Six Sigma Qualtec Improving Your Business Results Lean

Six Sigma Qualtec Improving Your Business Results What is Lean … really? Lean is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes the product or services, “value” is defined as any action or process that a customer would be willing to pay for …. Lean, whether in Services or manufacturing … • is based on the premise that anywhere work is being done, waste is being generated … and should be minimized or removed … • is about doing more (customer value) with less (resources) … • is about removing complexity … • is about reducing inventory and WIP … • is about improving flow, pull instead of push … • is about doing things faster … • is about reducing costs … • Is about increasing capacity • is not about eliminating people Six Sigma Qualtec – All Rights Reserved 2

Six Sigma Qualtec Improving Your Business Results LEAN IS ABOUT A RELENTLESS FOCUS ON THE IDENTIFICATION AND ELIMINATION OF WASTE. Ø It can be used at any level of the organization and applied to any process or work area, services, transactional, or manufacturing … Ø It is a mentality, a way of thinking, as well as a tool set Ø It can quickly help a team (or individual) understand any business process in a way that allows waste to be identified and removed to reduce costs, improve cycle time, and improve quality. Six Sigma Qualtec – All Rights Reserved 3

Six Sigma Qualtec Improving Your Business Results Manufacturing or Services There are Common Elements • Goal is to Drive Performance whether in mfg or services. It is Systems thinking irrespective of deliverable and improvement tools. • Certain things must happen – Goals as expressed by Dashboards/Scorecards (Op. Ex doesn’t set them…just needs them expressed in terms of measureable outputs) – Governance – The decision process to identify, select and prioritize the activities that drive performance. EVSMs and Process Metrics are the foundation tools. – Improvement Activities – The problem solving approaches and tools used to execute projects • Driving Performance improvement isn’t a Lean initiative, it’s a business initiative. • Solving specific problems with Lean in either mfg or services starts by identifying a S-M-A-R-T project charter and understanding processes with process characterization. • Significant improvements in both services and manufacturing can be realized through “Lean thinking”, and recognizing opportunities to improve through Lean “lenses” Six Sigma Qualtec – All Rights Reserved 4

Six Sigma Qualtec Improving Your Business Results Common Elements - Op. Ex Diagnostic • Enterprise (or Macro) Value Stream Mapping • Metrics Based Process Mapping (SIPOCs, Flow Charts, Functional Maps, Spaghetti Charts, etc. ) • Process / Root Cause Analysis These concepts help UNDERSTAND the SYSTEM. Six Sigma Qualtec – All Rights Reserved 5

Six Sigma Qualtec Improving Your Business Results Common Elements Definitions & Objectives of Lean “Precisely specify value by specific product, identify the value streams for each product, make value flow without interruptions, let he customer pull value from the produce, and pursue perfection” (Lean Thinking, Womack Six Sigma Qualtec – All Rights Reserved 6

Six Sigma Qualtec Improving Your Business Results Unique Aspects of Services Examples of Types of Work • Service - Installation & Integration Of Hardware or HR Recruiting • Transactional - Mortgage Operations or Credit Review • Analytical - Finance Department • Creative - Designing Published Content for Mobile Devices, software development Six Sigma Qualtec – All Rights Reserved 7

Six Sigma Qualtec Improving Your Business Results Unique Aspects of Services • There is typically greater involvement of customers in the production process. In many cases, the customer is a supplier to the process. – Sometimes the involvement is so ingrained in the process that you really end up with co-production with the customer. • Since services processes are often very people-centric (vs. machine-centric), it is very difficult to get to real standardization. • Quality is an experience, not just a measurement against specifications. The inability to standardize the process makes it very difficult to standardize quality. The customer’s definition of quality is a perception, subjective vs. objective Six Sigma Qualtec – All Rights Reserved 8

Six Sigma Qualtec Improving Your Business Results Unique Aspects of Services • There is much less visibility to what is actually happening. Information is flowing, not product, and that information can be digital, paper, or even verbal. And, HOW it flows often has little or no standardization • IT systems play a much bigger role. They enable the process, but can also be a rigid constraint on the process. There may be multiple and often un-integrated systems. Workarounds persist in the form of excel spreadsheets, word docs, etc • WIP and inventory are often hidden and ignored, but they are there and can have the same negative impacts as in a manufacturing environment (e. g. wasted resources, longer lead times, more variation Six Sigma Qualtec – All Rights Reserved 9

Six Sigma Qualtec Improving Your Business Results Lean’s fundamental focus of eliminating waste aligns well with the concept of preserving value with less work and doing more with less. Lean thinking provides specific “lenses” for looking for different types of waste in your services or backoffice processes … Six Sigma Qualtec – All Rights Reserved 10

Six Sigma Qualtec Improving Your Business Results Examples of Waste in Services • Transportation (Handling). Movement of paperwork, multiple handoffs of electronic data, approvals, excessive email attachments and distributing unnecessary cc copies to people who don't really need to know • Inventory. Purchasing or making things before they are needed (e. g. office supplies, literature. . . ). Things waiting in an in-box, unread email and all forms of batch processing create inventory • Human Motion. Walking to copier, printer, fax. . . Walking between offices. Central filing. Unnecessary meetings … • Waiting. Slow computer speed. System downtime (computer, fax, phone. . . ). Waiting for approvals, waiting for customer information or waiting for clarification or correction of work received from upstream process create much waste in office and business systems. Six Sigma Qualtec – All Rights Reserved 11

Six Sigma Qualtec Improving Your Business Results Examples of Waste in Services • Overproduction. Printing paperwork or processing an order before it is needed. (things can change) Any processing that is done on a routine schedule - regardless of current demand • Over-processing. Relying on inspections, rather than designing the process to eliminate errors. Re-entering data into multiple information systems, making extra copies, generating unused reports, and unnecessarily cumbersome processes are overprocessing. Demand-side waste can create over-processing • Defects. Data entry errors or invoice errors. Engineering change orders, design flaws, employee turnover and miscommunication are all ‘defects’ in office processes Six Sigma Qualtec – All Rights Reserved 12

Six Sigma Qualtec Improving Your Business Results Examples – Constraints 1. Physical constraint – People, tools, systems, etc. 2. Logistical constraint – Unnecessary end-customer dependencies 3. Managerial constraint – Policies that require levels of sign off or work hour requirements that do not match well with the arrival of work. 4. Behavioral constraint – Worker or supervisor tendencies to: “get the easy ones out of the way first, ” or “I’ve done my part, it’s too bad that the next step in the process wasn’t able to handle the volume and didn’t complete everything on time. ” Six Sigma Qualtec – All Rights Reserved 13

Six Sigma Qualtec Improving Your Business Results Differences in Application Example - Material & Information Flow Manufacturing Various stages of manufacturing inputs ranging from raw materials to shipped finished goods. It is all VERY visible. Service Various forms of information, documents, etc in paper, digital, or even verbal form. Flows in many cases are not visible. Information Flow Highly structured with formalized IT systems. Very specific instructions for operators Multiple and often unintegrated systems. Workarounds persist in the form of excel spreadsheets, word docs, etc Schedule Notification Multiple points around VSM Material Flow WIP Yes…physically evident as queues Work is loosely scheduled or unscheduled Sometimes There…mostly virtual Quality Metric First Pass Yield TAKT Time Very applicable concept, driven by real demand patterns Lead Time Constraint WIP / Queues between Process Blocks What is flowing Six Sigma Qualtec – All Rights Reserved Percent Complete, Percent Accurate or Percent C&A Only applicable when considering the work flow through a dedicated resource Based on a single transaction passing through the Value Stream 14

Six Sigma Qualtec Improving Your Business Resulting Differences in Application of Tools ‘Most organizations, for example, used just a few tools, such as value stream mapping. This implies that many of the tools and techniques used in a manufacturing context are currently not immediately and obviously applicable to service environments. Instead, some of the tools need to be adapted to cope with the need for greater process flexibility…may be because the service sector has yet to understand the value, relevance or purpose of the tools being applied from within the toolkit. ’ (Radnor 2006) Six Sigma Qualtec – All Rights Reserved 15

Improving Your Business Results Six Sigma Qualtec Resulting Differences in Application of Measures - Time – Cycle Time (or Process Time) • The time it takes to deliver the desired outcome if left to work uninterrupted – Lead Time • The time it takes to get from when work is available until when its delivered to the processes customer whether that be an internal or external customer • This is made up of Process and Wait Time – Activity Ratio • The percent of the time something is being worked versus the percent of the time its sitting in process • Findings say its about 10% in services Six Sigma Qualtec – All Rights Reserved 16

Six Sigma Qualtec Improving Your Business Resulting Differences in Application of Measures - Quality • Percent Complete & Accurate – Incoming work usable “as is” by the downstream recipient without having to Correct, Add or Clarify (“CAC”) • Rolled First Pass Yield – Multiply all the %C&A, even if parallel processes Six Sigma Qualtec – All Rights Reserved 17

Six Sigma Qualtec Improving Your Business Results The Practical Challenge - Project Selection “Give me six hours to chop down a tree and I will spend the first four sharpening the axe” Abraham Lincoln Six Sigma Qualtec – All Rights Reserved 18

Six Sigma Qualtec Improving Your Business Results Failure Demand Waste - Service Blueprinting • Service Blueprinting puts the customer at the center of the process map • Putting customer at the center gives you a better starting point to determine predictable demand flow • It also gives you a picture of “failure demand” which is a core service organization’s waste and not one of the items listed originally in TPS as MUDA. • But this opens a whole way of thinking which most organizations are ill prepared to support organizationally or with data. Six Sigma Qualtec – All Rights Reserved 19

Six Sigma Qualtec Improving Your Business Results Summary • Manufacturing and Service Environments are obviously not the same and must be treated differently • Fundamentals of Op. Ex and Lean still apply • Tools are adapted (some might call it simplified) and the emphasis is changed • The key to success is in the Project Selection which is challenging often relying on experience in lieu of well documented processes which would kill any momentum to first obtain • The impact is large because of the amount of waste yet its not dealing with the greatest potential inherent in the overall system Six Sigma Qualtec – All Rights Reserved 20