Driving Customer Satisfaction with Lean Six Sigma Group-Bob Brooks.pdf · Driving Customer...

Copyright 2002 Consensus Strategies, LLC. All Rights Reserved.

©2002 Genesis Group LLC 1

σ6 Copy right 2002 Consensus Strategies, LLC. All Rights Reserv ed. ©2002 Genesis Group LLC


©2002 Genesis Group LLC

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Driving Customer Satisfaction with Lean Six Sigma

Bob BrooksGenesis Group



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What is Six Sigma?What is Lean?



σ6Copyright 2002 Consensus Strategies, LLC. All Rights

Reserved.©2002 Genesis Group LLC

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The Two Sides of Six Sigma

Six Sigma

Measure Philosophy





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Six Sigma Philosophy

Customer Focus

EmployeeEmpowerment

DataDriven

Decisions

ProcessOrientation





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The Six Sigma Stairway

Customer Requirements

Measurement

Employee Participation/Empowerment

Exploiting Technologies

Supplier Partnerships

CustomerSurvey

Total Cycle Time ReductionDefect Elimination

1

10

100

1000

10000

100000

1000000

2 3 4 5 6 7

100,000

10,000

1,000

100

10

0

Baseline

Entitlement

Benchmark





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enable dives

Strategy and Process

Processes

enables drives

Strategy





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The Process Perspective is:

• A disciplined method and approach to focus on business processes.

• A horizontal view of the business.• A means of improving customer satisfaction

Process Improvement





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Customers Drive Process

Input

• Defects• Timeliness• Cost

Processfor each step:• Defects• Cycle Time• Costs

Output

• Defects• Timeliness• Cost

CustomerSatisfaction

•5-Ups

MeasureAct





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Saving Big Blue

“I don’t know what ‘platform support’ is, but let me answer your question very simply. If there is a key customer requirement, do it. Whatever this thing is - ‘platform whatever’ - get it out of the way.”

Lou Gerstner





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Six Sigma as a Measure

3 Sigma 6 Sigma 3 SigmaProcess Process Process

X

LowerSpecification

Limit

Upper Specification

Limit





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Sigma as a Measurement of Defects

100K

10K

1K

100

10

1

2 3 4 5 6 7

(66,810 DPMO)

AverageCompany

Best inClass

Restaurant BillsDoctor Prescription WritingPayroll ProcessingOrder Write-upJournal VouchersWire TransfersAirline Baggage Handling

Domestic AirlineFlight Fatality

Rate

IRS Tax Advice (Phone In)

Sigma

Poor

(66,810 DPMO)

(233 DPMO)

(.43 DPMO)





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Six Sigma Improvement Model

The DMAIC” PROCESS

Define – Scope the problem

Measure – Gather Data

Analyze – Root Cause Data Analysis

Improve – Develop Solutions

Control – Maintain the Gain



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Improvement DisciplineImprovement Discipline

• Six sigma provides a systematic, logical approach to project management.

-Document-Response plan-Control Charts- Institution-alize

-Develop solutions-Select best solution-Pilot & Measure-Implement full scale

-Analyze data & process-Use graphical & statistics to verify root cause(s)

-ID key measures-Collect baseline data-Validate scope

-Charter-ID 5-Ups- Stake-holders-Map the process

ControlImproveAnalyzeMeasureDefine



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Six Sigma Steps and ToolsSix Sigma Steps and Tools

• Planning matrices• Fishbone• Pareto chart• Histogram• Run chart• Scatter diagram• Process capability measures• Sampling plan• Operational definition• data collection plan• Defect concentration diagram• Check sheet• Traveler sheets

• Process mapping• Decision matrices• Pugh’s method• Requirements analysis• How-how fishbones• FMEA• Error-proofing• Cellular design• Single piece flow systems• Pull systems• Process balancing• Process piloting• Force field analysis• Gantt charts

Define Measure Analyze Improve Control

• 5-ups• Molecule map• Stakeholder matrix• Communication plan• Flow charts• Process maps• Value stream mapping• Activity analysis

• Qualitative analysis• Graphical analysis• Data stratification• Estimation• Hypothesis testing• Analysis of variance• Regression analysis• Datatransformations• Multi-vari charts• Box plots•Cost/benefit analysis

• Statistical process control• Corrective action planning• Documented Procedures• Training



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What is Lean?What is Lean?

• A process improvement methodology• Based on principles developed at Toyota in the

50’s• Focuses on reducing cycle time by:

• Reducing the seven wastes• Using the “lean toolbox”



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Six Sigma and Lean – Six Sigma and Lean –

How They’re SimilarHow They’re Similar

• Both methodologies:• Emphasize focusing on the

customer• Involve empowering

employees• Stress continuous

improvement• Use basic “quality tools”



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Six Sigma and Lean –Six Sigma and Lean –

How They’re DifferentHow They’re Different

Six Sigma:• Focuses on defect

reduction• Emphasizes analysis• Is process focused Relies

heavily on statistics• Emphasizes

implementation infrastructure

• Is more client-centric

Lean:• Focuses on cycle time

reduction• Emphasizes solutions• Is value stream focused• Is more consultant

driven• Tends to be

implemented in phases by tool



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Lean ConceptsLean Concepts

• Pull Systems • Single Piece Flow • Continuous

Improvement • Muda • Value Stream

Customers and Outputs

Sales

Design

Ship

Prod



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The Seven WastesThe Seven Wastes

Over-production

Waiting

Moving objects

Moving people

Inventory

Over-processing

DefectsProduction

Inspection

Repair

Womack and Jones, Lean Thinking



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Value - Add ActivitiesValue - Add Activities

The answer to all 4 questions must be yes for a step to be value-add.

• Does the customer care?

• Does it change the thing?

• Is it done right the first time? • Is it required by law or regulation



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Common Lean ToolsCommon Lean Tools

Seiri (Organization) Seiton (Orderliness) Seiso (Cleanliness) Seiketsu (Standardized

cleanup) Shitsuke (Discipline)

X59 Pick Up slab

28%17%

12%0%6%37%

100%% Total241510053286Total

X910 Tape slab to w all section

X128 Tape Back Seam

X117 Tape Front Seam

X46 Cut tapeX55 Get new

sections

X104 Seam s Good?X53 Pick Up roof

section

X52 Pick up w all section

X201 Collect Pieces

Setup

Move

Control

Wait

Rework

Value-Added

Estimated Avg Secs

Process Step

Value Stream Mapping Kan-Ban

Work Cells

• Standard Work• Poka-Yoke• SMED • Kaizen Events

5SsVisual Controls



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Lean Tools Support Six SigmaLean Tools Support Six Sigma

D

M

A

I

C

L

E

A

N

Lean Tools • Value stream

analysis• The seven wastes• The five S’s• Cellular design• One piece flow• Pull systems• Error proofing• Visual controls



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Removing Non-Value Add StepsRemoving Non-Value Add StepsAlso Reduces DefectsAlso Reduces Defects

X

X

X

X

X

X

X

XX X

X

XX

XX

X

X

XXX

X



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Do It Right The First Time

Fix It Before It Gets Out

Fix It After It Comes Back

$10

$100

$1000

The Cost of Defects Escalates RapidlyThe Cost of Defects Escalates Rapidly

What happens to revenue as defects are reduced?





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Six Sigma Profit Model

EffectiveProcesses

Satisfied Customers

Profitability



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What is the pay-off?



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Higher Quality Leads to Higher ProfitsHigher Quality Leads to Higher Profits

Superior

Quality is

ProfitableROI%

Inferior Superior

30

25

15

5

0

29%

14%

Source: Quality Progress, April 1999.

On average, companies that deliver superior quality to customers, relative to companies that offer inferior quality, achieve much greater return on investments (ROI).





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Quality Award Winners Out-Perform Competition

100

90

80

70

60

50

40

30

20

10

0

Aver

age

perc

enta

ge o

f cha

nge

in p

erfo

rman

ce91%

43%

69%

79%

32%37%

23%

7% 8%0%

9% 6%

Award winnersControl firms

Operatingincome

Sales Totalassets

Employees Returnon sales

Returnon assets

Performance measure

100

90

80

70

60

50

40

30

20

10

0

Aver

age

perc

enta

ge o

f cha

nge

in p

erfo

rman

ce

63%

22%

39% 38%

25% 22%15%15%17%

7%10%

4%

Small firmsLarge firms

Operatingincome

Sales Totalassets


Returnon assets

Performance measure

100

90

80

70

60

50

40

30

20

10

0

Aver

age

perc

enta

ge o

f cha

nge

in p

erfo

rman

ce

65%

21%

39% 38%

25% 22%15%15%17%

7%10%

4%

Low capital intensityHigh capital intensity

Operatingincome

Sales Totalassets


Returnon assets

Performance measure

100908070605040302010

0

Sto

ck re

turn

s %

114%

80%76%

Awardwinners

S&P500

Portfolio ofall stocks

Stock portfolio

110120





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15

10

5

0

AverageAnnual %Improve-ment

Operating Indicators 20

15

10

5

0


Empl. Sat. Attend. Suggestions

Employee Related Indicators

10

5

0Cust Satis. Reduced Cust. Retention Cust. Complaints


CustomerSatisfaction

15

10

5

0

Financial Performance Indicators

Market $/Emp ROA ROSShare


Reliability On Time Defects Lead Time Cost of Delivery Quality

Process Improvement and Improved Operating Results



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The Axis of Success, A Main Effects The Axis of Success, A Main Effects ModelModel

IncentivesEmployeeMotivation

WorkProcesses

Leadership

Customer Satisfaction





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Sample Results

60% loan origination cycle time

30% call center’s first-time call resolution

70% state tax filings cycle time & 50% error

30% credit card application accuracy

12% in the number of “very satisfied” customers



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Cultural Impact of Process ImprovementCultural Impact of Process Improvement

Common approach to problems

Common language

Common values• Teamwork• Customer focus• Process perspective• Decisions based on data• Bias toward action



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WIIFMWIIFM

What’s in it for employees?

• Improved growth and advancement opportunities• Jobs with increased variety and autonomy• Increased opportunities to use valued skills• Better opportunities to have a significant impact• Increased employability

Lean six sigma programslead to increased employee

satisfaction.



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Six Sigma-Based Continuous Process ImprovementSix Sigma-Based Continuous Process Improvement

The bottom line is the bottom line:• Increased sales to new customers

1. Positive word-of-mouth2. Improved effectiveness of sales and marketing

efforts

• Increased sales to current customers1. Improved responsiveness2. Reduced defects

• Higher margins• Employee motivation is improved

» Improved productivity» Reduced turnover



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How do you implementlean/six sigma



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Organizing for Lean/Six SigmaOrganizing for Lean/Six Sigma

Steering Committee Approach

Leadership Team

Steering CommitteeProcess

ImprovementLeader

MasterBlack Belt

Process Improvement

Teams



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StrategyD

esig

n

Tech

nolo

gy

Fina

nce

Mar

ketin

g

Man

ufac

turin

g

Hum

an R

esou

rces

IT Six

Sigm

a

Six sigma must be treated as an integralpart of corporate strategy.

Six Sigma and Business StrategySix Sigma and Business Strategy



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Strategic IssuesStrategic Issues

Where to start?

When to start?

How fast to go?



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When to Start?When to Start?

When should six sigma be implemented?• Before or after a reorganization.

• Before or after a downsizing.

• After a merger.

• In response to competition.

• To gain a competitive edge.

• Now.



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Where to Start?Where to Start?

Easy to do.

Large Payoff

Small Payoff

1. Here First

2. Next

3. Finally

4. Maybe Never

Hard to do.



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When Selecting Projects . . . When Selecting Projects . . .

Issues to consider:

• Customer impact

• Corporate strategy

• Operational impact

• Visibility

• Savings

“This is a must win game.”- any coach



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Businesses Are ProcessesBusinesses Are Processes

Inputs Outputs

YourCompany

Processes



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Process HierarchyProcess Hierarchy

Forecasting Staffing Program Delivery

ProgramPlanning

Build Calendarand

Format Data

Edit Customer/Forecast

Create andValidate

Forecasts

ConsensusMeeting

FinalizeForecast

CoreProcesses

Level 1

SubProcesses

Level 2

SubProcesses

Level 3(and below)

CreateAssumptions

and Scenarios

EvaluateScenarios

Select Scenario/

Create Forecast

RunScenarios



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How Fast Should Six Sigma be Rolled Out?How Fast Should Six Sigma be Rolled Out?

How ready is your organization?

How committed is top management?

What resources can you commit to the effort?

Too slow can be dangerous.

Too fast can be more dangerous.



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Introduction of Advanced ToolsIntroduction of Advanced Tools

2

5

OutlierUpper Control Limit

X Average

Lower Control Limit

Time

USL5152 53 54 55 565758 5960LSL

Variable 1

Variable 3

Variable 2

Design of Experiments

Control Charts

Histogram



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Change

A Basic Change Process ModelA Basic Change Process Model

Unfreeze Refreeze



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Socio-tech Perspective

Organization ChangeOrganization Change

The System

Socio

Tech

Work Processes

Values

Norms

Roles

CommunicationPatterns

Tools

Systems



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Diffusion of InnovationDiffusion of Innovation

%

20%5%

Unstoppable

Imbedded

Time



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Lessons LearnedLessons Learned

It’s all about managing change What does the data say? Top management leadership is essential Start where the organization is Build a beach head Involve everybody you can – create ownership Bake it into your culture Create metrics Reward success Carry the wounded – bury the dead

Properly improving your processes always pays

(Usually the hard way)



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Thank You!

Driving Customer Satisfaction with Lean Six Sigma Group-Bob Brooks.pdf · Driving Customer...

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