Six Sigma and Project Management 041205 · 1/6/2007 · Analyze capabilities against CTQ's ......

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Six Sigma and Project Six Sigma and Project Management Management Ken Knoke Ken Knoke PMP PMP Black Belt Black Belt April 12, 2005 April 12, 2005

Transcript of Six Sigma and Project Management 041205 · 1/6/2007 · Analyze capabilities against CTQ's ......

Six Sigma and Project Six Sigma and Project ManagementManagement

Ken KnokeKen KnokePMPPMP

Black BeltBlack BeltApril 12, 2005April 12, 2005

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What We Will Cover TodayWhat We Will Cover Today

σσ What is Six Sigma?What is Six Sigma?

σσ How is Six Sigma similar to project How is Six Sigma similar to project management?management?

σσ What is a Six Sigma project like?What is a Six Sigma project like?

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What is Six Sigma?What is Six Sigma?

σσ A Symbol A Symbol σσ A MetricA Metricσσ A BenchmarkA Benchmarkσσ A ToolA Toolσσ A VisionA Vision

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What Does Six Sigma RepresentWhat Does Six Sigma Represent

Elimination of variation in a process so that it is 99.9997% Elimination of variation in a process so that it is 99.9997% defect freedefect free

+ or – 1 Std

Or – 3.4 defects per million

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Is Six Sigma Achievable?Is Six Sigma Achievable?

If the world operated at a If the world operated at a four sigmafour sigma level level (99.904%)(99.904%)

σσ Unsafe drinking water for one hour Unsafe drinking water for one hour each montheach month

σσ 5,000 babies given to the wrong 5,000 babies given to the wrong parents each yearparents each year

σσ 500 airline crashes per month500 airline crashes per month

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What is the six sigma process?What is the six sigma process?σσ Identify a problemIdentify a problemσσ Form a teamForm a teamσσ Gather data about the extent of the problemGather data about the extent of the problemσσ Determine possible causesDetermine possible causesσσ Statistically test the possible causes to see if Statistically test the possible causes to see if

they are validthey are validσσ Devise solutions to the statistically valid causesDevise solutions to the statistically valid causesσσ Implement the solutionsImplement the solutionsσσ Monitor the solutions to ensure that they have Monitor the solutions to ensure that they have

fixed the problemfixed the problem

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Six Sigma Project RequirementsSix Sigma Project Requirements

σσ Team commitmentTeam commitmentσσ Four to six months durationFour to six months durationσσ 20% to 30% of each team member20% to 30% of each team member’’s times time

σσ Available DataAvailable Dataσσ To calculate size of problemTo calculate size of problemσσ To measure potential causesTo measure potential causes

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Six Sigma vs. Project Management Six Sigma vs. Project Management

σσ Six Sigma activities are projectsSix Sigma activities are projects

σσ ToolsTools

σσ CertificationCertification

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Six Sigma as a ProjectSix Sigma as a Project

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Six Sigma vs. Project Management Six Sigma vs. Project Management

Six Sigma Activities Are ProjectsSix Sigma Activities Are Projects

“All improvement takes place project by project . . .and in no other way.”

Dr. Joseph M. Juran

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Six Sigma vs. Project Management Six Sigma vs. Project Management

Six Sigma Activities Are ProjectsSix Sigma Activities Are Projects

“A temporary endeavor undertaken to create a unique product or service.”

PMBOK

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Six Sigma vs. Project Management Six Sigma vs. Project Management

Project Management PhasesProject Management Phases

σσ InitiateInitiateσσ PlanPlanσσ ExecuteExecuteσσ ControlControlσσ CloseClose

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Six Sigma vs. Project Management Six Sigma vs. Project Management

Six Sigma Phases Six Sigma Phases -- TransactionalTransactional

σσ DefineDefineσσ MeasureMeasureσσ AnalyzeAnalyzeσσ ImproveImproveσσ ControlControl

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Six Sigma vs. Project Management Six Sigma vs. Project Management

Six Sigma Phases Six Sigma Phases -- DesignDesign

σσ DefineDefineσσ MeasureMeasureσσ AnalyzeAnalyzeσσ DesignDesignσσ VerifyVerify

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ToolsTools

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Six Sigma vs. Project Management Six Sigma vs. Project Management

Common ToolsCommon Tools

σσ Project CharterProject Charterσσ Gantt Charts/Milestone ChartsGantt Charts/Milestone Chartsσσ Pay Off Matrix/Probability Pay Off Matrix/Probability –– Impact MatrixImpact Matrixσσ FMEA/Risk Response PlanFMEA/Risk Response Planσσ Control ChartsControl Chartsσσ Pareto DiagramsPareto Diagramsσσ Process MapsProcess Mapsσσ Cause and Effect DiagramsCause and Effect Diagrams

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Tools Tools –– Project CharterProject Charter

DMADV Project Charter Resource Plan General Information Review Timing

Project Overview

Problem Statement: The creation of the Builder Cabinet Group has brought together two companies with different ERP systems. Adrian uses JDEdwards for sales order processing, purchasing, accounts payable, accounts receivable and the general ledger. Adrian’s manufacturing systems have all been developed internally. Duncanville uses the Friedman package for all processes except for the general ledger. They are currently transitioning their general ledger, accounts payable and accounts receivable to JDEdwards. These disparate systems make it difficult, if not impossible, for the Builder Cabinet Group to provide their customers with a consistent approach to ordering, invoicing, etc. The different systems also add inaccuracies to analyses of costs, inventories, etc. In addition, the separate manufacturing systems make it difficult to roll out process changes to all BCG facilities and to easily move resources between facilities.

Goal Statement: Review the JDEdwards and Friedman ERP systems and make a decision of which one best meets the needs of the Builder Cabinet Group. Determine if standardizing on either system is preferable to leaving the current ERP system structure in place. Develop a high level implementation resource and timing estimate for the implementation. Develop an estimate of the financial benefits to the BCG of having an integrated ERP solution. In Scope:

• Order Entry • Manufacturing • Purchasing • Inventory Management • Configuration • Determining expected financial benefits of the BCG being one system • Determining high level implementation costs and timing • Choices: Selecting JDEdwards, selecting Friedman or not standardizing • Accounts Receivable • Accounts Payable • Billing • Quoting

Out of Scope:

• General Ledger (Assume will stay on JDE)

Project No.: Project Name: BCG ERP Selection Leader: Bob Winterhalter Instructor: TBD Champion: Keith Allman Team Members (Key): Ken Knoke, Bob Winterhalter, CB Roe, Mary Hojnacki, Heather Price, Jennifer Miller, Mike Petrie Jr., Cark Previte, Clay Smith, Bill Harke, Tammie Floyd, Kasey Harris

Business Unit: All BCG

Business Objectives: Determine the ERP system that best fits the needs of the Builder Cabinet Group

Project CTQ: Current Process Capability: Multiple systems, little integration, many ways of interacting with customers

Start: 4/01/08

D 4/15/05

M 5/16/05

A 7/03/05

D 8/24/04

V 9/24/04

Finish: 9/24/04

Six Sigma Charter Six Sigma Charter

σ Business Need

σ Product Description

σ Scope

σ Team Members

σ Milestone Dates

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Tools Tools –– Gantt/Milestone ChartsGantt/Milestone Charts

For Six SigmaFor Six Sigma

σ More high level

σ Based on estimates

σ Drives milestones not individual daily activities

Task Start End Status 1 8 15 22 29 6 13 20 27 3 10 17 24 1 8 15 22 29 5 12 19 26 2 9 16 23 30Define 30-Mar 22-AprKick Off Meeting 30-Mar 30-Mar CompleteFinalize Charter 15-Apr 15-AprClass (Define/Measure) 13-Apr 15-AprDevelop Plan 18-Apr 22-AprDevelop Risks 18-Apr 22-AprMeasure 25-Apr 3-JunIdentify customersPrioritize customersDetermine how to gather customer needsGather customer needsTurn needs into CTQ'sDeveleop design score cardDetermine financial benefits of standardizationAnalyze 6-Jun 15-JulClass 8-Jun 10-JunMeet with VendorsReview vendor cababiitiesAnalyze capabilities against CTQ'sDesign 18-Jul 12-AugClass 20-Jul 22-JulSelect recommended vendorDetailed functional specificationSelect items to be testedDetail vendor reviewVerify 15-Aug 23-SepClassFinalize selectionAnalyze capabilities against CTQ'sDetermine implementation costsFinal report and presentation 23-Sep

April SeptemberAugustJulyMay June

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Tools Tools –– Payoff MatrixPayoff MatrixFor Six SigmaFor Six Sigma

σσ Helps to Helps to determine determine which which solutions to solutions to pursuepursue

High Pursue Rescope High Standard Work ScanningLow Eliminate Eliminate Low

Low High Low High

Benefit

Effort

Shortage ProjectEvaluation Rules

Benefit

Effort

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Tools Tools –– FMEA/Risk Response PlanFMEA/Risk Response Plan

σσ Identifies risksIdentifies risksσσ Assigns probability and impactAssigns probability and impact

Item Name: FMEA Team:Prepared by: Jim Lind, Steve Reppen, Pat Gaunt, Carmen Bernabie

Accounts Receivable Jim Lind, Steve Reppen, Pat Gaunt, Carmen Bernabie FMEA Date (Orig): May 30, 2004 (Rev.): 11/15/2004

Process Step Key Process Input Potential Failure Mode Potential Failure Effects

SEV

Potential CausesOCC

Current Process ControlsDET

RPN

Actions Recommended Resp.& Target Date Actions Taken

SEV

OCC

DET

RPN

What is the process step?

What are the Key Process Inputs?

(KPIV's)

In what ways can Key Inputs go wrong? (Process fail to meet requirements)

What is the impact on the Key Output Variables (customer requirements) or internal requirements?

How

Sev

ere

is e

ffect

to

the

cust

omer

? What causes the Key Input to go wrong? (How could the failure mode occur?)

How

freq

uent

is

caus

e lik

ely

to

Occ

ur? What are the existing controls that

either prevent the failure mode from occurring or detect it should it occur?

How

pro

babl

e is

D

etec

tion

of c

ause

?

Ris

k P

riorit

y #

to

rank

ord

er c

once

rns What are the actions for

reducing the Occurrence of the cause, or improving Detection? Should have actions on high RPN's or Severity of 9 or 10.

Who's Responsible for the recommended action? What date?

What were the actions implemented? Include completion month/year. (Then recalculate resulting RPN.)

CFS rep. will monitor accounts at least weekly to determine risk and appropriate course of action if needed.

SOP for the CFS rep., reporting plan and follow-up by supervision.

CFS rep. does not monitor accounts on a timely basis, no SOP in place to set time frames for notification.

Money is not collected on a timely basis, effecting cash flow and profitability.

8 Lack of training, performance expectations not set, no regular reporting system and lack of follow-up by supervision.

8 Data warehouse account receivables reports. These are not generated automatically but need to be requested by user. Weekly conference call with sales to discuss top ten delinquent accounts.

8 512

All invoices are deemed past due after 30 days, even when different terms are specified in the contract

SOP for the CFS rep., reporting plan and follow-up by supervision.

Customers are contacted even when not past due according to contract terms

Customer satisfaction is lowered. Unnecessary time and effort by CFS rep. is spent following up on amounts not past due.

8 This policy has not been reviewed on a regular basis to update to reflect the current customer base

8 None 8 512

No difference in the current process for channels of distribution or project type to reflect different contract terms

SOP for the CFS rep., reporting plan and follow-up by supervision.

Contract terms vary to type of project and customer.

Customer satisfaction is lowered. Unnecessary time and effort by CFS rep. is spent following up on amounts not past due.

8 This policy has not been reviewed on a regular basis to update to reflect the current customer base

8 None 7 448

Entering PO dollar information accurately.

Accurate Invoices

Incorrect invoice entered into system.

Customer will not pay inaccurate invoices on a timely basis.

8 Lack of training, performance expectations not set, no regular reporting system and lack of follow-up by supervision.

8 None 8 512

Frequency of customer contact

SOP for the CFS rep., reporting plan and follow-up by supervision.

No current standard work or SOP to specify standards for frequency of customer contact

Money is not collected on a timely basis, effecting cash flow and profitability.

8 Lack of training, performance expectations not set, no regular reporting system and lack of follow-up by supervision.

8 No regular reporting and follow-up system established.

9 576

PROCESS FMEA(Potential Failure Modes and Effects Analysis)

σσ Shows mitigationShows mitigation

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Tools Tools –– Control ChartControl ChartFor Six SigmaFor Six Sigma

σσ Used to Used to monitor if a monitor if a process is in process is in controlcontrol

σσ Used to view Used to view the impact of the impact of process process changeschanges

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Tools Tools –– Pareto ChartPareto ChartFor Six SigmaFor Six Sigma

σ Used to identify the critical few problem areas

Others

LATE OR DER CH ANGE

KEYED INCORRECTLY

Key ing ERROR

PAC KAGING ERROR

ASSUMED ON TRUCK

HASHMARK ERROR

5 3 3 5 84581 3.3 2.0 2.0 3.3 5.330.054.0

100.0 96.7 94.7 92.7 89.3 84.0 54.0

150

100

50

0

100

80

60

40

20

0

DefectCount

PercentCum %

Perc

ent

Cou

nt

Pareto Chart for Shortage Reason

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Tools Tools –– Process MapsProcess MapsFor Six SigmaFor Six Sigma

σσ Used to identify Used to identify process stepsprocess steps

σσ Help in Help in determining determining where problems where problems may occurmay occur

SORT PAPERTO APPROPRIATEAREAS

SORT ACCESS. PAPER

pick parts listby dock/ack#

line 1 pick parts

stage parts on cart

line 2 pick parts

stage parts on cart

check off clamp listing

check off clamp listing

pick parts and build by Ack.#

Built parts listing in Accessories

stage on cart/move to Access.

package in Accessories

check off clamp listing

molding pick list by Ack# and dock

pick line 1 molding

pick line 2 molding

pick by Ack.# in reverse order

pick by Ack.# in reverse order

stage on cart in rev. ack. #

stage on cart in rev. ack.#

check off clamp listing

check off clamp listing

PB Lam. & TKC pick list

pick line 1 PB/TKC

pick line 2 PB/TKC

pick by ack.# in reverse order

pick by ack.# in reverse order

stage on cart in rev. ack.#

stage on cart in rev. ack.#

check off clamp listing

check off clamp listing

SORT CABINET PAPER

Cab. Clamp list for build by seq.

pick parts & build by ack/seq.

check off BTT220 at truck and load

Talls Clamp list for build by seq.

pick parts & build by ack/seq

stage talls in designated area by dock/ack.#

check off BTT220 at truck and load

Is list the complete?

NO YES Take cart to dock

Check off BTT220 and load

go to fascilitator to verify

is it a stockout?

Yes

NO

audit or repick

Specials clamp list for build

pick parts and build by ack./seq.

stage spec.'s in designated area by dock/ack.#

check off BTT220 at truck and load

COMPLETE?

Turn in BTT 220 to shipping clerk to review with marks to signify B/O Cabs or Accessories.

Mark B/O as instructed on list

YES NO

check w/ fasc. Or repair/offline

still missing?

NO

YES

mark BTT220 w/ check off or B/O.

Audit load one more time if possible.

CLOSE LOADS

1

1 11

X6

X1

X1 X1 X1X4X4 X4X4X4

X2

X2X2

X3X3X3

X3

X2

X4

X3

Incorrect hash marking

Items not built in the BTT cells

Items loaded onto the wrong trailer

X8

X8 X8 X8

X7 X7 X7

X7

X8

X1

X5

X6

X8

X7

Poor accessory labeling

Late customer order changes

Keying errors

Items arriving late at the dock

Lack or adequate training

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Tools Tools –– Cause & Effect DiagramCause & Effect Diagram

For Six SigmaFor Six Sigma

σ Determines potential causes of problems

Materials PeopleLoader Mistake

Check Off Wrong Item

Ignore Ack No. Material arrives early

Label mis readParts Arrive Late Wrong items on cart

Work Center behind schedule Trailer moved Loaded on Wrong Trailer

Label too smallHire the Wrong People Many trailers to same cust.

HurryInventory error Don't care

Mis reads labelDelayed trucking No customer focus

Bad minimums Not detailed oriented Hash & set on dock Hash in anticipation of receiving product

Components Late Don't Check all lines for the Ack Does not hash mark when loadingHit F5 by mistake

Wrong accessories on cart Keying Mistake Ineffetive trainingPoorly Trained Team

Qty on Wrong Line No follow upSimilar Descriptions High turnover

Employee additude

Cabinets Shorages to Customers

Unclear/Incorrect hash marksFeeder work center late Bad data base

Given to wrong work centerLoaders Hurry Hash Marking Wrong Size Trailer

Picker errorTruck Over Cubed

Manpower shortages MiscountLost Labels Misread when keyed Different sized trailers

Poor Lighting Not printed Don't notify plant

Don\'t notify production

Small/hard to readCSR Error Late Customer Add Ons

Don't show qtyCustomer request

Accessory Labels Hand offs/silos

Sequencing

Items Not Built in BTT CellsEnvironment Methods Equipment

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CertificationCertification

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Juran Institute Juran Institute Green BeltGreen BeltCertification RequirementsCertification Requirements

σσ 64 hours of classroom training64 hours of classroom trainingσσ Pass 2.5 hour written examPass 2.5 hour written examσσ Successfully complete a 4 month projectSuccessfully complete a 4 month projectσσ Pass 1.5 hour oral defense of projectPass 1.5 hour oral defense of projectσσ Submit Submit ““stand alonestand alone”” project book (100+ pages)project book (100+ pages)

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Juran Institute Juran Institute Black BeltBlack BeltCertification RequirementsCertification Requirements

σσ Must be a Green BeltMust be a Green Beltσσ Additional Black Belt requirementsAdditional Black Belt requirements

σσ Additional 64 hours of classroom trainingAdditional 64 hours of classroom trainingσσ Pass another 2.5 hour written examPass another 2.5 hour written examσσ Successfully complete another 4 month projectSuccessfully complete another 4 month projectσσ Pass 1.5 hour oral defense of that projectPass 1.5 hour oral defense of that projectσσ Submit Submit ““stand alonestand alone”” project book (100+ pages)project book (100+ pages)

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Masco BCG Masco BCG Black BeltBlack BeltRecertification RequirementsRecertification Requirements

σσ Successfully lead and complete a 4 month Successfully lead and complete a 4 month project with at least $100,000 per year in project with at least $100,000 per year in savings (or strategic equivalent)savings (or strategic equivalent)

σσ Pass 1.5 hour oral defense of projectPass 1.5 hour oral defense of projectσσ Submit Submit ““stand alonestand alone”” project book (100+ pages)project book (100+ pages)σσ Act as advisor on at least two other projects Act as advisor on at least two other projects

during the yearduring the year

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Six Sigma ProjectsSix Sigma Projects

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The Six Sigma Process The Six Sigma Process –– Project Project SelectionSelection

σ A project is defined as a problem scheduled for a solution.

σ Projects are launched in waves lasting 4 to 5 months. Typically 6 – 10 projects will be launched in each wave. Projects are focused and specific!

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Selection CriteriaSelection Criteria

σσ MBP action itemMBP action itemσσ Customer focusedCustomer focusedσσ SpecificSpecificσσ MeasurableMeasurableσσ SupportedSupportedσσ Realistic (timing)Realistic (timing)σσ Cost reduction opportunityCost reduction opportunityσσ Ease of data collectionEase of data collection

The Six Sigma Process The Six Sigma Process ––Project SelectionProject Selection

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The Six Sigma Process The Six Sigma Process –– People People SelectionSelection

σ People are selected based on:σ Knowledge of the problemσ Ability to manage projectsσ Capability to utilize Six Sigma tools

σ Process works best with “ownership”σ Juran Institute serves as Master Black

Belt

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Team MakeupTeam Makeup

One Black Belt assists multiple teamsOne Black Belt assists multiple teamsGreen Belt team leaderGreen Belt team leader33--4 other team members 4 other team members

(may or may not be Green Belts)(may or may not be Green Belts)

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Six Sigma – Summary (as of 3/05)Six Sigma Six Sigma –– Summary (as of 3/05)Summary (as of 3/05)

Complete In Process TotalGreen belts 111 59 170

Black belts 13 15 28

Projects 47 19 66

Savings $4.6 million TBD

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Masco BCG Six SigmaMasco BCG Six Sigmaσσ 10 Waves of Projects Completed10 Waves of Projects Completed

σσ Six Green Belt business process (transactional)Six Green Belt business process (transactional)σσ One Black BeltOne Black Beltσσ Two Green Belt manufacturingTwo Green Belt manufacturingσσ One Green Belt DFSSOne Green Belt DFSS

σσ Division President, 7 Vice Presidents, and 43 Division President, 7 Vice Presidents, and 43 Directors / Senior Managers certified!Directors / Senior Managers certified!

σσ 6 Additional Waves Scheduled for 20056 Additional Waves Scheduled for 2005σσ Three Green Belt business process (transactional)Three Green Belt business process (transactional)σσ One Black BeltOne Black Beltσσ One Green Belt DFSSOne Green Belt DFSSσσ One Orange Belt (manufacturing)One Orange Belt (manufacturing)

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Six Sigma Transactional Six Sigma Transactional ProjectsProjects

σσ Damaged doors Damaged doors --FedExFedEx

σσ Sequenced trucksSequenced trucksσσ CSR keying errorsCSR keying errorsσσ Customer Service Customer Service

order preparationorder preparationσσ Expedite order entryExpedite order entryσσ Contract executionContract executionσσ Invoice accuracyInvoice accuracy

σσ Credit memo touch Credit memo touch time reductiontime reduction

σσ Shipping shortagesShipping shortagesσσ Installer payroll Installer payroll

accuracyaccuracyσσ Spec book accuracySpec book accuracyσσ Hiring processHiring processσσ Inventory accuracyInventory accuracyσσ Cabinet damage to Cabinet damage to

western customerswestern customers

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MerillatMerillatSix Sigma Improvement ProcessSix Sigma Improvement Process

Project Name: Reduce Shortages to CustomersProject Number: 2003-2

Green Belt Project Leader: Ken Knoke

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DefineMeasureAnalyzeImproveControl

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Project MissionProject MissionProblem Statement:

Merillat customers regularly state they do not receive products (cabinets and accessories) that we report we ship. The overall shortages reported for 2002 averaged 1,300 pieces per month. Itis assumed one-half of these shortages occur during multi-stop shipments. The estimate of the internally caused shortages is 650 pieces per month.Objective(s):

Reduce internally created shortages on customer shipments by 325 pieces per month.

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Project ScopeProject ScopeIn Scope:

Shortages of all products (cabinets and accessories), all customers that receive direct shipments, all plantsThe process starts when the products arrive at the dock door. The process ends when the packing list is printed and put on the truck.

Out of Scope:

Masterpiece, outside purchases delivered directly from supplier (i.e. Larson and similar product), shipments from our service centers, and shipments from our plants that are multi stop loads.

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Project TeamProject TeamChampion: Ken Knoke

Green Belt Project Leader: Ken Knoke

Green Belt Team Members: Brett BoschmaMike GarwoodKeith DozierErle Dordal

Other Team Members: None

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Project Justification & Expected Project Justification & Expected ResultsResults

COPQ: $22,100/Month

Expected COPQ Savings: $ 5,525/Month

Operational/Strategic Impact:

Shortages are a major cost and inconvenience to our customers. They cause the customer to reschedule installations and/or make several trips to the site of installation.

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Financial Impact: COPQ Financial Impact: COPQ CalculationCalculation

Average cost of freight per no charge order = $ 1/PieceCalculated by Ken Knoke

Average product cost of no charge order = $ 16/pieceCalculated by Ken Knoke

Average number of pieces per no charge order = 1.5 PiecesCalculated by Ken Knoke

Average no charge pieces per month due to shortages = 1,300 PiecesCalculated by Ken Knoke

Cost of a customer shortage to Merillat is:

$16 Material/Piece +$1 Freight/Piece = $17/Piece

$17/Piece * 1,300 Pieces/Month = $22,100/Month

Due to Customer Shortages

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Financial Impact: Shortages per Financial Impact: Shortages per MonthMonth

1. Shipping shortage as reported into the system were found to be unreliable (see slides 18 – 19)

2. We had no reliable historical measurement of shortage rate so we needed to develop an estimate.

3. Each plant selected one or more in scope customers to provide manual feedback of shortages. They reported an average shortage rate of .165%.

4. Merillat Shipped 790,000 pieces per month in 2002

5. 790,000 pieces shipped per month times .165% shortages equals

1,300 shipping shortages per month

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High Level Process Map (SIPOC)High Level Process Map (SIPOC)SUPPLIER INPUT PROCESS OUTPUT CUSTOMER

• Computer room• Traffic Department

• BTT Production Cell• Accessories

Department• Custom Shop

• Truck Loaders

• Computer room

• Truck Loader

• Daily Shipping Schedule

• Picked components

• Packaged cabinets and accessories

• Hash Marked Load Sheet

• Packing List

• Carts of picked components

• Packaged cabinets and accessories

• Items loaded on the truck

• Hash marked load sheet

• Computer printed packing list

• Completed truck with packing list

• Parts pullers

• Truck loaders

• Computer room

• Truck Loader

• Receiving Crew at Ship to Location (ie Distributors, Dealers, Builders, Service Centers, etc.)

• BTT Paperwork Correct

• Items put on correct truck

• Load sheet marked correctly

• Shipments keyed correctly

• Customer Receives Product on Packing List

Receive LoadPaperwork

Produce Product

Load Product

Key Shipments into Computer

Process Paperwork and

Put on Truck

CTQCRITICAL TO QUALITY

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Operational Definitions of Key Operational Definitions of Key TermsTerms

Accessory An accessory is a finished goods end item. It is generally a trim item (moldings, fillers, valances, end panels, etc.) or an item that can be added to the kitchen to enhance its functionality (appliance garages, cutting boards, knife dividers, etc.). Generally, an accessory is not assembled or packaged in the manufacturing cells that are located immediately behind the truck.

Assembly Plant An assembly plant is a Merillat facility that manufactures and ships cabinets and accessories to our customers. Shipments from assembly plants to our customers are in scope for this project.

Cabinet A cabinet is the basic component of a kitchen. It can be mounted on the floor (B12L, B24, BBC36/39, etc.) or on the wall (W1230, W2430 W4830, etc.) Generally, a cabinet is assembled and packaged in the manufacturing cells that are located immediately behind the truck.

COPQ The cost of not doing things correctly the first time.

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Operational Definitions of Key Operational Definitions of Key TermsTerms

Direct Shipment A direct shipment is a shipment from one of Merillat’s assembly plants that goes to a customer’s site without stopping to unload other customers’products at their sites. Direct shipments are inside the scope of this project.

Masterpiece Masterpiece is a product line that is produced by our sister company KraftMaid. This product is shipped from KraftMaid to Merillat customers with no involvement by Merillat personnel. Masterpiece shipments are out of scope for this project.

Multi-Stop Load A multi-stop load is a shipment that makes several stops to unload product at several locations and /or several customers. Multi-stop loads that are not unloaded by Merillat personnel are out of scope for this project.

Packing List A packing list is a computer generated document that is created after loading of the truck is complete. The packing list is placed in the trailer before the shipment leaves. The customer uses this document to indicate what should be on the truck. A discrepancy between the packing list and what the customer actually receives defines what a shortage is.

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Operational Definitions of Key Operational Definitions of Key TermsTerms

Service Center A service center is a Merillat facility that coordinates deliveries and installations of kitchens at our builder customers. The service center may occasionally serve as a cross docker in this process. Shipments from service centers are out of scope for this project.

Shipment A shipment is a trailer load, or partial trailer, of cabinets and accessories that is sent to a customer.

Shortage A shortage is an item that Merillat tells the customer that was shipped but the customer does not receive.

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

DefineMeasureAnalyzeImproveControl

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Project Y (or Ys) in Y = f (x)Project Y (or Ys) in Y = f (x)

Y (or Y's) =

= Pieces (cabinets and accessories) of product not shipped to customers which are reported as shipped

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Detailed Process MapDetailed Process MapSORT PAPERTO APPROPRIATEAREAS

SORT ACCESS. PAPER

pick parts listby dock/ack#

line 1 pick parts

stage parts on cart

line 2 pick parts

stage parts on cart

check off clamp listing

check off clamp listing

pick parts and build by Ack.#

Built parts listing in Accessories

stage on cart/move to Access.

package in Accessories

check off clamp listing

molding pick list by Ack# and dock

pick line 1 molding

pick line 2 molding

pick by Ack.# in reverse order

pick by Ack.# in reverse order

stage on cart in rev. ack. #

stage on cart in rev. ack.#

check off clamp listing

check off clamp listing

PB Lam. & TKC pick list

pick line 1 PB/TKC

pick line 2 PB/TKC

pick by ack.# in reverse order

pick by ack.# in reverse order

stage on cart in rev. ack.#

stage on cart in rev. ack.#

check off clamp listing

check off clamp listing

SORT CABINET PAPER

Cab. Clamp list for build by seq.

pick parts & build by ack/seq.

check off BTT220 at truck and load

Talls Clamp list for build by seq.

pick parts & build by ack/seq

stage talls in designated area by dock/ack.#

check off BTT220 at truck and load

Is list the complete?

NO YES Take cart to dock

Check off BTT220 and load

go to facilitator to verify

is it a stock out?

Yes

NO

audit or repick

Specials clamp list for build

pick parts and build by ack./seq.

stage spec.'s in designated area by dock/ack.#

check off BTT220 at truck and load

COMPLETE?

Turn in BTT 220 to shipping clerk to review with marks to signify B/O Cabs or Accessories.

Mark B/O as instructed on list

YES NO

check w/ fasc. Or repair/offline

still missing?

NO

YES

mark BTT220 w/ check off or B/O.

Audit load one more time if possible.

CLOSE LOADS

1

1 11

X6

X1

X1 X1 X1X4X4 X4X4X4

X2

X2X2

X3X3X3

X3

X2

X4

X3

Incorrect hash marking

Items not built in the BTT cells

Items loaded onto the wrong trailer

X8

X8 X8 X8

X7 X7 X7

X7

X8

X1

X5

X6

X8

X7

Poor accessory labeling

Late customer order changes

Keying errors

Items arriving late at the dock

Lack or adequate training

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Pictures of the ProcessPictures of the Process

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Pictures of the ProcessPictures of the Process

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Plan for Data CollectionPlan for Data CollectionQuestions to be answered:

•What is the level of customer shortages?

•Does the type of product impact the number of shortages?

•Is there a difference in the shortages by reporting method?

All shortagesAll shortagesAll orders at all All orders at all plantsplants

SystemSystemNo charge orders with a reason code of No charge orders with a reason code of ““shortageshortage””

System reports of System reports of shortagesshortages

All ShortagesAll ShortagesLas VegasLas VegasJim ZehJim ZehA monthly report of shortages by the A monthly report of shortages by the Service CentersService Centers

QAC ReportQAC Report

All shortagesAll shortagesChicago MarketChicago MarketSteve WittigSteve WittigA monthly report of shortages reported A monthly report of shortages reported in the Chicago marketin the Chicago market

Chicago ReportChicago Report

All shortagesAll shortagesVarious sitesVarious sitesBrett BoschmaBrett BoschmaA report of shortages reported by A report of shortages reported by selected customers of Ocalaselected customers of Ocala

Ocala shortage Ocala shortage reportreport

All shortagesAll shortagesReicoReicoKeith DozierKeith DozierA monthly report of shortages reported A monthly report of shortages reported by Reico to Culpeperby Reico to Culpeper

Reico shortage Reico shortage reportreport

All shortagesAll shortagesKSIKSIMike GarwoodMike GarwoodA monthly report of shortages reported A monthly report of shortages reported by KSI to Adrianby KSI to Adrian

KSI shortage KSI shortage reportreport

Small random Small random teststests

Various sitesVarious sitesRick Rick WohlgamuthWohlgamuth

Random receiving audits conducted at Random receiving audits conducted at selected customer sites.selected customer sites.

Rick Wohlgamuth Rick Wohlgamuth truck auditstruck audits

QuantityQuantityWhereWhereWhoWhoDefinitionDefinitionMeasureMeasure

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Validate Measurement SystemValidate Measurement System1. Perform a Box Plot analysis to determine if the manual samples are

significantly different than system reporting

The fact that there is no overlap indicates that the manually reThe fact that there is no overlap indicates that the manually reported shortages ported shortages are significantly different than the system reported shortages.are significantly different than the system reported shortages.

Manual Value System Value

0.15

0.20

0.25

0.30

Per

cent

Sho

rt

0.165

0.295

Box Plot of Manual Shortage Reports vs. System Shipping ReportsBased on November Reports

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Validate Measurement SystemValidate Measurement System2. Perform a Test of Two Proportions

Ho = There is no difference between manual reporting and system reportingHa = There is a difference between manual reporting and system reporting

The fact that PThe fact that P--Value is equal to 0 indicates that we should reject the Null HypValue is equal to 0 indicates that we should reject the Null HypothesisothesisThere is a difference between manual reporting and system reportThere is a difference between manual reporting and system reporting!ing!

Test and CI for Two ProportionsTest and CI for Two Proportions

SampleSample X X N N Sample pSample p1 Manually Reported Data 207656 208013 0.998284 1 Manually Reported Data 207656 208013 0.998284 2 System Reported Data 207437 208013 0.9972312 System Reported Data 207437 208013 0.997231

N = Number of Pieces ShippedN = Number of Pieces ShippedX= Number of Pieces Reported Not to Be ShortX= Number of Pieces Reported Not to Be Short

Estimate for p(1) Estimate for p(1) -- p(2): 0.00105282p(2): 0.0010528295% CI for p(1) 95% CI for p(1) -- p(2): (0.000765354, 0.00134028)p(2): (0.000765354, 0.00134028)Test for p(1) Test for p(1) -- p(2) = 0 (vs not = 0): Z = 7.18p(2) = 0 (vs not = 0): Z = 7.18 PP--Value = 0.000Value = 0.000

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Measure Baseline PerformanceMeasure Baseline Performance

CURRENT

COPQ: $22,100/Month

Pieces Short/Month: 1,300

PPM: 1,600

Sigma Level: 4.5

GOAL

COPQ: $16,575/Month

Pieces Short/Month: 975

PPM: 1,200

Sigma Levels: 4.6

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Pareto Diagram Pareto Diagram –– All ShortagesAll Shortages

Others

Replac ement

Accessory

Cabinet

1 32 64111 0.515.430.853.4

100.0 99.5 84.1 53.4

200

100

0

100

80

60

40

20

0

DefectCount

PercentCum %

Per

cent

Cou

ntShortage Categories

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

CauseCause--Effect Diagram Effect Diagram Materials People

Loader Mistake

Check Off Wrong Item

Ignore Ack No. Material arrives early

Label mis readParts Arrive Late Wrong items on cart

Work Center behind schedule Trailer moved Loaded on Wrong Trailer

Label too smallHire the Wrong People Many trailers to same cust.

HurryInventory error Don't care

Mis reads labelDelayed trucking No customer focus

Bad minimums Not detailed oriented Hash & set on dock Hash in anticipation of receiving product

Components Late Don't Check all lines for the Ack Does not hash mark when loadingHit F5 by mistake

Wrong accessories on cart Keying Mistake Ineffetive trainingPoorly Trained Team

Qty on Wrong Line No follow upSimilar Descriptions High turnover

Employee additude

Cabinets Shorages to Customers

Unclear/Incorrect hash marksFeeder work center late Bad data base

Given to wrong work centerLoaders Hurry Hash Marking Wrong Size Trailer

Picker errorTruck Over Cubed

Manpower shortages MiscountLost Labels Misread when keyed Different sized trailers

Poor Lighting Not printed Don't notify plant

Don\'t notify production

Small/hard to readCSR Error Late Customer Add Ons

Don't show qtyCustomer request

Accessory Labels Hand offs/silos

Sequencing

Items Not Built in BTT CellsEnvironment Methods Equipment

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

X1: Incorrect Hash marking is a major cause of shortages

X2: Items not built in the BTT cell are more likely to be short

X3: Items are being loaded on the wrong trailer

X4: Accessory labeling will cause shortages

X5: Late customer order changes will cause shortages

X6: Keying errors when closing loads will cause shortages

X7: Items that are late arriving at the dock will cause shortages

X8: Lack of training of loading personnel will cause shortages

After the data gathering process began, we realized that we had not taken our C-E diagrams to a detailed enough level for effective data analysis. Consequently, we performed a new Pareto analysis and C-E diagrams to develop more precise X’s.

Potential XPotential X’’s s ––Possible TheoriesPossible Theories

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Pareto Diagram Pareto Diagram –– By ReasonBy Reason

Others

LATE OR DER CH ANGE

KEYED INCORRECTLY

Key ing ERROR

PAC KAGING ERROR

ASSUMED ON TRUCK

HASHMARK ERROR

5 3 3 5 84581 3.3 2.0 2.0 3.3 5.330.054.0

100.0 96.7 94.7 92.7 89.3 84.0 54.0

150

100

50

0

100

80

60

40

20

0

DefectCount

PercentCum %

Perc

ent

Cou

nt

Pareto Chart for Shortage Reason

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

CauseCause--Effect Diagram Effect Diagram –– Hash Mark Hash Mark ErrorsErrors

Hash Mark Errors

Expertise of Loader

Loader Distraction

Miscounts

Experience of Loader X3

Lack of Training

Not Following Standard Work

No standard work

No follow up

Lunch & Breaks

Hand Offs

Crew Rotation

Shift Change

Loader Attitude Similar

Descriptions

Wrong Count in Box

Large Quantities X5

Line backed up

Turnover

Turnover

Ergonomics

Personal Problems

Illness

Changing Trailers

Improper line balancing

Packaging Error

Loader does not count accessory

Fatigue

Shift X4

No standardized training

low priority

No supervisor

low priority

Count is all that matters

Reduce Injuries

Loads overlap shifts

Time between shifts

Work conditions

Too few doors

Late items

Too busyTrust accy dept count

Similar product

Small print

Loader literacy

Different by cell? X2 Crew rotation

Things that can be measured

Non Cell Cab

Staged X1

Different by Plant? X6

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

CauseCause--Effect Diagram Effect Diagram –– Assume Items Are Assume Items Are on the Truckon the Truck

Assume that items are loaded on the truck

Loader says that he loaded it

Lost label

Inside defective cabinet

In trash can

Distraction

Expertise

Misread label

Too few dock doors

Trailer moved

Waiting on itemsLoaded on wrong truck

Misread labels

Similar numbers

Shift Change

Time between shiftsLoads

not tied to shifts

Multi tasking

People talking to loaders

Breaks

Hurry

Miscounthurry

Small print

Outside cell for repair

Item scrapped-label not turned in

Accidentally fall in

Thought label was duplicate

paperwork sorted wrong

Items loaded in yardNo parts

Support areas behind

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

X1: Is there a difference in shortage rate by type of product?

X2: Is there a difference in shortage rate by cell or Supervisor?

X3: Is there a difference in shortage rate by loader experience?

X4: Is there a difference in shortage rate by shift?

X5: Is there a difference in shortage rate by lines with an order quantity greater than 1.

X6: Is there a difference in shortage rate by plant?

Potential XPotential X’’s s ----Theories to be Theories to be TestedTested

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

DefineMeasureAnalyzeImproveControl

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

X1: Is there a difference in shortage rate by type of product?

X2: Is there a difference in shortage rate by cell or Supervisor?

X3: Is there a difference in shortage rate by loader experience?

X4: Is there a difference in shortage rate by shift?

X5: Is there a difference in shortage rate by lines with an orderquantity greater than 1.

X6: Is there a difference in shortage rate by plant?

Potential XPotential X’’s s ----Theories to be Theories to be TestedTested

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Data Collection Plan for Shipping Data Collection Plan for Shipping ShortagesShortages

H0 HADescription/Data Type

Sample Size, Number of Samples

Where To Collect Data

Who Will Collect Data

How Will Data Be

RecordedRemarks

1 The shortage problem is systematic throughout the entire loading/shipping process

Is there a difference in shortage rate by type of product?

Shortage rate is independent of type of product.

Shortage rate is not independent of type of product.

Chi-Square Y = DiscreteX = Discrete

Selected customers by plant for approximately 1500 cabinets shipped per plant.

Completed load sheets

Six sigma team members

Shipping shortage spread sheet

2 Is there a difference in shortage rate by Supervisor of the cell that shipped the product?

Shortage rate is independent of Supervisor.

Shortage rate is not independent of Supervisor.

Chi-Square Y = DiscreteX = Discrete

Selected customers by plant for approximately 2-3000 cabinets shipped per plant.

Completed load sheets

Six sigma team members

Shipping shortage spread sheet

3 Is there a difference in shortage rate by loader experience?

Shortage rate is independent of loader experience.

Shortage rate is not independent of loader experience.

Chi-Square Y = DiscreteX = Discrete

Selected customers by plant for approximately 1500 cabinets shipped per plant.

Completed load sheets

Six sigma team members

Shipping shortage spread sheet

4 Is there a difference in shortage rate by shift?

Shortage rate is independent of shift.

Shortage rate is not independent of shift.

Chi-Square Y = DiscreteX = Discrete

Selected customers by plant for approximately 1500 cabinets shipped per plant.

Completed load sheets

Six sigma team members

Shipping shortage spread sheet

5 Is there a difference in shortage rate by items with an order quantity greater than 1?

Shortage rate is independent of lines with quantity greater than 1.

Shortage rate is not independent of lines with quantity greater than 1.

Chi-Square Y = DiscreteX = Discrete

Selected customers by plant for approximately 1500 cabinets shipped per plant.

Completed load sheets

Six sigma team members

Shipping shortage spread sheet

6 Is there a diffeence in shortage rate by plant?

Shortage rate is independent of ship plant.

Shortage rate is not independent of ship plant.

Chi-Square Y = DiscreteX = Discrete

Historical shipment and shortage reports from customers.

Customer shortage reports

Six sigma team members

Shipping shortage spread sheet

Tools To Be Used

Data To Be Collected

Ref.

Theories To Be Tested (Selected From The C-E Diagram, FMECA, and/or FDM)

List Of Questions That Must Be Answered To Test Each Selected Theory

Where Applicable, State The Null and Alternative

Hypotheses

Note: Customers were selected based on the scope of the project – no multi stop loads, shipments from service centers, masterpiece, etc.

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Theory: The shortage problem is systematic throughout the entire loading/shipping process

Ho: Shortage Rate is independent of type of product.

Analysis:

Conclusion: Shortage rate IS independent of Cabinets and Accessories.Shortage rate IS NOT independent of Non Cell Cabinets and Cabinets.Shortage rate IS NOT independent of Non Cell Cabinets and Accessories.

Non Cell Cabinets are more likely to be short than Cabinets and Accessories

Test of Theories XTest of Theories X11

Chi-Square Test: shipped type, short type

Expected counts are printed below observed counts

shipped short ty TotalCAB 20566 57 20623

20568.24 54.76

ACCY 14429 28 1445714418.61 38.39

NON CELL 689 10 699697.14 1.86

Total 35684 95 35779

Chi-Sq = 0.000 + 0.092 +0.007 + 2.810 +0.095 + 35.736 = 38.741

DF = 2, P-Value = 0.0001 cells with expected counts less than 5.0

Chi-Square Test: shipped type_1, short type_1

Expected counts are printed below observed counts

shipped short ty TotalCAB 20566 57 20623

20573.04 49.96

ACCY 14439 28 1446714431.96 35.04

Total 35005 85 35090

Chi-Sq = 0.002 + 0.993 +0.003 + 1.416 = 2.415

DF = 1, P-Value = 0.120

Chi-Square Test: shipped type_1_1, short type_1_1

Expected counts are printed below observed counts

shipped short ty TotalCAB&ACCY 35005 85 35090

34356.55 733.45

NON CELL CAB 689 677 13661337.45 28.55

Total 35694 762 36456

Chi-Sq = 12.239 +573.299 +314.393 +1.5E+04 = 15626.909

DF = 1, P-Value = 0.000

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Theory: The shortage problem is systematic throughout the entire loading/shipping process

Ho: Shortage rate is independent of the Cell that shipped the product.

Analysis:

Conclusion: There is not enough data to make a conclusion.The data will be combined by supervisor. See following slide.

Test of Theories XTest of Theories X22

Chi-Sq = 0.029 + 11.276 +0.000 + 0.019 +0.000 + 0.005 +0.005 + 1.784 +0.005 + 1.843 +0.002 + 0.595 +0.002 + 0.797 +0.001 + 0.551 +0.002 + 0.753 +0.005 + 1.944 +0.002 + 0.635 +0.130 + 50.572 +0.006 + 2.209 +0.002 + 0.717 +0.002 + 0.620 +0.008 + 2.966 +0.002 + 0.653 +0.224 + 86.750 +

0.002 + 0.836 +0.001 + 0.316 +0.021 + 8.272 +0.001 + 0.216 +0.005 + 1.794 +0.000 + 0.111 +0.020 + 7.891 +0.006 + 2.383 +0.001 + 0.494 +0.004 + 1.672 +0.003 + 1.229 +0.004 + 1.418 +0.005 + 1.792 +0.003 + 1.057 +0.004 + 1.394 +0.001 + 0.273 +0.005 + 1.949 +0.000 + 0.034 = 198.329 DF = 35

* WARNING * 11 cells with expected counts less than 1.0

* Chi-Square approximation probably invalid

32 cells with expected counts less than 5.0

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Theory: The shortage problem is systematic throughout the entire loading/shipping process

Ho: Shortage rate is independent of the Supervisor over the cell that shipped the product.

Analysis:

Conclusion: Shortage rate IS NOT independent of Supervisor

Different Supervisors have different shortage rates

Test of Theories XTest of Theories X22

Chi-Square Test: Ship Super_1, Short Super_1Expected counts are printed below observed counts

Ship Sup Short Su Total1 1531 1 1532

1528.04 3.962 1409 1 1410

1406.36 3.643 7384 6 7390

7370.90 19.104 1801 3 1804

1799.34 4.665 6529 16 6545

6528.09 16.916 1801 22 1823

1818.29 4.717 1023 16 1039

1036.32 2.688 467 1 468

466.79 1.219 1782 6 1788

1783.38 4.62

Chi-Sq = 0.006 + 2.211 +0.005 + 1.918 + 0.023 + 8.982 +0.002 + 0.592 +0.000 + 0.049 +0.164 + 63.452 +0.171 + 66.033 +0.000 + 0.036 +0.001 + 0.412 +0.001 + 0.202 +0.000 + 0.044 +0.008 + 2.991 +0.004 + 1.573 = 148.881

DF = 12, P-Value = 0.0008 cells with expected counts less than 5.0

Ship Sup Short Su Total7 1023 16 1039

1036.32 2.688 467 1 468

466.79 1.219 1782 6 1788

1783.38 4.6210 1933 4 1937

1931.99 5.0111 1025 3 1028

1025.34 2.6612 4113 5 4118

4107.36 10.6413 4326 7 4333

4321.80 11.20

Total 35124 91 35215

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Theory: The shortage problem is systematic throughout the entire loading/shipping process

Ho: Shortage rate is independent of loader experience.

Analysis:

Conclusion: Shortage rate IS NOT independent of loader experience.

Loaders with more experience create more shortages thanloaders with less experience.

Test of Theories XTest of Theories X33

Chi-Square Test: shipped loader -1, short loader -1

Expected counts are printed below observed counts

shipped short Total0-6 Months 3702 8 3710

3699.29 10.71

7-12 Months 6090 10 61006082.39 17.61

13-18 Months 5395 15 54105394.38 15.62

19-24 Months 1508 1 15091504.64 4.36

25-30 Months 1455 16 14711466.75 4.25

21-36 Months 1191 6 11971193.54 3.46

Total 19341 56 19397

Chi-Sq = 0.002 + 0.686 +0.010 + 3.289 +0.000 + 0.025 +0.007 + 2.586 +0.094 + 32.527 +0.005 + 1.873 = 41.105

DF = 5, P-Value = 0.000

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Theory: The shortage problem is systematic throughout the entire loading/shipping process

Ho: Shortage rate is independent of shift.

Analysis:

Conclusion: Shortage rate IS independent of shift.

There is no difference in shortage rate by shift.

Chi-Square Test: shipped shift, short shift

Expected counts are printed below observed counts

Shift shipped short Total1 16803 43 16846

16802.69 43.31

2 18891 49 1894018891.31 48.69

Total 35694 92 35786

Chi-Sq = 0.000 + 0.002 +0.000 + 0.002 = 0.004

DF = 1, P-Value = 0.949

Test of Theories XTest of Theories X44

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Theory: The shortage problem is systematic throughout the entire loading/shipping process

Ho: Shortage rate is independent items with an order quantity of greater than 1.

Analysis:

Conclusion: Shortage rate IS NOT independent of items with an orderquantity greater than 1.

Customer order lines with a quantity of 1 are more likely to be short than order lines with quantities greater than 1.

Chi-Square Test: shipped multi, short multi

Expected counts are printed below observed counts

shipped short TotalNo 11927 40 11967

11936.31 30.69

Yes 23859 52 2391123849.69 61.31

Total 35786 92 35878

Chi-Sq = 0.007 + 2.827 +0.004 + 1.415 = 4.252

DF = 1, P-Value = 0.039

Test of Theories XTest of Theories X55

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Theory: The shortage problem is systematic throughout the entire loading/shipping process

Ho: Shortage rate is independent ship plant.

Analysis:

Conclusion: Shortage rate IS independent of ship plant.

Customers have an equal chance of shortages regardless of the plant from which the product was shipped.

Results for: 2003-2 Analyze Phase.MTW

Chi-Square Test: Ship, Short

Expected counts are printed below observed counts

Ship Short Total1 54566 93 54659

54563.11 95.89

2 102492 184 1026761.02E+05 180.14

3 50955 80 5103550945.46 89.54

4 12187 30 1221712195.57 21.43

Total 220200 387 220587

Test of Theories XTest of Theories X66

Chi-Sq = 0.000 + 0.087 +0.000 + 0.083 +0.002 + 1.016 +0.006 + 3.424 = 4.618

DF = 3, P-Value = 0.202

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

X1: Shortage rate is independent of product type.TRUE – There is no difference between Cabinets and

Accessories.FALSE – There is a difference between shortage in Non

Cell Cabinets and the other categories.

X2: Shortage rate is independent of the cell or Supervisor that shipped the product.FALSE

X3: Shortage rate is independent of loader experience.FALSE

X4: Shortage rate is independent of shift.TRUE

X5: Shortage rate is independent of items with an order quantity greater than 1.FALSE

X6: Shortage rate is independent of ship plant.TRUE

Summary of Results

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

DefineMeasureAnalyzeImproveControl

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Improve PhaseImprove PhaseWe selected the following the following vital We selected the following the following vital

few few ““XX’’ss””::σσ Loader ExperienceLoader Experienceσσ SupervisorSupervisorσσ Cabinets not build in the BTT CellsCabinets not build in the BTT CellsReasons:Reasons:σσ Shortages were found to be statisticallyShortages were found to be statistically

not independent of eachnot independent of eachσσ All three pointed to a lack of standardized All three pointed to a lack of standardized

processesprocesses

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Improvement StrategyImprovement StrategyThree of the vital X's stem from a lack of Three of the vital X's stem from a lack of

standardized processesstandardized processes

Supervisor Supervisor Loader ExperienceLoader ExperienceNon Cell CabinetsNon Cell Cabinets

Therefore we must standardize the Therefore we must standardize the process and implement mistake process and implement mistake

proofing where possible.proofing where possible.

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Selection ProcessSelection Process

High Pursue Rescope High Standard Work ScanningLow Eliminate Eliminate Low

Low High Low High

Benefit

Effort

Shortage ProjectEvaluation Rules

Benefit

Effort

σσ Selection Matrix Selection Matrix –– We compared a Kaizen We compared a Kaizen to develop standard work and Poke to develop standard work and Poke ––Yoke to ScanningYoke to Scanning

Scanning Score = 210Scanning Score = 210Kaizen Score = 240 (Higher is better)Kaizen Score = 240 (Higher is better)

σσ Payoff MatrixPayoff Matrix

Weight ScoreWeighted

Score ScoreWeighted

ScoreCost of the Project 10 1 10 3 30Timing Until Implementation 30 1 30 3 90Benefit in Reduced Shortages 30 3 90 2 60Risk of Not Solving the Problem 10 2 20 2 20Mistake Proofing 20 3 60 2 40

Total Score 210 240

Scanning Standard Work

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Solution AlternativesSolution AlternativesPossible ApproachesPossible Approaches

σσ Process MappingProcess Mappingσσ BrainstormingBrainstormingσσ Creative ThinkingCreative Thinkingσσ Bench MarkingBench Marking

We selected the Kaizen process:We selected the Kaizen process:σσ Contains Process Mapping, Brainstorming and Creative ThinkingContains Process Mapping, Brainstorming and Creative Thinkingσσ Similar to Work Out but with more immediate resultsSimilar to Work Out but with more immediate resultsσσ Is the standard method for defining and implementing shop floor Is the standard method for defining and implementing shop floor

changes at Merillatchanges at Merillat

The goal of the Kaizen was to develop and implement Standard The goal of the Kaizen was to develop and implement Standard Work, to perform a 5S on the shipping dock and to create and Work, to perform a 5S on the shipping dock and to create and

implement and implement a Control Planimplement and implement a Control Plan

The Kaizen was held in Adrian on March 12 The Kaizen was held in Adrian on March 12 -- 1414

σ Work OutWork Outσσ FMEAFMEAσσ KaizenKaizen

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Kaizen ResultsKaizen Resultsσσ Standard Work CreatedStandard Work Created

σσ ImprovementsImprovements

Standardized Hash MarkingStandardized Hash MarkingDouble check at carton sealerDouble check at carton sealerKey shipments from load sheetKey shipments from load sheetLoad sheet remains in trailerLoad sheet remains in trailerOut of sequence cabinets set off by carton sealerOut of sequence cabinets set off by carton sealerResponsibilities defined for loader and loader/floaterResponsibilities defined for loader and loader/floater

σσ 55--S Performed on the Shipping DockS Performed on the Shipping Dock

σσ Control Plan CreatedControl Plan Created

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Kaizen ResultsKaizen Resultsσσ Standard Work CreatedStandard Work Created

Process

Plant Name Adrian Department Production loading Tools & Mtl'sTakt Time 60 Part Name PartsCycle Time Safety Equip.

No. Icon1 Check Trailer Prep trailer - clean, sweep & inspect for leaks Prevent injuries and damage to the product2 Place initials on top of front page of load sheet To know who to talk to if an issue arises with the load3 Check Load Sheet (BTT220) Correct trailer and size To determine load plan

Check cubes - size of load4 Determine Accessory loading Load on nose, tail, or KAAT Satisfy the customer5 Put conveyer in trailer Easier to load cabinets6 Arrange tall cabinets Line up talls on side of trailer To make space to load other cabinets

and to sequence them properly7 Load Cabinets & Accessories Product arrives at trailer

Inspect packaging for tears, rips and bad taping To be sure that the product is packaged properlyMatch sequence # to load sheet To make sure we have the right product

in the right orderMatch date & dock to load sheetMark as shipped on load sheet To assure the product was loadedUse the appropriate color pen for you shift To identify the shift it was loaded onIf quantity = 1 then diagonal line thru number Consistency in marking shipmentsIf all not received then circle qty & tally actual Consistency in marking shipmentsIf quantity > 1 then tally marks next to qty Consistency in marking shipments

8 Place load sheet on last item tallied If the load sheet must leave the To know where you left offtrailer, mark the last item tallied with an "X"

9 Place plastic sheets between stops To help customers unload properly10 Handle out of sequence items Place yellow tag on item To let the customer know it is out of sequence

Mark load sheet (see above) To assure the product was loadedFill out 'Out of Sequence Form' To track how many out of sequence items we ship Put on form when missed High light item when received

11 Contact yard man to move trailer Notify 20 cabinets prior to finishing the load To give the yard man time to deliver a new trailerSafety / In-Process Quality Work Element

KEY Ergo Stock Check Walking TOTALSReturn to Start

Loading Process

Approved By:

Work Ldrs Supervs. ManagerDate: Date: Date:

Work ElementsKey points Reason

Safety, Quality, Technique, Cost

Standard Work Sheet

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

σσ Hash marking before standardizationHash marking before standardization

σσ Hash marking standardHash marking standard

Kaizen ResultsKaizen Results

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Kaizen ResultsKaizen Resultsσσ 55--S Performed on the Shipping DockS Performed on the Shipping Dock

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DefineMeasureAnalyzeImproveControl

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Kaizen ResultsKaizen Resultsσσ Control Plan CreatedControl Plan Created

CONTROL PLAN

CONTROL SUBJECT

SUBJECT GOAL

UNIT OF MEASURE SENSOR FREQUENCY SAMPLE

RECORD OF MEASURE

MEASURED BY

ACTION CRITERIA

ACTION TO TAKE

WHO DECIDES WHO ACTS

RECORD OF ACTION TO BE TAKEN

Marking accuracy of load sheet

1 defect per 1000 items shipped

Defect per 1000 items shipped

Customer feedback on selected customers

Daily 100% of shipments to selected customers

Copy of packing list or BOL's

West production supervisor

Any error Review with loader

West production supervisor

Supervisor of loader

Shipping error log. Post in the "Glass House"

Loader Follows Standard Work

100% compliant

% compliant Standard work audit

One loader a day

Team lead does 11 audits per day across all Standard Work

Standard work audit cards

Team leader Any non compliance

Provide feedback to loader

Standard work. Auditor

Std work auditor, team leader, production manager, std work team

On Standard Work Audit Card and data base

Loader/Floater Follows Standard Work

100% compliant

% compliant Standard work audit

One loader/floater a day

Team lead does 11 audits per day across all Standard Work

Standard work audit cards

Team leader Any non compliance

Provide feedback to loader/floater

Standard work. Auditor

Std work auditor, team leader, production manager, std work team

On Standard Work Audit Card and data base

Accessory Clamp list attached to cart

100% carts have clamp list attached

% carts Loader floater every load 100% of all accessories

Clamp list on cart

Loader floater Any missing paperwork

Retrieve paperwork and report that areas Supervisor

Loader/Floater Supervisor Not needed

Cartoner Hash marking

All items properly marked

% items marked properly

Standard work audit

One cartoner per day

Team lead does 11 audits per day across all Standard Work

Standard work audit cards

Team leader Any non compliance

Provide feedback to cartoner

Standard work. Auditor

Std work auditor, team leader, production manager, std work team

On Standard Work Audit Card and data base

1st page of load sheet filled out

1st page filled out properly on 100% of loads

% of loads Shipping clerk Every load 100% of load sheets

Load sheet Shipping clerk Any error Report to loader floater

Shipping clerk Shipping clerk Not needed

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Kaizen ResultsKaizen Resultsσσ Standard Work CreatedStandard Work Created

Process

Plant Name Adrian Department Production loading Tools & Mtl'sTakt Time 60 Part Name PartsCycle Time Safety Equip.

No. Icon1 Check Trailer Prep trailer - clean, sweep & inspect for leaks Prevent injuries and damage to the product2 Place initials on top of front page of load sheet To know who to talk to if an issue arises with the load3 Check Load Sheet (BTT220) Correct trailer and size To determine load plan

Check cubes - size of load4 Determine Accessory loading Load on nose, tail, or KAAT Satisfy the customer5 Put conveyer in trailer Easier to load cabinets6 Arrange tall cabinets Line up talls on side of trailer To make space to load other cabinets

and to sequence them properly7 Load Cabinets & Accessories Product arrives at trailer

Inspect packaging for tears, rips and bad taping To be sure that the product is packaged properlyMatch sequence # to load sheet To make sure we have the right product

in the right orderMatch date & dock to load sheetMark as shipped on load sheet To assure the product was loadedUse the appropriate color pen for you shift To identify the shift it was loaded onIf quantity = 1 then diagonal line thru number Consistency in marking shipmentsIf all not received then circle qty & tally actual Consistency in marking shipmentsIf quantity > 1 then tally marks next to qty Consistency in marking shipments

8 Place load sheet on last item tallied If the load sheet must leave the To know where you left offtrailer, mark the last item tallied with an "X"

9 Place plastic sheets between stops To help customers unload properly10 Handle out of sequence items Place yellow tag on item To let the customer know it is out of sequence

Mark load sheet (see above) To assure the product was loadedFill out 'Out of Sequence Form' To track how many out of sequence items we ship Put on form when missed High light item when received

11 Contact yard man to move trailer Notify 20 cabinets prior to finishing the load To give the yard man time to deliver a new trailerSafety / In-Process Quality Work Element

KEY Ergo Stock Check Walking TOTALSReturn to Start

Loading Process

Approved By:

Work Ldrs Supervs. ManagerDate: Date: Date:

Work ElementsKey points Reason

Safety, Quality, Technique, Cost

Standard Work Sheet

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PlantShipDate Customer Week Shift Cell

Has Cell Been

Converted?(Yes or No)

PiecesShipped

PiecesShort Outlier

CumulativeShipped

CumulativeShort

CumulativeRate

Last 30 Load

Shipped

Last 30 LoadShort

Last 30 LoadRate

1 3/24/03 KSI 2 2 2 YES 187 1 187 1 0.53%1 3/26/03 KSI 2 2 3 YES 278 1 465 2 0.43%1 3/26/03 KSI 2 2 4 YES 200 1 665 3 0.45%1 4/1/03 KSI 3 1 3 YES 268 0 933 3 0.32%1 4/3/03 KSI 3 2 3 YES 344 0 1277 3 0.23%1 4/7/03 KSI 4 2 4 YES 299 0 1576 3 0.19%1 4/7/03 KSI 4 1 3 YES 359 0 1935 3 0.16%1 4/8/03 KSI 4 1 10 YES 348 0 2283 3 0.13%1 4/8/03 KSI 4 2 7 YES 285 0 2568 3 0.12%1 4/9/03 KSI 4 2 7 YES 265 0 2833 3 0.11%1 4/9/03 KSI 4 2 3 YES 607 0 3440 3 0.09%1 4/10/03 KSI 4 2 10 YES 438 0 3878 3 0.08%1 4/10/03 KSI 4 2 3 YES 366 0 4244 3 0.07%1 4/11/03 KSI 4 2 2 YES 420 0 4664 3 0.06%1 4/11/03 KSI 4 2 8 YES 302 0 4966 3 0.06%1 4/14/03 KSI 5 2 3 YES 325 0 5291 3 0.06%1 4/14/03 KSI 5 2 8 YES 329 0 5620 3 0.05%1 4/15/03 KSI 5 2 8 YES 333 0 5953 3 0.05%1 4/15/03 KSI 5 2 3 YES 341 0 6294 3 0.05%1 4/16/03 KSI 5 2 3 YES 363 0 6657 3 0.05%1 4/16/03 KSI 5 1 9 YES 308 1 6965 4 0.06%1 4/17/03 KSI 5 2 3 YES 204 0 7169 4 0.06%1 4/17/03 KSI 5 2 7 YES 218 0 7387 4 0.05%1 4/17/03 KSI 5 2 3 YES 514 0 7901 4 0.05%1 4/21/03 KSI 6 1 4 YES 302 0 8203 4 0.05%1 4/21/03 KSI 6 1 2 YES 332 1 8535 5 0.06%1 4/22/03 KSI 6 2 4 YES 301 0 8836 5 0.06%1 4/22/03 KSI 6 2 10 YES 265 0 9101 5 0.05%1 4/23/03 KSI 6 2 9 YES 359 0 9460 5 0.05%1 4/23/03 KSI 6 1 5 YES 386 0 9846 5 0.05% 9846 5 0.05%1 4/24/03 KSI 6 2 7 YES 325 0 10171 5 0.05% 9984 4 0.04%1 4/24/03 KSI 6 2 10 YES 296 0 10467 5 0.05% 10002 3 0.03%

Shipping Shortage Tracking Log - Adrian

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Shipping Shortage Tracking Summary

Shipping Shortage Rate

Plant Before Target As of 4/29/03

Adrian .16% .12% .03%

Las Vegas .18% .14% Not yet implemented

Culpeper .16% .12% .11%

Ocala .15% .11% .12%

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Theory: Adrian’s shortage rate has improved due to the implemented changes

Ho: Shortage rate is independent of shipments before or after this project.

Analysis:

Conclusion: Shortage rate IS NOT independent of before or after the project.

The project has made a significant improvement in Adrian

Adrian Shipping Shortages Before and After Adrian Shipping Shortages Before and After ProjectProject

Chi-Square Test: Ship, Short

Expected counts are printed below observed counts

Ship Short TotalBefore 13389 22 13411

13396.68 14.32

After 10002 3 100059994.32 10.68

Total 23391 25 23416

Chi-Sq = 0.004 + 4.121 +0.006 + 5.524 = 9.656

DF = 1, P-Value = 0.002

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Theory: Culpeper’s shortage rate has improved due to the implemented changes

Ho: Shortage rate is independent of shipments before or after this project.

Analysis:

Conclusion: Shortage rate IS NOT independent of before or after the project.

The project has made a significant improvement in Culpeper

Culpeper Shipping Shortages Before and After Culpeper Shipping Shortages Before and After ProjectProject

Chi-Square Test: Ship_2, Short_2

Expected counts are printed below observed counts

Ship_2 Short_2 TotalBefore 50955 80 51035

50965.28 69.72

After 27990 28 2801827979.72 38.28

Total 78945 108 79053

Chi-Sq = 0.002 + 1.515 +0.004 + 2.759 = 4.280

DF = 1, P-Value = 0.039

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Theory: Ocala’s shortage rate has improved due to the implemented changes

Ho: Shortage rate is independent of shipments before or after this project.

Analysis:

Conclusion: Shortage rate IS independent of before or after the project.

The project has not yet made a significant improvement in Ocala

Ocala Shipping Shortages Before and After Ocala Shipping Shortages Before and After ProjectProject

Chi-Square Test: Ship_3, Short_3

Expected counts are printed below observed counts

Ship_3 Short_3 Total1 12187 18 1220512188.14 16.86

2 5158 6 51645156.86 7.14

Total 17345 24 17369

Chi-Sq = 0.000 + 0.076 +0.000 + 0.181 = 0.257

DF = 1, P-Value = 0.612

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Current COPQ

Plant

Average MonthlyShipments

ShortageRate

AverageShortages per Month

ShortageRate

AverageShortages per Month

ShortageRate

AverageShortages per Month

Adrian 286567 0.16% 459 0.12% 344 0.03% 86Las Vegas 252856 0.18% 455 0.14% 341 0.18% 455Culpeper 157062 0.16% 251 0.12% 188 0.11% 173Ocala 90330 0.15% 135 0.11% 102 0.12% 108Total 786815 1300 975 822

Pieces Short at Start of Project 1300Cost per Piece 17$ Cost of Poor Quality at Start 22,100$ per month

Planned Improvement in Pieces 325Cost per Piece 17$ Planned Improvement Dollars 5,525$ per month

Improvement in Pieces as of 4/29 478Cost per Piece 17$ Improvement Dollars as of 4/29 8,126$ per month

Before Target AS of 4/29/03

Actual Improvement Exceeds Plan!

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Lessons LearnedLessons Learnedσσ Determine data availability before assigning projects Determine data availability before assigning projects

to enable enough data to be available to analyzeto enable enough data to be available to analyze

σσ Be sure to dig deep enough in the Analyze phase to Be sure to dig deep enough in the Analyze phase to get to the true vital few Xget to the true vital few X’’ss

σσ It is not enough to change the process, the control It is not enough to change the process, the control plan must be worked very hard to be sure the changes plan must be worked very hard to be sure the changes are locked inare locked in

σσ Accessories are no more likely to be short than Accessories are no more likely to be short than cabinetscabinets

σσ Loaders with more experience have a higher shortage Loaders with more experience have a higher shortage rate than loaders with less experiencerate than loaders with less experience

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Next StepsNext Stepsσσ Las Vegas implement improved process Las Vegas implement improved process

by 5/9/03by 5/9/03σσ Ocala and Las Vegas monitor standard Ocala and Las Vegas monitor standard

work to get shortages down to the work to get shortages down to the planned levelplanned level

σσ Add shortage tracking to Production Add shortage tracking to Production Manager MBPManager MBP’’ss

σσ Continued monitoring by OperationsContinued monitoring by Operations

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Other ResourcesOther Resources

σσ www.isixsigma.comwww.isixsigma.com

σσ www.sixsigmaforum.comwww.sixsigmaforum.com

σσ www.juran.comwww.juran.com

Six Sigma and Project Management 041205.pptSix Sigma and Project Management 041205.ppt

Questions?Questions?