Six Sigma and Lean Six Sigma for Municipal Government

ICMA Conference September 15, 2009

Presented by: Stacy Waters, MBA, CMC Principal and Executive Vice President for:

Presented by: Stephen Deas,CSSBB Founder and President for:

THE WATERS THE WATERS CONSULTING CONSULTING GROUP, INC. GROUP, INC.

For more information about this presentation or related services, contact us at 800.899.1669 or via email at swaters@watersconsulting.com

A Brief Overview: The Waters Consulting Group, Inc.
Since 1976, the firm has provided consulting services in the area of human resources consulting Primary focus in the disciplines of Compensation; Strategic Management; Organization Design; Performance Management and Executive Recruitment Nationwide services to a variety of organizations in the public and private sectors including:
•Cities, counties, other local government agencies •Utility and transit authorities •Government-related retirement systems •Professional associations

THE WATERS THE WATERS CONSULTING CONSULTING GROUP, INC. GROUP, INC.

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A Brief Overview: Quality Minds, Inc
Human capital development and process improvement firm located in Charleston, SC. Areas of specialty include: •Process and Quality Improvement •Lean Tools and Techniques •Lean Six Sigma •Safety Improvement •ASQ Certifications •Process Mapping •Statistical Process Control

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Session Outline
• • • • What is Six Sigma? What is Lean? What is Lean Six Sigma? How is Six Sigma used to improve local government?

Lean: Improves Efficiency Six Sigma: Improves Effectiveness

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Lean Six Sigma for Strategic Advantages
• What does Lean Six Sigma Mean for Services?
– Applying Lean Six Sigma to Services – Why Services are Full of Waste- and Ripe for Lean Six Sigma

• Why invest in Lean Six Sigma?

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Getting Faster to Get Better
• • • • • • Why you may need BOTH Lean and Six Sigma Knowing the difference between Lean and Six Sigma What Six Sigma has to offer What Lean has to offer Why does Lean need Six Sigma? Why does Six Sigma need Lean?
Lean: Improves Efficiency Six Sigma: Improves Effectiveness

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Case Studies and Reference Materials
• There are many case studies on the Internet regarding local government • • We use Fort Wayne, Indiana – but there are many other examples Lean Six Sigma for Service (by Michael George)

Lean Six Sigma

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Lean and Six Sigma “Believers”
• • Lockheed Martin has been using Six Sigma and Lean since the late 90s. Named "Consumer Driven 6-Sigma" for a reason, Ford’s aim is to address customer issues first: Over 70,000 Green Belts in North America. Dominion Energy is now in its 10th year of an enterprise-wide Six Sigma initiative. Their

unique approach encourages the entrepreneurial spirit and has led to over $300 million in savings since 2001. • From recruiting to the Bradley fighting vehicle (and everything in between - including meal scheduling), the US Army continues to improve processes and save dollars through Lean Six Sigma. They anticipate reaching a $3 billion-savings mark this year after five years of practicing LSS.

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Six Sigma in Government – Quick Examples
Google “municipal governments using six sigma” or “cities using six sigma” and find on the front page:
– Fort Wayne, Indiana (2000): Mayor introduced Six Sigma as the sole process for improving government administrative and civic services (23K hits) – Buffalo, New York (2008): Municipal Housing Authority used Six Sigma to improve the 72 step process for reserving a park shelter (46/72 steps were identified as waste) – Hattiesburg, Mississippi (2008): One project involved simplifying the cost it takes to tear down a building

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General Overview of Six Sigma, Lean, and Lean Six Sigma

Basic Overview of Six Sigma and Lean
What they have in common Six Sigma Lean Structured approach to improve Result of using different tools to processes, quality, cost, eliminate waste from processes (Effectiveness) (Efficiency) Top project priority is with customers Six Sigma can change work cultures Give the customer what she wants, when she wants it Organization is more aware of wasteful activity

Customer Focused

Organization Development

Human Capital Development

Internal employees are thoroughly Workers see jobs differently, trained to lead projects workers respect work environment more Projects have quick completion times and, as much as possible, are measured using financial criteria Waste is eliminated from business processes, work becomes quicker and more efficient

Results Oriented

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Lean Six Sigma Visualized
Waste
Customer Complaints Incapable processes Excessive costs Poor quality of service IC A
te ed as at W imin el

Lean
Six Sigma
D M Efficiency improvement
Improv ed bus iness proces ses

Six Sigma is a mechanism for becoming Lean.

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Customer “Wants” Vs. Production
The Six Sigma methodology systematically improves work processes to reliably meet the customer’s requirements.

What the Customer Wantsyou must know this and incorporate it into your work

What we Produce-you must be
Fails to meet minimum requirement

measuring this and understand how well your production meets what your customer wants

Exceeds what customer wants

σ

Sigma is a measure of variation
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The “Cost” of Doing Things Wrong
• Things done right 99.9% of the time means that there are things done wrong 0.1% of the time…
– One hour of unsafe drinking water per month – Two unsafe landings at O’Hare International Airport each day – 16,000 lost pieces of mail per hour – 20,000 incorrect drug prescriptions per year – 500 incorrect surgical operations per week – 50 newborn babies dropped each day by hospital staff – 22,000 checks per hour deducted from the wrong account

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The Time it Takes to Complete a Work Task
Worker One
60 50 40 30 20 10 0 Same Work Task Timed Multiple Times
Waste Actual Work Time

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The Context of Six Sigma
Systems and Processes

The Role of Systems and Processes
System
(A collection of processes that work together for a definite purpose)

Municipal Government (Human Resources)

P1

P2

Human Resource Processes P3 P4 P5 P6 (Hiring)

P7

P8

Inputs

P3 Step 1

P3 Step 2

P3 Step 3

P3 Step 4

Outputs

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The Hiring Process as an Example
Supplier
Who supplies each input?

Inputs

Process

Output

Customer
Who are the internal and external customers of this process?

What does this process What are the steps that What is the output of need in order to are followed to hire the process? produce good output? someone? Job requirement A new employee Job description Resumes Interviewers Interview process Candidates

In short, six sigma methodology identifies the key inputs that drive success of outputs. Once identified, actions are taken to improve the inputs in order to improve the outputs.

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Six Sigma Leadership

Leadership’s Role in Deployment
Leadership Support makes the Difference:
Deming’s 85/15 Rule: 85% of problems in any organization are within the system and are the responsibility of leadership while only 15% lie with the worker
• Systems are made of processes. Processes are used by workers to produce products and/or services. If the system is bad, the processes are bad and consequently service and/or product will be bad.

Specific Support Needed for Six Sigma Success:
• • • Careful planning and implementation Proper resources allocated Commitment beyond low hanging fruit

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Six Sigma Leadership Structure - Example
For Example: City Manager, City Council, Mayor

Executive Sponsors

Select projects, knock down barriers, be the leadership representative for project team

For Example: Department Heads, Quality Enhancement Director

Overseer of Six Sigma Program

Process Ownerssubject matter experts

BB

BB

(BB) Black belts manage projects. This is typically a full time job/responsibility. (GB) Green belts are black belts in training. Green belts are usually not full time positions

GB

GB

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Linking Projects to Goals and Organizational Performance
Sources for Projects Customer complaints-should always be priority #1 Internal issues Cost drivers Employee surveys Performance reviews

Strategic Level
(project selection is the responsibility of leadership)

City Manager, City Council, Mayor

Department Level-also called
tactical level

Leadership must consistently review department level indicators and create the “project hopper”

Department Level
Human Resources

Project Hopper

Division Level-also called working level

Division Level

Compensation

Benefits

Projects should come from the “hopper”
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The Six Sigma Process Define Measure Analyze Improve Control

Two Levels of Six Sigma
• Basic
– Most projects can be successful using basic tools in each of the five steps

• Advanced
– Some projects will need to use advanced tools. (Puts heavy emphasis on Black Belt.)

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Define Phase
S Supplier
Team Members Team Members Team Members Black Belt Team Members Team Members Leadership Team Members

I Inputs
Project Scope Project Goals Due Dates Tools Ideas Observations Mentor Process Importance

P Process
Develop a definition of the improvement opportunity

O Output

C Customer

A project charter Measure phase

It is important to develop a clear and thorough definition of the opportunity for improvement.

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Identifying Project Stakeholders
• What are Stakeholders?
• • Those who could be impacted by the results of the project Those that must support any change proposed in the project

Who Could Stakeholders be?
• • • • • Managers of the process People working in the process Internal and External Customers of the process Suppliers to the process Finance support of the process

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The Project Charter
• A written document that defines the project team, team leader, project mission, process scope, business case for project, goals for projects, and time frames for project. Charters can be created by top management or teams can create their own charter

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Measure Phase
S Supplier
Black Belt Team Members Team Leader Black Belt Define Phase Black Belt Team Members

I Inputs
Tools Data Video Recorder Software Project Charter Stop Watch Ideas and opinions

P Process
Measure the process’ performance

O Output
A map of the process A current state of performance

C Customer
Analyze phase

Once you identify the process to be improved, study and document the process to understand its current state of performance
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Analyze Phase
S Supplier
Black Belt Black Belt Black Belt Measure phase

I Inputs
Tools Forms Software Current state of process performance

P Process
Analyze the process to determine root causes

O Output
A root cause statement

C Customer
Improve phase

Once you measure the process, analyze the results of the measurement to establish tangible opportunities for improvement.

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Improve Phase
S Supplier
Team Members Team Leader Team Members Leadership Analyze Phase Black Belt

I Inputs
Ideas Focus Patience Time Root cause statement Tools

P Process

O Output

C Customer

Improve the An improved Control phase process by process or a attacking the root solved problem cause(s)
(Plan-Do-Check-Act)

Take actions on the tangible improvement opportunities from the Analyze Phase.

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PDCA Cycle of Improvement
Plan
Now you must decide what actions to take as a result of your check. The options typically include: •Adopt the change •Abandon it and go back to the drawing board •Run it through the cycle again using a different area, running a larger scale trial, or making the trial more complex.

To improve processes, first find out what areas need improvement. Based on what you learn, plan a change or test.

Act

Do

Once you have a plan, carry out the change or test on a small scale

Check
After completing the Do phase, check to see if the changes or tests are working (What did you learn? What went right? What went wrong? What does the data mean?)
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Control Phase
S Supplier
Black Belt Team Members Leadership Improve phase

I Inputs

P Process

O Output

C Customer
Internal and/or external customers of the improved process

Tools Control the A stable and improved process predictable Ideas to sustain the process Follow up improvement Improved process

Implement controls to sustain the process improvement. If you do not, the process may revert back to previous performance levels.

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Using Six Sigma to Increase Performance in City Government:
Fort Wayne, Indiana – Six Sigma Introduced in 2000

How They Did It
*In the first three years of deployment:
– Trained more than 20 Black Belts and 40 Green Belts – Launched 60 projects resulting in direct savings (or avoidance of expected costs) of approximately $3 million – Gained many less tangible improvements with quality and service improvements – not to mention employee morale
*Lean Six Sigma for Service©

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*Some Highlights
• Goal: A safer city – Now Fire Department performs more than 23% more re-inspections a year without additional staffing. • Goal: Reduce street complaints – Now 98% of potholes repaired within 24 hours (down from an average of 80 hours for a repair) • Goal: Stop variation in the cost of transportation engineering projects – Now only 14% of projects exceed their estimates by more than 10% • Goal: Reduce citizen complaints about tree trimming – Now rate of complaint calls reduced by 33% through determining the optimum level of communication methods
*Lean Six Sigma for Service©

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Fort Wayne’s Six Sigma Structure
Strategic Mayor Executive Council
(Deployment Team)

Quality Enhancement Director

Master Black Belt

Tactical

10 black belts were trained and each had to complete a Cityapproved project each year.

Working

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From City Leadership
More Services, Fewer Employees
• City Challenges – More people, more territory – Revenue down – Demands for service up – State and federal mandates up – Tornadoes, terrorism, floods Questions Posed – Who is your customer? – Is your service improving? – How do you measure improvement? – Show me the data
1999 2006 % Change

Population

190,000

252,000

33%

Non-public safety employees Miles of roads

936

950

2%

850

1200

41%

Square miles

79

109

39%

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Other Fort Wayne Projects & Results
Project
Reduce amount of late garbage pickups Reduce time to repair potholes Improve business permit accuracy and approval time Improve efficiency of waste water treatment processes

Results
Reduced amount of late garbage pickups by 50%

Comment
Also improved relationship between city and contractor

Reduced average pothole repair time Improved communication and from 2 days to 3 hours increased repair capacity Approval time reduced by 300% Efficiency improved 300% beyond goal, city avoided $1.7 million purchase of new equipment Reduced street light inventories to optimal levels by establishing proper tracking and control practices More business was attracted to Fort Wayne

Improve process for managing street Process improved such that light inventory $500,000 was saved and freed for other areas

Other Notable Results: 1. 2005 City Budget ($229,539,522): 5% savings due to projects ($11,476,976) 2. From 2000-2005, 60 projects completed by city workers

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Steps in Getting Started

When to Use Lean Six Sigma?
• • • • • Unknown causes to problems/ongoing challenges and “situations” Problems are frequent, common but not well defined; lots of “noise” and disruption A “broad brush” approach is not appropriate When other problem solving methods fail In complex situations with many variables

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Choosing a Pilot Project
• Select the right project • Select the right team members • Get outside help on your first project • Become self sufficient

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Six Sigma Belts – Leading the Initiative
• • • • First things first, get certified – get team certified Three levels of Belts: Green; Black; Master Black Belt Belts are based on level of competence in understanding and applying tools Actual definition and competencies for each belt can vary by organization and training institutions

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Tip 1 – Slow and Steady
• Public sector organizations should expect to have a longer learning curve with the first few projects because: 1. Most staff will not have had a prior history of formal quality initiatives. 2. Training of Black Belts takes time, energy, commitment. Prepare for this to be the focus of the first six months at least.

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Tip 2 – Persistence
• Expect to be faced with having to overcome long-held patterns of behavior Silo-ing of departments provides a lot of protection and security for individuals – so be prepared to face the challenge of this Continue to deliver the message of change with persistence, commitment and respect to all affected in the process

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Tip 3 – Use the Tools
• • Process Maps help people understand what is going on Failure Modes and Effects Analysis (FMEA) helps people prevent problems before they happen and provides control and structure Utilize tools to help keep things on track and shape the desired results for success

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Tip 4 – Communicate
• Having a team that is dedicated to communication is vital when change is in the air Making sure the right and accurate message is communicated Keeping the project on track Maintaining commitment and consistency This goes for internal and external communications

• • • •

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Tip 5 – Praise and Recognition
• Maintaining commitment and consistency • People like to be recognized for their efforts and contribution.

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Tip 6 – Involvement
• Have a mixture of people from front line to management to union The team for a project should consist of the people that “touch the problem” the most If the project is controversial, the selection of team members is even more critical

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Benefits of Lean Six Sigma Projects
• Internal Benefits
– – – – – Reduced claims filed Overtime reduction More positive public image Higher morale Positive change in culture and effectiveness

• External Benefits
– – – – Safer organizational initiatives Improved customer service Improved relations with neighborhood associations Overall better local, regional and even national image
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(c)2009 The Waters Consulting Group, Inc. and Quality Minds

Six Sigma and Lean Six Sigma for Municipal Government
ICMA Conference September 15, 2009

Presented by: Stacy Waters, MBA, CMC Principal and Executive Vice President for:

Presented by: Stephen Deas, CSSBB Founder and President for:

THE WATERS THE WATERS CONSULTING CONSULTING GROUP, INC. GROUP, INC.

For more information about this presentation or related services, contact us at 800.899.1669 or via email at swaters@watersconsulting.com

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