6 σ &

1. 6σ & Kaizen

2. KAIZEN

3. KAIZEN-The Concept • Kaizen….means improvement • Ongoing improvement • Involves everyone • Both Managers & Workers • Kaizen Philosophy • Our way of life need to be constantly improved • Working life, social life, home life • Kaizen embodies • Productivity Improvement • Total Quality Culture • QC Circles • Zero Defects • …..etc.

4. KAIZEN-The Concept Masaki Imai

5. KAIZEN-The Concept

6. KAIZEN-The Concept KAIZEN INNOVATION

7. KAIZEN-The Concept • Process Oriented Approach • Leads to Improved Results • Focus on the process improvement without loosing sight of the expected results. • People Oriented Approach • Focus on …. • Discipline • Time Management • Skill Development • Participation and Involvement • Morale • Communication

8. KAIZEN-The Practice

9. KAIZEN-The Practice • Just In Time- Management Oriented Kaizen • Exact number of required units brought to each successive stage of production at the appropriate time • The advantage of JIT • Shortened Lead Time • Reduced time spent on non-process work • Reduced inventory • Better balance between processes • Problem clarification

10. KAIZEN-The Practice • Group Oriented Kaizen- SMALL GROUP ACTIVTIES • Informal, voluntary small groups, organized within the company • Carry out specific improvement activities • Many forms:- • QC circles, Suggestion Groups, Workers group……… • QC Circles…the most famous • Emphasis on problem solving in the work area • Advantages of QCC • Sense of teamwork • Improved communication • Improved morale • Acquire new skills • Labor-Management relationship improved

11. KAIZEN-The Practice • Individual Oriented Kaizen- SUGGESTION SYSTEM • Individual provides suggestion on how to improve his work area. • Helps the individual to be Kaizen conscious. • Also helps in…. • Workers to speak out. • Opportunity for management to help workers. • An valuable opportunity for two way communication • Suggestions normally covers:- • Savings in energy, material and other resources • Improvement in working environment • Improvements in machines, processes, jigs and tools • Improvements in customer services

12. KAIZEN- Implementation • Seven Conditions for Successful Implementation of Kaizen Strategy • Top managementcommitment • Top management commitment • Top management commitment • Setting up an organization dedicated to promote Kaizen • Appointing the best available personnel to manage the Kaizen process • Conducting training and education • Establishing a step-by-step process for Kaizen introduction.

13. KAIZEN & INNOVATION

14. Figure 2.2 Ideal pattern from innovation Figure 2.3 Actual pattern from innovation Time Time

15. INNOVATION plus KAIZEN New Standard KAIZEN INNOVATION New Standard KAIZEN INNOVATION

16. KAIZEN and INNOVATION

17. Another comparison of Innovation and KAIZEN Innovation KAIZEN Creativity Individualism Specialist-oriented Attention to great leaps Technology-oriented Information: closed, proprietary Functional (specialist) orientation Seek new technology Line + staff Limited feedback Adaptability Teamwork (systems approach) Generalist-oriented Attention to details people-oriented Information: open, shared Cross-functional orientation Build on existing technology Cross-functional organization Comprehensive feedback

18. 6 Sigma

19. About Six Sigma • Six Sigma Was Developed at Motorola in the 1980’s As a Method to Improve Process Quality. • It Was First Used to Improve Manufacturing Process Capability and Then Migrated to Business Processes Capability • Companies That Have Deployed Six Sigma: Bank of America, Motorola, GE, IBM, Kodak and Many More • The Basic Premise Is, All Processes Have Variation. Variation Is the Enemy.

20. Six Sigma Philosophy ? • Know What’s Importantto the Customer (CTQ) • Reduce Defects (DPMO) • Center Around Target (Mean) • Reduce Variation (Standard Deviation) GE Company Proprietary November 1998

21. SIX SIGMA-Definitions • Business Definition • A break through strategy to significantly improve customer satisfaction and shareholder value by reducing variability in every aspect of business. • Technical Definition • A statistical term signifying 3.4 defects per million opportunities.

22. SIX SIGMA DEFINATIONS

23. SIX SIGMA-Definitions • In brief, Six Sigma is a process control method to improve the quality of products or services in a continuous manner. • This method uses six standard deviations of a normal distribution as the limits of customers’ acceptance of the system’s products. • This method is applicable to manufacturing as well as service industries. • With six sigmas, only 3.4 defects per million are allowed, or an acceptable level of 99.9997% is required

24. Six Sigma Performance Source: The Six Sigma Way by Peter Pande and Others

25. Who is Implementing Six Sigma • At least 25% of the fortune 200 claim to have a serious six sigma program - Michael Hammer. • Financial - Bank of America, GE Capital, Electronics - Allied Signal, Samsung, Sony • Chemicals - Dupont, Dow Chemicals • Manufacturing - GE Plastics, Johnson and Johnson, Motorola, Nokia, Microsoft, Ford. • Airline - Singapore, Lufthansa, Bombardier • And hundreds of others in Americas, Europe, Sub Continent.

26. Six Sigma Results Six Sigma Savings as % of revenue vary from 1.2 to 4.5 % For $ 30 million/yr sales – Savings potential $ 360,000 to $ 1.35 million. Investment: salary of in house experts, training, process redesign.

27. Key Concepts of Six Sigma • At its core, Six Sigma revolves around a few key concepts. • Critical to Quality: Attributes most important to the customer • Defect: Failing to deliver what the customer wants • Process Capability: What your process can deliver • Variation: What the customer sees and feels • Stable Operations: Ensuring consistent, predictable processes to improve what the customer sees and feels • Design for Six Sigma: Designing to meet customer needs and process capability

28. Dissecting Process Capability • Premise of 6 Sources of variation can be: • Identified • Quantified • Eliminated or Controlled Unstable Parts & Materials Inadequate Design Margin Inadequate Process Capability LSL USL Defects Defects Acceptable Process Capability

29. Six Sigma Methodology Define Definethe problem and customer requirements. Measure defect rates and document the process in its current incarnation. Analyze process data and determine the capability of the process. Improve the process and remove defect causes. Control process performance and ensure that defects do not recur. Control Measure Improve Analyze “Common sense” doesn’t mean “commonly done” or when done, done well.

30. Project Phases Control Define Measure Analyze Improve • Improvement strategy • Develop ideas to remove root causes • Design and carry out experiments, • Optimize the process. • Final solutions • Collect data on size of the selected problem, • identify key customer requirements, • Determine key product and process characteristic. • Analyze data, establish and confirm the “ vital few “ determinants of the performance. • Validate hypothesis • Establish standards to maintain process; • Design the controls, implement and monitor. • Evaluate financial impact of the project • Identify, evaluate and select projects for improvement • Set goals • Form teams. Six Sigma Methodology

31. Six Sigma – Case Study Service Organisation Background • M/s Alpha Inc. manages out bound cargo from a distribution centre to different stores. • Deliveries made on trucks - owned and hired. • Customers dissatisfied at delivery schedules. • Leadership decision to deploy Six Sigma; • Team of 1 Black Belt and 3 Green Belts formed • Sponsor of the project – Distribution Manager

32. Focus on customers generating annual revenue of USD 400,000/-. Define - Critical to Quality (CTQ) Current process sigma level - 2.43 or 175889 DPMO

33. Define - Goal Statement • Reduce number of delayed deliveries by 50 % by 31st December Y 2002 to better meet customer requirement of timely delivery defined as within +/- 1 hour of scheduled delivery.

34. Define - Performance Standards

35. Define - SIPOC Diagram • Detailed process maps drawn

36. Measure and Analyze • Driver and Distance identified as key factors influencing delivery performance. • Driver selected for focus. • Potential root causes as to why Driver influenced the time: • Size of the vehicle • Type of engine • Type of tyres • Fuel capacity

37. Improve • Experiments designed and conducted using truck type and tyre size. • Findings: • Larger tyres took longer time at certain routes where area was cramped and time lost in maneuvering. • High incidence of tyre failures since tight turns led to stress on tyres thus increasing number of flat tyres. • Team modified planning of dispatch process by routing smaller trucks at more restrictive areas.

38. Control • Test implementation. • Process sigma level up from 2.43 or 175889 DPMO to 3.94 or 7353 DPMO. • Performance still fell short of best in class 4.32 or 2400 DPMO. • Improvement led to significant customer satisfaction. • Process continually monitored and data on new cycle times, tyre failure collected as per defined methods and frequency, analysed and monitored. • Customer satisfaction measured and monitored.

39. Key Lessons Learnt • Define • Difficulty in identifying the right project and defining the scope; • Difficulty in applying statistical parameters to Voice of the Customers; • Trouble with setting the right goals; • Measure • Inefficient data gathering; • Lack of measures; • Lack of speed in execution;

40. Key Lessons Learnt • Analyse • Challenge of identifying best practices • Overuse of statistical tools/ under use of practical knowledge • Challenge of developing hypotheses • Improve • Challenge of developing ideas to remove root causes • Difficulty of implementing solutions • Control • Lack of follow up by Managers/ Process Owners • Lack of continuous Voice of the Customer feedback • Failure to institutionalize continuous improvement.

41. Key Lessons Learnt • “ Define “ ranked most important step but gets the lowest resource allocation • Project scoping and its definition is critical to its success/ failure; • “Measure” is considered most difficult step and also gets the highest resources Source: Greenwich Associates Study Y 2002

42. What Makes Six Sigma Different? • Versatile • Breakthrough improvements • Financial results focus • Process focus • Structured & disciplined problem solving methodology using scientific tools and techniques • Customer centered • Involvement of leadership is mandatory. • Training is mandatory; • Action learning (25% class room, 75 % application) • Creating a dedicated organisation for problem solving (85/50 Rule).

43. Benefits of Six Sigma • Generates sustained success • Sets performance goal for everyone • Enhances value for customers; • Accelerates rate of improvement; • Promotes learning across boundaries; • Executes strategic change

44. 6 Sigma vs Kaizen

45. Six Sigma & Kaizen- The Difference RELIES UPON GROUP DYNAMICS FIXED PLAN OF IMPLEMENTATION

46. Kaizen Six Sigma • Japanese Origin Western Origin • Culture Methodology (or Culture) • Kaizen Umbrella Road Maps • Continuous Improvement Immediate Perfection • Mistakes as Possibility for Improvement Reducing Variation and Defects • Long-term Results Short-term Results Possible • Every Possible Improvement Prioritising Projects • Providing Quality Ensuring Profitability • Participation of Every Single Employee Creation of Project Teams

47. Thank You