Process Transformation: The Lean Sigma Culture By Dr. Satnam Singh Master Black Belt Six Sigma Overview - 1 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
Six Sigma Overview - 2 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
R EVENUE V S . P RODUCTIVITY Change of Mind Set By working Smarter and more effectively by reducing unnecessary • Cost Plus Method wastes within a business we can make • Cost to Make + Profit = Selling Price direct savings to the bottom line • None Cost Method • Selling Price – Cost to Make = Profit • The Focus should be on reducing cost • The best way to reduce cost is to remove the waste £ Sales Cost Profit Maximise Profits Profit Business Costs Business Reduce Business Costs Costs Six Sigma Overview - 3 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
W HY L EAN S IGMA ? The changing world of the Industry BEFORE NOW • Rapidly expanding markets. • Increased competition in saturated or shrinking • Consumer orientated towards quantity not quality. markets • Abundant low cost • Consumer values more resources. exacting quality requirements and on time delivery. • Management concerned • Sharp rise in material/labour with increased sales not cost decreased cost. • Over capacity of production facilities Six Sigma Overview - 4 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
W HY L EAN S IGMA ? • Global Market – World-wide competition, continuously improving. • Success through People – Involves everybody. – Begins at the front line. • Focuses on the process – Improves Quality, Delivery, and Cost performance. Six Sigma Overview - 5 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
C HANGE OF M INDSET – PEOPLE ISSUES I am an authority figure in the company. I got this position because I solve problems. My staff seem unable to solve problems Am The I Dependency helping? Loop I am a subordinate. I cannot solve problems. But my boss can. Six Sigma Overview - 6 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
L EAN VS . S IX S IGMA What is Lean ? “The focus is on reducing Non Value Added (NVA) waste”. Waste is anything that impedes the flow of the product/service as it is being transformed in the value chain.’’ J. Liker, Becoming Lean. What is Six Sigma ? • Focus on quality and consistency • Is variation good for you? • Reduces Variation – Can we eliminate variation? • Use of Statistical Tools to solve problems • Combined with Lean – improves speed (Lean Six Sigma) Six Sigma Overview - 7 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
L EAN S EGMENTATION The Three Divisions of Work. Value Added : Any process that changes the nature, shape or characteristics of the product, in line with customer requirements e.g. pressing, welding, assembly. (Maximise) Waste : All other meaningless, non essential activities. i.e. 7W Categories Essential Non Value Added : (Eliminate) Any work carried out, which is necessary under current conditions, but does not increase product value. e.g. inspection, part movement tool changing, maintenance (Minimise) Six Sigma Overview - 8 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
A VOID I SOLATED I SLANDS OF W ORK Work Waste Tip : Set up the work area so that one person Source : Toyota Production System – T. Ohno can perform every operation! Six Sigma Overview - 9 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
W ASTE VS . W ORK « Waste » Work Source : Toyota Production System – T. Ohno Six Sigma Overview - 10 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
L EAN F OUNDATIONS Six Sigma Overview - 11 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
L EAN W ASTES Ohno’s Seven Wastes Overproduction Waiting / Queues Other resources such as energy, water, and air are Transportation often wasted Inventory Efficient, sustainable production minimizes inputs, Motion reduces waste Traditional “housekeeping” Over-processing has been expanded to the 5S Defects / Scrap Six Sigma Overview - 12 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
FORCES OF CHANGE New Strategic The Accelerating Technology Organization Direction Six Sigma Overview - 13 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
Six Sigma Definition Innovation Tool Statistical Measurement Customer satisfaction Understanding of current position through quality improvement and direction Six Sigma -6 σ -3 σ +3 σ +6 σ 1/2 spec Philosophy Change of way of thinking/ way of doing business Six Sigma Overview - 14 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
The Inspection Exercise The Inspection Exercise Count the number of times the 6th letter of the alphabet appears in the following text: The necessity of training farm hands for the first class farms in the fatherly handling of farm live stock is foremost in the eyes of the farm owners. Since the forefathers of the farm owners trained the farm hands for first class farms in the fatherly handling of farm live stock, the farm owners felt they should carry on with the family tradition of training farm hands of the first class farmers in the fatherly handling of farm live stock because they believe it is the basis of good fundamental farm management. Six Sigma Overview - 15 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
The Inspection Exercise The Inspection Exercise Count the number of times the 6th letter of the alphabet appears in the following text: The necessity of training farm hands for the first class farms in the fatherly handling of farm live stock is foremost in the eyes of the farm owners. Since the forefathers of the farm owners trained the farm hands for first class farms in the fatherly handling of farm live stock, the farm owners felt they should carry on with the family tradition of training farm hands of the first class farmers in the fatherly handling of farm live stock because they believe it is the basis of good fundamental farm management. Six Sigma Overview - 16 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
Dissecting Distribution Curve Dissecting Process Capability Inadequate Supplied Measurement Material Capability Variation Inadequate Inadequate Process Design LSL USL Capability Margin Defects Process Capability Six Sigma Overview - 17 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
Comparison of Sigma and PPM Sigma Defect Yield PPM Level (%) (%) 1 σ 697,700 69.77 30.23 2 σ 308,733 30.87 69.13 Lower spec Limit Upper spec Limit 3 σ 66,803 6.67 93.33 σ 3 4 σ 6,200 0.62 99.38 5 σ 233 0.02 99.98 2 σ 6 σ 3.4 0.0003 99.9997 σ 1 Target (Calculation of PPM is based on the assumption that process mean shifts by ± 1.5 σ ) Six Sigma Overview - 18 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
Six Sigma Definition Process Sigma Parts Per Million Yield % Services Manufacturing 0 933000 6.7 Poor 1 691000 30.9 Average 2 309000 69.1 Good Poor 3 66800 93.32 Excellent Average 4 6210 99.379 World Class Good 5 233 99.9767 Excellent 6 3.4 99.99966 World Class The difference between service and manufacturing industries are not exact. The one to two sigma difference shown above is taken from empirical Observation, and should not be confused with the 1.5 sigma shift. Six Sigma Overview - 19 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
What does Six Sigma Means DESIGN for What each sigma level means SIX SIGMA DMADV 6 σ fruit •Delicious fruits harvested in a timely manner •New product/ process implementation (DFSS) SIX SIGMA 5 σ barrier – Design Innovation PROCESS IMPROVEMENT •Harvesting of fruits in large volume The DMAICT methodology •Results of process optimization (DMAIC) 4 σ barrier – Process Innovation LEAN •Harvesting only low-hanging fruits WORKING •Results of 7 QC tools Process streamlining Process acceleration Waste elimination 3 σ barrier – Development of Suppliers CORRECTIVE ACTION •Collecting fruits fallen to the ground •Results of basic production Kaizen blitz, Error proofing Problem solving Six Sigma Overview - 20 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
What does Six Sigma Means Six Sigma Overview - 21 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
Why Six Sigma? Yearly improvement of 5% to 10% are no longer competitive Offers tools, approaches and technique to assess performance and identify areas for improvement It applies to both products and service industry 3 to 4 Sigma level are no more acceptable 10 fold reduction in defect levels every 2 years ~ 68% reduction every year Reduce cycle time by a factor of 10 every 5 years ~ 37% reduction each year Stretch goals leads to out-of-the-box thinking Six Sigma Overview - 22 Proprietary of Meridian Biz Management (MBizM) Rev 1.0
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