Lean Six Sigma Green Belt Training A Workshop

Lean Six Sigma Green Belt Training A

Workshop Goals This Workshop will help you learn to: • Implement a systematic approach to identify, map and control existing processes. • Develop upstream and outcome metrics and targets that track process performance in satisfying critical customer requirements. • Utilize methodologies for collecting, displaying, and interpreting data. • Apply proven approaches for continuously improving processes, including DMAIC problem solving, and Tollgate reviews. ING Business School Ref Intro-1 a

Agenda Day 1 Day 2 Day 3 Day 4 09: 00 -10: 45 Introductions / LSS Overview 10: 45 -11: 00 Break 11: 00 -12: 30 LSS Overview / Define Phase 12: 30 -13: 30 Lunch 13: 30 -15: 30 Define Phase 15: 30 -15: 45 Break 15: 45 -17: 30 Define / Measure Phase 17: 30 Close Day 1 and Homework assignment Measure Phase 10: 45 -11: 00 Break 11: 00 -12: 30 Measure Phase 12: 30 -13: 30 Analyse Phase 10: 45 -11: 00 Break 11: 00 -12: 30 Improve Phase 12: 30 -13: 30 Control Phase 10: 45 -11: 00 Break 11: 00 -12: 30 Control Phase 12: 30 -13: 30 Lunch 13: 30 -15: 30 Measure Phase 15: 30 -15: 45 Break 15: 45 -17: 30 Analyse Phase 17: 30 Close Day 2 and Homework assignment Lunch 13: 30 -15: 30 Improve Phase 15: 30 -15: 45 Break 15: 45 -17: 30 Control Phase 17: 30 Close Day 3 and Homework assignment Lunch 13: 30 -15: 30 Project Presentations 15: 30 -16: 30 Wrap-Up & Evaluation 16: 00 Close Programme 19: 00 Dinner ING Business School

Administrative Information • Safety (room, building) • Breaks and lunch • Facilities (bathrooms, services) • Courtesy (mobile phones, blackberries etc) • ? ING Business School Ref Intro-2

Introductions Activity Introduce a colleague covering the following information: ING Business School • • Name Work location Job responsibilities Experience prior to working at ING • Experience with Lean Six Sigma • Expectations of this workshop • Something interesting about you Ref Intro-3

Ground Rules • • • Be on time Follow an agenda Listen constructively Defer items to Parking Lot Ask Questions Have fun! ING Business School

Have you completed the Pre-work? ING Business School Ref Intro-1 b

Overview of Lean Six Sigma ING Business School

ING Strategy and Lean Six Sigma Customer Centric Identify Critical Customer Requirements Economic Value Lean Six Sigma Improve Persistency Reduce Operational Costs Define Gaps to Customer Requirements Increase Sales Establish Baseline Metrics Improve Mix of Business Execute Improvements to Close Gaps Reduce Risk and Economic Capital RESULTS Lean Six Sigma Is “How” to Achieve Strategic Objectives ING Business School Ref Overview-1

ING Strategy and Lean Six Sigma Mission Set the standard in helping our customers manage their financial future Positioning Statement ING is dedicated to deliver financial services solutions valued by the customer Brand Attributes Delivers on Promises Is Easy to Deal with Customer. Centric Treats Me Fairly ING Business School

Executing Strategy with Lean Six Sigma Strategy Deployment Voice of Customer Voice of Process Voice of Business Market Factors Competition/ Benchmarks SWOT Business Strategic Objectives Business Line Strategies Business Line Tactics METRICS PROJECTS Review Process METRICS ING Business School Ref Overview-2

Sources of Lean Six Sigma Projects Lean Six Sigma projects may be generated from a number of sources, examples include… • VOC – Improve timeliness, accuracy, satisfaction, control compliance risks, reduce fines • VOP – Reduce the gap between current performance and customer specifications • VOB – Increase sales, reduce expenses, improve productivity, includes VOE (Voice of the Employee) Increase employee retention, improve employee satisfaction METRICS ING Business School Ref Overview-3 a

Lean Six Sigma Project Selection Inputs Voice of the customer Voice of the business Voice of process Prioritize Projects Translate into project opportunities Strategic Fit Economic Value Time/Effort Known solution with supporting data? YES NO Process Not Capable – use DFSS methodology ING Business School Process Capable – use DMAIC methodology Ref Overview-3 b Implement solution, follow lean six sigma principles

Project Prioritization Matrix More detailed approach than Prework ING Business School Ref Overview-4

Lean Six Sigma Success Factors Business Process Framewor k Quantifiabl e Measures & Results Committed Leadership Incentives & Accountabil ity ING Business School Custom er & Market Network Strategy Integration Full Time Six Sigma Leaders • Establishing these factors provides the seeds of success. • They need to be integrated uniquely to fit each business. • They are all necessary for the best result. • The most powerful success factor is “committed leadership” Ref Overview-5

Lean Six Sigma Failure Factors • Leaping to the fix – faulty assumptions; not data based • Serving the wrong customer – not focusing on the voice of the “next” customer • Selecting the wrong projects – not linked to strategy • Solution-caused problems – poor sequencing; stakeholder under-involvement; ineffective resource planning; absence of change management; no project closure Adapted from Six Sigma’s Seven Deadly Sins by James P. Zimmerman and Dr. Jamie Weiss of Kepner Tregoe ING Business School Ref Overview-6

The Evolution of Lean Six Sigma The foundation for Lean Six Sigma has been effectively applied in a wide variety of companies worldwide over many decades Today: American Express, JP Morgan, Merrill Lynch, Wells Fargo, B of A , Caterpillar Financial …. . Design for Six Sigma: GE Six Sigma: Allied. Signal, GE Six Sigma: Motorola Reengineering: Michael Hammer Quality Circles 1970: Zero Defects: Philip Crosby Japanese Quality methods: Ishikawa, Taguchi Applied Lean Concepts: Toyota Production System Statistical methods for business: Juran, Figenbaum Late 1940 s; Statistical methods in Japan; W. Edwards Deming Statistical Sampling; Walter A. Shewhart 1920 Time and motion studies; Frederick Taylor ING Business School Ref Overview-7

What is Sigma? • The Greek letter σ (sigma) is used in statistics to describe variation. • Sigma (σ) represents the standard deviation in a population. • Standard deviation is derived from calculating the average difference between all data points of a population and the average of that population. ING Business School Ref Overview-9 a

Lean and Six Sigma Thinking Lean Thinking: Six Sigma Thinking: • Customer focused • Identify waste • Improve process speed/cycle time • Specific speed tools – Value-add analysis; Kaizen events • Critical Customer Requirement (CCR) focused • Culture and infrastructure to sustain results • Focus on variation • Methodology driven – DMAIC, DFSS Lean Six Sigma - Blended to Optimize Results ING Business School Ref Overview-8

What is Lean Six Sigma? (cont’d. ) • Measurement • Measures the variation and defect level in a process or product • Allows different processes to be compared • 3. 4 defects per million opportunities ING Business School Ref Overview-9 b

What is Lean Six Sigma? (cont’d. ) • Measurement • Measures the variation and defect level in a process or product • Allows different processes to be compared • 3. 4 defects per million opportunities • Improvement Methodology • • Customer-focused Data and measurement-driven Focused on reducing defect levels Results-oriented ING Business School Ref Overview-9 c

What is Lean Six Sigma? (cont’d. ) • Measurement • Measures the variation and defect level in a process or product • Allows different processes to be compared • 3. 4 defects per million opportunities • Improvement Methodology • • Customer-focused Data and measurement-driven Focused on reducing defect levels Results-oriented • Catalyst for Organizational Change • Large-scale fundamental change in culture • Move to a data-driven, customer-centric mindset ING Business School Ref Overview-9 d

Who is the Customer? • External • Purchasers of products and services • Distributors • Regulatory entities ING Business School Ref Overview-10 a

(cont’d. ) Who is the Customer? • External • Purchasers of products and services • Distributors • Regulatory entities • Internal • Other departments • Management / Shareholders ING Business School Ref Overview-10 b

Who is the Customer? • External • Purchasers of products and services • Distributors • Regulatory entities • Internal • Other departments • Management / Shareholders • Voice of Customer(VOC) • Information that can be collected from external/internal customers ING Business School Ref Overview-10

What is Variation? • Variation is the normal, measured difference in process outputs • Many process measurements focus on averages… averages don’t tell the whole story 1 ING Business School Process Customer Average Requirement Same Process Average 5 15 20 10 Days to close loan Ref Overview-11 a 25 30

(cont’d. ) What is Variation? Process Customer Average Requirement • Knowledge of process variation and defect levels provides more insight into process performance • Less variation reduces costs, increases reliability, and customer satisfaction Same Process Average Much Different Customer Defects 1 ING Business School 5 15 20 10 Days to close loan Ref Overview-11 b 25 30

Sources of Variation Market Suppliers Inputs Process Activities Critical Customer Requirements Process Outputs Defects Variation occurs in both process inputs and process activities – people, methods, materials, equipment, and environment In-process variation may lead to defects in process output The output (Y) is determined by performance of inputs and processes (x)…. Y=f(x) ING Business School Ref Overview-12

Goal of Lean Six Sigma Using Lean Six Sigma, we work to reduce variation and permanently move product or service outputs inside customer requirements. (Curve A to B) B A Critical Customer Requirement (CCR) Defects: Process output that does not meet Customer Requirements Product or Service Output ING Business School Ref Overview-13

Improve Process Yield We use Lean Six Sigma to improve process yield. Process Yield is the proportion of process output that meets customer requirements. Critical Customer Requirement (CCR) Proportion of process output (B) that meets customer requirements = 100% B A Proportion of process output (A) that meets customer requirements ≈ 70% Produce or Service Output ING Business School Ref Overview-14

The ‘Hidden’ Factory (Lean Thinking) • The hidden factory corresponds to the resources that today are directed at creating waste, while they could be focused on generating high quality products and services. • For the typical organization, about 25% to 40% of all work activities consists of hunting for mistakes, unnecessary audits, rework, duplication of efforts and the performance of unneeded tasks. ING Business School .

Rolled Throughput Yield (RTY) represents a combined yield for each step or sub-process. Obtain RTY by multiplying the yield for each step or sub-process. STEP 1 ING Business School STEP 2 STEP 3 STEP 4 Ref Overview-15 a

Rolled Throughput Yield Loan Documentation Yield = 95% Loan Application Yield = 91% Loan Processing Loan Review Rolled throughput Yield = 0. 95 x 0. 91 x 0. 96 x 0. 97 = 77. 2% ING Business School (cont’d. ) Yield = 96% Loan Servicing Yield = 97%

Rolled Throughput Yield • RTY can be calculated on either the number of items that make it through defect-free the “first time right” or on the final number of items that are defect -free once errors are corrected • In most situations, it makes sense to base sigma calculations on First Time Right ING Business School (cont’d. ) Process Step 1 Correct? No First Time Right = Number of items that make it through errorfree without corrections Errors Reworked Final Yield = Number of items that are defect-free AFTER errors are corrected Ref Overview-16

Rolled-Throughput-Yield - Activity 1. Appoint a facilitator in your project team to manage the time and the discussion. 2. Map your selected improvement process high-level (e. g. 6 -8 process steps) on a flip chart 3. Make an estimate of the yield rate at each individual process step You may have to first consider the criteria for defects and what the definition is for a defect free step! This may include establishing a target level for a step (e. g. this step must be finished in 2 hours) 4. Calculate the RTY % of the overall process 5. What is your conclusion? 6. Be ready to share your results in a short presentation. ING Business School

Process Sigma is a Great Metric • Focus is on defects, even one is a failure for a customer • Universal measure that can be applied to any product or service • Difficult to motivate people to improve quality from 99% to 99. 9997% σ DPMO Yield 3. 0 66, 807 93% 3. 5 22, 750 98% 4. 0 6, 210 99% 4. 5 1, 350 99. 87% 5. 0 233 99. 977% 6. 0 3. 4 99. 9997% Distribution shifted +/- 1. 5 sigma DPMO = Defects per million opportunities Sigma Improvement Requires Enormous Defect Reduction ING Business School Ref Overview-17

0 ING Business School DPMO 10 y lit ta 1000 te ra 100 1 om (0 est. 4 ic 3 p ai pm rlin ) e fa D 100000 1 2 m nti s er sw an % 21 of ls ca l e fli gh C or ta O re rri ve ct va So rni leg ls ft ght al (a d a ll R rin de dv ca es l k i i rri v c Pa ta qu er e er u al y o fro M yro ra s) ity f m is ll nt 1 s IR ha pr b i n nd oc ills W N t. C S. A la ire le es d s m ss tra ba ing er M ns gg ic ai a l fe a ge rs (a ll ca rri er s) O S 1000000 IR Is Six Sigma Performance Necessary? 3 4 5 6 Ref Overview-18 a 7 Process Sigma Is the Airline Industry Focused on the Right Processes?

Is Six Sigma Performance Necessary? (cont’d. ) At 3σ, or 93% Yield, there would be: • >90% of computers would not function • 10. 8 million mishandled healthcare claims annually • 54, 000 checks lost each night by a single large bank • 270 million erroneous credit card transactions each year in the US Source: The Six Sigma Handbook 2003, page 61, T. Pyzdek ING Business School Ref Overview-18 c

Is Six Sigma Performance Necessary? (cont’d. ) At 4. 5 σ, or 99. 9% Yield, there would be: • • • At least 20, 000 wrong drug prescriptions per year Unsafe drinking water almost 1 hour each month No telephone service for nearly 10 minutes each week Two short or long landings at O’Hare airport each day 25, 000 lost or incorrectly delivered articles of mail per hour • Over 9, 000 wrong felony convictions per year • 50 Newborn babies dropped at birth by doctors each day ING Business School Ref Overview-18 b

Setting Sigma Performance Targets • If the current Process Sigma is greater than 3. 0, a two times defect improvement goal is set, e. g. , improve from 1, 000 DPMO to 500. • If the current Process Sigma is 2. 9 or less, a ten times defect improvement goal is established, e. g. , 300, 000 DPMO to 30, 000. ING Business School Ref Overview-19

The Cost of Defects Activity: Brainstorm some costs that you incur as a result of defects. ING Business School Ref Overview-20

Cost of Defects - Examples • Hidden Factories • Re-work of defects in processes or products • Complex workarounds • Excessive phone calls, emails, faxes and other correspondence as a result of poor performance • Inspections and Audits • Back-end audits and approvals • Multiple approval steps • Lost Sales and Market Share • Market product requirements not met • Service or delivery requirements not met • Fines and Other Penalties ING Business School Ref Overview-21

Lean Six Sigma Business System • MTP Planning – the steering mechanism of the Business System • Process Management – documenting and measuring process performance • Problem Solving – using lean, DMAIC, DFSS, and other methodologies to close process performance gaps • People – recognizing and harnessing the exceptional potential of employees, suppliers, customers, and experts ING Business School Ref Overview-22

DMAIC vs. DFSS Lean Six Sigma DMAIC Lean Six Sigma DFSS Define Business Improvement Opportunity Does Process Currently Exist? No Yes Measure Current Performance Measure Market Requirements Analyze Root Cause of Current Performance Analyze Design Alternatives Develop New Process Is Current Process Capable of Meeting Customer Reqts? No Yes Improve Performance ING Business School Control Performance Ref Overview-23

(cont’d. ) DMAIC vs. DFSS DMAIC DFSS Define customer Define requirements and project goals Measure the process to determine current performance Analyze to identify and validate root causes of Design Improve defects Improve process by Control Verify eliminating causes of defects Control and monitor ongoing process performance ING Business School Define customer requirements and project goals Measure customer needs and specifications Analyze design options to meet customer requirements Design a detailed process that meets customer requirements Verify that current and future process meets customer requirements Ref Overview-24 a

Funneling the Focus of Process Work Variables DEFINE 20+ Many variables MEASURE 5 -8 Important variables ANALYZE 3 -5 Confirmed problematic variables IMPROVE 3 -5 Focus of improvement activities CONTROL 1 -3 Focus of ongoing control ING Business School Ref Overview-24 b

Project Components: DEFINE Overall objective: Clarify the Improvement Opportunity Identify Business Opportunity/Problem Identify Outcome Metric(s) and Target Valid CCR Establish Roles & Stakeholder Expectations Clarify Project Boundaries, Financial Benefit, and Preliminary Problem Statement Critical Customer Requiremen t Service Attribute Outcome Metric Charter & Schedule Project, Select Resources Identify Critical Customer Requirements (CCRs) To Measure Step ING Business School Target Ref Overview-25 a

Project Components: MEASURE Overall objective: Narrow the improvement opportunity to a specific problem statement. Plot Outcome Defect Data From Define Step Create Detailed Process Map F F 1 2 F 3 F Stratify Data Frequency Plots Run Chart Calculate Performance 4 Pareto Chart DPMO_____ Yield _____ Sigma _____ Goal _____ Collect Upstream Data Check Sheet Develop Data Collection Plan Project ____________ What questions do you want to answer? A Mary John Sally Jim Data What Measure type/ Data type B C E Understand Variation Control Chart UCL Operational Definition and Procedures How Measured 1 Related conditions to record 2 Sampling notes How/where recorded (attach form) LCL ING Business School Revise Problem Statement Ref Overview-25 b Assess Financial Impact (COPQ) To Analyze Step

Project Components: ANALYZE Overall objective: Identify and confirm the root causes of the problem statement. From Measure Step Identify Value Added & Non-Value Added Steps Customer Confirm Root Causes with Data Scatter Plots Continuo us Data Y Customer X Stratified Frequency Plots Made the Sale Brainstorm and Organize Potential Causes Level 1 Cause Level 2 Cause Root Cause 2 ING Business School 10 10 15 15 20 20 25 25 25 30 30 30 33 55 5 40 40 45 45 50 50 50 Level 2 Cause 55 55 Level 1 Cause Revised Problem Statement 60 60 >60 Did Not Make the Sale Contingency Table Level 2 Cause Level 3 Cause Level 1 Cause 5 5 5 Cause and Effect Diagram Sub Cause Yes No Defect Root Cause 1 Mixed Data Present Not Present 5 55 10 15 20 25 25 30 30 30 33 55 40 40 45 45 50 50 50 55 60 Time With Customer (in minutes) >60 Time With Customer (in minutes) Attribute Data Ref Overview-25 c To Improve Step

Project Components: IMPROVE Overall objective: To identify/implement countermeasures that will eliminate or reduce the confirmed root causes. From Analyze Step Cost/Benefit Analysis Identify Breakthrough Ideas Due Date Updated Pareto Chart Status 1. 3 s 3. 1 s 100 % Before Benefit Approval from Finance A 1 Recommended Action Responsibility and Target Date Action Taken RPN Current Controls “After” Severity Occurrence Detection Potential Cause(s) Detection Potential Failure Effect (s) Mode of Failure RPN Item or Process Step Occurrence FMEA Develop Pilot Plan Gantt Chart A 2 A 3 A 4 After } 50% A 2 A 1 A 3 Before After A 4 Good IMPROVE changes implemented } Improvement “After” Risk Priority Number = To Control Step Ref Overview-25 d 25% 3. 6 Process Sigma Time Total Risk Priority Number = 50% Improvement Update Metrics 3. 2 Process Sigma ING Business School 100 % 75% 25% Risk Analysis Severity fe ct i Ea ven se es s C to os Im t pl em To en ta t l. S Ac cor e tio n Ef Problem Who 75% Selection Matrix Specific Tasks Task / Project Cost Select Countermeasures Solutions Quantify Pilot Results : Problem Statement ____________________ Solution (s) / Specific Task (s) ______________ Cost/Benefit Analysis Lean Thinking Root Causes Develop Action Plan

Project Components: CONTROL Overall objective: To maintain the gains. From Improve Step Standardize the Process Standard Practices Communicate Results Close Project “Y” Outcome Metrics Trai n Good Cost/Benefit Analysis Approval from Finance “X” Upstream Metrics UCL Process Control Plan Celebrate! LCL ING Business School Ref Overview-25 e

Lean Six Sigma Involves Cultural Shift • Owns vision, • Leads change • Directs, integrates project w/in business • Creates business Project deployment plan Sponsor Executive Champion • Provide projectspecific support • SMEs (subject matter experts) provide support as Project Team needed Members / SME Understand vision All Employees Process Owner • Supports Black Belts and Local Champion • Sustains and leverage gains ING Business School Green Belts Apply concepts to their job and work area Black Belts Master Black Belts • Full-time • Train and coach Black Belts and Six Sigma Green Belts • Help Black Belts as team member • Experienced Green Belts • Full-time lead some • Facilitate problem solving projects • Train and coach Project Teams Ref Overview-26

Lean Six Sigma Roles/Responsibilities Executive Champion • Creates the vision and aligns Lean Six Sigma with business strategy • Defines strategic goals and measures • Establishes business targets • Promotes Lean Six Sigma tools and methodology • Helps to remove barriers to success • Reviews project and team progress • Attends tollgates during initial roll-out ING Business School Ref Overview-27 a

Lean Six Sigma Roles/Responsibilities (cont’d. ) Project Sponsor • • • Positions project within business environment Identifies process owner of improvement projects Develops preliminary project charter Defines improvement areas, goals and financial targets Identifies key SME resources for project team Positions and kicks off improvement project Reviews project and team progress Helps gain organizational support and removes barriers Helps gain organizational support for solution Recognizes team and contributing members Ensures access to data from existing databases Establishes and certifies savings ING Business School Ref Overview-27 b

Lean Six Sigma Roles/Responsibilities (cont’d. ) Process Owner • Participates in tollgates • Identifies resources and team members for project team • Ensures sufficient implementation resources • Ensures organization support of solution deployment • Evaluates sufficiency of project “controls” designed to hold gains upon solution implementation • Owns process, Responsible for sustaining project gains • Removes barriers for the team ING Business School Ref Overview-28 a

Lean Six Sigma Roles/Responsibilities (cont’d. ) Master Black Belt • Expert on Six Sigma tools and concepts • Trains Black Belts and ensures they are properly applying the methodology and tools • Coaches and mentors Black Belts and Green Belts • Works high-level projects, many of which are across divisions or business units • Assists Champions and Process Owners with project selection, project management and Lean Six Sigma deployment and administration • Removes barriers for the team ING Business School Ref Overview-28 b

Lean Six Sigma Roles/Responsibilities (cont’d. ) Black Belt • Responsible for leading, executing, and completing Lean Six Sigma projects • Teaches team members the Lean Six Sigma methodology and tools • Assists in identifying project opportunities and refining project details and scope • Reports progress to MBB, Process Owners and Champions • Mentors Green Belts and team members ING Business School Ref Overview-29 a

Lean Six Sigma Roles/Responsibilities (cont’d. ) Green Belt • Assists Black Belt as team member • Can lead smaller scope projects • Reports progress to MBB or BB, Process Owners and Sponsors Project Team Members/Subject Matter Experts (SMEs) • • Provide process knowledge and understanding Participate in identifying and gathering data Identify gaps Help analyze data and identify solutions ING Business School Ref Overview-29 b

What is a Tollgate Review? • A milestone that the project must pass through at each step (D-M-A-I-C) • Formal presentation(s) followed by questions and discussion • Assess status of project – project control • Review activities and accomplishments prior to proceeding to the next phase – alignment with plan • Revisit Project Charter assumptions • A tollgate review ends with a Go/No-Go decision Tollgate reviews ensure projects deliver desired results. ING Business School Ref Overview-30 a

Who Attends Tollgate Reviews? • Black Belt/Green Belt • Project Sponsor • Process Owner • Project Team (Key Members) • Quality Champion • Senior Mgmt. Stakeholders • Other Stakeholders • Master Black Belt ING Business School Required Recommended As Appropriate Required Ref Overview-30 b

Why Are Tollgate Reviews Critical? 1. Brainstorm reasons why Tollgate Reviews are important. 2. At what intervals should Tollgate Reviews be scheduled? Why? Discuss ideas ING Business School Ref Overview-31

Who is Using Lean Six Sigma? Manufacturing: Financial Services: Companies across all regions and industries ING Business School

UNIT 1 Define ING Business School

Define – Learning Objectives At the conclusion of this unit, you will be able to: • Describe actions for launching a Lean Six Sigma project. • Identify project stakeholders and expectations. • Clarify project scope. • Define Critical Customer Requirements (CCRs) to measure a process performance metric and establish a target for improvement. • Develop a project charter and schedule. ING Business School Ref Unit 1 -1

Define – Major Activities DEFINE Launch the Project MEASURE Identify Stakeholder Expectations ANALYZE Clarify Project Scope IMPROVE Measure Customer CCRs CONTROL Develop Project Charter and Schedule Overall objective: Clarify the Improvement Opportunity ING Business School Ref Unit 1 -2 a

Define – Key Deliverables/Commonly Used Tools Key Deliverables: Commonly Used Tools: • Stakeholder Analysis • Preliminary Financial Benefit • Preliminary Problem Statement • Project CCR’s • Process Outcome Metric/Target • Team Charter • Risk Analysis • Project Schedule • Surveys • Focus Groups • Interviews • Stakeholder Analysis • SIPOC • In and Out of Scope Analysis • Risk Analysis • Pert Chart ING Business School Ref Unit 1 -2 b

Define – Major Activities DEFINE Launch the Project ING Business School MEASURE Identify Stakeholder Expectations ANALYZE Clarify Project Scope IMPROVE Measure Customer CCRs CONTROL Develop Project Charter and Schedule Ref Unit 1 -3 a

Lead Team Identifies Lean Six Sigma Projects PLAN DEPLOY REVIEW REPORT GROW ING Business School Analyze current operations, competitive environment, customer input, employee surveys, benchmark information. Identify priorities that align with MTP, and that address local priorities. Establish metrics with targets for improvement to measure performance. Launch projects that focus on priorities. Coordinate activities in an action plan that defines who will be doing what by when. Monitor progress during Tollgates. Offer Feedback, both positive and constructive, to keep people informed. Share Thoughts, Feelings and Rationale so others can learn from a leader’s knowledge and experience. Inform Senior Management of progress. Recommend improvements. Continuously improve both results and the approach taken to achieve them. Ref Unit 1 -3 b

Lead Team Identifies Lean Six Sigma Projects (cont’d. ) Approach Options Methodology Options • Management Action • Process Management • Individual Assignment • DMAIC • Form a Project Team • DFSS ING Business School Ref Unit 1 -4 a

DMAIC for Existing Process Improvement Control the process Define the project’s purpose, scope and major milestones “maintain the gains & transition to full implementation” Improve the process “develop & pilot solutions” “clarify the opportunity” 5 1 CONTROL DEFINE IMPROVE 4 MEASURE ANALYZE 2 3 Measure the current process performance “narrow the problem area” Analyze potential root causes “confirm with data” ING Business School Ref Unit 1 -4 b

Lead Team Fills Lean Six Sigma Roles (cont’d. ) Project Roles • Executive Champion • Project Sponsor • Process Owner • Master Black. Belt • Green. Belt • SMEs ING Business School Ref Unit 1 -5

Define – Major Activities Launch the Project Identify Stakeholder Expectation s Clarify Project Scope Measure Customer CCRs Develop Project Charter and Schedule A stakeholder is someone with an interest in, and/or who may be effected by outcomes of the project. ING Business School Ref Unit 1 -6 a

Stakeholder Expectations The Project Sponsor communicates: • • • The need for change Desired outcomes Where performance is now and targets How performance will be measured Level of urgency Related issues to be addressed ING Business School Ref Unit 1 -6 b

Stakeholder Expectations (cont’d. ) Process Owner Internal/External Customers SMEs ING Business School Project Sponsor Project Team Lead Team Other Project Teams Internal/External Other Employees Suppliers Ref Unit 1 -7

Stakeholder Expectations (cont’d. ) What stakeholders typically expect: • On-time delivery • Resource management • Accurate cost forecast and control • Risk Management / Security • Measurable results / ROI • Easy to understand /implement ING Business School Ref Unit 1 -8 a

Stakeholder Expectations (cont’d. ) What Project Teams typically expect : • • Clear goals and deliverables Resource availability Time to work on the project Clear idea as to how performance will be evaluated • Positive and constructive feedback • Support, as needed ING Business School Ref Unit 1 -8 b

Activity Expectations ING Business School Ref Unit 1 -9

Define – Major Activities Launch the Project ING Business School Identify Stakeholder Expectation s Clarify Project Scope Measure Customer CCRs Ref Unit 1 -10 a Develop Project Charter and Schedule

Clarify Project Scope The scope of a project is the sum of activities that a team is committed to complete in a given scheduled timeframe. Begin thinking about scope using the highlevel process map you developed in the Pre. Work… Sell Policy ING Business School Review Application Underwrite Policy Issue Policy Ref Unit 1 -10 b

Clarify Project Scope (cont’d. ) In and Out of Scope Analysis ING Business School Ref Unit 1 -11

Clarify Project Scope Preliminary Problem Statement (cont’d. ) • What is Wrong – state the effect, not why it is wrong, and not the solutions • Measurable – how often, how much, and when • Specific – avoid broad categories, e. g. , poor morale; low customer satisfaction • How Customers Are Effected – areas of dissatisfaction • Objective – does not imply blame or cause • What Is and What Should Be – gap between customer expectations and performance ING Business School Ref Unit 1 -12

Clarify Project Scope Calculate Financial Benefit (cont’d. ) • An initial financial benefit of the project is developed based on the project scope and preliminary problem statement. • When determining Financial Impact, calculate annualized benefits. • Look for benefits that may accrue from reducing or eliminating defects in the process. ING Business School Ref Unit 1 -13

Activity Clarify Project Scope ING Business School Ref Unit 1 -14

Define – Major Activities Launch the Project ING Business School Identify Stakeholder Expectation s Clarify Project Scope Measure Customer CCRs Ref Unit 1 -15 a Develop Project Charter and Schedule

Customer Requirements Do you remember from the Pre. Work… • What are typical customer requirements? • What are customer requirements categories? Requirement Categories: Category Quality Cost Delivery Explanation Free of errors, defects, and mistakes Value exceeds or equals price Output received when needed Integrity Accountable to shareholders and communities served ING Business School Ref Unit 1 -15 b

Must Haves vs. Like to Have Separate Must Haves from Like to Haves… • Ask questions of internal customers • Negotiate for win/win reasonable requirements • Agree on specific, measurable, attainable and trackable performance levels ING Business School Ref Unit 1 -16

Who Caught The Fish? A ING Business School B C D E

SIPOC Analysis Worksheet - Example Date: 1/04 Process Name: New Business Process Suppliers Process Inputs Agent Completed insurance applications Agent Legible insurance applications By: Li Chan P R O C E S S Inputs Products Suppliers Services ING Business School Process Outputs Process Customers Underwriting approval Agent Timely response Agent Policy issued Agent/Policy Holder Outputs Process Products Customers Services Ref Unit 1 -17

80/20 Rule Use the 80/20 rule to identify the 20% of customer requirements that are most critical. Review your SIPOC Analysis while considering the following questions: • Who is the “next customer” – the direct recipient of our process output? • Who are the most critical customers of our process (it may only be one customer)? • Who would be most impacted if our process stopped producing an output? ING Business School Ref Unit 1 -18

Activity SIPOC Analysis ING Business School Ref Unit 1 -19

Critical Customer Requirements (CCR) A CCR is a description of a product/ service attribute or characteristic that influences a customer’s requirement. To identify CCRs for your process… • What attribute of my product/service does the next customer (my key customer) most care about? • What attribute of my product/service does the business most care about? • Work with your Project Sponsor to rectify any conflicts. ING Business School Ref Unit 1 -20

Measure CCRs with Outcome Metrics • Outcome metrics are “after the fact” “past tense” measures • They always focus on defects • They represent the proportion of total process output that is not satisfying the customer requirement over a period of time • A typical process has 1 -3 outcome metrics Critical Customer Requirement Service Attribute Outcome Metric “I want new % of Policies not insurance policies Turn Around Time issued on time issued quickly. ” ING Business School Ref Unit 1 -21

Tips for Defining Outcome Metrics • • • Customer Oriented Cost Effective Controllable Calculable Consistent ING Business School Ref Unit 1 -22

System of Metrics Region 1 Process A Process B Process C Business Line Region 2 Process D An outcome metric for one process should link to the next higher-level process – see example on next slide Process E Region 3 Process F ING Business School Ref Unit 1 -23

Setting Outcome Metric Targets Sources of Targets • • Critical customer requirement data Specifications Past performance trends Analysis of potential for process improvement (Process Sigma) • Benchmark levels of performance attained by competitors, or best in class in your organization ING Business School Ref Unit 1 -24 a

Setting Outcome Metric Targets (cont’d. ) Tips for Setting Targets • Use numbers to clarify desired level of performance • Be prepared to change target • Establish a time frame for achieving target with intermediate targets • With multiple process outputs, set targets for each to realize the overall product or service target ING Business School Ref Unit 1 -24 b

Valid CCRs Valid CCR Critical Customer Requirement Service Attribute Outcome Metric Target “I want my new policy issued quickly. ” Turn Around Time % of policies not issued on time <2% not on time Note: “On time” means within 5 working days beginning the day after the policy is received from agent. ING Business School Ref Unit 1 -25

Valid CCRs Promise what you can deliver. Valid target for 2005 Valid target for 2006, through 2 nd Quarter Valid target for 2006, end of year Policy issued within 5 working days of receipt Policy issued within 4 working days of receipt Policy issued within 3 working days of receipt ING Business School Ref Unit 1 -26

Activity Define Valid CCRs ING Business School Ref Unit 1 -27

Define – Major Activities Launch the Project ING Business School Identify Stakeholder Expectation s Clarify Project Scope Measure Customer CCRs Ref Unit 1 -28 a Develop Project Charter and Schedule

Project Charter Example Business Opportunity Business Benefits/Customer Benefits Over 15% of department resources spent on answering agent’s inquiry. Improving the process will enable resource allocation. Better support to agency will improve business and increase customer satisfaction. Business Benefits: More efficient handling of agent’s enquiry reduce resources, which can be allocated to improve other daily operations Customer Benefits: Timely service to agent, hence more satisfied customers. Key Deliverables Process Scope Starts when an agent makes an inquiry (by email or by phone). Ends when reply received and no more follow-up. Services limited to agents only (internal inquiry not included). The communication channels include email, phone, internal memo, and agent’s intranet. Review and improve agency inquiry process by Nov 2005. Answer all agent’s inquiry in less than 5 minutes Turn. Around-Time (KPI/Target). Process Control Plan Training plan for revised process ING Business School Ref Unit 1 -28 b

Project Charter Elements of a Project Charter • • • Business Opportunity Business Benefits/Customer Benefits Key Deliverables Metric /Target Process Scope Project Schedule and Resources ING Business School Ref Unit 1 -29

Identify and Mitigate Risks • • • People Technology Resources Cost Schedule Environment Can you think of others? ING Business School Ref Unit 1 -30

Identify and Mitigate Risks (cont’d. ) Risk Assessment Table Project Risk Items Potential Impact (1 -5) Probability of Occurrence (1 -5) Example: Severe storm 5 1 ING Business School Overall Risk (impact x Action Plan probability) 5 Ref Unit 1 -31 n/a

Project Schedule & Resources • Serves as a record of team participation • Tracks the number and duration of meetings • Clarifies a schedule for completing each of the DMAIC steps • Facilitates comparison of the planned schedule with actual time required • Includes actions to reduce/mitigate identified risks ING Business School Ref Unit 1 -32

Project Schedule & Resources (cont’d. ) Project Schedule Worksheet Project Theme Team Information Dat Attd. Hour e s Meeting Record Team Members/ % Dedicated Team Name Sponsor ING Business School Ref Unit 1 -33 a

Project Schedule & Resources (cont’d. ) Schedule: Week/Month Planned 1 2 10 3 10 4 10 1 10 2 11 Actual 3 11 4 11 1 11 2 12 3 12 4 12 1 12 Define Measure Analyze Improve Control ING Business School Ref Unit 1 -33 b 2 1 1 Project Close

Activity Develop Project Charter, Schedule and Resource Requirements ING Business School Ref Unit 1 -35

Project Tollgates A tollgate occurs at the end of each step in the DMAIC methodology with the purpose of. . . • • • Monitor team progress Identify additional resource needs Maintain focus Assist in dealing with sensitive issues Ensure coordination among all teams Share best practices Remove organizational barriers “See” the business Check for consistency Reward and recognize ING Business School Ref Unit 1 -34 a

Define Project Tollgate Prepare to answer the following questions during a tollgate review at the end of the Define Step: A. B. C. D. E. F. G. H. I. What is the problem or opportunity? Why is this project important to the business? Who is the project Sponsor Does the Project Charter address key stakeholder expectations? When does the Project Schedule call for the project to be completed? What identified risks most threaten the project? Who is working on this project? Why? How does the outcome metric measure performance against CCRs? How were targets established for each metric? ING Business School Ref Unit 1 -34 b

Unit Summary Having completed this unit, here are some questions you should be able to answer: A. What actions are involved in launching a Lean Six Sigma project? B. Who are typical project stakeholders? What do they typically expect from a project? C. What is a CCR? D. What metric is used to measure overall process performance in satisfying CCRs? E. How are the Project Charter and Schedule helpful? ING Business School Ref Unit 1 -38 a

Project Components: DEFINE Overall objective: Clarify the Improvement Opportunity Identify Business Opportunity/Problem Identify Outcome Metric(s) and Target Valid CCR Establish Roles & Stakeholder Expectations Clarify Project Boundaries, Financial Benefit, and Preliminary Problem Statement Critical Customer Requiremen t Service Attribute Outcome Metric Charter & Schedule Project, Select Resources Identify Critical Customer Requirements (CCRs) To Measure Step ING Business School Target Ref Unit 1 -38 b