IFN651 – Lean Six Sigma

Week 1 – S2.2015
Chun Ouyang
Business Process Management Discipline
Information Systems School
Science and Engineering Faculty

Queensland University of Technology

Brisbane Australia

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 Have been on holidays lately?

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 The Hidden Processes

Processes exist from the moment we create an

organization
However, we often lack awareness for
– how our processes look like
– how they currently perform
– how they can be improved

The root causes are

– functional focus
– lack of urgency
– lack of process management skills
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 Top Business Priorities: 2005-2013
according to CIOs

2005 2013
Improving business
Improving business processes
processes Increasing
Increasing enterprise
enterprisegrowth
growth
Security breaches and business Delivering
Deliveringoperational
operationalresults
results
Enterprise wide operating costs/budgets Reducing
Reducing enterprise
enterprisecosts
costs
Supporting competitive advantage Attracting and retaining new customers
Data protection and privacy Improving IT applications and infrastructure

Need for revenue growth Creating new products and services

Using intelligence in products and
services
Focus on internal controls
Shortage of business skills in IS
Faster innovation
Improving
Improving efficiency
efficiency
Attracting and retaining the workforce
Implementing analytics and big data
Expanding into new markets & geographies

Gartner (2005-2013)
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 Improving Business Process

• Business Process Management (IFN515)

• Lean Management
• Six Sigma
• Supply Chain Management
• Operations Management
• Business Process Re-Engineering

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 Process Analysis Methods

• Process SWOT Analysis

• Viewpoint Analysis
• Variation (Six Sigma) Analysis
• Value Added (Lean) Analysis
• Flow Analysis
• Pareto Analysis
• Bottleneck Analysis
• Process Time / Quality / Cost /
Sustainability Analysis
• Process Animation and Simulation

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 Process Quality and Product Quality

Impacts

Process Quality Product Quality

Task within process Product feature

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 Agenda

• Understanding Six Sigma

– History
– The Principle
– Objectives
– DMAIC cycle
– Roles & Responsibilities
• Brief intro to Lean management
• About this unit

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 Six Sigma

“[Six Sigma] is the most important training thing we

have ever had. It’s better than going to Harvard
Business School.”
J. Welch, former CEO,
General Electric
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 Six Sigma Origins

• In 1986, Bill Smith, a senior engineer and

scientist at Motorola, introduced the
concept of Six Sigma to standardize the
way defects are counted.

• Six Sigma was then used to address

quality concerns throughout the
organisation, from manufacturing to
support functions.

• In 1988, Motorola won the Malcolm

Baldridge National Quality award.

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 GE’s 6σ Implementation

“First, what it is not. It is not a secret society, a slogan or

a cliché. Six Sigma is a highly disciplined process that
helps us focus on developing and delivering near-
perfect products and services. […] Six Sigma has
changed the DNA of GE — it is now the way we work
— in everything we do and in every product we design.”

Six Sigma was rolled out in 1995 across the entire

organization and led to a cost savings of US320 in the
first two years, US$1billion by 1999.

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 Six Sigma in a Nutshell
Six Sigma is a:

 Reach perfection in your business by focusing

Philosophy on customer requirements

 Data Driven using structured problem solving

Methodology roadmap and tools resulting in breakthrough
improvement (70%)

Statistical Dimension  Sigma indicates the quality of a process

Improve your Process

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 Six Sigma: The Idea
The clients of an airline company
(i.e. passengers) expect that the
airline flights to arrive within 1 hour
around the scheduled arrival time.

8hrs 4hrs 1hr

(drift mean value m from target)

low
Centering

high

high low
Spread (deviation, s = Sigma)
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 Six Sigma: The Idea

(drift mean value m from target)

low
Centering

high

high low
Spread (deviation, s = Sigma)
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 Six Sigma: The Idea

(drift mean value m from target)

low
Centering

high

high low
Spread (deviation, s = Sigma)
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 Six Sigma: The Idea

(drift mean value m from target)

low
Centering

high

high low
Spread (deviation, s = Sigma)
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 Six Sigma: The Idea

(drift mean value m from target)

low
Centering

high

high low
Spread (deviation, s = Sigma)
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 Six Sigma: The Idea
 Goal: Center process output with low deviation
(drift mean value m from target)
low
Centering
high

high low
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 Six Sigma: The Idea

+/- 3 s Legend
LSL USL

Fulfillment of Customer
Requirement

4hrs 1hr
Deviation from
Customer
+/- 6 s Requirement

Lower Specification
Limit of Customer

Upper Specification
Limit of Customer

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 Six Sigma Principle

σ = Standard Deviation
N = Population of sample
xi = value in population
x = numerical average

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 Sigma Significance

Sigma Defects
numbers per million
600,000

1.5 500,000 500,000

# of Defect per Million

2.0 308,300 400,000

2.5 158,650 300,000

3.0 67,000 200,000

3.5 22,700 100,000

4.0 6,220 0
1.5 2.5 3.5 4.5 5.5
4.5 1,350 # of Sigmas
5.0 233
5.5 32
6.0 3.4

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 Sigma Significance Applied

99% (≈3.8s) 99.99966% (≈6s)

 20,000 lost articles of mail per hour  7 lost articles of mail per hour

 15 minutes of unsafe drinking water  1 minute of unsafe drinking

each day water per 7 months

 5,000 incorrect surgical operations  1.7 incorrect surgical

per week operations per week

 2 short or long landings at most  1 short or long landing at most

major airports each day major airports every 5 years

 11 hours of no electricity per month  1 hour of no electricity 34 years

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 Six Sigma: The Basic Aims (1/2)
Main Focus

Improvement of
organisational
performance

Change of
customer expectations

Expected Actual
performance performance

VOC: Voice of Customer VOB: Voice of Business

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 Six Sigma: The Basic Aims (2/2)

Increase
organisational
reliability

VOE: Voice of Employee – Process driven

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 Understanding Variation

• Means that a process or product does not produce the

same results every time it is measured
• Is always present at some level

• Is inherent in every process or product

• Is our enemy in delivering services or manufacturing

products
• Reducing Variations helps to improve quality, reduce costs,
increase profits, and increase customer satisfaction.
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 Six Sigma Objectives

1. Spotty use of Quality 1. Disciplined and consistent use

Improvement approaches and of proven Quality tools at all
tools levels.
2. Frequent “ship-and-fix” attitude 2. Do it right the first time, based
on customers’ requirements

3. Ignore costs of poor quality 3. Calculate and communicate

costs to all employees

4. Function-focused values, 4. Process-focused values,

mindset and practices mindset and practices

5. Frequent guess-work in 5. Measure and analyse

making decisions objective data to help make
decisions

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 How Does Six Sigma Solve Problems?

Practical Problem Statistical Problem

(Define/Measure) (Analyze)

Practical Solution Statistical Solution

(Control) (Improve)

Y=f(x)
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 DMAIC – Roadmap (1/2)
Champion
/
• Identify Problem Area
Process
Owner
• Who is the Customer and what is important to them?
Define • What process needs improvement?
• What is the problem and goal?

• How is process performance measured?

Measure • Do you have good data to measure the process?

• What factors (X) could be causing the problem?

Analyse • What are the root causes?

• What solutions will address/eliminate

Improve the root causes?
• Have the solutions been tested?
• Does the new process
ensure controlled and
(Q&A - Q) Control measured results and
ongoing improvement?
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 DMAIC – Roadmap (2/2)
Champion
/
• Identify Problem Area
Process
Owner
• Determine Appropriate Project Focus
Define • Estimate COPQ
• Establish Team

• Assess Stability, Capability and Measurement Systems

Measure • Identify & Prioritise all X’s

Analyse • Prove/Disprove Impact X’s have on Problem

• Identify, Prioritize, Select Solutions Control

or Eliminate X’s Causing Problems
Improve • Implement Solutions to Control or
Eliminate X’s Causing Problems
• Implement Control Plan
to Ensure Problem
(Q&A - A) Control Doesn’t Return
• Verify Financial Impact
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 How Six Sigma meets BPM
Six Sigma Rosemann (2004) Process
Lifecycle Steps

Process Identification
DEFINE
Process Modelling (as-is)
MEASURE
ANALYSE Process Analysis
Process Improvement (to-be)
IMPROVE

Process Implementation

Process Execution (to-do)

CONTROL
Process Monitoring and
Control

Mathiesen et al. (2011)

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 Six Sigma Roles & Responsibilities
• Sets Vision & Strategies, direction
Executive /
Executive / • Identify key performance
Leadership
Leadership • Leads change

• Supports Black Belts

• Leads team & business unit performance
Champion
• Implements solution

• Leads & facilitates problem solving

Master Black Belt • Trains & Coaches Black Belts & Green Belts

• Leads & facilitates problem solving

Black Belt Black Belt Black Belt • Trains & coaches project team

Green Belt Green Belt Green Belt

• Participates in Black Belt
projects
• Collect, analyse data &
Green Belt Green Belt Green Belt run experiments
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 What is LEAN?
Making the process flow, waste, and results visible
Dept 1

Dept 2
IN OU
T OU
T
IN

Dept 3

Dept 4
OU IN IN
T
OU
T

DONE

So they can be improved easily

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 The LEAN Principles

• Specify value from the standpoint of the end customer;

• Identify all the steps in the value stream for each product
family, eliminating every step and every action and every
practice that does not create value;
• Make the remaining value-creating steps occur in a tight and
integrated sequence so the product will flow;
• As flow is introduced, let customers pull value from the next
upstream activity; and
• As these steps lead to greater transparency, enabling
managers and teams to eliminate further waste, pursue
perfection through continuous improvement.
Womack, Jones, 1996
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 LEAN Concept: Value vs. Waste
Value-Added
– Brings product closer to its final form
– Changes the form, fit or function
– An activity the customer is willing to pay for
Non-Value-Added [Waste]
– Does not contribute to bringing the product to its final form
– Does not improve the form, fit, or function of the product or service
on the first pass through the process.
– An activity the customer is not willing to pay for
– Waste
Non-Value-Added but Required
– Quality Inspections, Writing Policies.

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 LEAN Concept: 8 Types of Waste

UNDER-UTILIZED
SKILLS

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 Example: Batch vs Continuous Flow
Batch & Queue Processing

Process Process Process

A B C

10 Minutes
10 Minutes
10 Minutes
30+ Minutes for order of 10

Continuous Flow
Process Process Process
A B C
12 Minutes for
order of 10
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 Lean Six Sigma

Lean • Eliminate Waste

• Improve Process flow
+
Six Sigma • Eliminate Variation
= =
Lean Six Sigma Improved Process
 A structured data-driven approach designed to help
prevent … jumping to conclusions!
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 About this Unit

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 Understanding the subject

• Lean Six Sigma is not a statistics course. Rather, it makes

people into excellent problem solvers by using appropriate
statistical techniques.
• Lean Six Sigma is an improvement initiative in which resources
(Belts) are armed with a powerful set of problem solving tools
and are sent into the organization to form, lead, and mentor
teams on solving complex, high return projects.
• The focus of the subject is process centric.
• We only apply tools when they meet our objectives.

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 Unit Coordinator
Dr. Chun Ouyang
Queensland University of Technology
P Block (Level 8)
Gardens Point Campus
GPO Box 2434
Brisbane, QLD 4001, Australia
phone: +61 7 3138 6587
email: c.ouyang@qut.edu.au
web: http://staff.qut.edu.au/staff/ouyang

Senior Lecturer and a member of the Business Process Management Discipline at

the Information Systems School since 2004
A member of the YAWL (www.yawlfoundation.org) initiatives since 2007
Co-author of 50+ publications (including over 15 journal articles)
Google Scholar: h-index 16, 2,200+ citations
Program Committee co-chairs of the 2nd Asia-Pacific BPM Conference in 2014, the
3rd China BPM Conference in 2013; and Doctoral Consortium co-chair of the 11 th
International BPM Conference in 2013
Funder of the ChinaBPM.org since 2012

Consultation times - On request, coordination via email

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 Co-Lecturer and Tutor
Glenn Siddayao
Consultant, Business Performance Improvement
at SMS Management & Technology, Brisbane

Former graduate of Master of BPM from QUT

BPM and Lean Six Sigma Black Belt practitioner

email: glenn.siddayao@gmail.com

BPM and Lean Six Sigma practitioner with proven ability and success in leading
business process improvement projects in both operations and service industries.
Currently holds
Master’s Degree in Business Process Management
Certified PRINCE2® Practitioner
IIBA® Business Analyst
A trainer for ISO 9001 and Lean Six Sigma, having had direct experience in course
development and delivery, including the development and improvement of
training materials.

Consultation times - On request, coordination via email

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 Resource Materials

• Open Source Six Sigma, “The Certified Lean Six

Sigma Green Belt eBook”, Third Edition, Lean Six
Sigma Belt Series
– Available online from www.opensourcesixsigma.com
• T. Pyzdek, “The Six Sigma handbook a complete
guide for green belts, black belts, and managers
at all levels”, McGrawHill (2003)
• L. Swift, S. Piff, “Quantitative methods for
business, management and finance”, Third
Edition, Palgrave Macmillan
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 Assessment

• Assessment 1 (50%)
– Pre-Assignment Test – Individual (15%)
• In class: 5-5.50pm Tuesday 25 August
– Case Study Assignment – Group work (35%)
• Report only due: Friday 23 October
• Written Exam (50%)
– During the exam period
– Closed book exam

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 Unit Timeline

Test Assignment
(25/08) (weeks 7-13)

Lectures (weeks 1-13)

`

1 2 3 4 5 6 7 8 9 10 11 12 13

Tutorials (weeks 2-13)

Pulse Insight survey

survey (opens at the end of
(weeks 4-5) the teaching period)

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 Weekly Outline
Intro to Lean
Six Sigma WEEK 1

Define WEEKS 2-3

Measure WEEKS 4-5, WEEK 6: Recap & Test

Analyse WEEKS 7-9 (by Glenn Siddayao)

Improve WEEK 10

Control WEEKS 11-12

Conclusions
& Outlook
WEEK 13
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 Class Timetable

Time Mon Tue Wed Thu Fri

12-1pm
1-2pm
2-3pm
4-5pm
GP-P512 (LECTURE)
5-6pm
6-7pm GP-S503 (TUTORIAL A) GP-S517 (TUTORIAL B)
7-8pm GP-S503 (TUTORIAL C)

NOTE: You are encouraged attend a tutorial class on Wednesday.

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 The key to successful learning

‘Participation’!

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 Dr. Chun Ouyang

Business Process Management Discipline

Information Systems School
Science and Engineering Faculty
Queensland University of Technology
Level 8, P Block, GP Campus
Brisbane QLD 4000

E-mail: c.ouyang@qut.edu.au
Phone: 07 3138 6587

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