Lean Six Sigma Introduction The Basics Version 1

The Lean Six Sigma Vision Ø Customer Focused (VOC) Ø Better, Faster, Lower Cost Ø Fact Based Culture (“Show Me The Data”) Ø More Proactive, Less Reactive Ø Do Things Right The First Time 2 Lean Six Sigma Basics

The Lean Six Sigma Definition Lean Six Sigma is the operating system of an Ø Ø organization that enables it to: systematically and efficiently work on strategic business imperatives, accelerate impact through the use of proven improvement tools, impact bottom line results, and achieve Customer satisfaction Lean Six Sigma is focused on removing waste and variation from processes to maximize value to our Customer. 3 Lean Six Sigma Basics

“Tell the Machine Gun Salesman to come back later. -- I am busy fighting a WAR!”. Lean Six Sigma Basics 4

The Lean Six Sigma “KISS” Approach Keep It Simple Statistically Involving Numerous Graphs Light On “Math”; Big On Data 5 Lean Six Sigma Basics

Which Golf Bag Would You Select … …And Why? 6 Lean Six Sigma Basics

Six Sigma Background Company Year Return on Investment Motorola 1987 $1. 5 B over 7 years Honeywell 1992 $1. 5 B over 5 years GE 1996 $5. 5 B over 4 years (formerly Allied Signal) “We didn’t invent Six Sigma – we learned it. The cumulative impact on the company is not anecdotal, nor a product of charts. It is the product of 276, 000 people executing and delivering the result of Six Sigma to our bottom line. ” -Jack Welch, 1997 8 Lean Six Sigma Basics

Balancing Long and Short-Term “You can’t grow long-term if you can’t eat short -term. Anyone can manage short. Anyone can manage long. Balancing these two things is what management is. ” Jack Welch, CEO General Electric Business Week, 6/8/98 9 Lean Six Sigma Basics

What is Lean Six Sigma? Level of Process Performance Ü 3. 4 Defects per Million Opportunities Ü Executive Ownership Philosophy Ü Waste Reduction and Variation Reduction – Customer Focused – Data Driven Ü Results: Better, Faster, Lower Cost Consistent, Rigorous Approach to Problem Solving Ü Ü Ü Lean Six Sigma Basics Define Measure Analyze Improve Control 10

Lean Six Sigma Roles Executive Ü Assure Six Sigma ownership & leadership alignment Ü Verify that the right problems are selected Ü Validate that the right people are selected Champion Ü Respected leader and owner of critical project Ü Approves project contract with Black Belt Ü Provides resources and eliminates barriers Black Belt Ü Masters basic & advanced Six Sigma methodologies Ü Change agent to lead strategic high impact projects Ü Respected by peers and management Green Belt Ü Works part time on less complex projects Ü Assists Black Belts on projects Advocate Ü Selected subject matter experts of critical projects 11 Lean Six Sigma Basics

The Lean Six Sigma Imperative Total Product or Service Price to Customers Profit Total Cost toto Produce or or Provide 0 a. Profit Budget Constraints and Competition Drive a Lowered Price Waste & (COPQ) Variation (COPQ) Profit Waste & Variation Waste (COPQ) Theoretical Costs i. e. , Cost of Doing the Right Things Right the First Time b. Theoretical COSTS Profit COPQ Theoretical COSTS c. d. COSTS e. Old Model: Cost + Profit = Selling Price New Model: Selling Price – Cost = Profit Lean Six Sigma Basics 12

The Cost of Poor Quality—What is it? Ø Costs that are associated with… ÄInternal Failure Costs ÄExternal Failure Costs ÄAppraisal Costs ÄPrevention Costs ÄLost Opportunity Costs 13 Lean Six Sigma Basics

Lean Six Sigma will Attack the Entire “Iceberg” Traditional Quality Costs (Easily Identified) Inspection Warranty Rejects Scrap Rework Hidden Quality Costs (Difficult to measure) Long Cycle Times FMI’s Lost More Setups Opportunity Expediting Costs Hospital Productivity Loss Engineering Change Orders Employee Morale, Productivity, Turnover Lost Sales Customer Satisfaction Overtime Late Delivery T&L Excess Inventory Lengthy Installs Lost Customer Loyalty Late Product Introduction . . . Higher quality, lower cost, on time. . . Increases customer satisfaction Lean Six Sigma Basics 14

Why “Six” Sigma? ØThere is a correlation between a company’s COPQ and the σ-capability of its key processes. 15 Lean Six Sigma Basics

Lean Six Sigma Impact Zones Customer Value Streams Capability Tools and Methodology Culture Values, Leadership, The Way We Work 17 Lean Six Sigma Basics

I n c r e a s e i n E ff i c i e n c y et e Sw pot S ! e h t r Lean Manufacturing Principles Continuous Improvement / TQM Go t as No High Likelihood of External Involvement (End-Customers, Suppliers) Low Likelihood of External Involvement (End Customers, Suppliers) Six Sigma Decrease in Variation Lean Six Sigma Basics 18

"A brilliant process executed by average people will yield brilliant results; with no process it takes brilliant people to yield average results" Jim Womack – Author of “Lean Thinking” and “The Machine that Changed The World”; Lean Expert; President and CEO of the Lean Enterprise Institute during a Bose Park Place Visit – June, 2003 19 Lean Six Sigma Basics

Next Steps 20 Lean Six Sigma Basics

Recommended Reading Ø The Power of Six Sigma Subir Chowdhury Ø The Power of Design for Six Sigma Subir Chowdhury Ø Six Sigma Mikel Harry and Richard Schroeder 21 Lean Six Sigma Basics

…A Final thought “The definition of insanity is doing things the same way and expecting improved results” --Toyota 22 Lean Six Sigma Basics