Objectives: Bringing A Stalled Six Sigma Initiative Back To Life by Peter Peterka

Objectives
D M A I C
ASQ Section 1508 St. Petersburg / Tampa DINNER MEETING Monday Monday, March 9, 2009 Bringing a Stalled Six Sigma Initiative Back to Life by Peter Peterka
To receive a copy of the presentation send an email to tampa@sixsigma.us
Give a brief history of the Six Sigma methodology Provide a summary of the principles for implementing Six Sigma in a business How to restart a stalled or inactive initiative Getting engagement from organizational leaders by p g g implementing Business Process Charting
SixSigma.us March 2009
Project Failure Stats

71% of projects fail each year They take 84% more time than planned They cost 56% more money than planned They achieve 93% of what they set out to deliver (falling to 67% on projects that are delayed or over budget) 0.5% of project managers admit to working on failed projects
Common Mistakes
Thinking the key to Six Sigma is Statistics, Statistics, Statistics - NO! IT IS A MANAGEMENT SYSTEM !!! Overemphasis on Cost Reduction Failure to address improvement as part of the job Ignoring team dynamics as a cause of project failures Overreliance on the Black Belt, Six Sigma equals projects Not understanding common cause vs. special cause variation Failure to apply the concept of the customer internally Recognizing managements involvement not just commitment Ignoring the management of change
Why should Six Sigma be any different? - Peter Peterka

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Change is never easy but not always bad.

An Overview of Six Sigma Why?

Six Sigma is a business strategy and methodology Six Sigma creates Breakthrough Performance Six Sigma saves money Six Sigma improves a companys value in the eye of their customer:
Reduced Cost Improved Delivery Faster and more on target New Products
Six Sigma applies to all organizations and processes

The problems we face cannot be solved with the same thinking that created them. -Albert Einstein
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An Overview of Six Sigma What?

Breakthrough Improvement Systematic and Focused Approach Right Projects Right People Right Project Management Methodology for Sustaining The Gains Right Results Process Thinking Right Place / Right Time from Walmart MBB Infancy
A History Lesson
In 1984 Motorola developed the concept of Six Sigma performance They had major issues in Manufacturing and Assembly with the focus on defect reduction There was a lot of training on great tools but limited insight on application Texas Instruments, Kodak, others tried later to implement
A History Lesson
Adolescence
In the mid-1990s AlliedSignal and GE popularized the method A variety of roadmaps are developed with varying tools to apply for process improvement The focus changed from defect reduction to ROI S Some efforts started towards application to Design ff t t t d t d li ti t D i and Service functions, especially in GE Ford, DuPont, 3M, Dow Chemical are other follow-ons in these efforts
A History Lesson
Young Adulthood
Focus begins to change to focus on application to major financial contributors to the business, not just for operations or individual functions Defined roadmaps are developed for development of new product offerings and services GE focuses majority of its efforts on Non NonManufacturing / Services, Financial services Bank of America, JPMorgan Chase, American Express enter into the game
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A History Lesson
Adulthood
Focus changes to value generation for the entire business a corporate initiative, not just a quality thing Roadmaps are defined separately for Development efforts (DFSS) and Process Improvement (DMAIC) Integration of Lean practices and tools becomes more widely visible Applications to government, military, health care, hotels, and other businesses continues to rise

Why do Six Sigma?

It should be identified as a business strategy for improvement and value generation Its focus is on providing breakthrough performance It can aid in saving money It can improve a companys value in the eye of their customers and shareholders through: Reduced cost Improved delivery performance Reduced warranty claims and costs Improved and on-target new offerings (products and services) The application to all processes in all organizations
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Transforming Business Decisions

Issues 1. Simple, non critical, easily reversed 2. Following trends, minor changes in processes, could be reversed if necessary 3. Differences between groups, major process changes, changes difficult to reverse h h diffi l 4. Major process changes or large capital expense, changes nearly impossible to reverse Methods used to solve problems Feelings
The DMAIC Methodology
Define
Simple Problem Solving Tools Process Analysis Tools & Methodology Complex analysis DOE, Regression
What is important? How are we doing?
Measure Analyze Improve Control

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What is wrong? What needs to be done? How do we guarantee performance?

Change the methods used to make decisions from feelings to the use of data
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Tools in the Funneling of Xs

Y = f (X1 X2 X3 X4 X5 X6 X7Xn)
Define Project Charter Measure Process Map C&E Matrix MSA FMEA Multi-Vari DOE Control
Control Plans SPC PM identifies process And potential savings Process Maps C&E prioritizes inputs MSA on Xs assures can be controlled FMEA reduces variation and effects for inputs gone wrong Multi-Vari identifies Noise variables and reduces the Xs for DOE DOEs identify the Critical Xs and their relationship to the Y Develop controls for Critical Xs to maintain performance of the Y
Financial Control Model Project Y

1 2 3 4-6 1 2 3 4 5 6 7 8 9 10 11 12 12 Month Financial Control Period
?
Implement Improvements
Analyze Improve
Report Quick Wins
2 Month Financial Review
Y = f (X5 , X22, X37)
The Roadmap funnels down the Xs from the trivial many to a vital few - the Red Xs
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Key Lessons for Leaders

First
1. 2. A compelling reason for change must be articulated Leadership team must be trained, and must believe that Lean Six Sigma is the solution, and drive projects Select the best people to become Black Belts p p Assign critical mass of Black Belts full time Projects driven by strategy Institutionalize by transferring training and coaching initiative from Consultant to internal organization
What is Crucial for Success?

Demand for breakthrough improvement A systematic and focused approach Selection of the right projects Training and holding accountable the right people Management leadership for implementation of project findings Project management to drive projects to completion Controls and conformance for sustaining the gains Driving for the right business results, financial or other Acceptance of process thinking throughout the business
Then
3. 4. 5. 6.
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Six Sigma Success Factors

The bottom line focus and big dollar impact Encourages and maintains top management commitment The emphasis on - and consistent use of - a unified and quantitative approach to process improvement The DMAIC methodology provides a common language so that experiences and successes can be shared through the organization C Creates awareness th t decisions should be based on t that d i i h ld b b d factual data The emphasis on understanding & satisfying customer needs Creates focus on doing the right things right Anecdotal information is replaced by factual data The combination of the right projects, the right people and the right tools Careful selection of projects and people combined with hands on training in using statistical tools in real projects
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Deployment Principles That Always Work Critical Success Factors

1. A Sense of Urgency for change must exist 2.Strategically align and connect business metrics and Lean Six Sigma metrics 3.Senior organization leaders must be engaged in the process Line organization owns resources & are accountable for project results Lean Six Sigma should be integrated into the daily management practices of the organization 4.Business Leaders own resources & are accountable for project results 5.A strong and respected Command Deployment Champion should report to Senior Leadership 6.Deploy critical mass of key full-time resources (Black Belts, Deployment Directors)
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Deployment Principles That Always Work Critical Success Factors

7. Resources should be selected from future leaders of the organization 8. Establish a consistent process for Project Identification and Selection 9. Actively manage Projects-in-Process to reduce/control project lead times Use Rapid Improvement Events for quick-hit projects 10.Track results rigorously: Lean Six Sigma results should pay as you go and be confirmed by objective parties 11.Black Belts/Green Belts must have team leadership skills 12.Integrate with other initiatives where applicable
TWENTY KEY LESSONS LEARNED

1. The time is right. 2. The enthusiastic commitment of top management is critical. 3. Develop an infrastructure. 4. Commit top people. 5. 5 Invest in relevant hands-on training. training 6. Select initial projects to build credibility quickly. 7. Make it all pervasive, and involve everybody. 8. Emphasize DFSS. 9. Dont forget design for reliability. 10. Focus on the entire system.
Gerald J. Hahn, 20 Key Lessons Learned, Six Sigma Forum Magazine, May 2002, pages 28-34.
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TWENTY KEY LESSONS LEARNED

11. Emphasize customer CTQs (critical to quality). 12. Include commercial quality improvement. 13. Recognize all savings. 14. Customize to meet business needs. 15. Consider the variability as well as the mean. g g 16. Plan to get the right data. 17. Beware of dogmatism. 18. Avoid nonessential bureaucracy. 19. Keep the tool box vital. 20. Expect Six Sigma to become a more silent partner.
Gerald J. Hahn, 20 Key Lessons Learned, Six Sigma Forum Magazine, May 2002, pages 28-34.
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Secretariat 1973 Belmont Stakes "The Photo"
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Business Process Charting

A graphical and numerical analysis method for any type of business process data used for insight into understanding and improvement of business results. Based upon Statistical Thinking Theory Directed toward identifying opportunities for improving business results A way to engage business leaders!
Key Elements of Business Process Charts

1. 2. 3. 4. 5.
Business Metric number with operational definition Process Owner Labeled on Chart Business Data Plotted over time often monthly Business Goal Marker Statistical Based Limits often based on Individual and Moving Range to start
Peter Peterka
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Peter Peterka
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Key Elements of Business Process Chart

1. Name and number of Business Metric: 5. 2. Process Owner Metric 1.42 Statistical Limits
How to: Determine the Proper Metrics

Actual Process Map of Business Process Cause and Effect Matrix approach relating metrics to business goals Affinity Brainstorming of Metrics Have each business leader give their 10 sweat metrics ti Traditional Financial Measures Customer Measures Indicators or Predictors of Performance (Xs)
4. 3. Business Data Plot Overview time often monthly

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Business Goal
Peter Peterka
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Determine the Operational Definition for the Metric

Definitions that will be interpreted the same way by different people in different situations. Same method of calculation Same method of counting
Example of Business Measures:

Customer Complaints Economic Profit Order Fulfillment Product Availability Customer Credits Inventory Levels Delivery Costs Number of New Products/Sales $$ Safety % Waste $$ Waste Raw Material Costs Cycle Time Inventory Turns Premium Freight IMC Index DSO Market Share
All Great Six Sigma Projects!!

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Metrics for Six Sigma Implementation

Percent Projects Completed Savings from Projects Percent Projects in Company Database Percent Course Attendance Consultant work days Instructor Scores Percent Courses with Correct Material Six Sigma Billing Errors
The Current Method of Business Analysis

Summarize business results with a table of numbers. Compare to last period, same period last year or goal. React to big percent changes; ignore small percent changes. Focus attention on those portions that are getting worse.
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Three Methods of Analysis

The Goal Approach Current values are judged to be either acceptable or not based on comparison with the goal, target, budget limit, etc. Alternate between doing okay and in trouble When doing okay ignore it When in trouble take action On-again, off-again approach is the complete antithesis of continual improvement. Goals are useful as a means to improvement, but when they become the end, to the degree of disrupting improvement, they are a problem!
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The Average Approach Compare actual results to average results Above vs. Below average is not a meaningful break point in performance Below average months are inevitable Creates internal comparisons that may not be either fair or helpful Other variations on this approach include: Best/worst result (there will always be one!) Best/worst result in X months
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The Business Process Chart Approach Results are judged first on whether they represent a real change in the underlying process (special cause) or not (common cause) The capability of the business process is compared to any goals, targets, etc.
To Measure or Not to Measure

Raw Monthly Number: $, Total, % Aggregate Numbers Percent to Sales or Similar Business Ratio Mix of Monthly and Year to Date Percent Change g % Change vs. Same Month Last Year Year to Date Percent Increase Take Care with Accounting Accruals/Adjustments
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Benefits of Business Process Charting

Improve Business Results Make better predictions, improve credibility Detecting real trends not phantom Learn more about processes Ask more helpful questions p q Identify chronic opportunities for Six Sigma Engage Champions more in Six Sigma
Statistical Thinking is ....

A philosophy of learning and action based on the following fundamental principles: All work occurs in a system of interconnected processes, Variation exists in all processes, and Understanding and reducing variation are keys to success. A Way of Thinking
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Benefits of Statistical Thinking

Strengthens the connection between improving the business and improving the business process Improve predictability and credibility Defines the appropriate direction for action Focuses scarce resources on the right issues L Learn faster about processes f t b t Engaging Champions more in Six Sigma
What Action is Appropriate?
Something Important I
Last Period
This Period
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It Depends!
What is happening to me? What happened to me?
Common-Cause and Special-Cause Variation

From Common Causes Systemic, Chronic, Built-in Variation From Special Causes Sporadic, Exceptional, Atypical Variation
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The Special and Common Cause Spectrum
Appropriate Type of Action

If special causes dominant
The Real World
Isolate and address the special cause(s) Dont over-fix

Common Causes Only
Massive Special Cause
If common causes dominant
Make a permanent change to the p g system Dont tamper after at each data point
It is important to know, at any point in time, which type of variation is dominant.
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2000
2500
3000
1000
1500
500
Individual Value 60 65 70 75 80 85 90
Nov-97 Jan-98 Mar-98 May-98 Jul-98 Sep-98
E
0
May-99 Jun-99 Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Jan-00
Nov-98 Jan-99 Mar-99 May-99

A
Feb-00 Mar-00 Apr-00 May-00
Special Cause Flag

ACE
Month
Jul-99
CONTINENTAL AIRLINES
New Product Growth
Business Metric with Special Cause
47
Jun-00 Jul-00
45
Sep-99 Nov-99 Jan-00 Mar-00 May-00 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01
Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01
Weather in Houston
Growth Line
2000
2500
3000
2000
2500
3000
1000
1500
1000
1500
500
500
0
May-99 Jun-99 Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01
0
May-99 Jun-99 Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Jan-00 Feb-00 Mar-00 Apr-00 May-00
New Product Growth
New Product Growth
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46
Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01
Growth Line Forecast
Goal
AMERICAN
90 85 80 75 70 65 60
Sep-00 Nov-00 Sep-99 Nov-99 Sep-98 Nov-98 Mar-99 Mar-00 Nov-97 Mar-98 May-00 May-99 May-98 Mar-01 Jan-00 Jan-99 Jan-98 Jan-01 Jul-98 Jul-99 Jul-00
AMERICA WEST
90 85 80 75 70 65 60 55 50
Aug-98 Aug-99 Aug-00 Feb-98 Feb-99 Feb-00 Feb-01 Nov-97 Nov-98 Nov-99 Nov-00 May-98 May-99 May-00
AMERICAN
90 85 80 75 70 65 60 55 50
Aug-98 Aug-99 Aug-00 Feb-98 Feb-99 Feb-00 Feb-01 Nov-97 Nov-98 Nov-99 Nov-00 May-98 May-99 May-00
CONTINENTAL AIRLINES
90 85 80 75 70 65 60 55 50
Aug-98 Feb-98 Feb-99 Nov-97 Nov-98 May-98 May-99
Weather in Houston
Aug-99
Aug-00
Feb-00
Nov-99
CONTINENTAL
DELTA
NORTHWEST
90 85 80 75 70 65 60 55 50 90 85 80 75 70 65 60 55 50
Nov-97 Nov-98 Nov-99 Nov-00 Nov-97
SOUTHWEST
3 Up BPChart
90 85 80 75 70 65 60
Nov-97 Sep-98 Mar-98 Nov-98 Sep-99 Mar-99 Nov-99 May-98 Sep-00 Mar-00 Jan-98 Nov-00 May-99 May-00 Mar-01 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01
Step Ch St Change
9 Up BPChart
90 85 80 75 70 65 60 55 50
Nov-97 Nov-98 Nov-99 Nov-00 Aug-98 Aug-99 Aug-00 Feb-98 Feb-99 Feb-00 Feb-01 May-98 May-99 May-00
Nov-98
Nov-99
May-00
Nov-00 Nov-00
Aug-98
Aug-99
Aug-00
Aug-98
Aug-99
Aug-00
Feb-98
Feb-99
Feb-00
Feb-01
Feb-98
Feb-99
Feb-00
Nov-00
May-98
May-99
May-00
May-98
May-99
SOUTHWEST
90 85 80 75 70 65 60
Nov-97 Sep-98 Nov-98 Mar-98 Sep-99 Nov-99 Mar-99 Sep-00 May-98 May-99 Nov-00 Mar-00 Jan-98 Jul-98 May-00 Mar-01 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01
TWA
90 85 80 75 70 65 60 55 50
Aug-98 Aug-99 Aug-00 Nov-97 Nov-98 Nov-99 Nov-00 Feb-98 Feb-99 Feb-00 Feb-01 May-98 May-99 May-00
UNITED
90 85 80 75 70 65 60 55 50
Aug-98 Aug-99 Aug-00 Nov-97 Nov-98 Nov-99 Nov-00 Feb-98 Feb-99 Feb-00 Feb-01 May-98 May-99 May-00
US AIR
90 85 80 75 70 65 60 55 50
Aug-98 Aug-99 Nov-97 Nov-98 Nov-99 Aug-00 Feb-98 Feb-99 Feb-00 May-98 May-99 May-00 Feb-01
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Business Data versus Manufacturing Data Becoming an Statistical Thinker

Business
Collected infrequently Often monthly Trends often desired Often individual values Lack operational definitions Difficult to quantify error More difficult to experiment Often time correlated data
Manufacturing
vs vs vs vs vs vs vs vs
Frequent By the hour or shift No trends desired Individual and subgroups Often clearly defined Easy to obtain measurement error Easy to experiment Data can be corrected correlation
Be able to explain to others the meaning of performance within the process limits Use data to understand the future rather than explain the past Get results by improving the process Use thinking always with data Learn how to apply in the absence of data in situations that L h t l i th b f d t i it ti th t call for judgment Control Chart your data Avoid two point comparisons Require and teach others to employ
Peter Peterka
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May-00
Feb-01
Feb-01
Roadmap to Implement Business Process Charts

Obtain 24 Month History Determine Business Goals Determine Key Business Metrics Refine Operational Definitions Business Leaders Meet Quarterly to Select Improvement Projects Identified on Chronic Common Cause Opportunities
Closing Thoughts
Being committed to the truth is far more powerful than any technique Peter Senge
Leadership 2 Day Statistical Thinking Workshop Refine Metrics and Drill Downs
The most important figures that one needs in management are unknown or unknowable, but successful management must nevertheless take account of them. Dr. W. Edwards Deming
Process Owners with Improvement Specialists support establish initial limits

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Continue to Monitor Business Metrics in Chart Form Make Sure to Identify Special Causes
If we know how to manage with data, then we can learn how better to manage without data Heero Hacquebord
Peter Peterka
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Contact Information
Instructor Information
Phone: Preferred Email:
Time to Drive Work
SixSigma.us General Information

Phone: + 1 817-886-4950 Preferred Email: info@sixsigma.us @ g
SixSigma.us Peter Peterka

Phone: + 1 512-415-3697 Preferred Email: peter@sixsigma.us
To receive a copy of the presentation send an email to tampa@sixsigma.us
55 56
Traditional Economic Model of Quality of Conformance
Total cost
Cost due to nonconformance
Cost of quality assurance
100% optimal level of quality

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Objectives

SixSigma.us March 2009

Project Failure Stats

Why should Six Sigma be any different? - Peter Peterka

SixSigma.us March 2009

SixSigma.us March 2009

Change is never easy but not always bad.

An Overview of Six Sigma Why?

Six Sigma applies to all organizations and processes

SixSigma.us March 2009

An Overview of Six Sigma What?

SixSigma.us March 2009

SixSigma.us March 2009

SixSigma.us March 2009

SixSigma.us March 2009

Why do Six Sigma?

SixSigma.us March 2009

SixSigma.us March 2009

Transforming Business Decisions

The DMAIC Methodology

What is important? How are we doing?

Measure Analyze Improve Control

What is wrong? What needs to be done? How do we guarantee performance?

Tools in the Funneling of Xs

Financial Control Model Project Y

Report Quick Wins

2 Month Financial Review

6 Month Financial Review

Y = f (X5 , X22, X37)

12 Month Financial Review

Key Lessons for Leaders

What is Crucial for Success?

SixSigma.us March 2009

SixSigma.us March 2009

Six Sigma Success Factors

Deployment Principles That Always Work Critical Success Factors

Deployment Principles That Always Work Critical Success Factors

TWENTY KEY LESSONS LEARNED

SixSigma.us March 2009

SixSigma.us March 2009

TWENTY KEY LESSONS LEARNED

Secretariat 1973 Belmont Stakes "The Photo"

SixSigma.us March 2009

Business Process Charting

Key Elements of Business Process Charts

Key Elements of Business Process Chart

How to: Determine the Proper Metrics

4. 3. Business Data Plot Overview time often monthly

SixSigma.us March 2009

Determine the Operational Definition for the Metric

Example of Business Measures:

All Great Six Sigma Projects!!

SixSigma.us March 2009

Metrics for Six Sigma Implementation

The Current Method of Business Analysis

SixSigma.us March 2009

SixSigma.us March 2009

Three Methods of Analysis

Three Methods of Analysis

SixSigma.us March 2009

Three Methods of Analysis

To Measure or Not to Measure