Introduction To Lean Six Sigma

Lean, Six Sigma and Quality
Lean, Six Sigma and Quality
in the Public & Service Sectors
in the Public & Service Sectors

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© 2008 e-Zsigma (Canada) Inc.

Objectives
1. Provide you with an introduction to…
• Lean principles, methods & tools
• Six Sigma concepts, methods & tools
• Basic quality management
2. Learn how these tools, methods and
principles can be applied successfully in
the Public & Service sectors
3. The importance of change management,
communication and leadership in a
continuous improvement culture

2

Agenda
• Introduction to Lean Principles
– Value-Added Assessment
– 8 Sources of Waste
• Introduction to Six Sigma
– DPMO (Defects per Million Opportunities)
– DMAIC (Define, Measure, Analyze, Improve, Control)
– Six Sigma Roles and Responsibilities
– The “Hidden Factory” & Rolled Throughput Yield (YRT)
• Opportunity Statements
• Leadership, Change Management &
Communication in a Continuous Improvement
culture

3

Exercise Time!

4

Introduction to Lean Principles
2. Identify & map
the Value Stream

1. Define value 3. Reduce waste
from the customer’s and improve
perspective flow

5. Pursue 4. Move from
perfection “push” to “pull”
from customer

5

Lean is …
A set of principles, concepts, and techniques designed for a relentless
pursuit in the elimination of waste. Producing a “Just-In-Time” system,
that will deliver to our customers …

Exactly what they need
When they need it
In the quantity they need
In the right sequence
Without defects
And at the lowest possible costs
Image: http://halfwaytoconcord.com

6

Brief History of Lean
Taiichi Ohno - founder of the Toyota Production System (TPS)
1950 - Engineer Eiji Toyoda observations of the Ford US Rouge plant
TPS evolution shaped by post war Japan market demanding smaller quantities
of a greater variety of vehicles – opposite to large batch production
Concept of flow predated TPS… Henry Ford’s research on keeping assembly
workers stationary while the automobiles move
1973 “oil crisis” made global industry start to take notice and “borrow” methods
1990 “The Machine That Changed the World”, Womack & Jones, Landmark
study of the automobile industry – “Lean Manufacturing” coined
Focus on improved productivity through adding resources that result in waste
elimination on reduced production lead-time
Today, lean manufacturing has become lean enterprise, spanning the entire
value stream: suppliers to customers… focusing on getting the best possible
value from the collective effort across the supply chain
Manufacturing, financial services, telecommunications, healthcare… etc

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The Five Principles of Lean Thinking

1. Specify and Focus on Value
2. Identify the Value Stream
3. Allow value to Flow without interruptions
4. Let the customer Pull value
5. Continuously pursue Perfection
These five principles apply to every process that
produces a product or service for an internal or
external customer in every industry.

8

Value-Added Assessment
Any process step, activity or task that transforms
the deliverables of a process such that the
customer and the community is aware of it and
is willing to fund and/or pay for it is considered
value added.
Value is always stated in the eyes of the
customer. Therefore, non-value-added has to be
everything else. Note: “Community” has been added for the Public Sector.

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Non Value Added = Waste
Waste is defined as anything that does not
add value to the customer.
“Lean Thinking” requires an organizational
culture that is intolerant of all forms of
waste.
The goal of Lean is to banish waste.

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So… Where do we start?...
1. Define (Customer) Value…
2. Identify & Map the Value
Stream
3. Reduce Waste & Improve
Flow
4. Move from “Push” to “Pull”
5. Pursue Perfection
Image: www.jdiamond.co.uk/lean.htm

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What’s the “Muda” for you?
“Muda” is the one word of Japanese you might hear most
often in lean organizations since muda means waste. Waste
can be considered any activity which absorbs resources but
creates no value:
• Mistakes which require rectification
• Processing steps which aren't actually needed
• “Touching” things more often than you need to
• Unnecessary movement of employees and materials
• People and processes waiting because an upstream activity has
not delivered on time
• Goods and services which don't meet the needs of the customer.”

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Eight Sources of Waste (aka “Muda”)

1. Inventory 5. Motion

2. Waiting or Delays 6. Errors/Defects

3. Overproduction 7. Over-processing

4. Transportation 8. Underutilized
human capability

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Tools to Make Waste Visible
1. Workplace Organization
a) 5S (or 6S)
b) Visual Workplace
2. Process Flow Charts
3. Spaghetti Diagrams
4. Value Stream Maps
5. Cause and Effect Diagrams
a) Five Whys
More on these tools later…
6. Pareto Chart
7. Process Reports, Audits and Assessments

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More Lean Tools & Concepts
• 5S (or 6S) • Touch once principle
• Visual Workplace • JIT
• Process reports, audits • Pull & Kanban
& assessments
• Single piece flow
• Error-Proofing (Poka Yoke)
• Work leveling
• Rapid Change-Over
• Work cells
• Kaizen Events
• Standardized work

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Lean Thinking
A continuous improvement discipline and culture of
analyzing the flow of product, materials, people,
information and consumption of resources and
systematically
eliminating waste.

Lean = Better,
Faster, Cheaper…
Increasing value for
the enterprise as well
as your customers.

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Continuous Improvement
Lean requires that everyone is committed to
finding better ways to do things.

This means excellence in everything we do
for our customers as well as ourselves.

Continuous improvement is how to achieve
excellence and without it, you can not
become a Lean organization.

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Organizational Culture Needs to Enable Lean
Lean Requires Organizational Rethink
Organizational goals and focus areas usually change
Traditional thinking is challenged – process design, flow, supplier
relationships, etc.
Relationships with other functional areas (within the organization and external
partners) dramatically changes
This needs the right “culture” to be enabled in any
organization
Higher quality is the way to lower cost
Change is embraced
Profound knowledge is sought for problem solving
Candid conversations uncover problems
Decision making is taken to shop floor
Swift execution through an iterative cycle of “projects”

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Lean requires a
CULTURAL
transformation.

Lean strategies
fails as a result of
not recognizing this
key element for
success.
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Exercise
Using the value-added assessment (slide 9) as well as the
8 sources of waste (slide 13), identify two specific
examples of waste that you have experienced recently in a
process (where you may have been the customer
or the supplier).
Provide an adequate (process level)
description of the waste and the reason(s)
why you think it does not bring value to
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the customer (or takes away value).

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Introduction to Six Sigma

ra ge”
“A ve

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What is Six Sigma?
“Six Sigma is a rigorous program & methodology
that organizations are leveraging to transform
themselves into best-in-class businesses.

This is achieved by a dramatic increase in
customer focus, establishment of near defect-
free processes, products, and services, with a
goal of maximizing shareholder value.”

Eliminate defects…
Eliminate defects…
Minimize variation…
Minimize variation…

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Brief History of Six Sigma
1980s – Motorola - Art Sundry's critique, "Our quality stinks"
Motorola four-point plan: 1. Global competitiveness 2. Participative
management 3. Quality improvements 4. Motorola Training and Education
Center
1984 - 10X quality improvement launched & Motorola Manufacturing Institute
established in 1984
Senior Quality Engineer Bill Smith presented Six Sigma “common metric” to
Bob Galvin in late 1985… "The father of Six Sigma"
1987 - Six Sigma improvement program launched
1988 - Motorola received first Malcolm Baldrige National Quality Award
1990s - Motorola established Six Sigma Research Institute (SSRI) to
accelerate the achievement of "Six Sigma and Beyond". Black Belt concept
was created by Mikel Harry
Six Sigma “adopted” by Allied Signal (1993) and General Electric (1995)
DMAIC Six Sigma toolkit created and built upon by Mikel Harry and others

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Five Dimensions
• Customer centric
• Process focused
Philosophy
Philosophy • Measurement based & fact driven
• Results oriented
• 99.9997% - 99% is not good enough!
Metric and Goal
Metric and Goal •
•
3.4 Defects Per Million Opportunities (DPMO)
Near-zero defects

• Step-by-step cookbook
Methodology
Methodology • Rigorous project methodology
• DMAIC, DMADV (DFSS) & others

• Lean & Six Sigma “toolbox”
• Basic quality tools
Tools
Tools • Advanced statistical tools
• Manufacturing AND service processes
• A whole system of management
People & Roles
People & Roles •
•
An entire organization involving approach
Clearly defined support & leadership roles
• ex. Black Belt, Champion, etc.

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Voice of the Customer” (VOC)
Customer Expectations Supplier Mandate
Predictable results Controlled Processes
Value for money Lean operations
Accuracy First-time quality
Service Service
Timely, quick Efficient
Flexible Nimble

What customer’s want is simple… They want it perfect, they want it
now and they want it free! Robert Rodin, CEO, Marshall Industries
Robert Rodin, CEO, Marshall Industries

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What is DPMO?
DPMO = Defects per Million Opportunities
“The number of errors per unit observed
divided by the number of opportunities to
make a error for the process being studied
normalized to one million.”

3.4 DPMO =

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Example of DPMO
An application to open a new bank account has 27 “critical to
quality” elements (fields of information, supporting content, etc. that
are required for the application to be passed through for final
approval prior to the account being opened.
A sample of 150 applications were randomly selected from the last
3 months of processing to see what errors occurred.
Since each sample had 27 things that could “go wrong”, there are
(150 x 27) 4,050 opportunities for a defect.
The file review (sample) resulted in 18 applications having one or
more things wrong with them, and in total, 32 distinct types of errors
were found (more than one error per application in some cases).

DPMO = 32 ÷ 4,050 x 1,000,000 = 7,901

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Why DPMO?
Classical yield only looks at the ratio of “good” product versus total product.
In the previous example, the yield would be calculated as:
Yield = “good” applications ÷ total produced
= (150 – 18) ÷ 150 = 88%
DPMO forces us to examine the product or service (step or activity in the
process) at a more granular level, first determining what are the required
elements that must be present, complete and accurate for the product or
service to move to the next step of the process.
The more complexity there is in a process, the greater the chance that one
or more tings will go wrong. Therefore, DPMO includes complexity in the
assessment.
DPMO forces you to look at the “hidden factory” where expediting, rework
and delays occur, but would likely not show up in classical yield metrics.
The resulting detail from DPMO determinations can then help to prioritize
where improvements can be made.

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How “Good” is Six Sigma?
If errors in a book were converted to sigma…
6 sigma -
4 sigma - 1 word for all
Misspelled words in a book 1 word per of the books in
30 pages a small library!

The number of patients that went “missing” at the Ottawa Hospital converted to sigma…
1 sigma - 2 sigma - 3 sigma - 4 sigma - 5 sigma - 6 sigma -
3.5 patients 1.5 patients 8 patients 5 patients 10 patients 1 patient every
per hour per hour per day per week per year 7 years

If you played 100 rounds per year & sigma was how many putts you missed...
2 sigma - 3 sigma - 4 sigma - 5 sigma - 6 sigma -
6 putts per 1 putt per 1 putt per 1 putt every 1 putt every
round round 9 rounds 2.33 years 163 years!

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The DMAIC Approach
Define… process improvement goals that are consistent with
customer demands and the enterprise strategy.
Measure… key aspects of the current process and collect relevant
data.
Analyze… the data to verify cause-and-effect relationships.
Determine what the relationships are, and attempt to ensure that all
factors have been considered.
Improve… or optimize the process based upon data analysis using
techniques like Design of Experiments.
Control… to ensure that any deviations from target are corrected
before they result in defects. Set up pilot runs to establish process
capability, move on to production, set up control mechanisms and
continuously monitor the process.
Source: www.isixsigma.com

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Create & Implement Profound Solutions

Virtually
defect-free!

Before Improvements

• Reduce process variation
• Shift the mean (average) After Improvements

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Implement Process Controls
Process Control Chart
Variation!

Helping process owners better manage their processes!

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Common “Six Sigma” Roles
• Deployment Champion
• Project Champions
• Process Owners
• Master Black Belts
• Black Belts
• Green Belts
• Yellow, White, etc. Belts

Image: http://www.far.on.ca/images/Team51Bikes.JPG

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The “Hidden Factory”

Deliver to
Step 1 Good? Step 2 Good?
customer

Correct Analyze Correct Analyze

The “Hidden Factory”

Extra cost? Delays? Customer Satisfaction? Employee Frustration? Risk?...

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Rolled Throughput Yield (YRT)
Step 1 Step 2 Step 3 Step 4 Step 5 Deliver to
Yield = 95% Yield = 95% Yield = 60% Yield = 90% Yield = 90% Customer

0.95 X 0.95 X 0.60 X 0.90 X 0.90 = YRT = 44%

Manager: Our on-time delivery in terms of target performance is 97%!
But… at what cost? How big is the hidden factory? What is the first-pass
yield at each step of the process? Like DPMO, YRT is a metric that
enables a more granular view of the process, which can lead to targeted
process improvement activities.
In this example, there is only a 44% chance that one product or service
will go through all of the process steps without one or more things going

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I/We have
a problem
Problem-Solving Roadmap

Existing Focus
Yes Root cause No Low No No Complex No New process
process on NVA, Cycle
& solution complexity & problem – defects needs to be
management time or
known? localized? & variation created?
system? Waste?

No Yes Yes Yes Yes Yes
Implement DMAIC DMAIC
Lean Kaizen Design for
process project: project: Six
Just do it! Event Six Sigma
management Lean tools Sigma tools
(DMAIC) (DMADV)
system emphasis emphasis

No
Problem Problem Problem Problem Problem
solved? solved? solved? solved? solved?

Yes Yes Yes Yes Yes

END

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Where Do We Start?
1. Identify opportunities for improvement
• Voice of the customer and operational metrics
2. Definition, Prioritization & Assignment
• High level opportunity definition/benefits analysis
• “Best fit” solution: Kaizen, Lean, Six Sigma…
• Prioritization: Who, what and when?
3. Make it So!
4. Measure, measure, measure

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Opportunity Statement
• Name of process
• Brief description of process
• Current as-is state
– Operational metric(s) and current performance
• Future state
– Measurable targets
• Estimated organizational benefit
• Known scope or constraints (obstacles)

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People - Skills and Process
Today’s Topics
• Change - Caswell’s
flow, Paradigms
• Communication &
Leadership
• Human Capacity
Exercise
• Process - Meetings
Image: http://www.strategicva.com/images/iceberg.jpg

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Change Mgmt - Caswell flow

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Change
From Joel Barker’s video, “Principles of Paradigm”
1. New principles show up BEFORE they are needed.
( i.e. XML, Star Trek )
2. People who “discover” the paradigm first are those not
vested in existing paradigm.
3. A paradigm shift starts everyone back at zero.
4. Everyone can benefit from a paradigm shift , even if
they did not create it.

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Change Exercise
Underutilized Human Capacity
(from 8 sources of waste - slide 12)
Groups of 3 or 4 - “best answer
WINS”
What “exotic” hidden talent or idea
does one of your group have… and
how will it change the world?

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Communication / Leadership
• What are key characteristics?
• Colin Powell - .ppt file of 18 lessons
#5 "Never neglect details. When
everyone's mind is dulled or distracted
the leader must be doubly vigilant.”
( contra 80-20 rule?)

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Meetings that … HUM
• Define the perfect meeting
• Various types of meetings
• 3 characteristics:
Plan, Participate, Produce

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Planning
• O A R (R) that drives the meeting
• Committee member rather than Chair can
lead this
• RSVP with New Business

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Promote Participation
• Chair initiates the tone with Objective
and Agenda
• Encourage interchange and
volunteerism, providing resources for
projects
• Note-taker to record Action Summary

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Produce Results
• Consensus: Not always possible
• Co-operation: Support of committee
• Commitment: To process and actions
• Lack of success: Private not public review
with Chair

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Learning vs. Time vs. Benefit
(Before deciding to move forward)

• What levels are necessary, viable, and
desired? … optimize the combination

Benefit

Time

Learning

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Final Quote from Powell’s slides:
http://www.blaisdell.com/powell

“Leadership is the art of
accomplishing more than the
science of management
says is possible.”

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What We’ve Covered Today
• Introduction to Lean Principles
– Value-Added Assessment
– 8 Sources of Waste
• Introduction to Six Sigma
– DPMO (Defects per Million Opportunities)
– DMAIC (Define, Measure, Analyze, Improve, Control)
– Six Sigma Roles and Responsibilities
– The “Hidden Factory” & Rolled Throughput Yield (YRT)
• Opportunity Statements
• The vital role Leadership, Communication & Change
Management play in a culture of Continuous
Improvement

50

Your Personal Scorecard
Do you have a better understanding of:
Lean principles, methods & tools?
Six Sigma concepts, methods & tools?
Basic quality management?
Do you think you and your team can apply these to
the Public as well as Service sectors?
Do you recognize the important role change
management, effective communication and
leadership plays in a continuous improvement
culture?
Are you interested in learning more about Lean &
Six Sigma and how it can be successfully
deployed in your organization?

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Closing Remarks & Discussion
For more information:

Bill Clarke
General Manager,
Centre for Government Excellence
A Division of e-Zsigma (Canada ) Inc.
Ottawa, Ontario Canada
Dir: 613-830-0322
bclarke@e-zsigma.com
www.e-zsigma.com

Thank you!
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Introduction To Lean Six Sigma

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