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Operations Management: Analysis and

Improvement Methods Module 4 Continuous
Improvement
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Content
Lesson 4-1.1 History of Continuous Improvement?
Lesson 4-2 Lean Management

Lesson 4-2.1 Lean Management (part 1)
Lesson 4-3 Six-Sigma Methodology

Lesson 4-3.1 Six-Sigma Methodology (part 1)
Lesson 4-1 History of Continuous Improvement

Lesson 4-1 History of Continuous Improvement
Practice and Improvement - Slide 1
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"We would estimate, very roughly, that a master has spent perhaps 10,000 to 50,000 hours staring at
chess positions" – (Simon & Chase, 1973)
"10,000-hour rule" – (Gladwell & Outliers, 2008)
Transcript
In this module, we will look at the history of what is known as continuous improvement initiatives. The
idea of continuous improvement, actually is a very old idea and people have been trying to improve on
processes for many years. One of the interesting studies about improvement, was a study of chess
players by Herbert Simon and William Chase who studied chess grandmasters, and said that they would
estimate very roughly that a master has spent perhaps 10,000 to 50,000 hours staring at chess positions.
The upshot of this study was that for tasks involving extreme cognitive complexity, it often takes many
years of practice before you can really get good at it. And it's not simply practice, but learning as you
practice and improving on your performance as you study the subject. This was sort of crystallized as
the 10,000 hour rule by Malcolm Gladwell in his book "The Outliers". Now there have been a number of
criticisms of this, but the inherent idea is that if you have cognitive complexity and you have to be able
to do tasks that are very complex, then you need to be able to perfect small parts of it so that when you
have to do the whole thing together, you have mastered every little bit of it.
Edward Deming - Slide 2
In this figure, Deming Chain Reaction is shown as a circular diagram. Deming Chain Reaction is written
in the center of the circle. Following actions are written clockwise around the center in this order
Improve Quality
Cost Decrease because of less rework, fewer mistakes, fewer delays, snags, better use of machine-
time and materials
Productivity Improves
Capture the market with better quality and lower price
Stay in Business
Provide jobs and more jobs
Father of Japan's post-war industrial revival
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Chain Reaction
14 Principles of Management
Transcript
If that's true for cognitive processes of the brain, let's think about what happens when you look at the
processes that we have to study when we look at manufacturing processes or service processes. While
there is a cockpit you aspect to many of the tasks that are done, overall such processes tend to be
relatively complex. And given that they are complex, it makes sense that studying this processes and
figuring out ways to improve parts of the process should lead to improvement in overall performance.
One of the earliest people to study this kind of improvements, was Frederick Taylor in the early parts of
the 20th century and then that was followed by Frank and Lillian Gilbert who are known for their
efficiency studies. Our story though starts with Edward Deming. Edward Deming was a statistician and
he worked for the US government for many years and found that many of the ideas that he was
championing, based on the work of assured in quality control, were often falling on deaf ears. So he
went to Japan and met a receptive audience in Japan. He is known as the father of Japan's post-war
industrial revival. And Deming is famous for his work in quality control, and in a different lesson we
will talk about that. He's also famous for what is known as Deming's chain reaction, and the idea here
essentially was that most people looked at building quality as an expense. So people used to say, "Well,
that's going to mean I have hired more inspectors et cetera " And Deming came back and said, "Listen, if
you improve quality, your costs will actually decrease because there's less rework that are less rejections.
Your customers are happy because you reduce rework and because people have to not worry about snags
in the next steps of the process. Your productivity actually improves. If your productivity improves, then
your cost decrease. You become more competitive. You become more competitive, you can sell more. If
you sell more, you get to stay in business and if you stay in business, you get to create more jobs. So
there's a virtuous cycle associated with improving quality." Deming is also famous for his 14 principles
of management which we won't discuss in this lecture.
System of Profound Knowledge - Slide 3
Appreciation of a system
Understanding of variation
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Psychology of change
Theory of knowledge
Transcript
Now the other thing that Deming came up with, is what he called the system of profound knowledge.
Now obviously, all knowledge is good, but when he talks about system of profound knowledge, he lists
four elements of understanding a process that allows us to improve the process. The first one is
appreciation of the process as a system. Realizing that different parts of the process work with one
another, interact with one another and have feedback loops that can cause either good or bad outcomes
to be realized. The second thing he talked about in his system of profound knowledge is that, we have to
understand the fact that all processes, all machines, all humans have a certain amount of variation. And
understanding the sources of this variation is important so that we can try and make our design processes
so that this variation can be minimized. Given that you have to make some changes so that variation can
be minimized, we have to think about how is change implemented. That there is a commitment to this
change. What does it do to the line worker who has to actually make the change in their behavior? So
there's a whole psychology of change that we should be concerned about. Then finally, he talked about
what he called the theory of knowledge. Now it's one thing to make small adjustments here and there,
but if you don't have a broad theory of why you're making this changes, then those changes, the small
changes that you make do not actually take you towards the goal that you really want and maybe you
may not even have a particular goal. So the idea of theory of knowledge is that essentially as you study a
process, you have to have a theory of why things work and once you have an idea of why things work,
then you can make the changes so that you can actually achieve your goals.
P-D-C-A Cycle - Slide 4
Four components of P-D-C-A Cycle are shown in this figure. There are three stairs having three wheels
consisting of four spokes each, showing four components of P-D-C-A Cycle which are Plan, Do, Check
and Act. Arrows around these wheel structures are showing that these wheels are revolving on
subsequent levels.
Plan - study the current process; identify possible improvements; What to measure? Who will do?
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Do - implement the change
Check - did the change lead to expected results?
Act - fully implement if it works; create new baseline
Transcript
So the theory of knowledge essentially leads to what is called the PDCA cycle. This is sometimes
known as the Deming Cycle although it originally was called the Shewhart Cycle, Shewhart was a
predecessor of Deming who did a lot of work in quality control. So there are this whole areas of study
called The Shewhart Control Charts which were studies in quality control. The PDCA cycle has four
components; plan, do, check, and act. Now for someone who has done any kind of scientific experiment,
this should seem obvious. That you plan an experiment, you do the experiment, you check the results
and then you see if those results can be implemented. More broadly. But thinking of this not only in
terms of scientific experiments but in terms of applying in day-to-day processes, was somewhat
revolutionary. So, the idea is, in the Plan phase, we study the current process. We look for possible
improvements that can be made. How would we know that we've actually made improvements? So,
what do we measure? Who will make the changes? So, this is the planning phase of the PDCA cycle.
Next, we go and implement the change. This is where we test whether our changes, if implemented,
what would have to be done to implement them. Then we check the results. After we make the change,
did we get the expected results? If we did, then we want to go ahead and act and fully implemented so
that it is sustainable over a long period of time. If it didn't succeed however, we have to go back to our
plan, think of the theory that we have and see if that theory needs to be updated so that we can go
through this loop again. If you successfully go through the PDCA cycle, then we've created an
improvement and we allow that improvement to stabilize. So, the idea is, we start out with some
baseline, we figure out what are processes, we figure out what changes need to be made, we test those
changes, we check if the test that we've just done has been successful. If it has been, we've now
improved the process, we are now at the next level. Soon as we get to the next level, we start the process
again. So, we stair step up our performance slope and we go from one base baseline to the next baseline,
to the next base line, at each point improving our process.
Toyota Production System (TPS) - Slide 5
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Elimination of "waste"
Taiichi Ohno– Industrial engineer who helped create the TPS
Shigeo Shingo– Industrial engineer and consultant who popularized TPS in Japan and US
TPS became "lean management" in the US
Transcript
The PDCA cycle was something that was incorporated at Toyota. And in the Toyota production system,
which was by the way revolutionary in terms of manufacturing, the whole idea is the elimination of
waste. Taiichi Ohno, one of the industrial engineers at Toyota Production System, realized that Toyota's
manufacturing was terribly inefficient. So, Taiichi Ohno started looking at ways to improve their
production systems. So, he created what's called the Toyota Production System. Shigeo Shingo, another
leading name associated with the Toyota Production System, was an industrial engineer and a consultant
who started looking at some of the suppliers for Toyota and at Toyota, and started teaching some of the
methods of the Toyota Production System. As he did that, he started contributing to some of the
elements of the Toyota Production System. So, one could say that Shingo is responsible for popularizing
TPS in Japan. Then some of his writings were translated into English, and then that became lean
management in the United States.
Six-Sigma Methodology - Slide 6
Originated in Motorola in the 1980's
William B. Smith and Mikel J. Harry are credited as cofounders
Applies rigorous statistical methods to improve quality
Goes mainstream after GE makes it a corporate-wide initiative in 1995
Transcript
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On a different track, there is something called the Six-Sigma methodology, and this originated with
Motorola in the 1980s. Motorola famously had terrible quality in those days. They used to make
televisions and then they sold their plan to a Japanese company, Quasar. When Quasar took over the
plant with the same equipment and the same people, they improved the quality dramatically so that they
had only about five percent of the defects that Motorola had with all the same processes, the same
technology and the same people. This was sort of a wake-up call for Motorola because that clearly said
that they were doing something wrong. There was an engineer by the name of Bill Smith at Motorola,
who started looking at the defects in the products as they were being manufactured in Motorola's plants.
And what he found is that products that were defective and were fixed along the production process were
the ones that mostly failed when they went out in the field. So, the whole process of fixing defective
products while they were in the plant actually lead to bad outcomes for the customers and gave Motorola
a bad name. So, this is where the idea of improving quality started. So, Bill Smith along with Michael
Harry who started the Six-Sigma Institute at Motorola, are credited as co-founders of the Six-Sigma
methodology. In this methodology, there is an application of rigorous statistical methods to improve
quality. Now, if it was only limited to Motorola, that would be one thing but once the success at
Motorola became visible to other companies, more and more companies decided to adopt this
methodology. In fact, General Electric under Jack Welch, decided to make it a corporate wide initiative
in 1995 at which point it got national prominence and has since been a go-to methodology for
continuous improvement.
Other CI Initiatives - Slide 7
Total Quality Management (TQM)
Feigenbaum (1956)
Business Process Re-engineering
Hammer and Champy (1993)
Theory of Constraints
Goldratt (1984)
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Transcript
There have been other initiatives along these lines other than Six-Sigma and Lean or Toyota Production
System. In the early 50s, there was a initiative called Total Quality Management. In total quality
management, we're concerned about getting employees involved in the quality process, having an
organizational dedication to quality, and so on. A second initiate worth noting is what's called business
process re-engineering. In this, most business processes are to be viewed as that as processes, so that
they have a number of steps that are followed sequentially. Then the idea is to look at these processes
and realize that many of the steps in this process are actually redundant and one could do away with
many of them. So, this became business process re-engineering. In the 90s this was quite a important
initiative and a lot of businesses actually restructured the way they did their things because of this
initiative. For example, the fact that an insurance company which would take several weeks to pay a
claim could do it within 15 minutes because of re-engineering their business process with tremendous
productivity gains in that industry. Lastly, one other initiative we should mention is the theory of
constraints. This was something started by Eliyahu Goldratt, and Goldratt came up with this idea in a
book called The Goal. If you've never read this book, this is a great book to read. And in The Goal,
Goldratt says that every business has a goal. Providing a service, generating value for shareholders,
whatever that goal is. Anything that gets in the way of reaching that goal is a constraint, and the job of a
business should be to focus exclusively on the constraints, to try and figure out a way to remove these
constraints. Now, any other activity that does not work on reviewing these constraints, he claims is not
really profitable. Now, obviously, if you remove one constraint something else can be a constraint and so
the idea is that you go and work on that other constraint. So, that was the theory of constraints and it had
quite a bit of success especially in manufacturing processes. So, this is in summary, some of the
continuous improvement initiatives that have been developed over the years. In our lectures, we will
focus more on two of them. We will look at Toyota Production System or Lean Management, as it's
called in the United States, and we'll look at Six-Sigma methodology.
Toyota Production System - Slide 8
Toyota production system is shown as a diagram of a house. Goal is written on the triangular roof area.
Goal is to produce highest quality product with lowest cost and shortest lead time. To be able to achieve
this goal, there are two pillars under the roof. On the left pillar, there is Just-In-Time Strategy and
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according to this strategy, one operates with the minimum required resources to deliver the product or
service which means you make exactly what is required in exactly right quantities provided exactly
where it is needed and when it is needed.
On the right-hand side pillar, there is Jidoka which means automation. Because of this automation,
abnormalities can be detected, and production can be stopped to respond to such abnormalities. The idea
of Jidoka is to harmonize the work between machines and workers. In between these two pillars, there
are motivated people working as a team trying to make these two pillars work together.
There are two foundations of this house, on the top one there is Standardized Work to get Leveled
Production which is called Heinjunka. Underneath all of this lies the Stability which means there should
be a stable process which could be repeated by even ordinary workforce.
Transcript
In this lesson, we will study more about lean management which is derived from the Toyota production
system. We will learn a little bit about some of the tools and techniques that are part of the lean
management initiative. The Toyota Production System as the name implies, was designed for
manufacturing of automobiles. One of the things that Toyota engineers and Toyota executives realized is
that the way work was being done in factories at that time, there was a lot of inefficiency. So, the idea
was to figure out a way to get rid of those inefficiencies. They call that inefficiency waste. So, for that in
the Toyota production system, the goal was to have the highest quality product, at the lowest cost, with
the shortest lead time. Now, each of those things has to be unpacked a little bit, and we'll do that as we
go along. But to be able to do that, they had two pillars in what they called the house of the Toyota
production system. The first pillar was what they called the just-in-time strategy. In the just-in-time
strategy, one operates with the minimum required resources to deliver the product or the service. Which
means that you make exactly what is required, in exactly the right quantities, provided exactly where it
is needed, and when it is needed. So, the whole idea is don't do things too early, don't do things late.
Obviously don't overproduce things, don't under produce things. Produce just the perfect quality. Now,
to be able to do that, they also looked at what they called Jidoka. Jidoka essentially means automation.
So, the idea here was that, is it possible to replace variable processes such as human processes with
automated processes? And this automated processes had to be such that one can detect abnormalities,
and if such abnormalities are detected, they can stop all production and a response is then required at
that point to fix whatever the abnormalities. The idea was to harmonize the work that was being done by
machines and the work that was done by man. In that case, in that time it was mostly man, but we can
say workers in general. Now, these two pillars together, had to work in such a way that you had
motivated people working in teams trying to make these two pillars work together. To be able to do that,
there were certain things that Toyota production system required. They needed all work to be
standardized. This is a throwback to the motion and time studies that Taylor first talked about in the
early parts of the 20th century. Then, they wanted to make sure that they had level production. That they
didn't have highly variable amounts being produced, and they called this Heijunka. The idea was to
create a stable process which will be repeated and you did not need exceptional people who actually
make the process work. Because it was well-planned and well-documented. Ordinary people could be
used to make the processor. So, that was the Toyota production system in a nutshell.
What is Lean Management? - Slide 9
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US version of Toyota Production System
Elimination of waste in processes through continuous improvement
Simplification of work
Transcript
Now, when this Toyota production system was brought over to the US, one of the things that people
focused on because it was so visible, is the fact that the Toyota production system did away with a buffer
inventory between steps of the manufacturing process. Because we were reducing the buffer inventory, it
was called lean. So, that's how it became lean management in the United States. Now, the basic concept
of lean management is that we want to eliminate waste in all processes through a continuous
improvement process. The idea is that we want to simplify all aspects of work as much as possible so
that it can be done relatively easily, and if at all possible, it can be done by machines.
Value - Slide 10
Customer's perspective
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What does the customer value?
Quality
Delivery
Cost
Transcript
To be able to do this, the first thing that we need to know is what is it that we are trying to achieve here?
Sort of shares of the goal when you think of Goldratt's theory of constraints. Toyota production system
or lean management looks at what is it that we should value? The idea here is that we should be looking
at everything that we do from the customer's perspective. What is it that the customer actually values?
Essentially, we can break it up into three things. The customer values quality, the customer values on-
time delivery, and the customer wants is done at the lowest possible cost. So, the customer is unwilling
to pay for quality that the customer does not want, is unwilling to pay for features that the customer does
not want. The customer does not want things to be delivered to them early and they do not want things to
be delivered to them late. So, whenever we think in terms of value, we have to think of it from the
customer's view point and not what we think is valuable.
Types of Activities - Slide 11
Table - Slide 11
Activities Explanation Expectation
Changes the form, function, or features of product

Value Adding Activity and service. Maximize
Something the customer is willing to pay.
Essential Non-Value Adding

Required due to regulations, policies, etc. Minimize
Activities
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Consumes resources but does not add value.

Non-Value Adding Activities Eliminate
Invisible to customer.
Transcript
So, that essentially then leads us to looking at our process and saying, well, which of the many activities
that we are doing are actually creating value? So, we look at what we call value-adding activity. Value-
adding activities are activities in which either the form of the product, or the function of the product, or
some feature of the product or service more generally is being changed. But it's not simply that we're
changing the form or function, we are changing it in a way that this is something that the customer is
willing to pay their hard-earned money to get. So, we don't simply want to make a change in the form.
We want to make a change in the form that is of value to the customer. Value-adding activities are the
activities we want to maximize. This is what we want to be doing. There are other activities too, where
it's hard to say whether the value is being added. So, for example we may have regulations. Despite
government regulations, there might be environmental regulations. This may not actually change the
form or function in a way that the customer really wants in their product or service. But these are
important from a broader societal point of view. There might be organizational policies that have to be
followed. This might be to have fairness in the workplace. These are non-value adding activities, but
they're essential non-value adding activities. Now, the idea here is that these are not something that we
can eliminate, but we'd like to minimize them to have as few of them as possible, or do things in such a
way that we meet the regulations and policies with the least amount of activity. Finally, we have what we
call the non-value adding activities. These are activities that consume resources but do not add any value
to the product. It will not change the form, function, or feature of the product or service in a way that the
customer cares about it. Oftentimes, these are invisible to customers. For example, a worker running
around the plants searching for a tool that they need to fix something, consumes time of the worker
might mean that the production facility is not being properly utilized, but no added value is being
created. The customer does not care that this person was running around. So, these kinds of activities we
would like to eliminate. So, we have three activities, value-adding activity we want to maximize,
essential non value-adding activities that we want to minimize, and non-value adding activities that we
want to completely eliminate.
Example: Check Deposit - Slide 12
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Value adding and non-value adding activities are explained by example of traditional check deposit
process. It is a flow chart with following activities
Drive to bank – it takes 30 minutes.

Wait in line – it takes 10 minutes.
Deposit check – it takes 1 minute
Drive back – it takes 30 minutes.
Only deposit check activity is value adding while all others are non-value adding activities.
A pie chart is also shown here which shows value adding activities to be 1.4% and non-value adding
activities to be 98.6%.
Transcript
Let's take an example of these activities so we can see what are value-adding and what are non-value
adding. Just a few years ago if you had to deposit a check in the bank, you had to go through a number
of steps. Here's one example of somebody who had to go and deposit a check. They had to drive to the
bank, and that might take 30 minutes. Depending on where you are, that could be three minutes, ten
minutes, or it could be an hour. Then, you go to the bank and you have to wait in line to get to the teller
so that you can actually deposit the check. That may take a certain amount of time. In this example, we
say it takes about 10 minutes of waiting in line. You get to the counter, you hand over the check, you get
your receipt, that takes about a minute. Then, you have to drive back and that takes another 30 minutes.
Now, so there are four steps in this process. Those four steps take a combined 71 minutes. Out of which
only one minute, the act of depositing the check, that is of any importance. That's the only thing that is
value adding. The rest are non value adding activities. So, if we look at the pie chart of all activities, we
see that only one point four percent of this check depositing process is value adding, and the remaining
98.6 percent is non-value adding. Now, this is hard to imagine and it seems extreme, but you would be
surprised at how often this is the case even in well-planned activities. Because of this, we find that it's
important to eliminate a lot of these non-value added activities.
Example: Check Deposit - Slide 13
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Value adding and non-value adding activities are explained by example of modern check deposit
process. It is a flow chart with following activities
Open app – it takes 30 seconds.

Enter information – it takes 1 minute.
Take photo of check – it takes 30 seconds.
Put away phone – it takes 30 seconds.
Only take photo check activity is value adding while all others are non-value adding activities.
A pie chart is also shown here which shows value adding activities to be 20% and non-value adding
activities to be 80%.
Transcript
So, let's look at a slightly better version of the check deposit. This is what we now do. We take our
smartphone, open an app. Maybe that takes 30 seconds. We punch in some information to log into our
account, we put in some information about which account we are going to deposit and that we are going
to actually make a deposit. Maybe, all of that takes a minute. Then, we take a photo of the check. That
takes 30 seconds. Then, takes another 30 seconds maybe to put the phone away. Let's remember that we
had a check deposit activity which took 71 minutes. With our new redesigned activity, we have a total of
150 seconds of which 30 seconds, the act of taking the photo of the check is the only value-adding
activity because that's what actually inputs information to the bank about the check. The rest of the
activities are all additional activities that have to be performed so that we can take a photo of the check.
Those are non-value adding activities. In this case, we find even though this is state of the art, this is
what we think of as being the wonderful advances that have been done. We find that the value-adding
activity is only 20 percent of the entire time, and the non-value adding activities are still 80 percent. So,
in general, it's been observed that even in well defined processes, value-adding activities tend to be 10 to
15 percent maybe 20 percent of the total time for the entire process. This is why we have to be very
concerned about what these non-value adding activities are.
7 Types of Waste - Slide 14 (1 of 8)
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Waiting
People, parts, or equipment waiting for a previous step to be completed
Transcript
These non-value adding activities are what Lean calls waste. In Lean, when defines seven types of
waste. Now, you may see certain other places where they talk about eight types of waste or nine types of
waste. That is because the original seven types people think of, we should add something more here.
Let's focus on the original seven types of waste that have been defined. Now, the seven types of waste
we are going to remember using a mnemonic, which will be based on the first letter of each type of
waste. So, the first type of waste, the W, is waste of waiting. This is, people or workers, parts or
equipment that are waiting for someone else to do their part of the process. So, equipment is not being
utilized properly, parts are just sitting around waiting for the next step to be completed or people are just
having to wait in line, for example. So, this is the waste of waiting.
Inventory
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Unnecessary storage of material
Transcript
The next one, the I, is the waste of inventory. This is the unnecessary storage of material. So, for
example, after making a part, I might decide I'm going to move it to my warehouse until it can be
processed at the next step, and then I have to go back to the warehouse and bring this particular part and
get it processed. The storage of intermediate material is inventory and inventory in Lean management is
considered waste.
Processing
Producing a higher quality product or service than required
Transcript
Then, there is the waste of processing. This is where we overdo what we're supposed to do. So, if I was
suppose to have a pair of scissors, it's important for the scissors to be sharp, and they're supposed to
meant to cut paper. Now, if I decide to spend an inordinate amount of time to make the pair of scissors
out of extremely harden steel with a finish that can cut through metal. Well, that would be a great scissor,
but that's not what anyone asked for. So, we are going to spend a lot of time processing this particular
product, creating a better product than what is required. Indeed, if I'm cutting just paper, and if it's for a
child scissor, I can make it out of plastic and it could still cut paper. So, the unnecessary processing
involved in making a better product, a higher-quality product than what the customer requires is a waste.
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Correction
The effort wasted inspecting for and fixing defects
Transcript
Then, we have the waste of correction. This is where we look at parts which are being produced and
which are defective. So, we have to create an inspection process in the manufacturing process or in the
service process, find out if anything is defective and then spend time fixing that defective. The effort
involved in doing those activities is a waste. If we could make the part without creating a defect, we
wouldn't have to do any of these extra things, and therefore that's service a waste. The customer doesn't
care that we are doing this. The customer only cares that they get a non-defective product. If he can do it
without the waste, that will be better for the customer.
Overproduction
Producing more products or services than the customer wants
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Transcript
Then, we have the waste of what's called overproduction. Producing just in case, we might have some
problem. Producing more products or services than the customer wants, creating forms in triplicate,
getting more information on forms than you are ever going to use. This is the waste of overproduction.
We've all had to experience going to a doctor's office and then have you fill out of form with all
problems that you might be facing. Each time you see a different doctor, they make you fill out the same
form. Except, we've already done this once, couldn't that same information be used again? This is where
we are we're producing by asking patients to fill out the form repeatedly even though they've done it
once.
Motion
Movement of people that does not add value
Transcript
Then, there's the waste of motion. This is the movement of people that does not add value. Remember
the example of a worker Lukoil running around the factory looking for a tool. There's motion that's
involved when the worker goes around looking for this tool, that's wasted motion. Wasted motion shows
up insidiously in some cases. So, for example, if I have a workspace in which I have to reach for tools,
and if my workspace is too large compared to really what I'm doing, I may have to reach very far, try to
get tools from a far distance, and in that case I am unnecessarily wasting the motion of moving my arm
to reach for that tool. This is something that was studied very early on by Taylor in his motion and time
studies.
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Material movement
Transportation of material, people, or equipment
Transcript
Then, there is the last type of waste which is the waste of material movement. This is the transportation
of people and equipment from one location to another. So, I may have parts that go from one machine to
another machine and then from that machine back to this machine and then to a third machine, and so I
have to have this part moving from machine to machine and all that extra movement of that part is called
waste of material movement.
Mnemonic
W-I-P-C-O-M-M
Transcript
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So, in short, we have the seven types of waste. To remember them, we use a mnemonic which uses the
first letter of each one of those types of waste and we call it W-I-P-C-O-M-M. So, waiting, inventory,
processing, correction, overproduction, motion and material movement.
Principles of Lean - Slide 22
Customer-focused Value
Identify all steps in the "Value Stream" Eliminate wasted steps
Make product Flow smoothly
Let customer Pull product
Create Perfection or ideal state with no waste
Transcript
The identification of different kinds of waste allows us to start looking at our entire process of creating
value. To do that, we use certain principles, and these are called the principles of Lean. We've already
talked about value from a customer point of view. So, the first principle of Lean is that value should be
customer-focused. The next thing that we do is we look at the process that is used to create value, and
this is what we call our value stream. The idea in mapping out this value stream is to figure out what the
wasted steps are and to try and eliminate them. Once we've tried to do that, we then try to make sure that
we do not, through our decisions, create artificial ways to block the smooth flow of the product. We want
our product to flow smoothly through the process and that we do not create artificial barriers that prevent
the smooth flow of the products. Next, an important, let's call it an invention of the lean system is this
notion of pull, where instead of us trying to make product and waiting for the customer to come, we wait
for the customer to come and demand the product from us. So, in this sense, our customer is pulling.
Now, when we say customer, we're not talking necessarily of the end user. We're talking about whoever
is next in line and whoever it is that we are serving in this value stream. So, if I have to make some part
and hand it over to the next person in the manufacturing process, that next person is my customer and I
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wait for them to ask me for more of the product before I make the product. The idea behind this is that if
I don't make and keep product, then my inventory goes down. If my inventory goes down, I do not have
any artificial buffers which are preventing the product from flowing smoothly. This will only work if we
can create a process that is somehow perfect. What do we mean by perfect? That there is no waste in this
particular process. This is called, in Lean, the creation of perfection, the ideal state. What process can we
design so that things will move smoothly to the product entirely by pull and there are no wasted steps in
this process? So, if you can do that, that is called creating the perfect process or the ideal process. Now,
obviously, this is all important and nice in concept. But how do we achieve this? How do we go about
taking a process that doesn't quite meet our standards, that's not ideal, where there's a lot of waste, and
convert it to a process that is ideal?
Lean Tools - Slide 23
Value Stream Mapping-more later
5S
5 Whys
Kaizen
Cells
Standardized Work
Transcript
Now, there are a number of tools that Lean management provides for us. Some of these are somewhat
complex, and the others are relatively easy to understand, although maybe difficult in practice. The first
tool that is used in Lean management is called value stream mapping. As we talked about the value
stream, this process allows us to pictorially represent what's going on in the value stream and allows us
to surface where the problems are. This is a somewhat involved exercise, and we'll talk more about it
later. Then we have some other tools. There's the 5S, the 5 Whys. There's the process called Kaizen.
There's the process of creating manufacturing cells. Then, there's the process of creating standardized
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work. We'll talk about each one of these in turn.
5S - Slide 24
1.Seiri- Sorting or Organizing
2.Seiton- Set in order (Simplify Access)
3.Seiso- Shine (Cleaning or Sweeping)
4.Seiketsu- Standardize neatness
5.Shitsuke- Sustain (Self-Discipline)
Transcript
So, the 5S comes from the five things that Lean management requires you to do. They are Japanese
words, all of which start in S, which is why we call it the 5S. Now, I'm likely to butcher the Japanese
pronunciation of these words. So, we'll use Google Translate to say these words. So, the first one is seiri,
which is sorting or organizing. In this step, we look at our workplace and figure out a better way of
organizing our workplace. The next step is called seiton. In this case, we try to set in order how things
are going to be done in this workplace, how do we simplify access to the different things that we need to
do work. Then we come to seiso, which is shine. This means how do we keep our workplace clean. By
clean, we don't necessarily mean hygienic or dusting, but organized, how do we keep things in the right
place, how do we make sure that our workplace is spotless. Now, people say that you should have a
clean desk because a cluttered desk is a sign of a cluttered mind. If that's the case, you should not come
to my office and see my desk. But in general, this is true. That if there is clutter, that means there is
disorganization. So, having a nice, clean workplace is important. Then there is seiketsu. In this case, now
that we've created a neat workplace, we want to standardize this neatness. What do we mean by
standardize this neatness? We want to make sure that we can continually have processes that keep the
workplace looking neat. So, it's not that at the end of the day, we going to clean up everything. Is that we
do everything so that things remain neat and tidy throughout time. Then, finally, we have the shitsuke
process, which is basically saying, sustaining the neatness. This requires self-discipline. How do we
make sure that whatever we've done and all the effort that we've put in in organizing, in simplifying
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access, in creating a shiny, new workplace, in standardizing the processes, how do we make sure that
this lasts, that soon as we walk away from this, that it's not going to get bad again? So, these are the 5Ss.
Again, the ideas are very simple. None of this requires us to have any profound theoretical knowledge,
but we do need to follow these steps and make sure that we reorganize everything so that it becomes
simple, that it becomes neat, it becomes standardize, it becomes repeatable.
5 Whys - Slide 25
A simple root cause analysis technique
My car won't start!
Why? There is no gas going to the engine
Why? There is no gas in the fuel tank
Why? I did not fill the tank
Why? I don't have any money
Why? I spent it all on new clothes
Transcript
The next tool that Lean offers is called the 5 Whys. Now the 5 Whys, when you first hear of it you say,
''Surely this cannot be a serious management tool.'' And yet, it's an extremely powerful but simple tool
for what's called root cause analysis. So, whenever you see a problem, you would like to know why this
problem occurs. And one way to do that, and you should try this, whenever someone talks about a
problem that they are facing, start asking them why. So, if someone comes and says to you, ''My car
won't start.'' You ask them, ''Why do you think the car doesn't start?'' And they'll say, ''Well, there's no
gas going to the engine.'' Now of course you could go immediately and start investigating whether there
is any problem in the fuel system and so on. But before you do that maybe you ask another question and
you ask, ''Why is there no gas going to the gas engine?'' And the person might say, ''Oh, that's because
there's no gas in the fuel tank.'' So, it wasn't something that I had to go and look at the fuel system, is
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that there's no gas in the fuel tank. So, the next question is but Why? And the person might tell you, ''I
didn't fill the tank.'' You say, ''Oh, why is that?'' And they might say, ''Well, I don't have any money.'' And
then you say, ''Well, why don't you have any money? I gave you some money." And maybe this is your
child that you're talking to. "I gave you money so that you would have enough money to fill the gas
tank.'' And they might say, ''Why don't I have money? Well, because I spent it all on new clothes.'' So,
the root cause of this had nothing to do with the car, had nothing to do with the fuel system, it had to do
with the fact that the person who's supposed to be responsible for this car was irresponsible with money.
So, this seems like a fairly simple example, but you will be surprised at how powerful it is. Asking why
several times often leads to people having to think about why things happened. The 5 Whys is a
technique that's also used for more in depth analysis of root causes, analysis like the Ishikawa diagrams.
Where you have multiple reasons why certain problems might be occurring and the 5 Whys allow us to
explore all of those reasons in turn.
Kaizen - Slide 26
Small group improvement activity
Use the line workers creativity to reduce waste
3–5 days of effort
Transcript
Then, there is the technique called Kaizen, and Kaizen essentially is a technique whereby we get a group
of people who are intimately involved in an activity. Oftentimes, this may be line workers in the
manufacturing facility. This might be office workers directly interacting with our customers, and we get
a group of these peoples together. Since these are the people who have to do the activity and who do it
repeatedly, they're often familiar with why that activity doesn't work as well as we think it should and
where the problems might be. This is then where we use the creativity of this group of people who have
to do this activity to come up with ways to reduce wasteful activity and to improve the process. This is
called Kaizen. Oftentimes, this is only a three to five day effort, so it's not like it's a major a year long
project. Although increasingly, Kaizen projects can be longer-term projects. But the idea here is let's
look at processes, small bits of the process, and see if we can figure out ways to make things better. Ask
the people who do the work and ask them, ''How do you think we should do this better?'' Everyone who
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comes to work and does their work wants to create value given the right incentives, given the right
motivation, given the right appreciation. So, to be able to do that, we do Kaizen activities.
Work Cells - Slide 27
Create natural groupings of tasks/products (Part Family) and equipment/personnel needed to do them
(Machine Group)
Single piece flow in the cell
One operator per cell if possible
Transcript
Now, when we do Kaizen activities, oftentimes, we have to isolate some part of the process. Now, there
are natural groupings of parts that we might be looking at or parts of the process that we may be looking
at. And these parts or processes might require a fixed set of resources, might be a small number of
machines or might be a small number of people. We construct work cells out of this natural grouping of
tasks and products. So, we may have what we call a part family. This might be groups of parts that are
similar in terms of their processing requirements and so therefore can be made by the same set of
machines or personnel. So, we have part families and machine groups, which we'll look at together. We
create a work cell of this machines or personnel, and typically, this work group has either one supervisor
or may have one operator for a bunch of different machines. Within this work cell, Lean suggests that
we have what's called single piece flow, which means that a part moves from one machine to the other
individually. That means we don't create batches of parts. So, we don't necessarily want 50 of the part
being done on the first process and then those 50 move on to the second process and then they are
processed there, so on so forth. We want single parts as far as possible to flow through this process. So,
this is what we call a work cell.
Standardized Work - Slide 28
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Every process step is rigorously documented
Sequence of task steps are specified with cycle times, inventory required, tools, and equipment needed
Everyone know their exact roles and responsibilities
Transcript
Finally, Lean requires what is called standardized work. So, in standardized work, every process step is
rigorously documented. We try to understand every bit of the work and we try to document it. We want
to make sure that we understand the sequence of tasks steps that are being done in the process. We want
to know what is the processing time for each task step. We want to know the cycle times associated with
the process. We want to know what tools and equipment might be required. We want to know how much
inventory is required to make sure that we can go from one step to the other with the least amount of this
inventory. We also want to make sure that everyone understands what their exact role is and what their
responsibilities are in this particular process. Now, this seems interesting because if we get down to that
level of detail it might even be possible to automate this work, and if it could do that, that takes out some
of the variability of human performance from this process. So, standardizing work is an important
element in Lean management. It's paradoxical that we are looking for continuous improvement which
requires us to generate new ideas and be creative, while at the same time, we're trying to make the
process as routine and as mundane as possible. But, the idea here is that creativity and involvement of
people in that creative process is a way to improve the process while making the process as simple as
possible. So, people still are able to express their creativity, still feel motivated for being part of this
process, but when they have to do it on a regular basis, this can be done relatively easy. I'd like to think
of this in the following way; I'd like to be able to design a nice shirt for myself. But, the act of wearing
the shirt ought to be really simple. So, if I could just take the shirt and wrap it and it just wraps around
my body perfectly, that's the ideal process that I could think of. So, is there a way for me to make that
happen? I use all my creativity in designing such a shirt. So, that is the idea behind standardized work.
So, in summary then, what we've learned in this is that we have a number of different principles that
Lean uses and they also give us tools that allow us to take a process and simplify the process and
eliminate wasteful steps in the process. The idea is to create a perfect process in which every step is
value-adding and there is no waste throughout the process. Now, clearly, this is something that we aspire
to. It is not essential that we are going to have this right away. But unless we know what we are aspiring
to, how do we know we're getting any closer? And so, the whole continuous improvement idea is to
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figure out where we need to go and then in slow steps keep improving so that we can get there.
Origin of Six-Sigma - Slide 29
Originated in Motorola
Wake-up call
Bill Smith's insight
Transcript
In this lesson, we are going to learn about Six-Sigma methodology. We're going to learn about the
DMAIC process and we're going to talk about why it is important to have measurable results when we
look at Six-Sigma projects. So, as we mentioned in our earlier lesson, the Six-Sigma methodology
originated in Motorola, and there was a time in the '70s when Motorola had terrible quality. Motorola
used to own a television manufacturing plant. That television manufacturing plant used to produce lots
of defectives. So, televisions that when they went out in service will fade. Motorola decided to get out of
making televisions and sold it to a Japanese firm. The Japanese company took over this manufacturing
plant, did not change the equipment, did not change the process, did not change the people working in
the plant, but they were able to produce televisions with less than five percent of the defectives that
Motorola was producing. When Motorola learned about this, that was a big wake-up call for them. How
is it possible that a different company can come in and gets such phenomenal results using exactly the
same resources? Now, around the same time, one of the Motorola engineers did a study and found that
when Motorola, in their plan, when they found defective, they fix defective product and put it back in on
the production line and he found that most of the products that were fixed in this manner when they went
out to the customers, those were the products that used to fail. So, you have this defect your product, you
spend a certain amount of resources in trying and fixing it, and then you send it out, and then when it
gets to the customer it fails. So, you've added unnecessary cost in trying to fix this particular product and
the customer is still going to be unhappy because the product fail. So, this suggested that what was more
important in making a product was not to have a defect in the product in the first place, rather than
having a defect and then trying to fix. The ability or the method by which we go and fix defective
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products so that we can sell them allows us to be complacent. It allows us to be complacent because we
think, okay, so, what if we produce some defectors? We can fix them. This complacency is what is the
cause of terrible product quality in many companies and so, one of the things that Bill Smith realized is
that what needs to be done is to tighten the processes that produce these products, so that the processes
are as stringent or as strict as possible so that the products coming out will be not defective. If they are
not defective, then they're not likely to fail once they go out in the hands of customer. This is the insight
on which Six-Sigma is paced.
Why is Three-Sigma not Enough? - Slide 30
When is rare not rare enough?
For a normal distribution with mean = μ and standard deviation = σ a value greater than μ + 3σ has a
probability of occurring of 0.001349
You can find this using Microsoft Excel as follows:
Prob (X > μ + 3σ ) = 1 - Prob (X ≤ μ + 3σ ) = 1 - Norm.S.Dist(3,1)
Transcript
Now, for many people, when they think of Six-Sigma, the first thing that comes to mind, especially if
you've had any kind of statistics, is this notion that we have a confidence interval that is often created in
statistic in which you take the mean plus or minus Three-Sigma. So, people assume that plus or minus
Three-Sigma, Three-Sigma on each side is actually Six-Sigma. However, that's not what we are going to
be looking at here. When we talk about Six-Sigma in this case, we are actually going to be looking at
plus or minus a Six-Sigma. So, the question is, why is Three-Sigma not enough? When we learn
statistics, we are often told that for a normal distribution, anything beyond the Three-Sigma limits is
very little probability. In fact, if you take a normal distribution with a mean of Mu and standard
deviation of Sigma, a value greater than Mu plus Three-Sigma has a very small probability of occurring
and that probability is 0.001349 or 0.13 percent. You can find this probability using Microsoft Excel and
using the built-in functions in Microsoft Excel. So, to find the probability that x happens to be greater
than Mu plus Three-Sigma, we can simply calculate 1 minus the probability and that x is less than or
equal to Mu plus Three-Sigma. The way we do this, is calculate 1 minus and we use the Microsoft Excel
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function norm.S.Dist and because we want Three-Sigma, we use 3 and the second parameter, 1, tells us
that we are looking at the cumulative distribution. So, if you enter this formula in Excel, you will get the
value 0.001349. Now, that seems like a fairly small probability, 0.001349. All right. So, let's see what
that means in some typical situations.
Example: - Slide 31 (1 of 3)
Out of Hospital Cardiac Arrests
There were 295,000 out-of-hospital cardiac arrests in the US in 2008. Suppose the probability of
death in such a case is 0.001349. The annual number of deaths from out-of-hospital cardiac deaths
will be
295,000× 0.001349 = 398 deaths
Transcript
Let's take the example of out-of-hospital cardiac arrests. Now, I found the statistic which said that there
were 295,000 out-of-hospital cardiac arrests in the United States in the year 2008. Suppose we assume
that the probability of debt in an out-of-hospital cardiac arrest happens to be that small probability of
0.001349. Then, if you calculate the number of deaths that would occur from out-of-hospital cardiac
arrest, that would be 295,000 multiplied by that small probability of 0.001349 and that's 398 deaths.
Now, 398 deaths is a significant event and one of the things that people suggest is that to prevent this
approximately 400 deaths, what should be done is we should have what are called defibrillators available
in all kinds of public locations, so that if such incidents occurs, then we can prevent that. So, the tiny
probability because of the large number of incidents that occur, gets magnified into a large number of
fatalities, 398 in this case.
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A circuit board has 100 components. Each component has a defect probability of 0.001349. Defect in
any component leads to failure of the circuit board. What is the probability that the circuit board will not
fail?
Prob( component is not-defective) = 0.99865
Prob( board does not fail) = 0. (99865)100 = 0.874
Transcript
Let's look at a different example. Suppose we have a circuit board which has 100 components. Now, 100
components seems large, but it's easy to find circuit boards with 3, 4, 500 components, it's easy to find
machinery which has thousands of little components. Think of your car for example, which has
thousands and thousands of components. Now, each component let's say has a defect probability of
0.001349, the same probability that we've been talking about, the three sigma probability. Now suppose
the defect in any one component leads to the failure of the entire circuit board, so what is the probability
that the circuit board will not fail? So right now, if you look at an individual component it has a
probability of failure of 0.001349, therefore the probability that it is not defective is going to be one
minus that probability or 0.99865. To find out the probability that the board does not fail, we want to
make sure that every component does not fail. So component one does not fail and component two does
not fail and three does not fail, so on, so forth, up to and component 100 does not fail. The way we find
that is take that probability of 0.99865 and raise it to the power 100 because we have 100 components,
and that turns out to be 0.874, which says that the circuit board will fail with a probability of 12.6
percent. That's a significant percent of failure and any company that puts out a product with 12.6 percent
of failures is likely not to be in business for too long.
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A resort hotel has an average 300 guests on any given day. Each guest has on average 10 interactions per
day with hotel staff. The probability of an unsatisfactory interaction is 0.001349. The number of
unsatisfactory interactions in a year will be 365×300×10×0.001349 = 1478
Transcript
A third example, we can look at a resort hotel which on average has 300 guests on any given day. Now,
each guest on average interacts with the hotel staff about 10 times per day. Now suppose we have a
wonderful staff and that staff does a great job with it's guests, but there can still be occasional
unsatisfactory interactions and suppose that on satisfactory interaction has a probability which is
relatively small, again, that same number, 0.001349. Then the number of unsatisfactory interactions in
the year we can calculate as saying, we have 365 days times 300 guests per day times 10 interactions per
day, times the probability of an unsatisfactory interaction and that gives us 1,478 unsatisfactory
interactions. Or in a year we will have complaints from our guess 1,478 times. Again notice, what's
happening is that we have a very large number of interactions, and so, we have a lot of opportunity for
things to go wrong. With the 100 components on the circuit board we had 100 things that could go
wrong. With our resort hotel, we have 365 times 300 times 10 opportunities for things to go wrong, and
this is why we end up with this large numbers.
DPMO - Slide 34
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Defects per opportunity (DPO)
DPO = Number of Defects÷Number of defect Opportunities
Defects per million opportunities
DPMO = DPO×106
Transcript
So in Six Sigma, we define two quantities. We define what we'll call the defects per opportunity or DPO,
and the DPO is simply the fraction obtained by looking at the number of defects that were observed,
divided by the number of defect opportunities. Now once we have the DPO, we can convert it into what
we call the defects per million opportunities or DPMO, and DPMO is simply the DPO multiplied by one
million. So that DPO is the fraction of times that we have a defect and DPMO is if you take that fraction
and multiply by a million opportunities to have a defect, how many defects do we actually see? So that's
a DPMO.
Example: - Slide 35
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A computer website uses CAPTCHA to authenticate non-robotic login attempts. Each CAPTCHA figure
has 9 pictures to recognize. On an average day there are 33,700 login attempts and the number of
pictures incorrectly identified is 1600. If the incorrect identification of a picture is a defect then
Defects identified = 1600
Defect Opportunities = 33,700 × 9 = 303,300

1600
DPO = Number of Defects÷Number of defect Opportunities = 303,300
= 0.005273
DPMO = DPO×106 = 5273
Transcript
Let's take a quick example. Many of you have seen this thing called capture which is something that's
used to authenticate whether you're not a robot, and so, there's a computer site which uses capture to
authenticate that the login attempts that it's observing are non-robotic. Now each capture figure, this
tends to be a grid of figures and you're asked to look and identify some element in that trigger, so it
might say, "Identify all pictures with a store front, or identify all pictures with a road sign", and so, you
have nine such pictures and you have to click on each picture that has that particular thing that you are
being asked to look for. Now for this particular website, the daily average of login attempts are 33,700,
and what it's found is that when it looks at the number of pictures, not the number of times the entire
nine picture grid, but individual pictures, the number of times it's incorrectly identified happens to be
1,600. So, now what's the defects per million opportunities here? So if we assume that an incorrect
identification of a picture is a defect, then the number of defects that have been identified in this
particular case is 1,600. How many defect opportunities were there? Now each login attempt has nine
pictures, so there are nine opportunities per login attempt. So therefore the total number of defect
opportunities is 33,700 multiplied by nine or 303,300 defect opportunities. So now we can calculate the
DPO, which is number of defects divided by number of defect opportunities, so that's 1,600 divided by
303,300 or 0.005273. Now, the DPMO is simply multiplying the DPO by a million and so that gives us
5,273 opportunities. So we have a DPMO of 5,273 for this capture exercise for this particular website.
Process Drift - Slide 36
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We assumed a normal distribution with mean = μ and standard deviation = σ
Common for the mean to shift over time
Motorola observed that the mean can shift by up to 1.5σ
Transcript
Now, so far, what we've been doing is we've been looking at processes that have a mean of Mu and the
standard deviation of Sigma. We've been assuming that that process is constant. What do we mean by
that? Suppose we are looking at a process that makes a particular component and we look at the
measurement of one of the dimensions of that component, and suppose that dimension happens to have a
mean, Mu, and a standard deviation, Sigma. We are assuming that as this process keeps running, the
mean is not going to change. However, if you think in terms of how machines work, machines tend to
deteriorate with time and they have to be readjusted or re-calibrated every now and then. As humans, as
we continue doing something, even the best trained of us will start getting tired, and as we get tired, our
average values will drift. They'll become larger for doing the same task. So all processes have a drift.
They tend to sort of change from what is called the nominal of that particular process. Now, because this
is so common, it kind of makes no sense to look at the process and say that the nominal of the process is
what we should use to look at how many defects per million opportunities there are. In fact, at Motorola
where Six Sigma was first developed, observed that it's very common for the mean to shift by up to 1.5
Sigma. Now, what is the importance of this? So, let's look at the figure on the side where we show two
normal distributions. The first normal distribution we show is the nominal distribution with a mean of
Mu. Now, if we have limits at three Sigma for what is acceptable, we have a very tiny area of rejection;
the famous number by now of 0.001349. But notice what happens as the mean drifts and if the mean
drifts from a mean of Mu to a mean of Mu plus 1.5 Sigma, then suddenly we find that the number of
defects becomes significantly large. So one of the things that Six Sigma methodology looks at is this
process drift. This process drift of 1.5 Sigma is called the Motorola shift because of the fact that it was
suggested by Motorola.
Motorola Shift- Slide 37
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Table - Slide 37
Actualσ 3 4 5 6
Motorola Shift 1.5 2.5 3.5 4.5
DPMO 66,807 6210 233 3.4
Columns 3 to 4 is 10-fold, columns 4 to 5 is 26-fold, and columns 5 to 6 is 68-fold
Process drift of 1.5σ means more "defects" then expected
If we set a limit of k×σ then to get DPMO we should calculate using (k−1.5)×σ
DPMO = (1−Norm.S.Dist(MS,1))×106
Transcript
So a process drift of 1.5 Sigma means more defects are created than we expect. So let's see how the
DPMO changes as we look at that. If we select a limit of k Sigma, then because of the Motorola shift,
we have to calculate using k minus 1.5 times Sigma. Then that gives us a DPMO value which we have a
formula, using Microsoft Excel, that we can use to calculate that. So if we have an actual Sigma value of
three Sigma, then because of the Motorola shift, we get 1.5 Sigma and at 1.5 Sigma, the DPMO is
66,807, noticeably larger than what we were anticipating when we had 0.001349 as our probability of
getting a defective. If we have four Sigma, then with the Motorola shift, we get 2.5 Sigma and we get a
DPMO of 6,210. If you had an actual of five Sigma, then the Motorola shift we get 3.5 Sigma and
defects per million opportunities of 233. If you have six Sigma, which is the title of our lesson, then with
the Motorola shift, we get 4.5 Sigma which gives us a defects per million opportunity of 3.4. So, what
we notice is that the number of defects are much larger than if you had used the same formula that we,
for DPMO, using the actual Sigma. Now, there's something else to notice here. When we go from a three
Sigma process in to a four Sigma process, we have a ten-fold reduction in the number of defectives,
from 66,807 to 6,210. When we go from four to five Sigma, it's the same difference. So we are adding
one more Sigma, but now we go from 6,210 to 233 which is roughly 26-fold improvement. When we go
from five Sigma to six Sigma, we go from 233 to 3.4 which is a 68-fold improvement. So having our
process being a three Sigma process and improving it to a four Sigma process gives us a 10-fold
improvement in terms of the number of defects produced. And from four to five, we get a 26-fold, and
from five to six we get 68-fold. So you can see that we have an exponentially increasing number in
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terms of improvement as we go from three Sigma to four Sigma to five Sigma to six Sigma. Because of
this, it is important to sort of take that next step because we see dramatic improvements in the quality
that we are observing. So, now, going from three Sigma to six Sigma, we are looking at a massive
improvement in the quality that we are producing
D-M-A-I-C - Slide 38
Five step D-M-A-I-C process for Six-sigma is shown in a linear fashion here. There is a series of five
interconnected arrows from left to right and each arrow represents the following steps in the given order
Define
Measure
Analyze
Improve
Control
Five step process for Six-sigma
Transcript
The Six-Sigma process is a very powerful process, as we saw in the improvements that we see in quality
as we go from three Sigma to Six-Sigma, to obtain this power, we need to have a formalized way of
making improvements in our process. The Six-Sigma methodology uses a process which is called the
DMAIC. The DMAIC is an acronym for a process that has five steps. These five steps are define,
measure, analyze, improve, and control. So, the D-M-A-I-C which are the first letters of each of this
steps of this process create the name DMAIC. Now, each of these steps has a particular role. Let's start
out with the first step of the process, which is Define.
Define - Slide 39
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Five step D-M-A-I-C process for Six-sigma is shown here. There is a series of five interconnected
arrows from left to right, representing a linear process and each arrow represents the following steps in
the given order
Define
Measure
Analyze
Improve
Control
In this figure “Define” is highlighted.
What is the problem?
Who does it affect? Customers?
What needs to be measured?
Project Charter
Project Team
Transcript
As the name suggests, in the Define phase, we want to know what is the problem that we are concerned
with? So, this is where we come up with the identification of the problem and scoping of the problem.
So, we want to know what is this problem? Who does it affect? In a sense, who are our customers? If we
know who our customers are, we want to have what's called the voice of the customers. So, you want to
know from our customers how it affects them when they have a problem. Because Six-Sigma is a very
rigorous methodology, we want to make sure that we are very careful about deciding how we measure
what this problem is. So, we want to know what is it that we are going to be measuring? Why do we
think there is a problem? Now, it could be that we have failures occurring of our product when they go
out to our customers, and maybe the measure is the number of failures per thousand parts shipped. Or it
could be a DPMO measure. It could be that we are concerned about the weight of material that we are
packaging in our packaged product. So, what needs to be measured is that weight of the product that is
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actually in the package. So, we need to figure out what is it that we are going to measure? How are we
going to measure, and how do we know that a problem exists? Beyond that, to define what this problem
is, we may want to create a project charter. Now, a project charter basically identifies what the problem
is, why is it important, who's going to be working on this project, who is sponsoring this project, so on
and so forth. Then, we need to identify what the project team is. Now, in the project team, again, we will
talk a little bit more in detail about some of the elements of a Six-Sigma project team. But usually, you
want to know who's involved, why are they involved, and what is their role in this particular project.
SIPOC Tool - Slide 40
the given order
Define
Measure
Analyze
Improve
Control
In this figure “Define” is highlighted.
A simple tool to define the problem
Mnemonic for
Suppliers-Inputs-Process-Outputs-Customers
Transcript
Now, a tool that is commonly used to do this define step is called the SIPOC tool. Now, the SIPOC tool,
basically, the SIPOC is another acronym. The SIPOC comes from the words suppliers, inputs, process,
outputs, and customers. So, the first letters of this create the acronym SIPOC and that's what we are
looking at. It's a relatively simple tool to understand the scope of what we are planning to work on. So,
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let's look at an example to see how one would use this SIPOC tool to come up with a definition for the
problem.
SIPOC Example - Slide 41
Making a grilled cheese sandwich
Usually one starts with the Process
and then move outward
Transcript
Let's take the example of making a grilled cheese sandwich, and I purposely chose something relatively
simple. For those of you who don't know what a grilled cheese sandwich, if you're not from the US and
have not seen a grilled cheese sandwich, it is essentially two pieces of bread that have butter, and a slice
of cheese is put in between, and it is then grilled on a pan. So, if I wanted to create a SIPOC for the
making of a grilled cheese sandwich, the first thing I'd like to do is I'd like to understand what is the
process. Once I identify what the processes of making a grilled cheese sandwich, I can move out on in
both directions and fill out the rest of the terms in the SIPOC.
Add Customers - Slide 42
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Table - Slide 42
Source Inputs Process Outputs Customers
Plate, Bread, Get Plate, Apply butter to bread, Stack
Cupboard, Sandwich,
Butter, Cheese, bread and cheese, Heat pan on stove,
Grocery, Waste, Cheese, Family
Pan, Spatula, Place sandwich on pan, Flip sandwich,
Kitchen Wrapper
Stove Place finished sandwich on plate
Transcript
So, as I just explained, the process of making a grilled cheese sandwich is the following: Now, when we
define a process in the SIPOC methodology, this is remember, very early stage where we're just trying to
get some handle on what it is that we're trying to do. So, we tend to not get too detailed about how to go
about making the details of the process. We want a fairly high level explanation of what's being done.
So, here's a high level explanation that I put together for making a grilled sandwich. So, what do you do?
You get a plate. On the plate, you keep your slices of bread and you apply butter to the bread. You stack
the bread and cheese together to make a sandwich. You go and heat the pan on the stove. You take your
sandwich and you place it on the heated pan. You flip it so that both pieces of bread are heated. Then,
when it's done, you take it off and you place the finished sandwich on the plate again. So, that's my
process. With this particular process, what are the things that I needed to make this sandwich. So, I need
to know what my inputs are. So, what are the things that I needed. Well. I needed a plate, that's where I
started out. I needed bread, I needed butter, I needed cheese. I need a pan. I need a spatula so that I can
flip things on the pan, and then I needed a stove, so I can heat the pan. Now, where do I get these inputs?
That's my source. So, my source, I might get the plate from a cupboard. I might get my bread, butter, and
cheese from the grocery store. My pan, my spatula, maybe also in the cupboard. My stove is in the
kitchen. So, those are my sources to get the inputs that I need to make the process. What's my output?
My output in this case, is a hopefully delicious sandwich. But in the process, I also generates some
waste. What are the wastes that I generate. Well, I had a wrapper that went around the cheese, and so
that rapper has to be disposed. So, one of the outputs is waste, which is the cheese wrapper. Who are my
customers? My customers might be my family. How specific I want to get about family is up to me. I
might decide that I need to get more specific, instead of saying family. I might say my spouse and my
children, because each of them might have some different ideas of what a grilled cheese sandwich
should be like, and so I may need to consult both of them to figure out what is the requirement for this
grilled cheese sandwich. Oftentimes, you will see in a SIPOC at the end of the customers, might be
requirements that were obtained from the customers about what the output of this process are to be.
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Should it be a heavily buttered sandwich or a lightly buttered sandwich. There's might be specific
requirements that the customers might tell us, so that we know whether our sandwich actually meets our
customers requirements. So, that's the SIPOC tool. It's really that simple. It tends to be a very simple tool
to just organize our thoughts about what it is that we want to do in this particular Six-Sigma project.
Measure - Slide 43
the given order
Define
Measure
Analyze
Improve
Control
In this figure "Measure" is highlighted.
Establish a baseline
What are the Key Performance Indicators (KPIs)?
What and how to measure?
Quantifiable performance measure-The "Y"
Transcript
Having defined our project, we then go on to the Measure phase of Six-Sigma methodology. Now, Six-
Sigma methodology is very rigorous in that we want to make sure that things are quantifiable, that things
are measurable, and that we do go about getting extensive data to backup whatever it is that we say.
Now, we will never know if something has been improved if we don't know where we started. So, the
first thing we want to do is establish a baseline. So what we do is we say, "What are our key performance
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indicators? What is it that we are going to measure to know that we are performing according to some
standard?" So we may specify what are our key performance indicators or KPIs. Then, maybe we will
need to know how are we going to measure once we've identified what we are going to measure we need
to know, how we are going to measure those things, all right? So when I talk about producing a grilled
cheese sandwich, how do I measure whether it's a good grilled cheese sandwich? I could think of a few
different things. I could think about the temperature of the grilled cheese sandwich when I serve it to my
customer. I could look at something like the amount of grease or butter on the sandwich when that is
given to the customer, and then I might have something that is a little less obviously quantifiable, a little
more subjective, the taste of the sandwich when I give it to my customer. To figure out the taste, I might
create a 10-point scale and ask my customer on a scale of 1-10, "How do you rate the sandwich?", and
then get a numerical value out of that. But I need a way to measure. This quantifiable performance
measure is called the Y in Six Sigma methodology or in the DMAIC process. The reason why it's called
a Y because we are trying to write an equation in some sense where our Y is the output and it's going to
be equal to some function of a bunch of inputs that are going into this particular Y. So, that's our
measure phase.
Analyze - Slide 44
the given order
Define
Measure
Analyze
Improve
Control
In this figure “Analyze” is highlighted.
Identify the "root causes"
Fishbone or Ishikawa diagram
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Key process inputs-The "X"
Prioritize
Statistical models to measure the effect of each X on the Y
Transcript
Once we are done with the measure phase, once we've identified how we are going to evaluate the
output of our process, we get into the analyze phase. The analyze phase, essentially, is to find what
might be the root causes of the problem that we've identified. Now, it's possible that we may many root
causes. It's possible, for example, if you identify that our grilled cheese sandwich is awful, there could
be many reasons why that happens. The cook is terrible, the ingredients are terrible, maybe the
equipment is terrible. So, it's possible that we have several possibilities. In this case, personnel or the
manpower, the inputs, the ingredients or materials, the equipment which is a stove or it could even be
possible that the ambient temperature in the kitchen somehow affects the quality of the sandwich that's
produced. So there could be many such root causes. A common technique that's used that we will not
discuss in detail here is a fishbone diagram or an Ishikawa diagram. In this, all the possible root causes
are identified, and then those root causes are investigated further by using the Five Why process that we
talked about when we talked about lean management. Now, once we've looked at multiple root causes or
all potential root causes, we try and figure out which of those root causes are actually important. So, we
have to prioritize because we could end up with 20-30 different root causes or reasons why something
could go wrong and not all of them are equally important. So, what we like to do is we like to prioritize;
we like to figure out what is the importance of each one of those. Then, one way to do that, for example,
is to think of the inputs that are going in and each of those root causes is now an input and we call it the
X's. So, remember we have an equation which says Y is equal to the function of the inputs so it is the
function of the X's. So, we figure out which of those X's are important and we try to build a statistical
model to measure the effect of the X or the input on the output. Now, the models that we may use in this
case could be fairly complicated statistical models, they could be very intricate regression models, or
they might be analysis of variance or NOR models, but we need to do it in a way that we can actually
come up with something that's measurable where we can show that indeed the input has an effect on the
output. So, notice that already in this DMAIC process, we are starting to talk about statistical techniques.
This is one of the strengths of the Six Sigma methodology because it forces you to come up with
quantifiable results that you can defend at least statistically that what you're claiming is indeed correct.
Now, once we've analyzed the problem, once we've figured out what the root causes are and the
contribution of each of the root causes are to the output that we are observing, the next step obviously is
to try and improve the process.
Improve - Slide 45
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the given order
Define
Measure
Analyze
Improve
Control
In this figure “Improve” is highlighted.
Brainstorm solutions
Implement the easiest solutions first
Test solutions-Use P-D-C-A
Implementation plan
Deploy solution
Transcript
So, how do we go about doing that, right? So, obviously we want to brainstorm solutions and there are
lots of different ways that people can create brainstorming sessions. When you come up with a
brainstorming session, you often come up with lots of possible solutions. Now, the idea is not to sort of
analyze to depth any particular process, but to start acting and trying to improve the process right away.
So, you start out with the easiest solution, what's called working on the low hanging fruit to see if you
can get improvements quickly. You then test the solutions. You may use something like the PDCA
methodology we talked about in lean management. This is the plan, do, check, act methodology where
you say, "If I make this change, does it actually improve the process?" And if it does then I look for the
next change and so on. So, you want to test your solutions to make sure that what you're saying is going
to improve, actually does improve. If it does, then you need an implementation plan. This
implementation plan has to take whatever new idea that you've come up with to improve the solution
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and try and deploy it practically so that once you leave, it will continue to keep the process at a higher
level or it will keep the process at that improved level because of this new improvement that you've
created. After you've done that, so the Six Sigma methodology basically has now improved the process.
But how do you know that this improvement will remain?
Control - Slide 46
the given order
Define
Measure
Analyze
Improve
Control
In this figure “Control” is highlighted.
How to sustain the improvement?
Who is responsible?
How do we measure?
Use of statistical control charts
Transcript
So for that, we have what's called the control phase. This is how do you sustain the improvement that
you obtained by going through this rigorous process of defining, measuring, analyzing and then
improving the process. So, you have to figure out who is responsible to do the things that are required to
make that improvement a lasting improvement. How do we measure that we've actually improved?
Because we know that we have variability in our processes, we know our processes tend to drift. So,
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how do we know over time that whatever change we made has actually improved things? So, we may
use statistical control charts. There are a number of charts P-charts, C-charts, et cetera, X-bar charts,
R-charts that one could use to make sure that our process remains in control after the improvement
phase. So, once again, you see the importance of using statistical techniques to make sure that process
improvements do occur. So, that's the DMAIC process in short.
Six-Sigma Infrastructure - Slide 47 (1 of 8)
Six-sigma infrastructure is shown as a pyramid divided into 6 hierarchies which are as follows (from top
to bottom)
Highest level possible in the Organization– Often C-level executives
Executive Leadership
Champions and sponsors
Master black belts
Black belts
Green belts
Yellow, white etc. belts
Provide strategic focus to the program
Transcript
One thing to realize about the DMAIC process is that it's rigorous, and it's an overall methodology to
organize your project. It doesn't actually do any solution, it does not tell you exactly what you should do
to solve your specific problem, but it helps you organize your particular project. Given the rigorous way
that Six Sigma does projects, it's important that there should be people who make sure that the Six
Sigma methodology is properly followed. So, in companies where Six Sigma is introduced or where it is
done on a routine basis, the whole infrastructure is created for the Six Sigma projects. Now, ideally you
want to have Six Sigma done throughout the entire company, but sometimes Six Sigma methodology
gets done only in part of the company because people want to try it out first. Whichever way you do it,
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whatever the scope in which you are going to apply Six Sigma methodology, we want to make sure that
we have executive leadership for the Six Sigma activities of that organization. So, we want the highest
person in that organization to be an executive leader for Six Sigma efforts. Often, these are C-level
executives, so they might be the CEO, might be the executive leader of the Six Sigma infrastructure. The
reason why you want the highest level person on board is because that signals to everyone how
important it is to follow the methodology. It also means that the highest level person, because of their
support for this methodology, will make sure that if problems arise, they can make sure that roadblocks
are removed. So, at this highest level, the executive leader has to provide strategic focus to the program
so that it's not just a bunch of random projects that are done. What projects are important? What are the
goals of the organization? How are those goals going to be achieved using the Six Sigma methodology?
So, goals in that particular case maybe something like, we want to reduce overall costs in the
organization, or the goal might be that we are to improve the overall quality of our product, but these are
high level goals set up by the executive leadership.
to bottom)
Master black belts
Black belts
Green belts
Identify individual projects
Align to mission and vision
Remove roadblocks
Transcript
47 of 53 10/22/18, 4:06 PM
Below that, we have what we'll call our champions and sponsors. These are people who identify
individual projects. So, for example, if the corporate goal is to improve the quality of the products, it
might be the goal of the manufacturing operation to reduce the number of defects in all processes from
the current value of let's say, five percent defects down to one percent deffect. Now, clearly this aligns
with the goal of the organization of creating better quality products. So, the champion or sponsor would
then be looking for projects in their part of the organization which aligns with that goal of an improving
quality. You have to identify the projects, make sure that these projects are aligned with the broad
mission and vision of the overall organization. You also have the role as a champion or sponsor to
remove any roadblocks that may arise makes sure that the projects are properly resourced et cetera. The
champion or sponsor is critical because very often, they sit at the top of the organization or at the
department in which that project is being done, and without the blessing of that person, very often, the
people in that organization will not cooperate or will not think that the project is important enough. So,
we have the champions and sponsors below the executive leaderships. This is not very unusual for
almost any organization, you always have this thing to do any projects. What makes the Six Sigma
infrastructure different is what comes below that. Below that is a whole stack of people who are
specifically trained in the methodology of Six Sigma, who are experts in the methodology of Six Sigma.
These people similar to what is done in the martial arts are provided with different colored belts. So, in
the martial arts, you often have the Black Belt who is a master of this particular martial art. Then, you
have lower level belts, and those belts indicate that you are progressing towards that high level of
competence which is the Black Belt.
to bottom)
Master black belts
Black belts
Green belts
Trains the Black Belts and Green Belts
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Helps as a technology/methodology consultant to Black Belts
Has a program-level focus rather than project focus
Transcript
So, in Six Sigma methodology, the highest level of belt you can get is what's called the Master Black
Belt. Now, the Master Black Belt is the person who has mastered all the elements of the Six Sigma
methodology. Because of their mastery of all the elements, they are elevated to the rule of a trainer.
Their job is to train everyone else in the Six Sigma methodology. So, they will train the Black Belts and
the Green Belts. Sometimes they may be involved in training even the lesser belts, the Yellow Belts, and
the White Belts. Not only do they train the Black Belts, and Green Belts, they are also a resource, they
are like a master consultant, a senior consultant where the Black Belt can come and if they have a
problem, consult with the Master Black Belt on detailed technological issues. It's important to realize
that Master Black Belts are not really project focus, their role is to look at the broad implementation of
the Six Sigma methodology across the organization. So, what they tend to do, is they tend to focus on
the programmatic levels. So, trying to make sure that the Black Belts are properly trained, that the Green
Belts are properly trained, that any questions that arise about methodology are properly answered rather
than work on individual projects.
to bottom)
Master black belts
Black belts
Green belts
Expert in six-sigma methodology
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DMAIC expertise
Statistical training
Respected for their expertise
Transcript
Now, below the Master Black Belts are the Black Belts. Now, the Black Belts are experts in Six Sigma
methodology just as the Master Black Belts are, but they don't have perhaps the detail level knowledge
about all the techniques associated with the Six Sigma methodology. They have expertise in DMAIC,
they have excellent statistical training, and they are generally individuals who are respected for their
expertise. So, what the Black Belt is, is the project manager for a particular project, and their role is to
make sure that the project is done using the right tools and techniques associated with the Six Sigma
methodology.
to bottom)
Master black belts
Black belts
Green belts
Project managers/leaders
Domain expertise
Trained to understand six-sigma methodology
Basic training in project management, statistical analysis, etc
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Supported by a black belt for more involved analysis
Transcript
Now, below the Black Belts are the Green Belts. The Green Belts are domain experts. So, for example, if
I was to do a Six Sigma project in marketing, the Green Belt would typically be a marketing
professional. Now, this marketing professional will serve as actually the project leader, they are the ones
who are actually heading the project. There will be a Black Belt assigned to this project, and that Black
Belt will take up some of the tasks associated with project management, and making sure that the right
statistical technique is being used to make sure that the DMAIC framework is being followed et cetera.
So, that's the role of the Black Belt. The Green Belt provides two main expertise. They are trained to
understand the Six Sigma methodology. They have basic training in project management, and statistical
analysis et cetera, but they are not necessarily experts in all of those techniques, that's why there's a
Black Belt associated with the project. So, the Green Belt is supported by a Black Belt for more detailed
analysis and to make sure that there is adherence to the Six Sigma methodology.
to bottom)
Master black belts
Black belts
Green belts
Have some training in six-sigma methodology
Project team members
Project champions or sponsors
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Transcript
Now, below the Green Belt are the bunch of other belts, the Yellow Belts, the White Belts etc. These are
people unlike in martial arts, the Yellow Belts and the White Belts are novices. But in Six Sigma
methodology, it is not that these people are novices, it's just that they have not been given sufficient
training in Six Sigma methodology. What they are often are sometimes fairly high-level executives.
They might be the project champion or sponsor, and the project champion or sponsor maybe a mid-level
executive or a senior executive in a company. They just don't have the time to do the detailed training
involved with Six Sigma. They don't have the time to make sure that all the details of Six Sigma
methodology are being followed. That's why we have a Black Belt associated with the project, but they
have to have some familiarity with the Six Sigma methodology, so when they see presentations or when
they evaluate the projects, they understand how the process was completed. So, they are given some
training in Six Sigma methodology. Oftentimes, Yellow Belts and White Belts are trained by Black
Belts. So, this may be project team members, this may be project champions who have this Yellow Belts
and White Belts. So, it's important when you're doing a project with Six Sigma methodology that
everybody in the team has some understanding about the methodology, so that they know how to
participate, that they don't jump to conclusions, that they follow the rigorous approach that is required to
come up with a verifiable and sustainable results.
Explained in Slide 49
Transcript
So, if you think of the Six Sigma infrastructure, the Master Black Belts are critical. They are the ones
who will train both the Black Belts and Green Belts. The reason why we don't have a hierarchy with the
Black Belts train the Green Belts is because- remember, we want to have expertise, and so we have the
Master Black Belts who train both the Black Belts and Green Belts so that there is no transference of
mistakes. So, if a particular Black Belt has some misconception about some aspect of the Six Sigma
methodology, you don't want them to train a whole bunch of Green Belts who then get that same
mistaken misconception. So, the Master Black Belt is generally involved in training Black Belts and
Green belts. Because the Yellow Belts and White Belts do not always work on projects of this nature, it
52 of 53 10/22/18, 4:06 PM
may not be necessary for them to have complete training, and so often the Black Belt may provide that
training on a project by project basis as people come into a project, and they see the need for to train
those people. The training is at a low enough level that the Black Belt is able to provide that training.
Explained in Slide 47
Transcript
So, there is this pyramid that we are looking at, where at the highest level, we have executive leadership,
and then at the lowest level, we have the Yellow Belts and White Belts who have some amount of
training in the methodology. Notice that the executive leader maybe a White Belt as well, but at the high
level, the executive leadership or the executive leader is providing strategic vision. But when they are a
White Belt, we're saying that they have, a reasonable understanding of the methodology, but not good
enough that they may be actually able to apply that. Now, it's possible and there are examples in
companies where many of the executive leaders have been Black Belts or have been Master Black Belts,
and they understand the methodology very well, but it's not required for them to be trained at that level
about the Six Sigma methodology.
53 of 53 10/22/18, 4:06 PM

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Operations Management: Analysis and Improvement Methods Mo... file:///Users/sujinyou/Downloads/BADM 567 Operations Manage...

Operations Management: Analysis and

Lesson 4-2 Lean Management

Lesson 4-3 Six-Sigma Methodology

Lesson 4-1 History of Continuous Improvement

Practice and Improvement - Slide 1

"10,000-hour rule" – (Gladwell & Outliers, 2008)

Edward Deming - Slide 2

Father of Japan's post-war industrial revival

System of Profound Knowledge - Slide 3

P-D-C-A Cycle - Slide 4

Do - implement the change

Check - did the change lead to expected results?

Act - fully implement if it works; create new baseline

Toyota Production System (TPS) - Slide 5

Taiichi Ohno– Industrial engineer who helped create the TPS

TPS became "lean management" in the US

Six-Sigma Methodology - Slide 6

Originated in Motorola in the 1980's

William B. Smith and Mikel J. Harry are credited as cofounders

Applies rigorous statistical methods to improve quality

Goes mainstream after GE makes it a corporate-wide initiative in 1995

Other CI Initiatives - Slide 7

Total Quality Management (TQM)

Business Process Re-engineering

Hammer and Champy (1993)

Lesson 4-2.1 Lean Management (part 1)

Toyota Production System - Slide 8

What is Lean Management? - Slide 9

US version of Toyota Production System

Elimination of waste in processes through continuous improvement

What does the customer value?

Types of Activities - Slide 11

Changes the form, function, or features of product

Essential Non-Value Adding

Consumes resources but does not add value.

Example: Check Deposit - Slide 12

Drive to bank – it takes 30 minutes.

Example: Check Deposit - Slide 13

Open app – it takes 30 seconds.

7 Types of Waste - Slide 14 (1 of 8)

People, parts, or equipment waiting for a previous step to be completed

7 Types of Waste - Slide 15 (2 of 8)

Unnecessary storage of material

7 Types of Waste - Slide 16 (3 of 8)

Producing a higher quality product or service than required

7 Types of Waste - Slide 17 (4 of 8)

The effort wasted inspecting for and fixing defects

7 Types of Waste - Slide 18 (5 of 8)

Producing more products or services than the customer wants

7 Types of Waste - Slide 19 (6 of 8)

Movement of people that does not add value

7 Types of Waste - Slide 20 (7 of 8)

Transportation of material, people, or equipment

7 Types of Waste - Slide 21 (8 of 8)

Lesson 4-2.2 Lean Management (part 2)

Principles of Lean - Slide 22

Identify all steps in the "Value Stream" Eliminate wasted steps

Make product Flow smoothly

Let customer Pull product

Create Perfection or ideal state with no waste

Lean Tools - Slide 23

Value Stream Mapping-more later