6SigmaBPChart1103
-
Upload
sayed-abdul-rahman -
Category
Documents
-
view
222 -
download
0
Transcript of 6SigmaBPChart1103
-
8/7/2019 6SigmaBPChart1103
1/25
1
Fort Worth ASQNovember 6th, 2003
2
Business Process ChartingBusiness Process Charting
Peter PeterkaFort Worth ASQ November 6, 2003
20
22
24
26
28
30
1 3 5 7 9
1
1
1
3
1
5
1
7
1
9
2
1
2
3
2
5
Day
-
8/7/2019 6SigmaBPChart1103
2/25
3
Objectives
Define Business Process Charting
How to Determine the Proper Metrics
Statistical Thinking Basis of BPCharting
Differences of Charting Business Data
Road Map to Implement BPCharting
4
Business Process Charting
A graphical and numerical analysis method for anytype of business process data used for insight intounderstanding and improvement of business results.
Based upon Statistical Thinking Theory
Directed toward identifying opportunities forimproving business results
Peter Peterka
-
8/7/2019 6SigmaBPChart1103
3/25
5
Key Elements of Business Process Charts
1. Business Metric with an operational definition
2. Process Owner Labeled on Chart
3. Business Data Plotted over time often monthly
4. Business Goal Marker
5. Statistical Based Limits often based on Individualand Moving Range to start
Peter Peterka
6
Key Elements of Business Process Chart
Metric 1.42
1. Name andnumber ofBusiness Metric:
3. Business Data Plot Overviewtime often monthly
2. Process Owner
4. BusinessGoal
5. Statistical Limits
-
8/7/2019 6SigmaBPChart1103
4/25
7
Determine the Operational Definition for the Metric
Definitions that will be interpreted the same way bydifferent people in different situations.
Same method of calculation
Same method of counting
8
How to: Determine the Proper Metrics
Actual Process Map of Business Process
Cause and Effect Matrix approach relating metrics tobusiness goals
Affinity Brainstorming of Metrics
Have each business leader give their 10 sweatmetrics
Traditional Financial Measures
Customer Measures
Indicators or Predictors of Performance (Xs)
Peter Peterka
-
8/7/2019 6SigmaBPChart1103
5/25
9
High Level Outputs ofHigh Level Outputs of
Business SystemBusiness System
CustomersCustomers
CashCash
10
Supply Chain ExcellenceSupply Chain Excellence
Supplier
Plant
Freight Carrier
Distributor
or
Customer
Customer Complaints
Specified matlreceived on-time& complete
Product shippedon-time &complete
Productdeliveredon-time &
complete
6 SIGMA
Correct:-product (perf.)
-quality (consist.)
-quantity-on-time service
Sales Credits
-quality- Company error-Company policy-2002: $??mm
Order entry& demandmanagement
Productdatapackage
Lab
Acceptabledata packagereceived
6 SIGMA
(RMs & Compts)-product (perf.)-quality (consist.)
-quantity
-on-time service
Waste
Rework
Obs Inventory
SupplierComplaints
Target Zero
-
8/7/2019 6SigmaBPChart1103
6/25
11
Business IndicesBusiness Indices
1. Economic Return
2. Sales & Operating Income3. Total Delivered Costs4. Opportunity Costs5. Order Fulfillment6. Product Availability7. Inventory/Service Indicators8. Business Process Speed9. Elements of Profitability10.Supplier Performance11.Improvement Assessment Matrix
High Level
Division/Group
Indices
12
Performance Metric Drill DownPerformance Metric Drill Down
Dead Inv. 4.5
Price % 9.3
New Products
Sales Volume 2.1 Operating Income 2.4 Asset Utilization
Factory Cost 2.2 Overhead 2.3
New Customers
Market Share
Customer Share
On Time 5.1 &5.4
Cycle Time 5.2 &5.3
Complaints 4.2
Prod. Avail. 6.0
Backorders 7.1
RM Price % 9.2
Waste 4.3
Air Freight 7.3 & 7.4
Sales Credits 4.1
CEEIMC 7.2
DSO 8.3
Carrying Costs 3.2
Supplier 10.0
Excess Inv. 4.5
Service
CustomerCustomer
Inv. Write-off 4.1
Economic Return 1.0Economic Return 1.0OperationalOperational
EfficiencyEfficiency
RevenueRevenueGrowthGrowth
-
8/7/2019 6SigmaBPChart1103
7/25
13
Mores Examples of Business Measures:
Customer Complaints
Economic Profit
Order Fulfillment
Product Availability
Customer Credits
Inventory Levels
Delivery Costs
Number of New
Products/Sales $$ Safety
% Waste
$$ Waste
Raw Material Costs
Cycle Time
Inventory Turns
Premium Freight
IMC Index
DSO Market Share
14
Metrics for Six Sigma Implementation
Percent Projects Completed
Savings from Projects
Percent Projects in Company Database
Percent Course Attendance
Consultant work days
Instructor Scores
Percent Courses with Correct Material
Six Sigma Billing Errors
-
8/7/2019 6SigmaBPChart1103
8/25
15
Understanding Variation
The Variability Onion of Metrics:
Region
State
CountryWorldwide
Line
Department
Plant
Division
Sector
Data can besegmentedmany ways
16
The Current Method of Business Analysis
Summarize business results with a table of numbers.
Compare to last period, same period last year or goal.
React to big percent changes; ignore small percent
changes. Focus attention on those portions that are getting worse.
-
8/7/2019 6SigmaBPChart1103
9/25
17
Three Methods of Analysis
The Goal Approach Current values are judged to be either acceptable
or not based on comparison with the goal, target,budget limit, etc.
Alternate between doing okay and in trouble When doing okay ignore it
When in trouble take action
On-again, off-again approach is the complete antithesis ofcontinual improvement.
Goals are useful as a means to improvement, but whenthey become the end, to the degree of disruptingimprovement, they are a problem!
18
Three Methods of Analysis
The Average Approach Compare actual results to average results
Above vs. Below average is not a meaningfulbreak point in performance
Below average months are inevitable Creates internal comparisons that may not be
either fair or helpful
Other variations on this approach include: Best/worst result (there will always be one!)
Best/worst result in X months
-
8/7/2019 6SigmaBPChart1103
10/25
19
Three Methods of Analysis
The Business Process Chart Approach
Results are judged first on whether they representa real change in the underlying process (specialcause) or not (common cause)
The capability of the business process iscompared to any goals, targets, etc.
20
To Measure or Not to Measure
Raw Monthly Number: $, Total, % Aggregate Numbers
Percent to Sales or Similar Business RatioMix of Monthly and Year to Date
Percent Change
% Change vs. Same Month Last Year
Year to Date Percent Increase
Take Care with Accounting Accruals/Adjustments
-
8/7/2019 6SigmaBPChart1103
11/25
21
Benefits of Business Process Charting
Improve Business Results
Make better predictions, improve credibility
Detecting real trends not phantom
Learn more about processes
Ask more helpful questions
Identify chronic opportunities for improvement
Engage Business Leaders and Champions
22
Statistical Thinking is ....
A philosophy of learning and action based on thefollowing fundamental principles:
All work occurs in a system of interconnectedprocesses,
Variation exists in all processes, and Understanding and reducing variation are keys to
success.
A Way of Thinking
-
8/7/2019 6SigmaBPChart1103
12/25
23
Benefits of Statistical Thinking
Strengthens the connection between improving the businessand improving the business process
Improve predictability and credibility
Defines the appropriate direction for action
Focuses scarce resources on the right issues
Learn faster about processes
Engaging Business Leaders and Champions
24
What Action is Appropriate?
Last Period This Period
Somethin
gImportant
-
8/7/2019 6SigmaBPChart1103
13/25
25
What Action is Appropriate?
Last Period This Period
SomethingImportant
26
It Depends!
-
8/7/2019 6SigmaBPChart1103
14/25
27
It Depends!
28
It Depends!
-
8/7/2019 6SigmaBPChart1103
15/25
29
It Depends!
30
It Depends!
-
8/7/2019 6SigmaBPChart1103
16/25
31
How Long does it take me to get to work?
20
22
24
26
28
30
1 3 5 7 911
13
15
17
19
21
23
25
Day
Why 23 one day and the next 26 minutes?
32
Common-Cause and Special-Cause
Variation
From Common Causes
Systemic, Chronic, Built-in Variation
From Special Causes
Sporadic, Exceptional, Atypical Variation
-
8/7/2019 6SigmaBPChart1103
17/25
33
The Special and Common Cause Spectrum
MassiveSpecialCause
CommonCauses Only
The Real World
It is important to know, at any point in time,which type of variation is dominant.
34
Appropriate Questions
If special causes dominant
What happened (in that period)?
Is it likely to continue or re-occur?
If common causes dominant
What is happening (throughout the whole timespan)?
-
8/7/2019 6SigmaBPChart1103
18/25
35
Appropriate Type of Action
If special causes dominant
Isolate and address the special cause(s)
Dont over-fix
If common causes dominant
Make a permanent change to the system
Dont tamper after at each data point
36
Business Process Chart for Improvement
Week
4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
5
1 2 3 4 5 6 7 8 910
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
MeanCustomer
Score
Basedon1-5Scale
-
8/7/2019 6SigmaBPChart1103
19/25
37
Business Metric with Special Cause
CONTINENTAL AIRLINES
Weather in Houston
60
65
70
75
80
85
90
Nov-97
Jan-98
Mar-98
May-98
Jul-98
Sep-98
Nov-98
Jan-99
Mar-99
May-99
Jul-99
Sep-99
Nov-99
Jan-00
Mar-00
May-00
Jul-00
Sep-00
Nov-00
Jan-01
Mar-01
Month
IndividualValue
E A ACE
Special Cause Flag
38
New Product Growth
0
500
1000
1500
2000
2500
3000
May-99
Jun-99
Jul-99
Aug-99
Sep-99
Oct-99
Nov-99
Dec-99
Jan-00
Feb-00
Mar-00
Apr-00
May-00
Jun-00
Jul-00
Aug-00
Sep-00
Oct-00
Nov-00
Dec-00
Jan-01
Feb-01
Mar-01
Apr-01
May-01
-
8/7/2019 6SigmaBPChart1103
20/25
39
New Product Growth
0
500
1000
1500
2000
2500
3000
May-99
Jun-99
Jul-99
Aug-99
Sep-99
Oct-99
Nov-99
Dec-99
Jan-00
Feb-00
Mar-00
Apr-00
May-00
Jun-00
Jul-00
Aug-00
Sep-00
Oct-00
Nov-00
Dec-00
Jan-01
Feb-01
Mar-01
Apr-01
May-01
Growth Line
40
New Product Growth
0
500
1000
1500
2000
2500
3000
May-99
Jun-99
Jul-99
Aug-99
Sep-99
Oct-99
Nov-99
Dec-99
Jan-00
Feb-00
Mar-00
Apr-00
May-00
Jun-00
Jul-00
Aug-00
Sep-00
Oct-00
Nov-00
Dec-00
Jan-01
Feb-01
Mar-01
Apr-01
May-01
Growth Line
Goal
Forecast
Chart created in MTES www.mtes.com
-
8/7/2019 6SigmaBPChart1103
21/25
41
AMERICAN
60
65
70
75
80
85
90
Nov-97
Jan-98
Mar-98
May-98
Jul-98
Sep-98
Nov-98
Jan-99
Mar-99
May-99
Jul-99
Sep-99
Nov-99
Jan-00
Mar-00
May-00
Jul-00
Sep-00
Nov-00
Jan-01
Mar-01
CONTINENTAL
60
65
70
75
80
85
90
Nov-97
Jan-98
Mar-98
May-98
Jul-98
Sep-98
Nov-98
Jan-99
Mar-99
May-99
Jul-99
Sep-99
Nov-99
Jan-00
Mar-00
May-00
Jul-00
Sep-00
Nov-00
Jan-01
Mar-01
SOUTHWEST
60
65
70
75
80
85
90
Nov-97
Jan-98
Mar-98
May-98
Jul-98
Sep-98
Nov-98
Jan-99
Mar-99
May-99
Jul-99
Sep-99
Nov-99
Jan-00
Mar-00
May-00
Jul-00
Sep-00
Nov-00
Jan-01
Mar-01
3 Up
Run Chart
42
AMERICAN
60
65
70
75
80
85
90
Nov-97
Jan-98
Mar-98
May-98
Jul-98
Sep-98
Nov-98
Jan-99
Mar-99
May-99
Jul-99
Sep-99
Nov-99
Jan-00
Mar-00
May-00
Jul-00
Sep-00
Nov-00
Jan-01
Mar-01
CONTINENTAL
60
65
70
75
80
85
90
Nov-97
Jan-98
Mar-98
May-98
Jul-98
Sep-98
Nov-98
Jan-99
Mar-99
May-99
Jul-99
Sep-99
Nov-99
Jan-00
Mar-00
May-00
Jul-00
Sep-00
Nov-00
Jan-01
Mar-01
SOUTHWEST
60
65
70
75
80
85
90
Nov-97
Jan-98
Mar-98
May-98
Jul-98
Sep-98
Nov-98
Jan-99
Mar-99
May-99
Jul-99
Sep-99
Nov-99
Jan-00
Mar-00
May-00
Jul-00
Sep-00
Nov-00
Jan-01
Mar-01
3 Up
BPChartStep Change
-
8/7/2019 6SigmaBPChart1103
22/25
43
9 Up
BPChart
AMERICA WEST
50
55
60
65
70
75
80
85
90
Nov-97
Feb-98
May-98
Aug-98
Nov-98
Feb-99
May-99
Aug-99
Nov-99
Feb-00
May-00
Aug-00
Nov-00
Feb-01
AMERICAN
50
55
60
65
70
75
80
85
90
Nov-97
Feb-98
May-98
Aug-98
Nov-98
Feb-99
May-99
Aug-99
Nov-99
Feb-00
May-00
Aug-00
Nov-00
Feb-01
CONTINENTAL AIRLINES
Weather in
Houston
50
55
60
65
70
75
80
85
90
Nov-97
Feb-98
May-98
Aug-98
Nov-98
Feb-99
May-99
Aug-99
Nov-99
Feb-00
May-00
Aug-00
Nov-00
Feb-01
DELTA
50
55
60
65
70
75
80
85
90
Nov-97
Feb-98
May-98
Aug-98
Nov-98
Feb-99
May-99
Aug-99
Nov-99
Feb-00
May-00
Aug-00
Nov-00
Feb-01
NORTHWEST
50
55
60
65
70
75
80
85
90
Nov-97
Feb-98
May-98
Aug-98
Nov-98
Feb-99
May-99
Aug-99
Nov-99
Feb-00
May-00
Aug-00
Nov-00
Feb-01
SOUTHWEST
50
55
60
65
70
75
80
85
90
Nov-97
Feb-98
May-98
Aug-98
Nov-98
Feb-99
May-99
Aug-99
Nov-99
Feb-00
May-00
Aug-00
Nov-00
Feb-01
TWA
50
55
60
65
70
75
80
85
90
Nov-97
Feb-98
May-98
Aug-98
Nov-98
Feb-99
May-99
Aug-99
Nov-99
Feb-00
May-00
Aug-00
Nov-00
Feb-01
UNITED
50
55
60
65
70
75
80
85
90
Nov-97
Feb-98
May-98
Aug-98
Nov-98
Feb-99
May-99
Aug-99
Nov-99
Feb-00
May-00
Aug-00
Nov-00
Feb-01
US AIR
50
55
60
65
70
75
80
85
90
Nov-97
Feb-98
May-98
Aug-98
Nov-98
Feb-99
May-99
Aug-99
Nov-99
Feb-00
May-00
Aug-00
Nov-00
Feb-01
44
Business Data versus Manufacturing Data
Collected Infrequently Frequent
Often monthly By the hour or shift
Trends often desired No trends desired
Often individual values Individual and subgroups
Lack operational definitions Often clearly defined
Difficult to quantify error Easy to obtain measurement error
More difficult to experiment Easy to experiment
Often time correlated data Data can be corrected correlation
Business Manufacturing
Peter Peterka
-
8/7/2019 6SigmaBPChart1103
23/25
45
Types of Control Charts
There are many types of control charts X-Bar & R, Individuals, p, c, u, cusum, etc.
Most control chart limits are mean +/- 3 Std Deviations
X-Bar charts will work for some Mfg Processes
Individuals chart will work in most instances forBusiness Process Charts Individuals charts are not perfect in all cases
Other charts will be technically more correct in some cases
But the simplicity of Individuals charts makes them a goodgeneral tool for business process charts.
46
Becoming an Statistical Thinker
Be able to explain to others the meaning ofperformance within the process limits
Use data to understand the future rather than explainthe past
Get results by improving the process Use thinking always with data
Learn how to apply in the absence of data insituations that call for judgment
Control Chart your data
Avoid two point comparisons
Require and teach others to employ
-
8/7/2019 6SigmaBPChart1103
24/25
47
DetermineBusinessGoals
DetermineKey BusinessMetrics
RefineOperationalDefinitions
Obtain 24Month History
Leadership2 Day StatisticalThinking Workshop
DuringWorkshopRefine Metricsand Drill Downs
Process Owners withImprovementSpecialists supportestablish initial limits
Business Leaders MeetQuarterly to Select ImprovementProjects Identified on ChronicCommon Cause Opportunities
Continue to MonitorBusiness Metrics in ChartForm Make Sure toIdentify Special Causes
Peter Peterka
Roadmap to Implement
Business Process Charts
48
Closing Thoughts
Being committed to the truth is far more powerfulthan any technique
Peter Senge
The most important figures that one needs in management areunknown or unknowable, but successful management must
nevertheless take account of them.Dr. W. Edwards Deming
If we know how to manage with data, then we can learnhow better to manage without data
Heero Hacquebord
-
8/7/2019 6SigmaBPChart1103
25/25
49
Contact Information and References
Peter Peterka - [email protected] Phone (512) 233-2721
Peters sites www.mtes.com or www.sixsigma.us
Books/Info www.asqstatdiv.org/aqc-thinking-title.html
Books/Info www.spcpress.com