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Lean Six Sigma Green Belt Training

Lean Six Sigma Green Belt Training

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Lean Six Sigma Green Belt Training

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  1. Lean Six Sigma Green Belt Training A

  2. Workshop Goals This Workshop will help you learn to: • Implement a systematic approach to identify, map and control existing processes. • Develop upstream and outcome metrics and targets that track process performance in satisfying critical customer requirements. • Utilize methodologies for collecting, displaying, and interpreting data. • Apply proven approaches for continuously improving processes, including DMAIC problem solving, and Tollgate reviews. Ref Intro-1a

  3. Agenda

  4. Administrative Information • Safety (room, building) • Breaks and lunch • Facilities (bathrooms, services) • Courtesy (mobile phones, blackberries etc) • ? Ref Intro-2

  5. Introduce a colleague covering the following information: Name Work location Job responsibilities Experience prior to working at ING Experience with Lean Six Sigma Expectations of this workshop Something interesting about you Introductions Activity Ref Intro-3

  6. Ground Rules • Be on time • Follow an agenda • Listen constructively • Defer items to Parking Lot • Ask Questions • Have fun!

  7. Have you completed the Pre-work? Ref Intro-1b

  8. Overview of Lean Six Sigma

  9. ING Strategy and Lean Six Sigma Customer Centric Economic Value Lean Six Sigma Improve Persistency Reduce Operational Costs Increase Sales Improve Mix of Business Reduce Risk and Economic Capital Identify Critical Customer Requirements Define Gaps to Customer Requirements Establish Baseline Metrics Execute Improvements to Close Gaps RESULTS Lean Six Sigma Is “How” to Achieve Strategic Objectives Ref Overview-1

  10. Set the standard in helping our customers manage their financial future Mission Positioning Statement ING is dedicated to deliver financial services solutions valued by the customer Brand Attributes Delivers on Promises Customer- Centric Is Easy to Deal with Treats Me Fairly ING Strategy and Lean Six Sigma

  11. Executing Strategy with Lean Six Sigma Strategy Deployment • Voice of Customer • Voice of Process • Voice of Business • Market Factors • Competition/ Benchmarks • SWOT BusinessStrategic Objectives BusinessLine Strategies BusinessLineTactics METRICS METRICS METRICS PROJECTS Review Process METRICS Ref Overview-2

  12. Sources of Lean Six Sigma Projects Lean Six Sigma projects may be generated from a number of sources, examples include… • VOC – Improve timeliness, accuracy, satisfaction, control compliance risks, reduce fines • VOP – Reduce the gap between current performance and customer specifications • VOB – Increase sales, reduce expenses, improve productivity, includes VOE (Voice of the Employee) Increase employee retention, improve employee satisfaction METRICS Ref Overview-3a

  13. Lean Six Sigma Project Selection Inputs • Voice of the customer • Voice of the business • Voice of process Prioritize Projects Known solution with supporting data? YES Translate into project opportunities • Strategic Fit • Economic Value • Time/Effort NO Implement solution, follow lean six sigma principles Process Not Capable – use DFSS methodology Process Capable – use DMAIC methodology Ref Overview-3b

  14. More detailed approach than Pre-work Project Prioritization Matrix Ref Overview-4

  15. Business Process Framework Customer & Market Network Quantifiable Measures & Results Committed Leadership Strategy Integration Full Time Six Sigma Leaders Incentives & Accountability Lean Six Sigma Success Factors • Establishing these factors provides the seeds of success. • They need to be integrated uniquely to fit each business. • They are all necessary for the best result. • The most powerful success factor is “committed leadership” Ref Overview-5

  16. Lean Six Sigma Failure Factors • Leaping to the fix – faulty assumptions; not data based • Serving the wrong customer – not focusing on the voice of the “next” customer • Selecting the wrong projects – not linked to strategy • Solution-caused problems – poor sequencing; stakeholder under-involvement; ineffective resource planning; absence of change management; no project closure Adapted from Six Sigma’s Seven Deadly Sins by James P. Zimmerman and Dr. Jamie Weiss of Kepner Tregoe Ref Overview-6

  17. The Evolution of Lean Six Sigma Today: American Express, JP Morgan, Merrill Lynch, Wells Fargo, B of A , Caterpillar Financial ….. The foundation for Lean Six Sigma has been effectively applied in a wide variety of companies worldwide over many decades Design for Six Sigma: GE Six Sigma: AlliedSignal, GE Six Sigma: Motorola Reengineering: Michael Hammer Quality Circles 1970: Zero Defects: Philip Crosby Japanese Quality methods: Ishikawa, Taguchi Applied Lean Concepts: Toyota Production System Statistical methods for business: Juran, Figenbaum Late 1940s; Statistical methods in Japan; W. Edwards Deming Statistical Sampling; Walter A. Shewhart 1920 Time and motion studies; Frederick Taylor Ref Overview-7

  18. What is Sigma? • The Greek letter σ (sigma) is used in statistics to describe variation. • Sigma (σ) represents the standard deviation in a population. • Standard deviation is derived from calculating the average difference between all data points of a population and the average of that population. Ref Overview-9a

  19. Lean Thinking: Customer focused Identify waste Improve process speed/cycle time Specific speed tools – Value-add analysis; Kaizen events Six Sigma Thinking: Critical Customer Requirement (CCR) focused Culture and infrastructure to sustain results Focus on variation Methodology driven – DMAIC, DFSS Lean and Six Sigma Thinking Lean Six Sigma - Blended to Optimize Results Ref Overview-8

  20. What is Lean Six Sigma? (cont’d.) • Measurement • Measures the variation and defect level in a process or product • Allows different processes to be compared • 3.4 defects per million opportunities Ref Overview-9b

  21. What is Lean Six Sigma? (cont’d.) • Measurement • Measures the variation and defect level in a process or product • Allows different processes to be compared • 3.4 defects per million opportunities • Improvement Methodology • Customer-focused • Data and measurement-driven • Focused on reducing defect levels • Results-oriented Ref Overview-9c

  22. What is Lean Six Sigma? (cont’d.) • Measurement • Measures the variation and defect level in a process or product • Allows different processes to be compared • 3.4 defects per million opportunities • Improvement Methodology • Customer-focused • Data and measurement-driven • Focused on reducing defect levels • Results-oriented • Catalyst for Organizational Change • Large-scale fundamental change in culture • Move to a data-driven, customer-centric mindset Ref Overview-9d

  23. Who is the Customer? • External • Purchasers of products and services • Distributors • Regulatory entities Ref Overview-10a

  24. Who is the Customer? (cont’d.) • External • Purchasers of products and services • Distributors • Regulatory entities • Internal • Other departments • Management / Shareholders Ref Overview-10b

  25. Who is the Customer? • External • Purchasers of products and services • Distributors • Regulatory entities • Internal • Other departments • Management / Shareholders • Voice of Customer(VOC) • Information that can be collected from external/internal customers Ref Overview-10

  26. What is Variation? Process Average Customer Requirement • Variation is the normal, measured difference in process outputs • Many process measurements focus on averages… averages don’t tell the whole story Same Process Average 15 25 30 20 5 1 10 Days to close loan Ref Overview-11a

  27. What is Variation? (cont’d.) Process Average Customer Requirement • Knowledge of process variation and defect levels provides more insight into process performance • Less variation reduces costs, increases reliability, and customer satisfaction Same Process Average Much Different Customer Defects 15 25 30 20 5 1 10 Days to close loan Ref Overview-11b

  28. Process Outputs Sources of Variation Market Critical Customer Requirements Inputs Process Activities Suppliers Defects In-process variation may lead to defects in process output Variation occurs in both process inputs and process activities – people, methods, materials, equipment, and environment The output (Y) is determined by performance of inputs and processes (x)…. Y=f(x) Ref Overview-12

  29. Using Lean Six Sigma, we work to reduce variation and permanently move product or service outputs inside customer requirements. (Curve A to B) Goal of Lean Six Sigma Critical Customer Requirement (CCR) B A Defects: Process output that does not meet Customer Requirements Product or Service Output Ref Overview-13

  30. Improve Process Yield We use Lean Six Sigma to improve process yield. Process Yield is the proportion of process output that meets customer requirements. Critical Customer Requirement (CCR) Proportion of process output (B) that meets customer requirements = 100% B A Proportion of process output (A) that meets customer requirements ≈ 70% Produce or Service Output Ref Overview-14

  31. The ‘Hidden’ Factory (Lean Thinking) . • The hidden factory corresponds to the resources that today are directed at creating waste, while they could be focused on generating high quality products and services. • For the typical organization, about 25% to 40% of all work activities consists of hunting for mistakes, unnecessary audits, rework, duplication of efforts and the performance of unneeded tasks.

  32. Rolled Throughput Yield Rolled Throughput Yield (RTY)represents a combined yield for each step or sub-process. Obtain RTY by multiplying the yield for each step or sub-process. STEP 1 STEP 1 STEP 1 STEP 2 STEP 2 STEP 2 STEP 3 STEP 3 STEP 3 STEP 4 STEP 4 Ref Overview-15a

  33. Rolled Throughput Yield (cont’d.) Loan Documentation Yield = 95% Loan Application Yield = 91% Loan Processing Yield = 96% Loan Review Yield = 96% Rolled throughput Yield = 0.95 x 0.91 x 0.96 x 0.96 x 0.97 = 77.2% Loan Servicing Yield = 97%

  34. Rolled Throughput Yield (cont’d.) (cont’d.) • RTY can be calculated on either the number of items that make it through defect-free the “first time right” or on the final number of items that are defect-free once errors are corrected • In most situations, it makes sense to base sigma calculations on First Time Right Process Step 1 Correct? No Errors Reworked First Time Right = Number of items that make it through error-free without corrections Final Yield = Number of items that are defect-free AFTER errors are corrected Ref Overview-16

  35. Rolled-Throughput-Yield - Activity • Appoint a facilitator in your project team to manage the time and the discussion. • Map your selected improvement process high-level (e.g. 6-8 process steps) on a flip chart • Make an estimate of the yield rate at each individual process step • You may have to first consider the criteria for defects and what the definition is for a defect free step! This may include establishing a target level for a step (e.g. this step must be finished in 2 hours) • Calculate the RTY % of the overall process • What is your conclusion? • Be ready to share your results in a short presentation.

  36. Process Sigma is a Great Metric • Focus is on defects, even one is a failure for a customer • Universal measure that can be applied to any product or service • Difficult to motivate people to improve quality from 99% to 99.9997% Distribution shifted +/- 1.5 sigma DPMO = Defects per million opportunities Sigma Improvement Requires Enormous Defect Reduction Ref Overview-17

  37. Is Six Sigma Performance Necessary? flight arrivals (all carriers) IRS answers 21% of calls Overnight delivery of 1st Class Mail Correct legal advice from IRS Soft drink quality in N. America 1000000 On-time Mishandled baggage (all carriers) Restaurant bills Payroll processing 100000 Wire transfers 10000 1000 100 DPMO Domestic airline fatality rate 10 (0.43ppm) 1 0 1 2 3 4 5 6 7 Process Sigma Is the Airline Industry Focused on the Right Processes? Ref Overview-18a

  38. Is Six Sigma Performance Necessary? (cont’d.) At 3σ, or 93% Yield, there would be: • >90% of computers would not function • 10.8 million mishandled healthcare claims annually • 54,000 checks lost each night by a single large bank • 270 million erroneous credit card transactions each year in the US Source: The Six Sigma Handbook 2003, page 61, T. Pyzdek Ref Overview-18c

  39. Is Six Sigma Performance Necessary? (cont’d.) At 4.5 σ, or 99.9% Yield, there would be: • At least 20,000 wrong drug prescriptions per year • Unsafe drinking water almost 1 hour each month • No telephone service for nearly 10 minutes each week • Two short or long landings at O’Hare airport each day • 25,000 lost or incorrectly delivered articles of mail per hour • Over 9,000 wrong felony convictions per year • 50 Newborn babies dropped at birth by doctors each day Ref Overview-18b

  40. Setting Sigma Performance Targets • If the current Process Sigma is greater than 3.0, a two times defect improvement goal is set, e.g., improve from 1,000 DPMO to 500. • If the current Process Sigma is 2.9 or less, a ten times defect improvement goal is established, e.g., 300,000 DPMO to 30,000. Ref Overview-19

  41. The Cost of Defects Activity: Brainstorm some costs that you incur as a result of defects. Ref Overview-20

  42. Cost of Defects - Examples • Hidden Factories • Re-work of defects in processes or products • Complex workarounds • Excessive phone calls, emails, faxes and other correspondence as a result of poor performance • Inspections and Audits • Back-end audits and approvals • Multiple approval steps • Lost Sales and Market Share • Market product requirements not met • Service or delivery requirements not met • Fines and Other Penalties Ref Overview-21

  43. Lean Six Sigma Business System • MTP Planning– the steering mechanism of the Business System • Process Management–documenting and measuring process performance • Problem Solving – using lean, DMAIC, DFSS, and other methodologies to close process performance gaps • People – recognizing and harnessing the exceptional potential of employees, suppliers, customers, and experts Ref Overview-22

  44. Define Business Improvement Opportunity Does Process Currently Exist? No Yes Measure Current Performance Measure Market Requirements Analyze Root Cause of Current Performance Analyze Design Alternatives Develop New Process Is Current Process Capable of Meeting Customer Reqts? No Yes Control Performance Improve Performance DMAIC vs. DFSS Lean Six Sigma DMAIC Lean Six Sigma DFSS Ref Overview-23

  45. DMAIC vs. DFSS (cont’d.) D M A I C D F S S • Define customer requirements and project goals • Measure the process to determine current performance • Analyze to identify and validate root causes of defects • Improve process by eliminating causes of defects • Control and monitor on-going process performance • Define customer requirements and project goals • Measure customer needs and specifications • Analyze design options to meet customer requirements • Design a detailed process that meets customer requirements • Verify that current and future process meets customer requirements Define Measure Analyze Design Improve Control Verify Ref Overview-24a

  46. Funneling the Focus of Process Work Variables Ref Overview-24b

  47. Project Components: DEFINE Overall objective:Clarify the Improvement Opportunity Identify Business Opportunity/Problem Identify Outcome Metric(s) and Target Establish Roles & Stakeholder Expectations Clarify Project Boundaries, Financial Benefit, and Preliminary Problem Statement Charter & Schedule Project, Select Resources Identify Critical Customer Requirements (CCRs) To Measure Step Ref Overview-25a

  48. Data Collection Plan Project ________________________ A B C E What questions do you want to answer? Mary Data Operational Definition and Procedures What Measure How Related How/where Sampling John 1 type/ Data Measured conditions to recorded (attach notes 2 type record form) Sally Jim Frequency Plots Pareto Chart DPMO_____ Yield _____ Sigma _____ Goal _____ UCL UCL LCL LCL F F 2 F F 1 3 4 Run Chart Project Components: MEASURE Overall objective:Narrow the improvement opportunity to a specific problem statement. Plot Outcome Defect Data Stratify Data Revise Problem Statement From Define Step Create Detailed Process Map Calculate Performance Collect Upstream Data Check Sheet Develop Data Collection Plan Understand Variation Assess Financial Impact (COPQ) Control Chart To Analyze Step Ref Overview-25b

  49. Scatter Plots Customer Customer 5 10 15 20 25 30 3 5 40 45 50 55 60 >60 5 10 15 20 25 30 3 5 40 45 50 55 60 >60 Y 5 5 10 10 15 15 20 20 25 25 30 30 3 3 5 5 40 40 45 45 50 50 55 55 60 60 >60 >60 Stratified Frequency Plots Time With Customer X (in minutes) Cause and Effect Diagram Root Contingency Table Sub Cause Cause 1 Level 2 Cause Made the Sale Made the Sale Level 3 Cause Level 1 Cause Level 1 Cause Yes No Revised ProblemStatement 5 5 Level 2 Cause 5 5 10 10 15 15 20 20 25 25 30 30 3 3 5 5 40 40 45 45 50 50 55 55 60 60 >60 >60 Level 1 Cause Present Level 1 Cause Did Not Make the Sale Level 2 Cause Did Not Make the Sale Level 1 Cause Defect Root Level 2 Cause Cause 5 5 2 Not Present 5 5 10 10 15 15 20 20 25 25 30 30 3 3 5 5 40 40 45 45 50 50 55 55 60 60 >60 >60 Time With Customer (in minutes) Project Components: ANALYZE Overall objective: Identify and confirm the root causes of the problem statement. From Measure Step Confirm Root Causes with Data Identify Value Added & Non-Value Added Steps Continuous Data Brainstorm and Organize Potential Causes Mixed Data To Improve Step Attribute Data Ref Overview-25c

  50. “After” Occurrence Occurrence Severity Item or Potential Potential Responsibility Detection Severity Detection RPN Process Failure Effect (s) Potential Current Recommended and RPN Step Mode of Failure Cause(s) Controls Action Target Date Action Taken Ease to Implement Effectiveness Root Causes Solutions Specific Tasks Total Score Problem Action Cost Total Risk Priority Number = “After” Risk Priority Number = Before Before After Good 3.6 Process Sigma 3.2 Process Sigma : Problem Statement ________________________________________ Solution (s) / Specific Task (s) ____________________________ IMPROVE changes Cost/Benefit Analysis implemented Before After Task / Project Status Who Due Date } Improvement 1.3 s 3.1 s Time 100% 100% Cost } 75% 75% Benefit Improvement 50% 50% 25% 25% Approval from Finance A2 A1 A3 A4 A1 A2 A3 A4 Project Components: IMPROVE Overall objective: To identify/implement countermeasures that will eliminate or reduce the confirmed root causes. From Analyze Step Cost/Benefit Analysis Develop Action Plan Quantify Pilot Results Identify Breakthrough Ideas Updated Pareto Chart Lean Thinking Select Countermeasures Risk Analysis Develop Pilot Plan Update Metrics Selection Matrix FMEA Gantt Chart To Control Step Ref Overview-25d