAM AND COMMUNICATE RESULTS
TEAM RESULTS

5.

IDENTIFY ROOT CAUSES & PROPOSED SOLUTIONS
Process Redesign Why-Why Diagram Nominal Group Technique

Brainstorming

REPORT

Cause & Effect Diagram

EFFECT

6.
RECYCLE IF NECESSARY

PRIORITIZE, PLAN AND TEST PROPOSED SOLUTIONS
Level Loading
PRODUCTION DAYS

Design of Experiments
90.00 83.67 77.33 71.00 64.67 CC+ AA+ CC+

8.

MEASURE PROGRESS & HOLD GAINS
SPC

7.

1 2 3

30

REFINE AND IMPLEMENT SOLUTIONS
Force Field Analysis

A B C D

Brainstorming Trend Chart

Phase
NEXT OPERATION

Step(s) 1&2 3&4 5 6&7 8&9

58.33 52.00

Pull System

GANTT Chart

Training & Procedures

PRIOR OPERATION

Define Measure Analyze Improve Control

Using Successive 6 Projects for Cycle Time and Defect Reduction
Hi

Low

Cycle Time and Defects Time

Six Sigma is really different!
A look into DMAIC:
   

Problem Process Definition Measure to determine current Process Capability and Control (Mean and Deviation) How / What Methodology do we apply to Improve Implement Methodology / Action to Improve Action for continuous improvement and control

Six Sigma Qualitative Tools --soft, yet they are very useful!


 

Brainstorming and affinity diagram. Pareto analysis. Cause-effect diagram. Process mapping

Six Sigma Quantitative Tools
Statistical testing.  Design for experiment.  Control chart .  Process capability .  Reliability analysis ... And there are others…

Tools & Templates by DMAIC Phase
Tool
Action Item/Implementation Plan Affinity Diagram Brainstorming Business Impact (ABM) Cause & Effect Matrix Check Sheet Control/Reaction Plan Control Chart Cycle Time Analysis Design of Experiment (DOE) Decision Matrix DPMO to Sigma Conversion Table Five Whys Failure Mode and Effects Analysis (FMEA) Force Field Analysis Four Up Histogram

Define Measure Analyze Improve Control
X X X X X X X X X X X X X X X X X X X X X X X X X X X

Note: The relationship between the specific tool and the DMAIC phase is based on most likely usage as opposed to possible usage.

Tools & Templates by DMAIC Phase continued
Tool
Ishikawa (Fishbone) Measurement System Evaluation (MSE) Multivoting Pareto Chart Process Capability Process Costing Tool Process Maps Problem Statement/Critical Business Issue (CBI) Requirements Analysis Run Chart Scatter Diagram Sigma Calculator SIPOC Chart Story Board SWOT Analysis Team Charter Thought Process Map

Define Measure Analyze Improve Control
X X X X X X

X X X X X X X X X X X

X X

X X

X X X X

Note: The relationship between the specific tool and the DMAIC phase is based on most likely usage as opposed to possible usage.

Define - Team Charter This is a project!

What is the focus of the team’s efforts? What are the boundaries (scope) of the effort? What is the expected outcome? Why is this important? Who are the key players?

Service Impacted Black Belt Green Belt Executive Sponsor Champion Start Date

The timely and accurate payment of commissions and collection of carrier payments

Division & Function Telephone Number(s) Telephone Number(s)

CitiStreet RSD Commissions, Finance Ext 2566 Ext 2477 Ext 2001 Ext 2014 Ext 2179 9/01/03

Pete Ferlita John Cirillo Bob Dughi Bill Valentine Andy Lovasz 1/1/03 Description
The process in which the opportunity exists. Describe the critical business issue that is being addressed. What performance improvements are targeted and what impacts are expected on Revenue, Expense, Cost/Risk Avoidance and Capacity Rework (ABM)?

Target Completion Date

Element
1. Process: 2. Problem Statement:

Team Charter
Carrier Billing, receipt of payments, and payment of AE Commissions Financial transactions are not being recorded in the Commission Accounting System resulting in deferred or lost carriers payments and incorrect payment of AE commission. Area of Improvement

3. Objective:

Baseline

Revenue PAEF Records PAEF Premium 1,485,530 $72,964,70 4

Goal $2 M -50% -75%

Target Date 7/1/03 9/1/03 7/1/03

Unit of Measure
(DPMO,%,$)

$ % %

4. Business Results:

5. Team members:

What functional areas of the organization will realize the benefits? Who are the team members?

Commissions, Account Executives

Dawn Simpson, Chris Hsieh, Melissa Kopsco, Bob Mezier, Deon Van Renburg, Andy Lovaz, Ralph Winnicker, Pete Ferlita John Cirillo, Mike Bikofsky Determine why certain transactions are not bridging to CAS. Eliminate records from entering the Premium Applied Error File. Account Executives – will be paid on time and correctly. Commissions Team – will take less inquiry calls from AE’s questioning incorrect payments. Citistreet – will recognize all revenue due from carriers in a timely manor. Project Start January 2003 “M” Completion “A” Completion “I” Completion “C” Completion Project Completion Possible IT support. February 2003 April 2003 September 2003 October 2003 October 2003

 

6. Project Scope: 7. Benefit to Customers:

Which part of the process will be investigated? Who are the final customers, what benefits will they see and what are their most critical requirements? D – Define M – Measurement A – Analyze I – Improve C – Control

8. Schedule of Key Milestone Dates:

9. Support Required:

Do you anticipate the need for any special capabilities, hardware, trials, etc?

Define - Thought Process Map
Problem Statement Assets reflected on the Travelers and CitiStreet record keeping systems are not in balance on a daily basis. This results in daily reconciliation issues, extensive manual effort and significant exposure to market value adjustments.

1. 2.

What is the problem? Do we have any data and information on the problem? What processes are being considered? What are the key questions that need to be answered?
. . . . Information and Data with Respect to the Problem Approximately 10% of our accounts are out of balance on a daily basis (e.g. fixed cell issues). There are approximately 500-700 reconciling items per day (plans and funds). Assets are out of balance by approximately $2MM Inception to Date . There are approximately $120M of receivables > than 5 business days out of balance YTD 2002.

Processes to be Considered Plan Setup, Product Definition, Fund and Case Translation, Trading/Transmission/Pricing, Cash Settlement, Monthly Travelers Bill, Transaction Processing, Reconciliation.

3.

. . . . . .

Key Questions Why do we have rejects every day? Are the systems functioning according to the latest specifications? Will we have IT resources available to work on this project? Do we need two record keeping systems? Do we need two transmissions (money in/money out)? Does Travelers need to be made aware of the daily reconciling items?

4.

. . . . . . .

Actions and Tools to Address the Key Questions Develop daily metrics and source of error for out of balance situations. Develop daily metrics and source of error for manual adjustments being sent to Travelers. Perform root cause analysis on all sources of error . Compile and review the complete set of systems specifications and perform a gap analysis. Evaluate the need for two systems. Evaluate the possibility of having one daily feed versus two. Develop a list of Subject Matter Experts for the "Processes to be Considered".

. . . . .

Action Plan Collect base line metrics. Conduct an As Is session in Hartford the week of 9/23/02. Conduct a Should Be session in E. Brunswick the week of 10/14/02. Implement process improvements. Implement a control plan.

Define - Top Level Process Map

What is the starting point of the process? What is the end point of the process? What are the major steps in the process? Who is involved in the process?

Benefit Distributions - Top Level Map
Plan Participant requests,completes and mails a Distribution Request Field Office/Outside Carrier receives the request

- Office Manager Reviews - Carrier Reviews - Mails request to National Office

Mail Room (N.O.) receives application

Benefits Area sorts by plan

- Opens Mail - Sorts Mail - Delivers to Benefits Department

- Opens Mail - Sorts by Plan - Distributes to Processors

Benefits Processor reviews and processes applications

Benefits Processor processes the check

- Review for good order - If not in good order, recycles - If in good order, processes

- Reviews check to Distribution Form - If in good order, mails - If not in good order, voids check and reprocesses

Mailroom sends check to the Plan Participant

Plan Participant receives the check

- Places check in envelope - Sends out the check

Measure - DPMO and Sigma

What is the output volume of the process?
What are the opportunities for error?

Time Period covered 12 months TOTAL UNITS PRODUCED parts / unit process step / unit performance opportunity / unit total opportunities / unit TOTAL OPPORTUNITIES DPMO

Participant Call Completion

319,366 1 0 0
1 319,366 46,558 TOTAL DEFECTS 14,869 total part defects total process step defects total performance defects

14,869 0 0

How many defects are produced?
What is the performance level of the process?

SHORT TERM SIGMA =

3.18

LONG TERM SIGMA =

1.68

Time Period covered 12 months TOTAL UNITS PRODUCED parts / unit

Plan Call Completion

66,651 1 0 0
1 66,651 18,799 TOTAL DEFECTS 1,253 total part defects total process step defects total performance defects

process step / unit performance opportunity / unit total opportunities / unit TOTAL OPPORTUNITIES DPMO SHORT TERM SIGMA =

1,253 0 0

3.58

LONG TERM SIGMA =

2.08

(DPMO: Defects per million opportunities)

Measure – Use Descriptive Statistics

Is our data normally distributed?
What are the confidence intervals? Can we use our data for further analysis?

Measure - Control Charts
Percent of Transactions Rejected

Individual Values

What are the performance trends? Is variation within the normal range? Is the process stable? Is the process capable?

70 60 50 40 30 20 10 0 J 40 F M A M J J A S O N D

UCL=69.85

X=40.83

LCL=11.81

Moving Range

 

URL=35.64 30 20 10 0 mR=10.91 LRL=0

Measure - Detailed Process Map
 


 

Who are the suppliers and customers? What are the inputs and outputs? Which inputs are controllable? Where do we have issues? What impacts cycle time? Is there a hidden factory? What % of the steps add value?

ADP/ACP Testing - As Is Process
Start Get data to define the testing population
ERISA BP via Mainframe Dump MM/SK via Excel DB Core via ERISA Lotus Notes DB

Generate a hardcopy census

Create year-end packages customized by market
ERISA

Mail year-end packages

ERISA - BP

ERISA/Marketing/Vendor BP via Vendor CR/MM/SK via in-house 20 48 21 28 26 Through 40 36

A

13

Through

17

27 22

18

Through 25

1

Through

12

Through

No Execute follow-up letter process B
ERISA Marketing 28 37 38 39 43

Wait for information from plan

Information received by follow-up date?

No

A

Log receipt of information

ERISA

41

ERISA

Through

52

Yes

Review census

Missing or unreadable information?

Yes

Note source of problem on cover sheet or check sheet
ERISA

Image the census and log image numbers on the Excel spreadsheet
ERISA - BP

Resolvable by a phone call?

ERISA 54 55 56 53 57

C

Through

60

42

43

65

Through

70

No No Yes
Return original information to client with request for additional information or clarifications
BP - Account Management Team CR - Case Managers MM/SK - ERISA Specialists

Call client for information

Information obtained?

Yes

Image and send the hardcopy census to the vendor for data entry
BP - ERISA

Data enter census', send an electronic copy via e-mail, and return the hardcopy to BP - ERISA
Data Entry Vendor

BP - Account Management Team CR - Case Managers MM/SK - ERISA Specialists

61

No B

62

64

71

Through

74

64

72

74

75

Through

79

Load P-Census to the AS400 which automatically populates the AS400, OMNI and ERISA Workstation
IT Operations

Log the hardcopy census' and distribute them to the ERISA Specialists for testing
BP - ERISA

Request the OMNI data on the ERISA Workstation

Extract data from the ERISA Workstation
BP/MM/SK - ERISA Specialists CR - Case Managers

Import data to Excel, review and scrub
MM/SK - ERISA Specialists CR - Case Managers 93 94

BP/MM/SK - ERISA Specialists CR - Case Managers 85 Through 92

80

81

82

83

84

Import data to ASC

Review and scrub data in ASC

Data complete and accurate?

Yes

To Page 2

BP/MM/SK - ERISA Specialists CR - Case Managers

BP - ERISA Specialists

No C

Measure - Issues List

What goes wrong at each step in the process? Where are the majority of the problems? What functional areas are most affected?

Issues Categories
Data and Data Entry Year End Package and Other Client Communication 18, 19, 20, 33, 34, 35, 36, 38, 60, 124, 126, 128, 131, 132, 139, 156 Internal Education Client Education Quality Control and QC Processes

1, 2, 3, 5, 6, 9, 10, 12, 16, 21, 22, 23, 25, 27, 32, 52, 53, 54, 55, 76, 77, 78 79, 80, 81, 89, 90, 94, 97, 102, 115, 118, 132, 135, 143, 145, 150 Mailing and Carriers 14, 26, 28, 29, 30, 31, 32, 118, 119, 120, 121, 122, 123, 130

31, 36, 65, 73, 104, 110, 166

19, 38, 53, 54, 59, 60, 61, 94, 03, 111, 139, 143

53, 65, 80, 81, 90, 98, 99, 100, 101, 118, 135, 145, 148, 150, 153, 154, 159, 169

Printing 13, 14, 15, 17, 109

Systems Software 91, 92, 95, 96, 104, 105, 106, 113

Imaging 68, 69, 70

ERISA Workstation 81, 85, 86, 87, 88, 93

Tracking and Sorting 1, 2, 4, 7, 10, 11, 12, 24, 25, 30, 31, 38, 41, 43, 44, 45, 52, 57, 58, 63, 66, 67, 70, 71, 72, 83, 107, 116, 117,127, 128, 129, 133,134, 140, 141, 149, 152, 154, 161, 162, 163

Process and Standards 39, 40, 41, 42, 47, 54, 56, 57, 62, 63, 73, 86, 87, 93, 111, 131, 135, 141, 144, 147, 149, 151, 155, 157, 158, 159, 160, 162, 164, 165, 166, 167, 168 Census and Plan Connect 46, 48, 49, 50, 51, 54, 74, 75, 81, 82

Staffing and Scheduling 3, 17, 18, 23, 29, 43, 44, 83, 84, 101, 103, 108, 128, 155, 169

Policy 8, 64, 112, 126, 136, 137, 144, 146

Analyze - Cause and Effect Matrix
Process: Recycled Paperwork - Benefits Distributions

What are the most important customer requirements?
Output Inputs Weight Process

Customer Requirements
Correct Payment Make Request Fast Payment Easy to Make Return Instr. Total Value Assistance

10 40

7 7 1 10 7 1 1 7 1 1 28 4 7 7 1 7 7 1 1 7 1 1 49 7 1 70 10 10 7 1 1 7 1 1 7 1 1 7 1 1 7 1 1 7 1 1 7 1 1 7 1 1 7 1 1 7 1 1
259

4 40 4 4 7 4 10 28 4 28 7 4 1 4 1 4 1 40 4 4 1 4 10 4 10 4 1 4 1 4 1 4 1 4 1 4 1 4 1
196

7 28 1 49 1 70 1 28 7 49 7 7 1 7 1 7 4 28 10 7 10 70 1 70 1 7 10 7 7 7 4 7 10 7 1 7 10 7 1
469

10 10 1 10 1 10 1 70 4 70 4 10 1 10 1 40 4 100 7 100 7 10 7 10 7 100 10 70 7 40 4 100 10 10 10 100 4 10 10
880

4 4 129 4 174 4 135 16 270 16 270 4 132 4 132 16 126 28 276 28 156 28 129 28 129 40 168 28 126 16 84 40 168 40 78 16 144 40 78
400

What is the relationship of major process steps and inputs to customer requirements? Where should we focus our improvement efforts?

Step

1 1 1 2 2 3 3 4

Request Form Request Form Request Form

Contact Phone Number Address

4 100 10 40 4 100 10 100 10 100 10 100 10 10 1 10 1 10 1 10 1 10 1 10 1 10 1 10 1 10 1 10 1 10 1 10 1
700

Screen Request Guidelines Screen Request Plan Information Send Form Send Form Fill Out Form Fill Out Form Fill Out Form Return Form Return Form Process Form Process Form Process Form Process Form Process Form Send Payment Send Payment
Contact Address Form Instructions Signatures Return Envelope Return Address Correct Form Procedures Processor Required Information Required Signatures Check Address

4 4 5 5 6 6 6 6 6 7 7 Total

Note: Rating scale 1, 4, 7, 10

Analyze - Ishikawa (Fishbone) (I think this is the best QM tool ever!)

Which of the process inputs are likely to contribute to the problem? What are the categories of root causes? What are the most likely root causes within each category?

Click on the boxes to enter your Cause & Effect
Material Methods Environment
Click to enter

click

Men

Machine

Measurement

Major Cause Forms
Poorly Designed Hard to Follow Form Congested Contract/Legal Language Used Inconsistent use of title

Major Cause Plan Participant
Unaware of requirements Not trained
Don’t Re ad Instructi ons

Major Cause Field Office/HELPLINE
Don’t instruct PP Too busy Not Trained No Procedures Provide Wrong Instructions Not trained Provide Wrong Form Not trained No guidelines No return envelope No return instructions Provide wrong forms Provide generic or no instructions

Don’t underst and instruct ions

Didn’t get instructions Call Carrier Directly

Problem Statement
Employer Signature missing on over 30% of forms

Inconsistent Across Products Hard to Follow Not Sent Legal Language Missing

Legal Concerns Don’t want responsibility Forget to Sign

Turnover Not trained Unaware of Requirements

Major Cause Instructions

Major Cause Employer

Major Cause Carriers

Analyze - Pareto

What is the frequency of occurrence of each potential root cause?
1500

Pareto by Reason Code
100 80

Count

60
40

500

Which root causes should we focus on first?

20 0 0

Defect
Count Percent Cum%
484 263 183 143 140 31 17 12 9 9 31 48 60 70 79 92 6 85 91 6 90 61 4 94 31 2 96 22 1 98 11 1 99 9 13 1 1 99 100

Percent

Which root causes are likely to contribute most to our defects?

1000

Analyze - FMEA

How can our product, service or process fail?

What are the consequences of failure?
How likely is the failure to occur? How likely is the customer to be affected?

Analyze - Components of Variation Locate the key ―trouble-makers‖
Nested Hierarchy

Where are the major sources of variation? How much variation is present at each level of the hierarchy? Where should we focus our efforts to reduce the variation?
3 2 1

Mutual Carrier

Nationwide

Travelers

Form Type
Reason Code

L

S

L

S

L

S

1234 1234 1234 1234

1234 1234

Dot Frequency Diagram
Reason Codes

.
4 1 2 3 MS 4 1 2 3 4 NL 1 2 3 4 NS 1 2 3 4 TL 1 2 3 4 TS

1

2

3 ML

Improve – Mean Sqr Error!!!

How real is the variation that we observe in our process? Does the measurement system contribute to the variation? Is the measurement system adequate?

1. Enter information (#
of questions, # of raters, category values) in

More than two raters Two raters only

Yes No

column below

2. Then enter data in indicated worksheet:
n= m= 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 20 3 P R sum x ij = sum p*q =
2

RAW DATA
Multiple Raters (> 2) 180 0.5
2 nm    x ij 2 n k

3. Once worksheet contains data, appropriate calculations will appear below

Number of questions Number of raters Categories

 overall  1 

i 1 j 1 k

Koverall =

1

nm ( m  1)  p j q j
j 1

Pobserved = Pchance =

P  Pchance   observed 1  Pchance

Two Raters

Koverall or individual =

Kappacategory for
n ij ij

 category  1 

 x m  x 
i 1

> 2 raters

Category
P R

Kappa
1 1

nm ( m  1) p j q j

Improve – by using DOE

Which of the improvement ideas identified with other tools represent the largest payback with respect to the CBI? Do multiple improvements work in concert to produce a better result?

Hardship Withdrawals DOE Data Matrix
StdOrder RunOrder
12 7 16 11 10 8 15 5 4 1 13 3 14 2 6 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Checklist
1 -1 1 -1 1 1 -1 -1 1 -1 -1 -1 1 1 1 -1

Instructions
1 1 1 1 -1 1 1 -1 1 -1 -1 1 -1 -1 -1 -1

Language
-1 1 1 -1 -1 1 1 1 -1 -1 1 -1 1 -1 1 -1

Sample
1 -1 1 1 1 -1 1 -1 -1 -1 1 -1 1 -1 -1 1

C*I C*L C*S
1 -1 1 -1 -1 1 -1 1 1 1 1 -1 -1 -1 -1 1 -1 -1 1 1 -1 1 -1 -1 -1 1 -1 1 1 -1 1 1 1 1 1 -1 1 -1 -1 1 -1 1 -1 1 1 -1 -1 -1

I*L
-1 1 1 -1 1 1 1 -1 -1 1 -1 -1 -1 1 -1 1

I*S
1 -1 1 1 -1 -1 1 1 -1 1 -1 -1 -1 1 1 -1

L*S
-1 -1 1 -1 -1 -1 1 -1 1 1 1 1 1 1 -1 -1

Complete Withdrawals
18 13 19 16 18 17 16 14 16 11 14 11 18 15 16 15

Pareto Chart of the Effects
(response is Complete Withdrawals, Alpha = .10) A: B: C: D: Checklist Instructions Language Sample

A D CD C B ACD ABD BD BCD AD BC AC ABCD ABC AB

0

1

2

3

Improve - Action Items


Which of the validated improvements are we going to implement? What is the expected benefit? What are the key deliverables? What is the implementation schedule? How will we know that the Action Item was successfully implemented?

Action Item Description: Develop and implement a process to establish product profitability expectations and to track and evaluate financial performance against the expectations. Expected Benefits: Ensure that the profitability expectation is positive prior to committing to the product. Key Deliverables: Standard unit costs; Data capture process; P&L Model. Appraisal Criteria: P&L model is implemented that meets with the approval of Finance. P&L model serves the needs of the Product Review Team, Product Review Board and Post Mortem Team. Team Members
Name (*-Action Item Owner, &-Backup, +-Mentor) * Ralph Winnicker Theresa LaPlaca Glenn Lovrich Organization - Location Operations Quality Finance Finance Skill Set or Knowledge Expected

Interdependencies/Linkage to other Action Items:
AI# 5 6 7 10, 15 18 Description of Dependency P&L model will be used to assess financial benefits. P&L model will be used to review financial benefits. Standard unit costs will be used for the detailed product specifications. P&L model will be used to assess the impact of rework due to performance issues. P&L model will be validated during the post mortem. Milestone
Develop and publish standard unit costs. Develop a data capture process with respect to project activity so that standard unit costs can be applied. Develop and implement a P&L model that evaluates product profitability in conjunction with the applied standard unit costs and the pricing model. Target Date Revised Target Date Actual Completion Date

Implementation Plan:
Status
Contingent on target date of Action Item 8.

10/31 11/15 12/15

Contingent on the completion of milestone 2.

Recent Accomplishments: Date Description 10/11 Reviewed data elements of the current Pricing Model with Glenn, and outlined a plan to develop a stripped-down version for use with the Product Specification Template (AI 7). 10/22 Glenn developed a stripped-down version. We determined that too much “off template” detail was required to develop the Product P&L. We decided to utilize the new Pricing Model (currently being developed), and to modify it to reflect Productlevel versus Case-level data. 11/4 Reviewed the new Pricing Model, and scoped out changes required to make it Product-level. 11/5 Next step is to review Model and proposed changes at 11/5 Action Item Review.
AIMS Review: Date 11/5/02 Prepared By Ralph Winnicker and Glenn Lovrich Remarks

Control - Control and Reaction Plan

Do the key outputs meet the performance standard? What are the most likely causes of an out-of-standard condition? What actions need to be taken? Who is responsible to take the actions?

Control - Control Charts

Individual Values

What are the performance trends? Are we holding the gains from our process improvements? Is any further action required?

Percent of Transactions Rejected
40

UCL=34.92
30 20 10 0

X=20.42 LCL=11.81

20

URL=17.82

Moving Range

10

mR=5.45
0

LRL=0

Control/Reaction Plan for Distributions
Process step 1 Screen Request for Distribution Form Out of Control Measurement Condition Measurement Frequency Reason Code Recycle Daily/Weekly  1,3,5,6,11,12,14, Database, 16,18,19 or 20 pareto and  exceeds 10% DPMO chart and DPMO target exceeded by 5% Daily/Weekly   Probable Cause Screening personnel not trained Screening personnel do not have adequate guidelines. Fulfillment personnel not trained. Fulfillment procedures not understood or not used. System address is incorrect.        What to Check New hires/transfers  or changes made?  Guidelines and checklists up to  date? Talk sheets used? New hires/transfers or changes made? Procedures distributed to all personnel? Procedures up to date? Address updates need to be processed? Current instructions and forms sent? Instructions and forms up to date?     Actions to Take Train/retrain personnel. Update guidelines and checklists. Enforce use of talk sheets. Train /retrain personnel. Enforce use of procedures. Update procedures. Update address information on system.    Responsible Field Office and HELPLINE  Management. Marketing. Field Office and HELPLINE  Management.  Field Office and HELPLINE Management Field Office and HELPLINE Management. Field Administrative Services and HELPLINE Management Benefit Distributions Processors     When New hires or transfers join the area or process changes are made New plan introduced or plan changes made Daily New hires or transfers join the area or process changes are made. Daily New Plan introduced or Plan changes made. Plan participant changes residence.

Reason Code Recycle 2 Send Distribution 5,11, or 19 Database, Package exceeds 10% pareto and and DPMO target DPMO chart exceeded by 5%

     

 

3 Plan Participant Completes the Distribution Forms 4 Plan Participant Returns the Distribution Forms as directed

Reason Code Recycle 2,4,5,8,9,10,13, Database, 15, 17,19 or 20 pareto and exceeds 10% DPMO chart and DPMO target exceeded by 5% Reason Code 4, Recycle 11, or 19 Database, exceeds 10% pareto and and DPMO target DPMO chart exceeded by 5%

Daily/Weekly

Instructions may be  complex, unclear, or may not have been  sent with the package. Plan Participant was  not provided with return instructions. Plan participant was  provided incorrect return instructions. Benefit distribution  processors not  trained. Different processors  using different criteria.

Maintain current inventory of instructions and forms. Update instructions and forms. Maintain current inventory of envelopes and instructions. Update envelopes and instructions.

Field Office and HELPLINE  Management.  Marketing and Field Administrative Services

New Plan introduced or Plan changes made. New Plan introduced or Plan changes made.

Daily/Weekly

 

 Return envelope and instructions sent? Return envelope and instructions up  to date? New hires/transfers  or changes made? Rating guidelines  being used? Reason codes being  used?

 

Field Office and HELPLINE  Management.  Marketing and Field Administrative Services

New Plan introduced or Plan changes made. New Plan introduced or Plan changes made.

Kappa Score is 5 Benefits Distribution lower than .7 Department reviews and processes the request

MSE for 3 January, July Raters and 20 Transactions

 

 Train/retrain Personnel. Enforce use of rating  guidelines.  Enforce use of reason codes.

Benefit Distributions Management Benefit Distributions Management Benefit Distributions Management

  

New hires or transfers join the area or process changes are made Daily January and July, annually.

Control - Business Impact (ABM)

What is the business impact of the process improvement? How should the savings be reflected in the current plan or forecast? Does the improvement free up capacity to satisfy new demand?

ABM Cost Model Per Repair •Processing •Imaging •Mailroom •Office Manager •10 Minutes
Cost Takeout

Non-Financial

Mail & Phone Cost

Market Risk

Rework Manpower

Cash Flow

$20,000
Market Value Adjustments

•05 Minutes Cost Avoidance •05 Minutes •10 Minutes
Reduce NonValue Added Cash Flow
Improved Customer Satisfaction

$250,000

•Account Executive •30 Minutes •Help Desk •Benefit Load •10 Minutes •17.4%
Increased Sales
Repeat Sales and Revenue Retention

Growth

•Supplies & Mail •$.80

•Long Distance

•$1.00

$20,000

$250,000

$270,000

Some Final Thoughts About 6 Tools

Select tools based on what you need to do Use of tools is a good way to share knowledge among team members The sequence of tool use documents the team’s thought process Never use a tool that’s more complex than the problem that you’re trying to solve Use enough tools to guarantee the success of the project But…Don’t become a slave to the tools

Designing Products for Six Sigma Performance
The DMADV Process is like DMAIC

Define

• Select cross-functional team • Define team charter

Measure Analyze

• Understand Customer needs

• Specify CTQs • Develop high level design

Design

• Develop detailed design • Build test plan

Validate

• Test design • Scale-up

WHAT IS DESIGN FOR SIX SIGMA (DFSS)?
Customer-driven design of processes with 6 capability.
Predicting design quality up front.

Drives quality measurement and predictability improvement in early design phases.
Utilizes process capabilities to make final design decisions. Monitors process variances to verify 6 customer requirements are met.

Top down requirements flowdown (CTQ flowdown) matched by capability flowup.
Cross-functional integrated design involvement.

New Product/Service Introduction that Achieves Six Sigma Business Performance— note the interactions
MARKET RESEARCH
DESIGN PRODUCTION LOGISTICS DISTRIBUTION

DMADV

SERVICE SALES

CUSTOMERS

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