LSS GB MHC D2002 Part I Course Book With Workbook 28052008 (2008)

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leanSixSigma

Certification Program

ACHIEVING BREAKTHROUGH PERFORMANCE

Mountain Home Training & Consulting, Inc.

leanSixSigmaadvanced training solutions

Green Belt Certification CourseMHC-2002

Part I

2008

Copyright © 1998-2008 Mountain Home Training & Consulting, Inc. All Rights Reserved. Certain materials used in this course book are included by permission of the owner, or from published government or other sources. Permission to reproduce any part of this

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Lean Six Sigma Green Belt Certification Course, MHC-2002

Part I

Table of Contents

I. Foreword II. Course Description III. Course Outline 1.0 Chapter One – Introduction to Continuous Process Improvement (CPI) 1.1 Overview of Continuous Process Improvement 1-1 1.1.1 The Need for Change 1-1 1.1.2 A Tool for Change – Continuous Process Improvement (CPI) 1-3 1.1.2.1 History of Continuous Process Improvement 1-3 1.1.2.2 Continuous Process Improvement (CPI) Defined 1-6 1.1.3 Overview of Lean Six Sigma & the DMAIC Process Improvement Model 1-15 1.1.3.1 Lean 1-15 1.1.3.2 Six Sigma 1-16 1.1.3.3 The Innovative Management Framework and the DMAIC Process Improvement Model 1-18 1.1.4 The Lean Six Sigma (LSS) Organizational Control Structure 1-26 1.1.4.1 The Lean Six Sigma Champion 1-26 1.1.4.2 The Steering Committee 1-27 1.1.4.3 The LSS Support Teams 1-28 1.1.4.4 LSS Work Groups 1-30 1.1.4.5 Peer Groups 1-33 1.1.5 The Impact of Lean Six Sigma on the Enterprise 1-34 1.2 Introduction to Business Process Management (BPM) 1-34 1.2.1 Organizing the New Enterprise 1-35 1.2.2 So, what is process management? 1-36 1.2.3 The Evolution of Process Management 1-37 1.3 The Human Side of Process Improvement (Culture Change) 1-38 1.3.1 Culture Change Defined 1-38 1.3.2 The Concept of Pain vs. Pleasure 1-39 1.3.3 Reactions to Change 1-41 1.3.4 Managing the Transition 1-42 1.4 Conclusion 1-44

2.0 Chapter Two – Defining the Performance Problem 2.1 Defining the Problem 2-1 2.1.1 Planning Concepts and Principles 2-1 2.1.1.1 Planning / Performance Cycle 2-2 2.1.1.2 Planning and Lean Six Sigma 2-3 2.1.2 Strategic Planning – Defining Mission, Vision, and Performance 2-3 2.1.2.1 Leaders Must Lead 2-5 2.1.2.2 The Strategic Planning Process 2-5 2.2 LSS Project Selection 2-7 2.3 Defining the LSS Project – Scoping the Effort 2-7 2.3.1 Conduct Customer Needs Analysis: Identifying Customers and Defining their Requirements 2-8 2.3.1.1 Gather the Voice of the Customer (VOC) 2-8 2.3.2 Define the Top-Level As-Is Business Process 2-14 2.3.3 Conduct High-Level Stakeholder Analysis (including SIPOC Analysis) 2-17 2.3.4 Conduct High-Level Value Stream Analysis 2-21 2.4 Document Project Plan and Final Project Charter 2-21 2.4.1 The LSS Project Charter 2-24 3.0 Chapter Three - Measuring the Baseline 3.1 Defining the Process – Introduction to Process Modeling and Mapping 3-2 3.1.1 Introduction to Process Modeling 3-2 3.1.2 Introduction to Process Mapping 3-8 3.1.3 Introduction to Value Stream Mapping 3-12 3.2 Understanding Variance – Variability, Stability, and Capability 3-14 3.3 Develop the Measurement Plan 3-16 Appendices Appendix A Chapter One Slides Appendix B Chapter Two Slides Appendix C Chapter Three Slides

Foreword Welcome to the Lean Six Sigma Green Belt Certification Course. Over the next five days we will introduce you to one of the most exciting initiatives in either the commercial or government – Lean Six Sigma (LSS). LSS combined with the aligning power of Business Process Management (BPM) creates a formidable toolset that will enable any organization to reach its peak performance. We must always be mindful of the importance of "The Mission" within each commercial business or government Agency. Each of us must continually strive to make our organizations more streamlined and less costly, while maintaining, and even increasing, our mission capabilities. I hope you take what you will learn from this course and really apply it. You can make a difference in the way we accomplish our mission and serve our customer! Good luck, and again, welcome to the course. A. DERRIL WATTS President & CEO Mountain Home Training & Consulting, Inc.


Part I 5 Days PURPOSE: The intent of the Lean Six Sigma Green Belt Certification is to develop team members who have the basic skills to contribute to process improvement projects. These individuals operate under the watchful eye of the project team leader who is normally a more advanced Black Belt or senior process improvement practitioner. Our seasoned corporate trainers are process improvement experts who use a myriad of learning techniques and tools, such as guided discussions, case studies, individual exercises, quizzes, and outside readings to truly connect with the student. SCOPE: The information shared in this course represents concepts, policies, and procedures employed in the conduct and management of a Continuous Process Improvement (CPI) Project. The attendee will receive the latest information concerning various CPI policies, strategies, and direction for implementation of this important part of both the commercial and public sector’s Transformation initiatives. The course will address recent successes in applying CPI, specifically LSS, techniques to organizations resulting in measured improvements in performance. And, for our government students, the course will also examine how LSS interfaces with other performance improvement approaches, including how it supports the U.S. Federal government’s renewed emphasis on Strategic Sourcing, including OMB Circular A-76 (Commercial Activities) reviews. It will provide the attendee with concepts, techniques, and tools that are utilized in the definition, measurement, analysis, improvement, and control (DMAIC) approach to organizational process improvement. WHO SHOULD ATTEND: This course is designed for individuals who are currently, or soon to be, involved in Continuous Process Improvement (CPI), Lean, Lean Six Sigma, or other process improvement efforts or government A-76 (Commercial Activities) studies; or those who need to know how to implement or manage such projects. This course is open to all commercial and government personnel who want to truly understand what it takes to transform an organization into a real competitor, able to compete in any environment. PREREQUISITES: None. AVAILABLE TRAINING MODES: Public Offering, On-Site, Live!Online (Instructor-led), and OnDemand (self-paced) online.. For further information regarding this course, contact Mr. Derril Watts at (256) 931-2372, or email: [email protected], or visit our web site at http://www.mhc-net.com .


Part I 5 Days COURSE OUTLINE I. Introduction to CPI. 15 Hours II. Defining the Performance Problem. 15 Hours III. Measuring the Baseline. 8 Hours TOTAL COURSE MATERIAL 38 Hours ADMINISTRATIVE/COURSE REVIEW 2 Hours TOTAL COURSE HOURS 40 Hours

Lean Six Sigma Green Belt Certification

MHC-2002

Part I

Chapter 1

Introduction to Continuous Process Improvement (CPI)

Mountain Home Training & Consulting, Inc. Page 1-1

Chapter 1 Introduction to Continuous Process Improvement (CPI)

Organizations face an array of challenges including increased Globalization, rapid technological advances, shifting demographics, changing security threats, and while at the same time improving quality of the products

and services it produces.

1.1. Overview of Continuous Process Improvement (CPI) & Lean Six Sigma 1.1.1. The Need for Change Continuous Process Improvement (CPI) is a key component of the Transformation policies of many government and commercial sector organizations. That policy is guiding the restructuring and reorganization of many companies and government agencies. Today’s environment is full of challenges that require a new kind of organization, one that is leaner, faster, and less costly than its predecessor. This environment creates change faster than ever before, where organizations must learn they are not only responsible for producing a product or service, but in doing so, they must stay relevant. Competition can come from many different fronts including other commercial businesses, government organizations, or the young 20-something who has a great idea and is building it out of his/her garage! Leading the Transformation of Business requires an enterprise to fundamentally rethink and redesign its core business processes and culture, leveraging its critical knowledge to achieve and sustain competitive advantage through dramatic improvements in critical measures of performance. To sustain a competitive edge in the future, an organization must continually learn and look for the best within itself. This new organization must be made up of high-performing knowledge workers who are self-adaptive, creative, responsive, and who collaborate and share what they know with others, and are continuously learning. The organization must systematically reach out to create knowledge that is useful to others, share it and capture it to

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facilitate the execution of its key business strategies. The end result is a successful enterprise that is effective, efficient, innovative, and competitive in any environment. Continuous Process Improvement (CPI) – A Broader Perspective. For many years industry has focused much of its efforts on the use of incremental improvement to create enough efficiencies to be able it to compete. It was believed that efficiency would lead to lower costs and therefore increase the return on investment of services provided by the company. There has been a realization that this yielded sub-optimal results since few of their efforts were easily broken into discrete business units. Many organizations in the commercial and government sectors have chosen to broaden its view of process improvement by including wide range of methods and tools that not only address improving the efficiencies of the process, but also must integrate those efficiencies through a holistic approach to improving the performance of all of the organization. The primary focus should be to determine whether processes can be eliminated, improved, or streamlined. In those instances when improvements can be made within the existing framework, then those changes will be made. The value of this approach is that all improvement efforts are integrated to create true breakthrough performance across the enterprise. This approach cuts across all functions and organizational units, permitting the enterprise to take a complete look at how it does business and to proactively achieve savings in all its functions and activities. CPI will rely on a broad range of process improvement techniques to achieve savings. This allows organizations to consider a wide range of options and combinations of these options, including: eliminating obsolete practices; consolidating functions or activities; redesigning and restructuring processes, functions or activities; adopting best business practices; privatizing functions or activities, and the use of competitive and non-competitive outsourcing. Many organizations are beginning to achieve significant increases in management efficiencies and customer support through the application of Continuous Process Improvement (CPI) concepts and tools. In one illustration from government, the U.S. Department of Defense (DoD) views CPI as a strategic approach for developing a culture of continuous improvement that improves reliability (of outputs and products), cycle time (shorter process times), cost (less resource consumption), quality, and productivity. In DoD, CPI comprises the application of a broad range of tools and methods, including such approaches as Lean, Six Sigma, Reengineering, and Theory of Constraints (TOC). CPI has been used throughout the DoD’s acquisition and logistics operations with great success. For example, the Air Force applied CPI to reduce its depot maintenance flow times for the KC-135 tanker by 52 percent in 4 years; the Army used a Lean approach to increase the mean time between overhaul (MTBO) for T700 helicopter engines by 300 percent; the Navy reduced the cycle time for F404 jet engines by 78 percent in 2 years; and the Marine Corps applied TOC tools to reduce the repair cycle time for CH-46 helicopters by 40 percent. The Defense Logistics Agency (DLA) reduced interest payments and administrative lead times on a major support con-tract by 10 percent through Lean and Six Sigma techniques. These successes, and many others



like them, demonstrate the government’s ability to apply world-class business practices to improve effectiveness and identify efficiencies that better utilize financial, physical, and human resources to support operational requirements. There are many more illustrations in both the government and commercial sectors that show similar successes. To warrant the types of change worthy of this level of special attention, these efforts must go far beyond the implementation of generally good day-to-day management practices, however. When we apply CPI, we attempt to rebuild the existing organization into one that is customer-focused in its external relations and process-focused and team-oriented in its internal relations. An organization structured in this way can look at the processes that are performed across functions and make them more efficient and effective. 1.1.2. A Tool for Change - Continuous Process Improvement (CPI) Now, you've probably heard a lot about continuous process improvement (CPI) methods including Quality Improvement (TQM), Zero Defect, Reengineering, Lean, Six Sigma, Theory of Constraints (TOC), along with countless others over the last few years, through business journals and trade publications, numerous business books, or in training workshops. It seems process improvement has now become the latest and hottest management trend to hit the business and governmental communities. But is it more than just a passing fad? Is CPI just the latest buzzword, with it a new assortment of consultants ready to slay the "bureaucracy" in the name of efficiency? Or, is CPI a culmination of many years of management evolution, bringing a new emphasis on creativity, going where no one has gone before? In this section of the course we will look at the many aspects of Continuous Process Improvement (CPI) and hopefully, when we are through, you will have the answer to these questions. 1.1.2.1. History of Continuous Process Improvement The origins of formalized process improvement actually date back to the early 1800’s when Eli Whitney created the first “interchangeable parts” to help standardize manufacturing. Though perhaps best known for his invention of the cotton gin, Eli Whitney's greatest innovation pioneered the era of mass production and modern manufacturing methods. In 1798, the federal government--fearing war with France--awarded Eli Whitney a contract of $134,000 to produce and deliver 10,000 muskets. With this contract, Whitney refined and successfully applied his revolutionary, "Uniformity System" of manufacturing interchangeable components. Faced with skepticism and delays in implementing his new production method, Whitney convinced President John Adams of the great significance of his

The History of CPI

Practitioners (Individual):• Deming• Juran• Crosby• Ishikawa• Womack• Hammer • Davenport

Practitioners (Organizations):• Motorola• GE• Allied Signal• NAVSUP• AMC• AFMC

PrePre--18001800’’ss TodayToday

ScientificScientificManagementManagement

JustJust--InIn--TimeTime(JIT)(JIT)

Quality CirclesQuality CirclesZero DefectZero Defect

TQMTQM

Six Sigma Six Sigma QualityQuality

ProcessProcessReengineeringReengineering

LeanLeanManufacturingManufacturing

19801980’’ss 19901990’’ss 20002000’’ss

Enterprise BusinessEnterprise BusinessProcessProcess

ManagementManagement

LeanLeanSix Sigma Six Sigma



innovative approach by demonstrating that randomly selected parts could be fitted together into a complete, working musket lock. Though it took ten years to deliver the last of the muskets, the federal government's investment and support enabled Whitney to prove the feasibility of his system and establish it as the leading source of the modern assembly line. He demonstrated that machine tools--manned by workers who did not need the highly specialized skills of gunsmiths--could produce standardized parts to exact specifications, and that any part could be used as a component of any musket. The firearms factory he built in New Haven, Conn., was thus one of the first to use mass production methods. During the next hundred years (more specifically during the 1890’s through 1920’s), many engineers, mathematicians and managers began to look for even more ways to create efficiencies in the process of producing goods and services. Three of the best known were Fredrick Taylor and Frank & Lillian Gilbreth. They spent years perfecting techniques and tools to measure the productivity of workers through an emerging discipline called Scientific Management. Techniques and tools that were created during this time were time studies, process charting, worker-management relationships, and motion studies and work simplification. Lillian Gilbreth also brought psychology into the mix by studying the motivations of workers and how attitudes affected the outcome of a process. There were, of course, many other contributors. However, these were the people who originated the idea of "eliminating waste", a key tenet of CPI and Lean Manufacturing.

Since the 1920's the word 'sigma' has been used by mathematicians and engineers as a symbol for a unit of measurement in product quality variation. (Note it's sigma with a small 's' because in this context sigma is a generic unit of measurement.) Then between the mid-1940’s and 1980, consultants like W. Edward Deming, Joseph Juran, and Kaoru Ishikawa, began to focus more on the quality of the products being produced and processes that produced them. They introduced more structured, statistically based analysis tools that helped organizations reach higher levels of quality with the assumption that if the quality levels of products and services could be optimized, then the cost of production and cycle time would be dramatically improved. During that same period of time, at Toyota Motor Company, Taichii Ohno and Shigeo Shingo, began to incorporate some of the production techniques from Ford Motor Company as well as other techniques into an approach called the Toyota Production System or Just In Time. They recognized the central role of inventory.

Toyota soon discovered that factory workers had far more to contribute than just muscle power. This discovery probably originated in the Quality Circle movement. Ishikawa, Deming, and Juran all made major contributions to the quality movement. It culminated in team development and cellular manufacturing.

The History of CPIA Litany of Approaches: Lean & the TPS, Six Sigma, TOC, Reengineering, TQM



In the mid-1980's engineers at Motorola, Inc used 'Six Sigma' as an informal name for an in-house initiative for reducing defects in production processes, because it represented a suitably high level of quality. Certain engineers - there are varying opinions as to whether the very first was Bill Smith or Mikal Harry - felt that measuring defects in terms of thousands was an insufficiently rigorous standard. Hence they increased the measurement scale to parts per million, described as 'defects per million', which prompted the use the 'six sigma' terminology and adoption of the capitalized 'Six Sigma' branded name, given that six sigma was deemed to equate to 3.4 parts - or defects - per million.) In the late-1980's following the success of the above initiative, Motorola extended the Six Sigma methods to its critical business processes, and significantly Six Sigma became a formalized in-house 'branded' name for a performance improvement methodology, i.e., beyond purely 'defect reduction', in Motorola Inc. In 1990 James Womack wrote a book called "The Machine That Changed The World". Womack's book was a straightforward account of the history of automobile manufacturing combined with a study of Japanese, American, and European automotive assembly plants. What was new was a phrase-- "Lean Manufacturing." Lean Manufacturing caught the imagination of manufacturing people in many countries. The essential elements of Lean Manufacturing are not substantially different from the techniques developed by Ohno, Shingo and the people at Toyota. The application in any specific factory does change. Just as many firms copied Ford techniques in slavish and unthinking ways, many firms copy Toyota's techniques in slavish and unthinking ways and with poor results. Then, in 1991 Motorola certified its first 'Black Belt' Six Sigma experts, which indicates the beginnings of the formalization of the accredited training of Six Sigma methods. Also in 1991, Allied Signal, (a large avionics company which merged with Honeywell in 1999), adopted Six Sigma methods, and claimed significant improvements and cost savings within six months. It seems that Allied Signal's new CEO Lawrence Bossidy learned of Motorola's work with Six Sigma and so approached Motorola's CEO Bob Galvin to learn how it could be used in Allied Signal. In 1995, General Electric's CEO Jack Welch (Welch knew Bossidy since Bossidy once worked for Welch at GE, and Welch was impressed by Bossidy's achievements using Six Sigma) decided to implement Six Sigma in GE, and by 1998 GE claimed that Six Sigma had generated over three-quarters of a billion dollars of cost savings. (Source: George Eckes' book, The Six Sigma Revolution.)



By the mid-1990's Six Sigma had developed into a transferable 'branded' corporate management initiative and methodology, notably in General Electric and other large manufacturing corporations, but also in organizations outside the manufacturing sector. By the year 2000, Six Sigma was effectively established as an industry in its own right, involving the training, consultancy and implementation of Six Sigma methodology in all sorts of organizations around the world. That is to say, in a little over ten years, Six Sigma quickly became not only a hugely popular methodology used by many corporations for quality and process improvement, Six Sigma also became the subject of many and various training and consultancy products and services around which developed very many Six Sigma support organizations. During this same time, the early 1990’s, three MIT professors, Michael Hammer, James Champy, and Tom Davenport, began promoting a more radical approach to process improvement – Business Process Reengineering (BPR). It became one of the best known and most widely used process improvement approaches in the industry. Reengineering started out focused on fundamental rethinking of the entire business and radically changing the process and infrastructure to achieve dramatic improvements in performance. Over the 1990’s, however, many organizations began to define their own application of BPR in terms of downsizing, restructuring, or Information Technology insertion. BPR was never intended to be a tool for head count reduction or simple reorganization. However, because of the continued “negative press” it received, it began its eventual fall from the ranks of the preferred process improvement approaches. Today, BPR is still the approach of choice for many organizations that are focused on dramatic process changes, but it doesn’t share the same popularity on the world stage as it once did. Today we are seeing more emphasis on an enterprise view of process improvement. By combining the process focus of Lean and the statistical disciplined analysis of Six Sigma with the holistic perspective of reengineering, you get a very dynamic and powerful process improvement approach that will bring an integrated application of the best of the concepts, techniques and tools that have evolved over the last two centuries. The early pioneers of process improvement laid the important ground work from which we can build a truly innovative and comprehensive Continuous Process Improvement (CPI) methodology. 1.1.2.2. Continuous Process Improvement (CPI) Defined Depending on to whom you talk, there can be many different definitions of process improvement. In this section, we will attempt to cut through all of the hype and get to the essence of CPI. In gaining a full understanding of a particular concept, it is sometimes useful to define what it is not, so, let's first take a look at what CPI is not. What are some of the myths that have become associated with the various techniques and tools that make up the CPI Toolbox?



There are many misconceptions as to the essence of CPI. Many times organizations go through a major reorganization and call it CPI. Others reduce their staffs by half and call it CPI. Still others will simply take an efficiency program they have in place and rename it CPI. First, CPI is not "reorganizing". CPI looks at what work is required to be done not how the organization is structured. Organization structures are defined only after the processes necessary to produce products and services for the organization's customers are designed. The organization structure is then designed so it best supports that process. CPI is not "downsizing". Downsizing focuses on the reduction of people to achieve short term cost reductions. CPI, on the other hand, focuses on rethinking the work we do on a daily basis or from the ground up, eliminating work that is not necessary and finding better, more effective ways of doing work. In a truly high performing organization, the number of people needed is driven by the requirements of the process as defined by the needs of the customer and not the need to simply sustain an organization's existence. Also, CPI is not simply about making an organization more efficient. You can have the most efficient organization in the world, but unless it effectively serves its customers, in essence, accomplishes its mission, it is still of no value. CPI is about creating value for the customer, which may be defined by the customer as lower cost, higher quality, or increased responsiveness. 1.1.2.2.1. So, what is CPI? Underlying CPI concepts are put into practice through a deployment approach that changes how we view and think about work. It provides a customer satisfaction focus that is value-driven, not task driven, with value being defined by the customer. Operations are viewed in the context of customer expectations and requirements, operational environments, resource requirements, corporate culture, and technology. It focuses on the following three key elements that, if commonly understood and supported, facilitate ongoing CPI initiatives and set the stage for greater, enterprise-level improvements:

1) A broad-based, structured CPI implementation method that spotlights why a sound plan is needed, which operations can be improved, how to effectively address the issues involved, and how to determine and implement the best solution. This involves strategic planning at the enterprise level and full consideration of the enterprise value stream to properly focus CPI activities. It also involves operational planning at the organizational level to accomplish the synchronized CPI project approach that improves the overall value stream. All of the

Continuous Process Improvement (CPI)Continuous Process Improvement (CPI)MisconceptionsMisconceptions

What is CPI?Misconceptions

CPICPICPI

DownsizingDownsizing ReRe--organizingorganizing

EfficiencyEfficiency



organization’s stakeholders need to participate in process improvement efforts to have the most beneficial impacts on value stream operations. The methodology describes key roles and responsibilities involved in supporting, monitoring, and repeating the improvement process. It also includes the use of peer groups that can benchmark activity and cross-fertilize best management practices with other organizations across different departments (or even industries) doing similar work. Such a methodology is a baseline and reference mechanism for continual refinement of CPI application.

2) A focus on CPI implementation within a structure of goals that are aligned to a customer-driven, outcome-based metric. In any government organization, CPI is about results for the customer (making the customer successful). For a manufacturer that may be the distributor or wholesaler, for a government agency like the DoD, that is the warfighter, for the Department of Agriculture that is America’s farmers, and so on. Goals that are pursued and achieved in each CPI project should be measured by results-oriented performance metrics that support customer requirements most cost effectively. CPI projects should be synchronized to ensure the most impact in the enterprise value stream. For any organization, its CPI efforts should be focused on reducing cost, shortening cycle time and improving process quality. They are the driving elements of improvement efforts.

3) Emphasis on the management and integration of CPI projects. CPI requires discipline, consistency, and continual focus. Sound project management principles are at the heart of success and periodic progress evaluation and reporting are important both for results achievement and the ability to develop coordination and synergy among improvement projects. This course will provide a suggested format for tracking CPI project status, how projects will be evaluated in terms of process improvements, and how project goals will be achieved.

CPI gives organizations a method for analyzing how work is currently being done and how processes can be improved to do the job more efficiently and effectively. CPI started with private sector manufacturing companies that produce tangible products and eventually spread to companies that provide services to customers. It has proven useful in the world of business and it is equally useful in improving government. CPI provides managers and workers the tools to build a strong foundation for improving cycle time and reliability, aligning the work of subordinate organizations to enterprise-wide goals, and optimizing costs.

Cycle Time refers to how long it takes from the time a customer identifies a need for something until it is ready to be received. CPI looks at the “touches” that occur during this period, how

Key Tenants:Key Tenants:

• A broad-based, structured CPI implementation method.

• A focus on CPI implementation within a structure of goals that are aligned to a customer-driven, outcome-based metric.

• Emphasis on the management and integration of CPI projects.

What is CPI?



much time is consumed by each touch, and evaluates whether a particular touch benefits the customer. Touch refers to touch labor, otherwise traditionally known as the application of direct labor, and typically includes both value and non-value added components in the eyes of the customer.

The objective is to align the organization and its processes to shorten the cycle time without adversely affecting the reliability and cost of the good or service. Cycle time improvement can be focused on any process to reduce the time and resources involved.

Reliability refers to the degree of certainty that a product or service (or any expected outcome) of a process will perform as intended over a set period of time. Experienced CPI practitioners know that simply attempting to speed up a process with the objective of reducing cycle time is to run the risk of compromising quality, thereby degrading reliability. CPI balances the need for speed with the need for reliability.

Cycle time and reliability almost always can be improved if money is no object. However, be-cause no organization enjoys unlimited funding, CPI practitioners consider the costs and benefits of process improvements before undertaking them. It is important to consider the anticipated improvement in the context in the entire value stream operation and build a solid business case to support the improvement.

Finally, CPI practitioners are obligated to align their efforts with the goals of the enterprise, which typically are expressed in a strategic plan and carried out through operational or business plans. The strategic and operational or business plans provide the foundation and building blocks for a strong and institutionalized CPI culture in the organization. Such organizations --

• have effective methods for identifying processes whose improvement would most benefit the customer;

• train people to perform CPI analyses and having a formal way of certifying their skills from, for example, Level 1 (novice-Green Belt) to Level 2 (intermediate-Black Belt), to Level 3 (expert-Master Black Belt);

• assess the maturity of the CPI work using a structured; and

• focus on knowledge management and sharing through various methods, including peer groups that provide a forum for the cross fertilization and exchange of ideas and techniques.

What is CPI?Cycle Time vs. Reliability



Several principles evolved from organizations that have engaged in CPI planning and implementation; they represent the best of current CPI thinking:

• Determine the current situation using facts not opinions.

• Analyze problems as a variation from a known or expected standard.

• As a goal, improve the entire system, not just elements of the system.

• Focus on the people, machines, and systems that add value.

• Improve processes through continuous controlled experimentation.

• Make decisions based on long-term improvement—even if it is disruptive in the short-term.

• Work with suppliers and customers as if they were partners. 1.1.2.2.2. The two ends of the Spectrum – Breakthroughs vs. Incremental Change First let’s discuss Breakthrough Performance Improvement (BPI). The major emphasis of this approach is the fact that an organization can realize dramatic improvements in performance through radical redesign of its core business processes. This is in contrast to the approach of incrementally improving processes in order to achieve a measured level of performance. The key ingredient of the BPI is the notion of breakthroughs. This aspect of CPI assumes the existing process is not sound and therefore needs to be replaced. For example, if a Travel Department wanted to significantly improve the way it processes business travel for its customers, it may attempt to find information technologies that would allow its existing paper forms, such as a travel order or travel voucher, to be "automated". Converting travel forms into an electronic format certainly could decrease processing time and cost of processing, but it wouldn't achieve nearly the level of performance that asking the question, "why are we even using travel forms?" would have.

© 2006 MHTC, Inc.

Two Ends of the CPI SpectrumCPI = I2 + BPI

• I2 - Incremental Improvement

• BPI – Breakthrough Process Improvement

(CPI = I2 + BPI)

Time

BPI

I2 As-Is

To-Be

GAP

C1/C2 =Customer

Competition



These breakthroughs are defined as "levels of performance that stretch an organization beyond its current performance in order for it to reach its vision." The difference in current performance and its "breakthrough" performance is defined as the "performance gap". These gaps in performance, if not closed, will impede an organization's ability to perform at a level necessary to compete". The size of the gap and the timeline at which it must be closed are the two major determinants of whether an improvement effort warrants a Breakthrough focus or an Incremental Improvement (I2) focus, or anything in between. The difference is significant. Even though both are very important aspects of CPI, each has its own role to play. An organization should pursue a path of Breakthrough Performance Improvement (BPI) if its performance gaps are large and the gaps must be closed in a very short timeframe. This will require significant re-thinking of existing business practices. In another example, a Supply Operations Depot who distributes supplies to automobile manufacturers currently delivers those supplies within thirty (30) days upon receipt of the customer's request. During a recent Strategic Planning effort, the Supply Operations Depot senior leadership found that the majority of its customer base truly needed the supplies within a week or less, as opposed to the current thirty (30) days. They also determined through strategic benchmarking that several other organizations in the industry could deliver similar supplies within four (4) to five (5) days. For the Supply Operations Depot to remain relevant (thus competitive), it decided it had to reduce the time it took to deliver supplies to its customers from its current thirty (30) days to three (3) days. And because their competitors can deliver their supplies much faster today, they felt it was essential they were delivering their supplies within three (3) days by the end of the fiscal year. This radical change in performance required the organization to completely redesign the way it filled parts orders, which would cut across many departments and cultures. But for the organization to remain relevant, it had to change, and change in a very short period of time. As you can see from the illustration above, a Breakthrough Performance Improvement (BPI) effort normally results from a significant change in output product and service requirements (from customers or competitors), a significant change in controls or constraints imposed on the business process or a significant change in the technological platform supporting the business

Two Ends of the CPI Spectrum

No ProcessNo ProcessPerformancePerformance

GapsGapsComplete ProcessComplete Process

ReplacementReplacement

IncrementalImprovementIncremental

Improvement

Six Sigma Quality

Six Sigma Quality

Lean Thinking

Lean Thinking

Lean Six Sigma

Lean Six Sigma

DMADVDFSS

DMADVDFSS

EnterpriseBPM

EnterpriseBPM

EnterpriseBPR

EnterpriseBPR

More Complexity

LessComplexity



process. This level of process change effort might also be undertaken following a radical change in the availability of an organization’s financial resources (i.e. budget cuts or downsizing requirements). By contrast, Incremental Improvement (I2) actions are defined as those improvements that can be undertaken and supported by an organization with minimal impact on external suppliers, customers and other organizations within the functional area. The focus of this aspect of continuous process improvement is an emphasis on reducing the overhead associated with self-imposed controls and restrictions. It also focuses on eliminating non-value added activities, reducing non-value added costs, optimizing available resources with respect to process and activity output requirements, and other improvements that can be made within the authority level of the target organizational element. There is typically no predetermined timeline to reach the new levels of performance, so the sense of urgency that is readily apparent in a BPI effort is not visible in I2 projects. It is also important to realize the impact and level of effort necessary to implement a BPI project as compared to an I2 project. The larger the scope and higher the expected performance gains the higher the level of effort. 1.1.2.2.3. The Vision for Continuous Process Improvement (CPI) Continuous Process Improvement (CPI) is based on a vision of the future that is increasingly shared by enterprises around the world. It is evolving into the sum total of everything we've learned about management in the industrial age recast into a knowledge age framework. Shared Knowledge As the Information Age comes to an end and the Knowledge Age takes hold, the principles of knowledge management are clear. Critical knowledge must be captured and then shared throughout the enterprise.

© 2006 MHTC, Inc.

Two Ends of the CPI SpectrumPerformance Gains vs. Level of Effort

I2 6σ Lean LeanSix Sigma

DMADVDFSS

EBPM BPR

Leve

l of E

ffort

Perf

orm

ance

Gai

n

An Approach that WorksThe Vision for CPI

• Shared Knowledge• Mission Support• Senior Leadership• Reduced Costs• Reusable Technology• Single Interface• Just-In-Time



Several years ago, Alvin Toffler, in his book Power Shift, discussed the close relationship of knowledge, power, wealth, and the transformation of society. According to Mr. Toffler,

"… a revolution is sweeping today's...world. No genius in the past... could have imagined today's deepest power shift; the astounding degree to which both force and wealth themselves have come to depend on knowledge."

Toffler defines a power shift as a transfer of power, a deep-level change in the very nature of power. He further states that, "Knowledge itself, therefore, turns out to be not only the source of the highest-quality

power, but also the most important ingredient of force and wealth." Put simply, knowledge has gone from being an adjunct of money power and muscle power, to being their very essence. It is, in fact, the ultimate force multiplier. This is the key to the power shift that lies ahead, and it explains why the battle for control of knowledge and the means of communication is heating up all over the world. Knowledge provides competitive advantage (e.g., what the customer needs, what the competition is doing, how & why to redesign business processes.). Corporate knowledge is to be made available where and when it is needed, and in the format and context in which it is needed, along with appropriate security, anywhere in the enterprise. Sharing of that knowledge must become a way of life! Only when all of the individuals of the enterprise realize the importance of sharing what they know with those who need to know, will the organization truly create value. Mission Support The focus of all organizations should be on their mission of producing the right product or service for their customers. The reason any organization exists is to provide a specified product or service to an external customer. There is no other reason an organization should continue to exist. Business processes will be streamlined or redesigned in such a way that those activities, which support the mission, will be strengthened; those activities that do not add value will be eliminated.

Now, however,

Capital Capital was the strategic resource in the past.

KnowledgeKnowledge has become the strategic resource.

An Approach that WorksThe Knowledge Age



Senior Leadership All Senior Leaders must participate in and take responsibility for the management of his/her organization’s processes. This means that the organization’s senior and mid-level managers are responsible for the performance of his or her organization, therefore they are also responsible for the Lean Six Sigma efforts of that organization as well. Without leadership from the Senior-most leader of the organization and other leaders throughout, process improvement efforts will not succeed. Reduced Costs Activities that increase the cost of doing business but provide no benefits to the customer are to be reduced or eliminated. Managers must search out and eliminate such non-value added activities and costs so that scarce funding resources can be applied to those activities that provide a higher return on investment, and enable the organization's mission to be accomplished. Increased Quality The emphasis has shifted from provider-driven products to customer-driven products. Our customers have expectations of what quality is and if our products and services don’t meet those expectations our customers go to someone who can. Six Sigma quality levels are the standard in some industries and those who can’t either reach that level or who aren’t making visible efforts to achieve a six sigma level quality are left in the dust. An environment of Continuous Process Improvement (the Japanese word – Kaisen) is essential to competing in today’s ever changing marketplace. Single Interface An organization should have to master only one system interface for accessing its information resources. Increasingly, this interface will be focused on process requirements which cross functional/departmental boundaries. Just-in-Time Information, training and support will be delivered electronically to the work site at the precise time it is needed, whether that work site is an office, a vehicle, or one's home. This vision shares many features with the transformation that is occurring in the private sector all across the industrial world. The hierarchical, compartmentalized corporation organized by function, product, or territory is giving way to the horizontally structured enterprise organized around business processes.



1.1.3. Overview of Lean Six Sigma & the DMAIC Process Improvement Model Two very effective tools in the Continuous Process Improvement toolbox are Lean and Six Sigma. As has already been discussed, the intent of any CPI effort is to reduce cost, increase quality and reliability, and reduce cycle time. By combining the process focus of Lean with the product quality focus of Six Sigma, you get a truly powerful and practical approach to process improvement. Let’s take a look briefly at each of these two methods. 1.1.3.1. Lean You can’t discuss Lean without first talking about Just-In-Time (JIT). Just-In-Time was pioneered at Toyota in the 1950s. JIT is a philosophy of continuous improvement with a set of concepts and techniques geared to better meet the needs of customers through elimination of waste that negatively impacts process flows and the value-added component of any product or service. JIT is thought to have originated in a Japanese study of American grocery stores replenishment processes where meeting customer changing demands and spoilage challenges have to be carefully balanced. JIT was originally focused on production shop floor improvement and gradually expanded to focus on a variety of staff functions and the external supply chain:

• was originated by Toyota engineer and CEO, Taiichi Ohno, as an approach to facilitating flow in response to a customer’s demand pull signal and eliminating waste in any form from production and delivery processes.

• cellular flow, kanban, Single Minute Exchange of Dies (SMED) setup reduction, and a focus on statistical quality control are a few examples of JIT techniques to reduce customer delivery cycle times and costly process variation.

• encourages supplier partnering to deliver just-in-time to customer-supplier linkages throughout the supply chain.

Lean is the evolution of Just-in-Time. Lean’s main focus is on the removal of waste, which is defined as anything not necessary (not value added) to produce the product or service. Lean is a process improvement strategy that facilitates an organization’s ability to make everything, everyday in the exact quantity required, with no defects. The goal is to achieve perfection through the total elimination of waste in the value stream. Lean uses incremental improvement

© 2006 MHTC, Inc.

An Overview of Lean Six SigmaLean Thinking



to constantly expose waste to balance operational and standard workflows beginning with the initial product design. Several Lean refinements include value stream mapping and a refined continuous improvement application to any type of organization generating a product or service. Lean, like any process improvement approach, is a mindset that drives individual behavior and ultimately culture change. In Lean organizations: • Waste is highlighted as it is encountered.

• Waste is relentlessly attacked using a variety of simple and effective tools.

• The environment challenges employees to expand their capabilities and creativity.

• Leaders challenge traditional processing conventions and metrics.

• The ability to respond to the customer is quicker, with higher quality products and services at lower cost.

• Everyone listens intently to the voice of its customers in providing new and improved products and services, striving for continuous quality, cycle time, and cost improvements.

1.1.3.2. Six Sigma Six Sigma (6σ) concepts and tools were originally developed by Motorola to minimize process variation in its manufacturing process. Since then these concepts and tools have been adopted by organizations worldwide as a means of systematically solving performance problems. It is a strategy based on the assumption that the outcome of the entire process will be improved by reducing the variation of multiple elements. It is a process improvement strategy that uses quality improvement as the method for business improvement. Six Sigma is uniquely driven by a close understanding of customer needs, disciplined use of facts, data, statistical analysis, and diligent attention to managing, improving, and reinventing business processes. Six Sigma process improvements focus on variation reduction to produce highly repeatable processes that create customer satisfaction and is characterized by the formula “Y = ƒ(X) + ε”. This formula simply means that all of the outputs (Ys) are determined by inputs and activities (the Xs) with some degree of uncertainty (ε). This is one of the core philosophies behind the Six

An Overview of Lean Six SigmaSix Sigma



Sigma approach. By controlling the inputs of the process you are more able to control the amount of variation (or inconsistency) that is inherent in our products and services.

Sigma is the Greek letter used by statisticians to denote an estimate of variation called standard deviation. Sigma, or the standard deviation, can be calculated for any set of data. A stated sigma level, like Six Sigma, is used to describe whether or not the process variation really meets the customer’s stated requirements. We will discuss variation in much more detail in Chapter Three of this course, but for now, it is important to understand that Six Sigma performance is the statistical term for a process that produces fewer than 3.4 defects or errors per million opportunities. These errors represent the inconsistency in our process and must be reduced to a level that fulfills our customer’s true requirements. When a process is at a Six Sigma level of performance, we are confident that there is only a very small chance for customer dissatisfaction. From a manager’s perspective, Six Sigma is all about predictability and control of process performance. It is focused on creating consistency of results for the products and services we produce. Another benefit of fully implementing Six Sigma approach to process improvement is it drives improvement from the top down using a well defined structure. For example, the following are commonly recognized roles for Six Sigma implementation. Clearly-defined roles within the Six Sigma approach are:

• Executives are trained as “Champions” to help break down barriers

• “Master Black Belts” serve as trainers and mentors

• “Black Belts” lead projects and “Green Belts” provide the bulk of the leg work.



Even though the Six Sigma approach does a great job of identifying and defining variation and defects, as well as product quality, it is important to note, Six Sigma does not directly accelerate cycle time and responsiveness. But reducing variation that adversely impacts on cycle time and cellular flow improvements is critical to improving the whole value stream. 1.1.3.3. The Innovative Management Framework and the DMAIC Process Improvement Model Before we discuss the DMAIC Process Improvement Model, it is extremely important to understand the context in which the DMAIC approach is used. Several years ago, Mountain Home developed an integrated framework methodology called the Innovative Management Framework™ (IMF). This methodology incorporates many of the concepts, techniques, and tools from Quality Management, Lean, Six Sigma, Process Reengineering, Balanced Scorecard, and Knowledge Management to provide a holistic approach to creating a truly high-performance learning enterprise.

The premise of the IMF methodology is the idea that an organization goes through a life cycle of performance, continuously learning from its own mistakes and from the mistakes of others. At the heart of the IMF is the concept of the Learning Organization. The essence of the Learning Organization is an understanding of how an organization transitions through the learning stages from unconscious incompetence and to unconscious competence. We have to understand what it really takes for us to learn in an organization because we don’t start out knowing everything we need to know to meet the customer’s needs. We start out a level of knowledge known as unconscious incompetence. This means we don’t even know that we don’t or need to know. If you will notice in the figure below, underneath the arrow that is labeled “Learning”, you will see that there are different activities that need to take place. Between, for example, unconscious incompetence and conscious incompetence, we conduct strategic planning. This includes mission analysis, environmental analysis, performance analysis, and the conduct of a critical knowledge assessment which is actually the understanding of the knowledge, skills, and abilities it really takes for us to perform the process or activity. You will also note that in each set of actions we always have customer relationship management (CRM). We are not talking about a CRM software product; we are talking about the idea of continuously building and sustaining a nurturing relationship between us and our customers, us and our suppliers, and for that matter, our suppliers and our customers. CRM is something that must continue through this entire process. The more you build on that relationship, the more you

© 2006 MHTC, Inc.

UnconsciousIncompetence

(Stage 1)

UnconsciousCompetence

(Stage 4)Conscious

Incompetence(Stage 2)

ConsciousCompetence

(Stage 3)

LEARNING

1 2 3 4

Strategic Planning

•Mission Analysis•Environmental Analysis•Performance Analysis

•Critical Kn Assessment•CRM

Process Analysis

•Lean Six Sigma•Process Modeling

•ABC/M•Benchmarking

•Critical IT Assessment•Critical Culture

Assessment•Business Case Analysis

•CRM

Implementation

•Process Change Mgmt Plan•Organization Change Mgmt Plan

•Technical Change Mgmt Plan•CoPs

•PA/AAR/R•CRM

An Approach that WorksLife Cycle of the High-Performance, Learning Enterprise



know. So between stages one and two, we do the things we need to do to go from unconscious incompetence, where we don’t even know we need to know anything to conscious incompetence which means we know the things we need to know but we just aren’t quite there yet. Continuing through the life cycle, we then go from conscious incompetence to conscious competence, which means we now have an appreciation of what we didn’t know. Maybe we’ve attended some type of training and we have had some experience, and we can follow check sheets. We now understand the basics of what we need to do, we can follow the process, but we have to continually think about what we are doing. To get us from conscious incompetence to conscious competence, we have to conduct process analysis; we have to understand what our processes are and what our costs are. We must look for best business practices, either through benchmarking or coming up with them ourselves. It is in this set of actions where we do an assessment of our Information Technology and our culture and we build a business case for any changes to our process, culture or technology that needs to be made. The idea here is that if we follow these steps, we will now know a lot about our organization and our customer and that gets us from we know we need to know and now we do. But that not the high performance organization, that’s just an organization that may survive and may even do pretty well. To get an organization to a level of performance, where they are consistently creating perpetual customer value over time, they have to get to the point of unconscious competence. In other words, they don’t even think about doing what they do, they just do it! A perfect illustration of this is the difference between a forty year old driver and a sixteen year old driver. Think about what a driver has to do; when you first became a driver you didn’t even know you needed to know certain things about driving a car, you just knew you wanted to drive. That’s unconscious incompetence. Then, you begin reading your drivers handbook and maybe take driver’s education in school. You begin to realize just how there is that you’ve got to know to drive a car; you just don’t understand all of things you need to know. Then you get your learner’s permit and you begin to learn what it takes to actually drive a car on the road, you learn the rules of the road, you begin to understand all of the things that are necessary to keep the car on the road and get you from point A to point B. But assume you are faced with a situation; there are cows who have gotten loose from their pasture and are now on the road on which you are driving. How do you handle this situation? Has your training and experience prepared you for this type of situation? Let’s take a look at the difference in how the forty year old and the sixteen year old driver handles the situation. Remember, the forty year old driver, because of his/her years of experience in driving, is most likely at a level of unconscious competence. He/she doesn’t have to stop and think about how to handle the cows on the road, they just react in a way that is based on their past experience and training. He/she will typically have a much better idea of what to do and how to avoid the situation than the sixteen year old driver, which is still back at the



conscious competence stage. He/she will have to go through a series of time-consuming thoughts that may include “I may have to apply my brake”, “I may have to swerve off the road”, “I may have to do something but I’m not exactly sure what it is”. This is because the sixteen year old driver doesn’t have the experience base, i.e. the knowledge necessary to make appropriate decisions quickly. So, what is knowledge? Knowledge is nothing more than information combined with experience. The sixteen year old driver may know the information, they may have studied it, they may have a little bit of experience, but they don’t have experience level necessary to get them to the point where they don’t have to worry about what decision to make. This is where we get into implementation. Implementation is the set of actions that is between stage three and stage four. This is where the organization becomes a true high-performing enterprise. It is through a thorough understanding of all of the elements of the enterprise: process, organization culture, organization structure, and technology, and how they interrelate that creates a synergistically aligned enterprise. You will notice that the key actions here are process change management, organization change management (culture & structure), and technical change management. It is also where the enterprise deploys communities of practices (COP’s) where the various elements of the organization can collaborate on active work and learn from reviews and a retrospect of past work. The key notion at the heart of this model is for an organization to become a truly high-performing learning enterprise; it has to reach the level of unconscious competence. We may be able to create value for the customer while at stage three, but we cannot reach the point consistently creating customer value until we have integrated all of the capabilities within the enterprise, where what we do actually becomes the essence of who we are! So now that we have defined what a learning enterprise is, let’s discuss how we create it. To fully understand the journey to a high-performance learning enterprise, we have to first set the context. We do this by asking five separate but integrated questions:

1. What is the state of the environment? What is going on outside of our organization that is going to have an impact on what we do as an organization?

2. What is the state of the enterprise? What are we doing internal for the organization that is to allow us to be competitive in that environment?

3. What will it take us to improve? What will we need to do to improve our position in the market place? Our position in this environment? Our ability to serve and provide for our clients? What is it that we need to

© 2006 MHTC, Inc.

Strategy

Organization

(Structure & People)

Process

Technology

What is the state of the environment?

What is the state of our enterprise?

What will it take to improve?

What will our future look like?

Is it worth it?

An Approach that WorksInnovative Management Framework



change to help us improve? This improvement could require anything from incremental improvement, Lean Six Sigma, or something more radical like reengineering. There are a whole assortment of techniques and tools along the “Two ends of the Spectrum” as we discussed earlier that can be used to assist us in improving our performance.

4. What will our future look like? In other words, we know that we have to change, but now we have to determine what we have to change to. What does our organization have to look like if it’s going to become? We have to again look at the relationship between this question and how it relates to the state of the environment which drives what the future will look like.

5. Is it worth it? What do we have to do to make sure that all the work that we have done in improving our organization will be worth the time and cost?

If you will notice in the figure above, Strategy drives our organization’s structure and culture, our technology requirements, and our processes. To effectively improve performance, all of these elements of the enterprise have to be studied together. They cannot be looked at independent of each other. What is the state of the environment? This first step is answering the question, “Is our organization relevant as we relate to our environment?” Is what we provide relevant to our customer? Is what you produce relevant to your competition? This is a tough question because if your competition is continually looking for ways to beat you, you can just about bet you are relevant in the environment. The way you answer this question is to perform three different types of analyses which includes mission analysis, environment analysis, and performance analysis. These three different aspects of planning address where the organization is now (mission analysis) and where it needs to be (performance analysis), and why it needs to get there (environmental analysis). Three major deliverables come from this step in the IMF: 1) Identification of the organization’s core business processes, 2) the gaps in performance (breakthrough objectives) which have to closed, thus what projects to pursue, and 3) what approach to process improvement will be deployed.

© 2006 MHTC, Inc.

An Approach that WorksStrategy -- What Is The State Of The Environment?

Organization

(Structure &

People)

Are We Relevant? Why should we care?

• Mission Analysis (What is the As-Is State of the Environment?)

• Environmental Analysis (Why do we need to move from As-Is to To-Be?)

• Performance Analysis (What is the To-Be Vision of the environment? How will we know we are there?

Deliverables:Deliverables:

• Situational Assessment• Process vs. Organization Decision Matrix• Breakthrough objectives (gaps in performance)

Strategy

Technology

Process

© 2006 MHTC, Inc.

An Approach that WorksBaseline -- What Is The State Of Our Enterprise?

Does our organization have properly aligned Processes, Organization (People & Structure), and Technologies to create perpetual customer value (DMAIC)?

• Process Baseline (Are we performing the right processes which produce the product/service that best meets our customer’s needs?)

• Organization (People & Structure) Baseline (Are we aligned properly to ensure we produce customer value? Do our employees possess the knowledge it takes to create customer value?)

• Technology Baseline (Have we deployed enabling technologies that enable our people to produce customer value?)

Deliverables:

• Documented Baseline Condition• Critical Enterprise Process Assessment• Critical Culture Assessment• Critical Technology Assessment

Organization

(Structure &

People)

Strategy

Technology

Process



What is the state of our enterprise? Before any process improvement can take place, the enterprise must fully understand itself. The key to successful process improvement is viewing the improvement from a context of entire organization, not just one function or business unit. You must identify and clearly define the four elements of the enterprise (process, organization culture, organization structure, and technology) and their interrelationships. Without establishing the baseline, there is nothing to analyze! The deliverables from this step of the IMF are: 1) Baseline Process Assessment, 2) Baseline Organization Assessment (structure & culture), and 3) Baseline Technology Assessment. What will it take to improve? Once a baseline has been established, the organization can now begin to break down and analyze all of the various aspects of the selected process, organization structure, organization culture, and supporting technologies. This is where the analysis takes place and the organization will apply all of the appropriate techniques and tools of lean, six sigma, theory of constraints, process reengineering, or any other useful process improvement method to assist the organization reach its performance objectives. What will the future look like? The most challenging of all of the steps in the IMF methodology is the identification and documentation of realistic improvement opportunities. There are three major deliverables that come from this step: 1) Process Change Management Plan, 2) Organization Change Management Plan, and 3) Technology Change Management Plan. Each of these “plans” addresses a specific element of the enterprise that needs to be improved. Even though there are “three plans”, they must all three be integrated, i.e., changes to the process could dramatically affect the culture and/or technology, changes to the technology could have a profound affect on the way the organization is structured, and so on. To boil this step down to its essence, it is where the organization defines the potential new To-Be opportunities, the alternatives that we can look at to get to where we need to be.

© 2006 MHTC, Inc.

An Approach that WorksAnalysis – Where do we need to go and how do we get there?

What will it take to improve (DMAIC)?

Analyze Baseline for Potential Improvements

• Apply Tools• Analyze Gaps

What will our future look like (DMAIC)?

Define New To-Be Enterprise

• Process Change Management Plan• Organizational Change Management Plan• Technology Change Management Plan

Deliverable:

Potential New Enterprise Alignment Opportunities (To-Be Alternatives)

Organization

(Structure &

People)

Strategy

Technology

Process



Is it Worth It? Now is it worth it? The focus of this step of the IMF is to make the case for change, using real data and solid analysis. Many organizations really don’t want to go through the rest of this part of the methodology because they feel it’s too hard to prove the savings or benefits from the change. But from our experience, verifiable savings comes from verifiable data. So, if the organization collected the appropriate data (through a rigorous and disciplined approach) and came to logical conclusions, the recommended improvements will indeed stand up to scrutiny. This is why the major deliverable from this step of the IMF is the Business Case. The business case will provide the detailed analysis necessary to prove the value of improvement opportunities as well as give the organization an implementation strategy for ensuring those improvements endure. This controlling of the process’ performance is critical to establishing an environment of Continuous Process Improvement (CPI). All of these questions helps us create what we call the high performance learning enterprise. First of all, it is an alignment of the strategy (what senior leadership believes organization should be involved in and where it should be heading) with the individuals who actually perform the process. We call this Vertical Alignment. The enterprise is horizontally aligned when its processes actually meet the customer’s real needs. Perfect organizational alignment happens when the culture fully understands what the strategy is and the process is producing exactly what the customer needs. It is then, and only then, that you create perpetual customer value. Now that we’ve discussed the overall framework for process improvement, let’s go over the DMAIC Process Improvement Model. Within this framework context, DMAIC, which is normally pronounced “Duh-May-ick”, provides a rigid and disciplined problem-solving model which focuses on the analysis of data as opposed to reliance on opinion. The DMAIC acronym actually represents the five key phases of Six Sigma improvement: Define, Measure, Analyze, Improve, and Control. This approach leads a process improvement team from problem definition to implementing solutions that are linked to root causes. The model also focuses on

© 2006 MHTC, Inc.

An Approach that WorksThe Result - Is it Worth It?

Making the Case for Change

Is the change worth the effort (DMAIC)?

• Develop Business Case for To-Be High-Performance Enterprise

• Implement New Enterprise and Monitor Performance

Deliverable:

High-Performance, Learning Enterprise

Organization

(Structure &

People)

Strategy

Technology

Process

CustomerCustomerProcess/ActivitiesProcess/Activities

StrategyStrategy

CultureCulture

Performance Measures:• Are we serving the right

customers?• Are we producing the right

product/service that best satisfies our customer’s needs?

Performance Measures:• Does our workforce

understand the true needs of our customer?

• Is our workforce focused on meeting our customer’s needs?

Performance Measures:• Is our workforce fully

capable of executing the processes to meet the true needs of our customer?

Performance Measures:• Are we performing the

right processes which produce the product/ service that best meets our customer’s needs?

The HighThe High--Performance Learning EnterprisePerformance Learning EnterpriseFrom Vision to PerformanceFrom Vision to Performance

PerpetualCustomer Value



establishing best practices to help ensure the improvement solutions stay in place. DMAIC is typically implemented through two primary modes in Six Sigma improvement efforts, the project team approach–which normally involves full time deployment of key team members for 1 to 6 months or the kaizen approach–which stresses rapid, intense progress through all DMAIC stages (in as little as 1-2 weeks), except full-scale implementation.

Mountain Home has taken the traditional Six Sigma DMAIC methodology and integrated both Lean and Business Process Management (BPM) techniques and tools to provide an even more in-depth look at the issues facing today’s organizations. This methodology focuses on the four elements of any enterprise: Process, Organization Structure, Organization Culture, and Technology. By approaching process improvement from a holistic perspective, the team can avoid many of the mistakes that teams make when taking a more myopic view of problem solving. Now, let’s discuss briefly what each of the five key phases of the DMAIC approach entails. 1.1.3.3.1. Define The Define phase is focused on both the strategic and process views. Before you can solve a problem you must understand what the problem REALLY is. Strategic Planning becomes the baseline for the defining of those problems and is the first step in the Define phase. The only reason an organization would choose to pursue a process improvement effort is because it knows it has a performance problem. This step of the Define phase enables the organization to define who its customers are, why they provide products and services to them, what they have to do to provide those products and services, and how they measure whether or not they have satisfied the customer’s requirements. Once this initial analysis is completed, the organization can begin to pinpoint where the problems exist and decide on an approach to solving those problems. The second step in the Define phase is the establishment of the process improvement project. This is where the organization determines the scope of the problem, thus the scope of the project, the members of the process improvement team, how the project will be monitored and how to measure the success of the project. This includes the establishment of a Project Charter that will lay out the roles and responsibilities of all of the players in the effort, as well as the methodology or approach to be used, the timeframe for conducting the study, and what the intended outcome will be.

© 2006 MHTC, Inc.

The DMAIC Process Improvement Model



The basic steps in this phase are:

• Based on the Strategic Plan, identify and define potential process improvement projects.

• Select high-potential project. • Charter Initial LSS Team. • Clarify the Voice of the Customer. • Determine the Scope of the project – Develop Process vs. Organization Matrix. • Define the Value Chain – Develop SIPOC Diagram. • Build high-level Value Stream Map.

1.1.3.3.2. Measure The Measure phase of the methodology will focus on the documenting of the current state of the process including baseline performance, As-Is process model and maps, current information technology support, and a culture assessment. In addition, the team will collect and analyze process cycle time, quality, and cost data that will be used to determine the causes of the problems identified in the Define phase. The basic steps of this phase are:

• Model/Map the selected process. • Build detailed Value Stream Map. • Identify Process performance indicators. • Determine appropriate process measurements. • Develop the Measurement Plan. • Collect measurement data. • Populate Process Models/Maps

1.1.3.3.3. Analyze The purpose of the Analyze phase is to pinpoint and verify causes of performance problems and unearth the contributors to poor performance. The use of statistical analysis tools will validate the real causes creating a “fact-based” foundation for process change decisions. The basic steps in this phase are:

• Perform Process Analysis. • Conduct Value Stream Analysis (Value Added/Non Value-Added). • Perform Data Analysis (i.e., Process Capability Drivers, Process Cycle Efficiency,

Process Yield). • Perform Root Cause Analysis. • Verify Root Causes. • Determine Areas/Opportunities for Improvement.



1.1.3.3.4. Improve Developing the “To-Be” process, organization, technology package is the purpose of the Improve phase. The team will identify and document potential solutions, test those solutions for viability, pilot high probability alternatives, and develop a business case and full-scale implementation plan. The basic steps in this phase are:

• Identify Process Improvements through: Generate Potential To-Be Solutions (Idea generation). Rank and Select Specific Improvement Opportunities. Identify Best Practices. Select Solutions.

• Develop To-Be Process/Activity Maps & Value Stream Maps. • Develop Business Case. • Plan and Implement Solution.

1.1.3.3.5. Control The Control phase of the methodology is characterized by the hand off of the project results to the process owners and creating a system of monitoring and maintaining performance gains resulting from the project. The Control phase will also focus on documenting relative lessons learned and recommendations on future actions or opportunities. The basic steps in this phase are:

• Establish Process Standards for Inputs, Process and Outputs. • Develop a Process Control Plan. • Closure and Recognition (Lessons Learned, Team Recognition).

1.1.4. The Lean Six Sigma (LSS) Organizational Control Structure Successful CPI implementation requires a variety of responsibilities spread across the organization. Some of the responsibilities fall upon existing roles, especially top-level leadership. Other responsibilities fall upon new roles, primarily those involved in directly leading CPI activities. These roles are applicable to various different organizational levels and the functions performed are basically the same at each level. © 2006 MHTC, Inc.

CPI/LSS - Roles for Successful Implementation



1.1.4.1. The Lean Six Sigma Champion Champions lead the overall push for Lean Six Sigma within their respective organizations and drive the development of the mission, vision, and strategic plan. They provide the necessary resources to the Steering Committees, LSS Support Teams, and LSS Work Groups, monitoring the implementation of Lean Six Sigma across the organization. The champion has the primary responsibility for creating the vision and leading the development of the enterprise strategic plan with goals and objectives that will be used to align subordinate strategic and operational plan elements cascading down through the entire organization. Champions will also be needed at multiple levels within the organization with similar responsibilities at their level. It is imperative that champions sustain visible support of CPI through consistent words and actions. The champion will typically be the designated leader of the organization or a highly placed executive. The champion has a comprehensive strategic view of his or her own organization and a critical understanding of how the organization fits into the enterprise at large and its links to the external environment. The following are the ongoing responsibilities of the top management champion:

• Support the prioritized efforts of all Lean Six Sigma-related functions (Steering Committee, LSS Support Team, and LSS work groups) to the organization’s enterprise strategic plan.

• Conduct periodic reviews of Lean Six Sigma related resource allocations with the Steering Committee, assess LSS projects’ effectiveness via progress against aligned metrics, and encourage cross-pollination of ideas and LSS lessons learned across the organization.

• Promote the exchange of Lean Six Sigma knowledge both inside and outside of the organization.

• Remove barriers that drive waste or inhibit improvement opportunities.

• Remove fear of failure (punishment) to encourage risk taking.

• Publicly recognize and reward Lean Six Sigma successes.

• Continually convey a sense of urgency and dissatisfaction with the status quo.

The top management champion is critical to any degree of LSS organizational success beyond the possibility of isolated islands of excellence as a result of disconnected subordinate LSS efforts. Within the LSS deployment cycle, the top management champion is chiefly responsible for creating a vision, supporting the organization’s mission, developing the strategic plan, and insuring funding for the agreed upon LSS initiatives. LSS champions are also needed at multiple levels within the organization to support the top management champion’s strategic agenda.



1.1.4.2. The Steering Committee Steering Committees create and share the vision, and acknowledge its importance to the organization’s success. The Steering Committee members develop strategies focused on organizational success, define operational plans and metrics, monitor performance and provide guidance and business focus as necessary. This group is sometimes called a Deployment Team in the early stages of CPI or Lean Six Sigma implementation. The Steering Committees should include the decision makers that control the resources for all major functions within the organization, as well as Senior CPI Practitioners or Lean Six Sigma Master Black Belts. This committee, which is sometimes called a Deployment Team in the early stages of CPI or Lean Six Sigma implementation, makes critical decisions regarding Lean Six Sigma priorities and resource allocation for the entire organization. As a group, it provides the level and prioritization of resources necessary to accomplish CPI goals. The Steering Committee is chaired by a senior leader of the organization. This group is accountable for LSS deployment actions within the respective organizations of the members, and its role may lessen as the organization reaches CPI maturity. At each level in the organization, a Steering Committee serves to initiate and monitor deployment and culture change. Although much of the pre-deployment work and early decisions are the responsibility of the Steering Committee, the need for “steering” will remain until CPI becomes the standard way of operating. As the deployment rolls out, the committee monitors progress via the deployment metrics established during pre-deployment and addresses organizational barriers that impede progress toward results. The following are among the Steering Committee’s responsibilities:

• Develop and manage CPI results, goals, objectives, guidelines, and measures. Determine what is needed for successful deployment and evaluate and report how deployment is performing relative to those needs.

• Establish and manage CPI management processes. Understand risks to deployment; develop contingency plans and execute as needed.

• Execute ongoing deployment of Lean Six Sigma. Ensure the deployment within the organization matches the strategic plan.

• Ensure integration between CPI activities and other processes to prevent or reconcile conflicts of interest. Decide how the organization should view Lean Six Sigma in respect to other ongoing initiatives.

• Manage internal and external CPI communications.



1.1.4.3. The LSS Support Teams LSS Support Teams assist in the assessment of the current situation to determine variations from the organization’s standards. The Support Teams also assist the Steering Committee in creating and implementing plans to improve performance. The LSS Support Team’s role involves direct transfer of knowledge to all employees, encouragement to create critical mass for cultural change and sustaining support for CPI as a journey rather than a project with an end point. The support team’s ultimate goal is to create the capacity within work groups to sustain a CPI culture without an external support team. The LSS Support Team is a collection of individuals, either full-time or part-time based on the needs of the organization. External CPI expert facilitators may likely be required at the beginning of an organization’s CPI experience to overcome initial inertia and lack of expertise, but they should be expected to transfer Lean Six Sigma related knowledge to facilitate internalization of all facilitator and training requirements as soon as practicable. Internal change agents and instructors are more effective in the long-term movement toward the required organization’s cultural change due to their insider knowledge of processes, people, and obstacles. Because of this they offer credibility that an outside consultant can’t provide. The Support Team’s resource requirements should be offset by the savings that are being enabled through their activities. The number of Support Team members depends on several variables, including available funding, current staffing levels, importance of the goals to be accomplished and availability of competent resources. It is possible to have a Support Team that individually does not represent the entire range of required competencies but collectively supports all the competencies. If this approach is chosen, the goal of the organization becomes cross-training so that each member will eventually have multiple competencies. The Support Team should include among others, experienced CPI practitioners or Lean Six Sigma Black Belts. The Support Team is integral to the implementation of CPI; therefore, it is essential that the team members possess the knowledge of LSS tools, techniques and concepts as well as the knowledge of how to facilitate the development of a CPI culture. Culture is defined as one’s perception of himself/herself in his/her environment, or in other words, the set of expectations that drive his/her behavior on the job. Development of the CPI culture is a systematic process of achieving higher levels of competence and motivation while creating the processes that make expectations explicit. Members of the Support Team should work their way through the various roles on the team and ultimately take the LSS skills learned back into the operational organizations in an-other capacity.



The Support Team’s key responsibilities include the following:

• Transfer of Lean Six Sigma knowledge to the work group.

• Plan for and overseeing the development of the culture to support CPI.

• Assess the current situation to define opportunities for improvement.

• Plan for improvements to the value stream in alignment with strategic objectives.

• Coach the work group on ways to implement the operational plan.

o Utilize LSS tools to solve problems.

o Teach techniques for implementation that support LSS principles.

o Conduct training to support LSS competency.

• Coach the work group in how to monitor performance and identify LSS opportunities.

The Support Team is responsible for providing expertise throughout the cycle of strategic and tactical LSS improvement. The Support Team focus is on teaching the organization to operate in a LSS environment with a continually developing competency. Another critical role of the Support Team is to facilitate the operational mission using LSS tools, techniques and processes. This is accomplished by working with the Steering Committee in relation to decisions on the elimination of waste and variation and the deployment of LSS. The critical preparation activities may include: data collection, policy deployment training, SWOT (Strengths, weaknesses, opportunities, and threat) analysis, etc. The LSS Support Team also facilitates value stream mapping of the organization’s processes. The percent value-added is the most important analysis to be initially calculated and analyzed. It will help the organization to understand the potential of LSS, plan improvements and set goals. The Support Team is also responsible for ensuring the future state reflects the use and implementation of LSS to support the mission. The LSS Support Team focuses on the following decisions:

• What are the appropriate initial implementation areas to map?

• What is the best way to communicate the vision to achieve understanding across the organization?

• Who are the stakeholders, and how should they be integrated into the process?



1.1.4.4. LSS Work Groups Work Groups analyze the current situation, seeking ways to improve operations. These groups utilize the know-how and experience of the individual members and consult, as necessary, with peer groups to discover improved processes. As better ways to perform work are identified and implemented, the Work Groups assist in training and developing other members of the workforce. LSS Work Groups consist of three types of roles: process owner, team leader, and team members. This group is ultimately responsible for studying and changing processes to improve their effectiveness and efficiency in accomplishing the organization’s goals. The most important task for the work group will be to align the goals and activities of their process with those of the organization. The work groups are primarily focused on accomplishing the four implementation steps of the mission deployment cycle, although they also have an often unrecognized impact on organizational strategy through their level of support for strategic initiatives. Work Group Process Owners are the individuals who have ultimate responsibility and authority for the performance/results of the processes being improved. It is essential that process owners be involved in any LSS activity regarding their respective processes. Process owners can exist at a variety of levels within an enterprise, from weapons system program managers to shop floor or staff employees responsible for specific work processes. Work Group Team Leaders are responsible for the overall improvement efforts for processes under their cognizance. The team leader for an improvement effort could be chosen from a variety of organizational roles such as process owner, engineer, manager, planner, or practically any other function that would participate in the LSS initiative. The team leader should be either an experienced CPI Practitioner or Lean Six Sigma Black Belt. The team leader’s responsibilities are as follows:

• Schedule and coordinate team meetings and locations.

• Lead meetings and discussions.

• Manage team dynamics and resolve conflicts.

• Keep team energy alive.

• Periodically update Steering Committee.

• Maintain regular communication with Steering Committee.

• Monitor, manage, and document team progress through metrics tracking.



Work group team members are knowledgeable about and have a stake in the process being improved. They are the ones who will recommend and change the actual process. Team Members should be trained at least to the CPI Intermediate or Lean Six Sigma Green Belt level. Their responsibilities are as follows:

• Understand the charter and tasking.

• Participate willingly in a team environment.

• Buy in to the idea that the process needs to be changed.

• Be open to new ideas and ways to perform their jobs.

• Participate in appropriate Peer Groups.

• Accomplish the following basic steps of process improvement:

o Analyze the current situation.

o Conduct a current state analysis of the process area to determine the actual current situation and draw the current situation in a visual and easily understood map including the three flows; material, information and time.

o Measure key aspects of the operation to form a baseline using actual data.

o Determine the ability of the operation to meet “takt” time.

o Determine the ability of the operation to meet the quality requirements.

o Identify changes to be made.

o Determine the areas that have problems or opportunities for improvement.

o Identify root causes of problems.

o Determine solutions to problems or improvement actions.

o Create an action plan.

o Divide actions into appropriate level of activity—projects, rapid improvement events, and “just do it” actions.

o Prioritize actions in an action plan.

o Communicate the plan to all involved groups.

o Implement the action plan.

o Resolve unanticipated issues.

o Conduct or participate in training to support the implementation.

o Identify disciplined behavior that will sustain the changes.

o Document the process changes in appropriate procedures or checklists.

o Monitor the plan.



Create the plan for monitoring the process.

Make the data to be monitored visual.

Actively participate in regular reviews.

Resolve any deviations from the standard.

Identify and recognize behavior consistent with successful implementation.

Support supervision in conducting the reviews.

Develop behavior consistent with new roles and responsibilities.

o Analyze the new current state and create new standards.

If the new performance exceeds the previous current situation, standardize the results.

If performance does not exceed the previous current situation, analyze why, determine the root cause of the failure, and return to the step “Analyze the current situation.”

1.1.4.5. Peer Groups Peer Groups share common functional responsibilities and carry out similar activities. They provide an opportunity for cross feeding information about CPI goals, challenges, approaches, activities, and accomplishments. Examples of potential peer groups include turbine engines, fighter aircraft, and communications-electronics. The knowledge management movement has focused a great deal of attention on the need for collaboration and lessons learned. The “PA-AAR-R” method is one way to ensure that collaboration and lessons learned are included in every project initiated. “PA-AAR-R” is an acronym for Peer Assist-After Action Review-Retrospect. One way to speed up a CPI or LSS project is to bring in those who have already gone through a similar effort and have captured lessons learned which comes from a Peer Assist. The peer group can come from either the same organization or from an outside agency or organization that the team trusts to give helpful advice. Learning from others lessons is a great way to ensure the project doesn’t hit already identified road blocks! It is also very important to do an After Action Review after each phase of the project. This is sometimes referred to as “Gate Reviews”. The major “Gate Reviews” (After Action Reviews) should, at a minimum, occur at the end of each of the key phases of the DMAIC methodology. Retrospect is a project wrap-up. It gives the team and the sponsor an assessment of the entire effort and what went right and what went wrong. It is the Retrospect that gives the organization a sense of closure for the project.



1.1.5. The Impact of Lean Six Sigma on the Enterprise Lean Six Sigma successes result from an organization that exhibits specific, recognizable behaviors. Chief among them are the ever vigilant lookout for waste and the unshakeable belief that there is always a better way to get things done. Excellence in mission performance is only achieved when these kinds of behaviors are widespread to the point that they define the culture of an organization.

A supportive and innovative culture must underlie this formal framework. If nurtured, it will increasingly flourish as the number of successful LSS projects increases. Several core values comprise an effective Continuous Process Improvement (CPI) culture. These should be recognized and developed throughout the organization:

• Mutual trust and respect for all

• Keeping the customer first (Connected broadly to the mission and very specifically to the attainment of the strategic plan.)

• Using competition and cooperation to further advance performance

• Respecting the value of people

• Challenging yourself and your co-workers to higher and higher performance

• Using applied creativity at all levels to solve problems

• Always being conscious of the cost of your actions. 1.2. Introduction to Business Process Management (BPM) Every core business process exists to provide a needed product or service for a defined customer. A core business process according to defined requirements, rules, or constraints produces these products and services. In producing the product or service, the process requires materials and information, which are provided by suppliers, and consumes the resources allocated to the process. When you hear the terms "downsizing" or "restructuring" on the evening news, or read about them in the morning paper, you are learning about companies that are moving toward process management and away from hierarchical management.

© 2006 MHTC, Inc.

CPI/Lean Six SigmaThe Impact on the Enterprise

• Mutual trust and respect for all. • Keeping the customer first (Connected broadly to the mission and very specifically to the attainment of the strategic plan.) • Using competition and cooperation to further advance performance.• Respecting the value of people.• Challenging yourself and your co-workers to higher and higher performance.• Using applied creativity at all levels to solve problems.• Always being conscious of the cost of your actions.



The hierarchical (vertical) organization served the needs of industrial age organizations well. The arranging of work into like functions was suited to the needs of an uneducated workforce. It simplified employee supervision and training, maximized managerial span of control, and had little dependence on the free flow of information. However, a new model is needed for knowledge age organizations. Work can be organized and managed as an end-to-end process, rather than as the sum of disjointed functions. Thus, work teams can now be arranged around a single process creating focus and direction. Once the concept of process management is firmly rooted in the enterprise, it becomes possible to see real and lasting improvements in process performance. 1.2.1. Organizing the New Enterprise Peter Drucker, in a 1988 Harvard Business Review article entitled, "The Coming of the New Organization", suggested we look at a symphony orchestra. In an orchestra, several hundred musicians play for one director. There is no chain of command and no middle management. The director interacts directly with individual players. Tom Peters, author of the landmark book, In Search of Excellence, uses a movie studio production process to illustrate an environment conducive to a flattened organization structure. In a movie studio, the director interacts directly with individual actors and others on the set without going through an elaborate vertical structure. What enables both a symphony orchestra and a movie studio to work effectively? What provides the glue to keep all of the "players" from going their own independent direction? What keeps them working to effectively and efficiently produce a common product? There are several factors that both of these horizontal organizations share that are critical to their success. Each of these factors is an important consideration for organizations planning to rightsize, or restructure, their organization to a horizontal structure. The first factor is that each of the individual players/actors must have a common sheet of music by which to play or a common script from which to act. Put simply, they all must share a common vision and each individual must know

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Process ImprovementProcess Improvement

Business Process ManagementBusiness Process Management

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Sound Business Plan Clearly defined roles

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Business Process ManagementBusiness Process ManagementOrganizing the New Enterprise



what needs to be done to accomplish their common purpose. Put into business terms, these organizations must have a detailed business plan of where the organization is going and a specific guide on how they are going to get there. This plan must be understandable and each individual must know precisely how he or she fits into this plan. Secondly, in both organizations, all individuals have clearly defined roles. The players and actors know when to come in, how to do their part and when to exit. They not only know what part they play, but they also know how their part interacts with other players and actors. The director also has a clearly defined role that is critical to the success of the enterprise. In fact, this role may be perhaps more critical than director positions in a hierarchical structure. The Individual players are directly dependent on how the director interprets the business plan. TRUST is very important at this point. Each member of the organizational team must trust one another to carry out their individual responsibilities. Finally, the information system must support the business plan, which lays out the processes that must be performed in order to accomplish the mission, and the individual roles. The information system, be it automated or manual, must provide the common sheet of music so that each individual clearly knows how he or she fits into the organization and how they relate to others in the organization. In addition, the information system must provide each player, actor, and director the critical information needed to perform their individual roles. Team members need sufficient information on what is expected of them. If the system does not provide the essential information, confusion will result, and the mission of the entire organization will suffer. Also underlying all successful flattened organizations is the core business process. A clearly defined and understood core process will enable organizations to focus on the things that are important, that add value. Management of the process becomes critical. 1.2.2. So, what is process management? Why is this concept essential for real and lasting improvements in process performance? To begin to answer these questions we need to first give a working definition of what we mean by “core business process”:

Another way to look at a core business process is that it is a group of interrelated tasks and activities that accomplish the defined mission of an enterprise. By this definition, even the largest organizations have no more than five or six core business processes. It is the

An end-to-end set of decisions and activities that, when accomplished, produce a pre-defined product or service for an external customer.



improvement of these processes on a continuous basis that will allow organizations to be able to continue to perform their mission during a time of dwindling resources. We define the philosophy of Process Management as: A philosophy of management that advocates an integrated approach to the management of an end-to-end process, including its lower level activities, which produces a product or service for a given customer. This concept goes beyond organization structures. It encompasses everything necessary to identify, produce, and deliver a quality product or service to a fully satisfied customer. When an organization chooses to manage by process, the organization's structure and rules are no longer the focus of its efforts. The total satisfaction of the customer becomes the reason for the organization to exist. Performance is now measured by how well the product or service is received by the customer, not how well one department or division performed. Another aspect of this management philosophy deals with the idea of managing the mission versus managing the organization. Simply stated, if the process directly supports the mission of the organization, then by managing the process, you are, in turn, managing the mission. Too many organizations spend too much time managing the rules of the organization. They give little attention to the process by which the mission is being accomplished or the products and services being produced. By incorporating the philosophy of process management, the mission (the success of which is measured by satisfying the customer) becomes the emphasis as opposed to whether or not the organization is being managed. 1.2.3. The Evolution of Process Management A way to illustrate this concept of process management is by looking at the evolution of process management. Please refer to the following: Basic Process Model: Let's first discuss what a basic process is. In its simplest terms, a process is a set of decisions and activities that are performed to transform a defined input into a defined output. In other words, it defines the flow of work through an organization beginning with an external input and ending with an external output.

© 2006 MHTC, Inc.

Business Process ManagementBusiness Process ManagementThe Evolution of Process Management

Stage One: The Basic Process ModelStage One: The Basic Process Model

InputInputProcess

OutputOutput

Stage Two: The Basic System ModelStage Two: The Basic System Model

InputInputActivityActivity

OutputOutput

InputInputActivityActivity ActivityActivity

OutputOutputOutputOutput

InputInput



The Basic Systems Model: The Basic Systems Model describes the interrelationships between sub-processes (or activities), that together, produce a product or service for a pre-defined customer. It is at this level that many organizations spend most of their time trying to improve. But instead of assessing the performance of the "system" as a whole, they key in on a single activity. When this is done without regard to the whole system, many times the improvement in the performance of a single activity may decrease the performance of the overall system. The Process Management Model: The culmination of the evolution of the process is the Process Management Model (PMM). Notice in the PMM to the right the five parts of the model: 1) the mission (which is the reason the organization exists), 2) the customer (who the organization serves), 3) the product (what the organization produces for the customer), 4) the process (the activities and decisions that are performed in the development of the product), and finally, 5) an information infrastructure (the management of information flow). The concept is really very simple. If an organization doesn't have customers, they don't have a product. If they don't have a product, they won't need a process to produce the product. If they don't have the need for the process, eliminate it. Of course this is all taken in the context of the mission of the organization, which defines the reason we exist. 1.3. The Human Side of Process Improvement (Culture Change) After going through the time-consuming process of improving your agency's activities, you would expect it to run smoother, demand fewer resources, and allow you to provide world-class service to your customers, right? After all, you did go out to the "Best in Class" organizations in the commercial and government sectors and model the way their processes were designed. So, shouldn't your agency be world-class? Maybe not! Even though you have followed all of the steps of the LSS methodology and you've really cut out waste, there may be a problem achieving the savings or gaining the efficiencies and the level of effectiveness you were expecting. One of the most often sited reasons why many CPI projects do not achieve the level of success the organization expects deals with the issue of organization culture change. You can have the most efficient process in the world, on paper or in a model, and still not have a "world-class"

© 2006 MHTC, Inc.

Business Process ManagementBusiness Process ManagementThe Evolution of Process Management

Final Stage: The Process Management ModelFinal Stage: The Process Management Model

ProcessProcess CustomerCustomerProduct/Product/ServiceService

MissionMission

Information InfrastructureInformation Infrastructure



operation. We must remember that people have to execute the plans, perform the activities, and provide the interface to the customer. If you have left the feelings of people out of the CPI effort, your project will not succeed. 1.3.1. Culture Change Defined Let’s first begin with a question. Do human beings fear change? Every time that question is asked the answer almost always comes back with a resounding, “YES!”. But, what most people don’t realize is that human beings don’t really fear change. In fact, human beings are constantly changing throughout their lives. We progress through a significant amount of physical and mental changes from birth through adolescence to adulthood. And, since our mind changes and evolves, so do our perceptions about ourselves and how we relate to our environment. So, in essence, we really don’t fear change. If we don’t fear change, then what do we fear? We fear the UNKNOWN! We resist change. This resistance to changing our environment is based on the fact that many times we don’t know how that change will impact us. Let’s illustrate this point with a real life situation. I want to introduce you to a friend of mine, his name is Tom. Tom was at the top of his game. He has just been told he has been diagnosed with a terminal disease. Tom reacts with total disbelief. He doesn’t understand how this can happen. He has always exercised and watched his diet. He felt he had total control of his environment and always felt that something like this couldn’t possibly happen to him. After the initial shock of the diagnosis, he becomes deeply afraid. But, what is he really afraid of? The fear Tom is exhibiting comes from his not knowing the outcome of his disease. This uncertainty causes fear because he doesn’t understand the impact the disease will have on his “known” environment. He is not only very familiar with his existing environment, he is very comfortable with what happens in that environment. He has created certain “rules”, or habits, that define his comfort zone. Now, that environment has just been turned upside down. Tom’s resistance to change is a normal reaction. We see the same type of reaction any time a significant change happens, especially in an organization going through a process improvement effort. Understanding the difference in fear of the unknown and resistance to change is the basis of understanding culture change in an organization. Most people faced with significant change during a Lean Six Sigma effort tend to react in much the same way as Tom did. So what is culture change? Let’s start with the definition of culture. We define culture from an individual’s perspective, so given that, culture is, “an individual’s perception of himself/herself in his/her environment.” It would follow that culture change is, “the changing of an individual’s perception of himself/herself in his/her environment.” Individuals’ perceptions of their environment will determine how they act and perform.



1.3.2. The Concept of Pain vs. Pleasure Culture change does not come only as a result of a change in the process. As we have seen, it also comes as a result of consistent change in the way a person feels about that process and the environment in which that process is performed. Human beings must perceive there is less pain (emotional cost) and more pleasure (benefit) associated with the change than not changing. Psychologists have understood and operated under this notion for years. However, it has only been in the last few years that the business and government communities have realized the importance of this relationship to their "bottom-line". When an organization is planning a change of any kind that will affect the day-to-day activities of people, the relationship between pain (emotional cost) and pleasure (benefit to the individual) must be considered. Human beings are stimulated, or held-back, based on their association of personal benefit or cost to a change in their environment. As a person is faced with change, he/she will evaluate or question whether or not making the change will cost a great deal in emotional stability or provide a great deal of personal benefit. It is this relationship that determines real, lasting change in a person. Before we go any further, let's define what we mean by pain and pleasure in the context of organizational culture. Everything we, as human beings, do in our daily lives is based on two things: our avoidance of pain or our quest for pleasure. What do we mean? Pain is the feeling of dread a person feels when faced with a new situation. Pleasure, on the other hand, is the benefit or sense of accomplishment, satisfaction, contentment, or happiness a person feels as a result of being in the situation they are in. Here are a couple of examples. Try to remember back when you were a child and your parents wanted you to take swimming lessons. Do you remember the first time they brought you to the swimming pool for your lesson? If you are like most people, you felt very comfortable while you were in the shallow part of the pool, where your feet could touch the bottom. But, what happened when the swimming instructor asked you to move into deeper water? Did you willingly and happily move into the deeper end of the pool or were you hesitant?

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The Pain-Pleasure Relationship

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The Big DecisionThe Big Decision

PainPleasure "What will I get out of this?"

"Will changing benefit or cost me?"

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Again, most people when faced with this situation on their first time in the water, not only were hesitant, but they felt a profound sense of dread or pain. In their mind they were evaluating whether or not they wanted to "change" from an environment where they felt comfortable (at the shallow end of the pool) and enter a "new" environment (the deep end of the pool). Some children never get past this obstacle of feeling afraid of the deep end of the pool and most eventually quit swimming lessons. On the reverse side, most children find that the "pleasure" they would get from learning to swim in the deep end of the pool outweighs the "pain" of not "changing" their situation. Maybe the reason they changed their way of looking at the deep end was their need to impress their friends. They may have been done by jumping off of the diving board at the deep end of the pool, or maybe it was as a result of peer pressure where they were concerned that they would feel isolated or left out if they didn't do what the others did. Either way, the change happened. Even though this is a very simple example of the relationship between pain and pleasure, it illustrates the very essence of culture change, changing my perception of whether the change is going to cost me or I will gain from it. You can easily apply this same notion to the workplace. For instance, a supply distributor has elected to change the way they distribute supplies to their customers. The current system (or the way the process is now performed) has been in place for ten years. The current employees that process supply requisitions have "grown up" using this system and see no reason to change it. They have been told of the benefit the organization will realize if the change is made, in terms of cost savings, ability to process more supply requisitions more easily, etc. So, why do these employees resist the change to the new process? The answer is simple. They associate more pain to changing than not changing. They may feel that when management says, "cost savings,” they really mean job abolishment. When they say "ability to process more supply requisitions" they really mean the employees' workload will increase. With this interpretation, or misinterpretation, of the situation, is there any wonder why these depot employees are not interested in changing the way they do business? This is a real situation. It happens every day throughout all organizations. So, let's explore what these individuals actually went through as the decision-making process (transition from old to new) took place. The following will give you an idea of what the employees at the supply depot, as well as, the children faced with swimming lessons, in the examples above were going through. Consider these different reactions to change.



1.3.3. Reactions to Change Shock. Once a change has been announced, usually the first reaction people have is to meet the change with a sense of shock. They ask themselves, "Where did this come from?", "What is going on?", "I didn't know anything about this!", or "This isn't what I agreed to!" How many of us have been confronted with a change and felt this way? Anger. After you've gotten over the shock of the new situation, most people, if they view the change as a negative impact on their personal situation, become very angry. Many times they will begin a process of looking for the person or persons to blame. They may begin to talk about the new situation in very negative terms, such as, "It won't work!" or "I'm not going to support this!" This anger, if not addressed, may lead to some actually trying the sabotage the change process. Denial. This phase is a little harder to define. Many people, depending on their basic values and beliefs, go directly from anger to the fourth phase, Acceptance. However, there are a significant number of people who go through a denial phase, so it is necessary to show you what to look for. A person going through this phase will make up excuses why he should not be held accountable for anything that goes wrong with the organization as a result of the change. For example, he may make the excuse, "The change will never work because I haven't been directly involved with the solution!" or "Don't blame me if it doesn't work!" This attempt to disassociate himself from the new situation often causes the person to alienate himself from the group. Acceptance. Only after a person gets through the first phases can he truly begin to accept the change that is taking place. Once the person has accepted the change as real and that it is going to happen, he begins to rationalize his role in the new situation. It is important to understand that not only can an individual accept the situation and begin to work toward the new vision, but one can also accept the situation as having a negative impact and choose to leave the organization. Either way, the individual has accepted the fact that the new environment exists.

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The Faces of ChangeThe Faces of Change

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Anger"Not my fault, It's not my fault!"

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Acceptance




It is extremely important for you to understand that people will go through each of these phases, in varying degrees, as they transition from the old way of doing business to the new. How we manage this transition period is the key. 1.3.4. Managing the Transition Without a doubt, culture change is the most important aspect of Continuous Process improvement (CPI). Understanding what it takes to facilitate culture change is critical to the success of any CPI effort. Here are a few ideas to ensure the change actually takes place.

• Recognize there is a definable culture in every organization. • Learn the strengths and weaknesses of the culture.

• Learn what motivates the culture.

• Stay consistent in direction.

• And, above all, change must be LEAD, not pushed.

Change cannot be accomplished without the commitment and involvement of the organization's leaders. We have talked about how important leadership is to Lean Six Sigma. As we transition from an old way of doing business to a new way of doing business, leadership becomes the glue that will hold the organization together. Let's look at the role a leader should play during the change process.

• Leaders must have a clear vision of the organization after the change is made. They must have a clear idea of what results the change will generate.

• Leaders must have a solid model of how the change will happen. They should have

a "mental model" of how the change will happen which will guide analysis of the situation and help him/her to formulate the strategy on how change will be implemented.

• Leaders should initiate change at the point where they have the most control, no

matter what level of the organization the leader exerts influence. • Leaders should recognize that change in any one part of the organization affects

the whole enterprise. The most important task of a leader is creating the climate that is conducive to the change being attempted. An emotional atmosphere in which people feel that the leader is empathetic and non-



judgmental toward the employees and their needs is a climate in which people will be more open about their feelings and resistance. If the process represents the “What” and organization does, then culture represents “Why” an organization does what it does. If LSS is going to realize its full potential of dramatically improving the way organizations do business, changing of the culture must be considered an integral part of the process. Systems cannot be developed irrespective of the people that will be managing and operating those systems. One of the biggest reasons why many LSS projects do not achieve the level of success the organization expects is because the organization did not address the issue of organization culture change in an open, honest manner. You can have the most efficient process in the world, on paper or in a model, and still not have a "world-class" operation. We must remember that people have to execute the plans, perform the activities, and provide the interface to the customer. If you have left out of the improvement process a plan on how to change the behavior of the human resource, your project will not succeed. Remember, culture change does not come only as a result of a change in the process. It also comes as a result of consistent change in the way a person feels about that system. Human beings must see that there is less pain (emotional cost) and more pleasure (benefit) associated with the change than not changing. 1.4. Conclusion The success of a LSS effort is based, in part, on the preparation and readiness of an organization to accept fundamental change. Experience has shown that there are several factors that need to be in place before launching such an effort. Leadership. No organization can transform itself as radically as is called for in a LSS effort without the active and motivating influence of top management. It can't be done. Without a clear vision of where the organization needs to go and a leader’s dedication to getting there, the effort will do nothing more than consume thousands of taxpayer dollars. No appreciable increase in performance will be realized and the organization’s effectiveness will suffer greatly.

© 2006 MHTC, Inc.

Process vs. CultureProcess vs. Culture

Log

Pres

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Provide TrainingProvide Training

What We DoWhat We DoWhat We Do Why We Do ItWhy We Do ItWhy We Do It


© 2006 MHTC, Inc.

LeadershipLeadership

TrainingTrainingStrategy/MethodologyStrategy/Methodology

Project TeamsProject Teams

Introduction to CPIIntroduction to CPIConclusionsConclusions



Strategy. Since all LSS efforts begin with a strategy, every organization must have a clear statement of mission and a well-developed strategic plan that lays out goals, objectives, metrics, and evaluation techniques. From these elements, business processes can be identified, defined, and prioritized. The strategies must be translated into a logical plan, a flow of tasks to carry out the plan, as well as metrics to measure performance outcomes and goal attainment. And, there must be an emphasis on thorough problem-solving, hiding no problems and assigning no blame. Project Teams and Supporting Infrastructure. Advanced planning needs to be in place to organize LSS project teams and an established infrastructure to support CPI implementation.. Since the steering committees, support teams, and work groups are made up of individuals from different organizational elements, this is not a trivial exercise. Training. Continuous Process Improvement (CPI) changes the very nature of an organization and that means overcoming organizational inertia and culture shock. Some people will have to learn new skills and new patterns of working, and the nature of the work itself will change.


MHC-2002

Part I

Appendix A Chapter 1 Slides

Introduction to Continuous Process Improvement (CPI)

Lean Six Sigma – Green Belt Certification Training

Mountain Home Training & Consulting, Inc. (MHTC)Mountain Home Training & Consulting, Inc. (MHTC) I-1


MHC-2002

Part I

Chapter 2

Defining the Performance Problem

Mountain Home Training & Consulting, Inc. (MHTC) Page 2-1

Chapter 2 Defining the Performance Problem

"If you don't know where you're going, then any road will get you

there......" Cheshire Cat, Alice in Wonderland 2.1. Defining the Problem For a Lean Six Sigma project to be successful it must have a clear definition of what needs to be improved. Every organization needs to take the time to define the environment around it and how that environment impacts the organization’s ability to produce value for its customers. The DMAIC process improvement model begins with Define. To be successful in process improvement, there are two levels of definition that must be completed, the first is the Enterprise-Level which is accomplished through strategic planning and the second is the process-level from where we will find our LSS projects. It’s from strategic planning that we define general customer requirements, the enterprise-level business process(es) that produce a product or service that meets the customer’s requirements, the gaps in performance, and the overall direction of the enterprise. Once performance gaps have been identified, the organization can confidently define LSS projects that will help the enterprise close those gaps. 2.1.1. Planning Concepts and Principles To plan is to prepare for the future. A ship at sea must plan its turns well in advance if it is to end up at the ship’s Captain’s desired location. The size of the ship and its speed determine both the importance of planning, and the length of the planning horizon. This rule holds for organizations as well. All organizations must plan. An organization's planning horizon is determined by its size and the rate of change of factors that can impact on its future. These factors can include technology, the economy, competition, and social and political forces.


Green Belt CertificationGreen Belt CertificationChapter 2Chapter 2

Lean Six SigmaLean Six SigmaCertification SeriesCertification Series

LSS Green Belt Certification – Defining the Performance Problem Chapter 2


No manager disputes the importance of planning but few managers do it well as evidenced by the well-publicized failures in both highly regarded companies in the private sector as well as government agencies at all levels. In fact, few managers can demonstrate that they dedicate a significant amount of their management time to planning. When asked, some managers are not even able to produce a current set of planning documents relevant for their area of responsibility. Planning need not be so troublesome. It is a skill that all managers can master regardless of their level of responsibility or position in the organization. Several myths about planning discourage managers from becoming skilled planners.

Planning is only performed at the highest levels of the organization.

Planning is the job of planners or the planning department. Planning means trying to predict the future. We never have enough data to plan well. It costs too much and takes too much time to develop good plans. It is impossible to keep plans up to date. Plans seldom influence the day-to-day activities of managers. It is more important to develop the budget than develop a plan. We will address each of these planning myths, but before we do, let’s see what planning really means, and define some basic planning terms. 2.1.1.1. 2.2.1.2Planning/Performance Cycle During the planning period, an organization decides what it wants to accomplish and then establishes performance indicators for measuring the degree of accomplishment. During the performance period, measurements are continually made which track performance. During the evaluation period, performance results are evaluated and recommendations are prepared for use during the next planning period. It's just that simple.

© 2006 MHTC, Inc.

PLAN PERFORM EVALUATE

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The Planning/Performance Cycle



2.1.1.2. Planning and Lean Six Sigma A Lean Six Sigma project begins with planning. Planning provides the context for developing a process vision, which is the fundamental driver of all Continuous Process Improvement (CPI) efforts. The more radical the CPI objective, the more important it is to associate LSS efforts with strategic and business goals and objectives. Planning also determines the measures and critical success factors that will be used to evaluate the success of LSS projects. Planning defines the destination, while the LSS project provides the vehicle. There is much truth in the aphorism that “if you don't know where you are going, any road will get you there”! There are two levels of planning: strategic and business (or annual) planning. Strategic planning looks outward to establish the context in which the organization or business unit will operate with respect to its defined mission, and to set the vision for a desired future state. Business planning looks inward to marshal available resources in pursuit of the vision. Both levels of planning rely on definitive objectives and quantitative measures of performance to guide and monitor progress. At the completion of the Define phase, an LSS project is in place that is consistent with the strategic objectives of the enterprise, supported by sufficient resources, guided by a well-conceived process vision, and bounded by clearly defined objectives. The objectives are related to strategic goals that define the success factors for the project, and keyed to performance measures that monitor the attainment of project objectives. The principal benefit of this initial upfront planning is that LSS teams begin their work with a clear understanding of their mission and an idea of what successful performance will look like. Their efforts are properly focused on how they will achieve the process vision and performance objectives set in place by senior management (or by the whole organization), not wasted on trying to determine what their objectives should be. 2.1.2. Strategic Planning – Defining Mission, Vision, and Performance As we have said, Lean Six Sigma is meaningful only if it improves an organization in ways that are consistent with its strategy. Alignment between strategies and processes is essential to improving business performance, thus strategy and process objectives must reinforce one another. Performance requirements of the strategic plan form the foundation for all performance criteria across the enterprise. When performance requirements are cascaded down through all levels of the organization, then every Lean Six Sigma initiative can be traced back to an objective in the strategic plan which, in turn, can be traced back to a mission requirement, thus giving it validity and credibility. The purpose of the strategic plan is to develop a planned response (over a specified planning horizon) to factors that are not within the organization's span of control but which will impact mission achievement. The strategic plan relates the organization's mission to these external



factors, taking into account the organization’s baseline capabilities, resource availability and markets (or customer base). The strategic plan identifies both the factors that can contribute to mission accomplishment and the factors that can inhibit mission accomplishment. In a sense the strategic plan is not a plan at all; rather it is an assessment of the current or baseline situation of the enterprise with respect to its mission, extended out over a specified period of time. The baseline situation describes the organization as it is presently constituted: core-competencies, resources, products, etc.; and all of the external or environmental factors that impact it: economic, social, geo-political, technological, etc. Each of the out-years is really a scenario of how things might look in that out-year based on trend lines, and (if you are really serious) potential paradigm shifts, or dislocations that could affect the mission objectives or operations. In this sense, a strategic plan is really an assessment and a "what-if" document. What if voice-recognition becomes a useful technology in 2007? What if inflation jumps to 8% next year? What if terrorism is no longer an issue? What if my department gets a new mission in three years? How will these things impact my current situation? In a high-performance organization, strategic planning is tightly integrated with business planning and process improvement. Short and long term performance objectives can be developed through comparative Benchmarking of world-class standards. Customers and suppliers (in a customer-centered organization) are considered integral to the planning process and must be included. The strategic plan is the first step in developing an organization that is mission-driven rather than rule-driven. The strategic plan begins with mission. All elements of the strategic plan, as well as elements in the annual business plan, have a direct connection to mission. The strategic plan documents how the organization will shape itself to serve customer requirements within the constraints of mission. Rule-based organizations do not need a strategic plan because nothing in the plan can overcome what is already documented in the rules and regulations. Only mission-driven, customer-centered organizations can improve processes in any sustainable way. In rule-driven organizations, the regulations, directives, and bureaucracy nullify meaningful attempts to improve processes, because following the rules supersedes fulfilling mission objectives and serving customer needs. To illustrate this difference, consider the scene from the movie From Here to Eternity where a sergeant is shown refusing to issue weapons to soldiers as the Pearl Harbor raid is taking place because he doesn't have an official authorization to do so - Mission-driven or Rule-driven?

© 2006 MHTC, Inc.

Rule-Driven

SOPsRegs

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DefineAre You Ready for Process Improvement?Are You Ready for Process Improvement?



2.1.2.1. Leaders Must Lead There is a myriad of pitfalls that can be encountered when a senior manager attempts to demonstrate or to gain commitment to a given effort among employees, however. In some instances, even the successful demonstration of strong leadership will not curtail the affects of some barriers. Enthusiasm and commitment of all concerned can be affected adversely. Dr. W. Edwards Deming has stated that as much as 85-95 percent of the problems in an organization result from the behavior and decision of managers and the system itself, not the employees that make up the system. This is especially true in the arena of actual and perceived commitment. In this arena, perception plays a key role in determining the attitude of all organizational members. Opposition is everywhere! Maurice Maeterlick stated this principle best, when he observed, “At the Crossroads that Lead to the Future … Every Progressive Spirit is Opposed by Ten Thousand Guardians of the Past.” Opposition in the forms mentioned previously can quickly become a barrier -- sometime an insurmountable barrier -- to Strategic Planning and Business Planning and implementation. It is, therefore, very important to take action to thwart the initial signs of a lack of enthusiasm and opposition to new plans. 2.1.2.2. The Strategic Planning Process The strategic plan defines what an organization is all about now and in the future (mission and vision), whom it will serve (customers and other stakeholders), what needs it will produce (products and services), how well it will perform (goals and objectives), and under what terms it will operate (values and beliefs). Strategic planning establishes the external boundaries of the enterprise with respect to the environment in which it operates. The strategic plan is developed through consideration of the interrelationships of mission, customer base requirements, and environment with respect to potential organizational performance. When there is a gap between present and potential performance, an LSS effort may be required to close the gap. The gaps identified in performance are expressed in terms of breakthrough objectives. As we discussed earlier, these breakthroughs are defined as "levels of performance that stretch an organization beyond its current performance in order for it to reach its vision." The difference in current performance and its "breakthrough" performance is defined as the "performance gap". These gaps in performance, if not closed, will impede an organization's ability to perform at a level necessary to compete". The size of the performance gap and the timeline at which it must be closed are the two major

© 2006 MHTC, Inc.

Strategic Planning

Mission

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Strategic Planning – Defining Mission, Vision, and PerformanceThe Strategic Planning Model



determinants of whether an improvement effort warrants a breakthrough focus or an incremental improvement focus. The strategic plan identifies the scope of the process improvement effort, not the means. The following are the key areas of focus during strategic planning:

• Mission Analysis:

- Identify major customer groupings. - Define customer requirements. - Identify key Products and/or Services to meet requirements. - Identify and Define Core Business Processes. - Identify core competencies. - Map Core Processes against As-Is organization structure.

• Environmental Analysis:

- Conduct strategic Benchmarking. - Conduct SWOT (Strengths, Weaknesses, Opportunities, & Threats) analysis. - Develop organization-level assumptions.

• Performance Analysis:

- Define Organization’s Vision, Values & Beliefs. - Develop organization-level goals & objectives. - Develop Enterprise-Level Performance Scorecard. - Conduct Performance Gap Analysis and prepare breakthrough objectives.

• Document the strategic plan.

When mission, customer base, and the environment are properly considered, the strategic planning process produces a plan that contains, in general, a vision to guide organizational decision making, a thorough situation analysis that can be used to develop annual business plans, and a series of breakthrough objectives that, when realized, will enable the organization to make great strides forward.



2.2. LSS Project Selection Once the strategic plan is completed, senior management must now decide how they are going to close the gaps in performance identified during their analysis. It is from this analysis that senior management identifies the process improvement parameters that will guide all process improvement projects. Senior management will initiate a preliminary LSS Project Charter that will approve the initial stages of discovering the critical elements of the project. 2.3. Defining the LSS Project - Scoping the Effort Once a project is identified and officially chartered, it is critical to fully understand the purpose, scope, performance requirements, specific customer characteristics, the products/services produced to satisfy those customer characteristics, and the process that produces the products and services. This is the focus of the first step in the DMAIC model – Define. To address each of these initial elements of the LSS project, we will use the same approach as we did for strategic planning beginning with Mission Analysis, then Environmental Analysis, and finally Performance Analysis. Each of these key elements of planning will not only help us clearly define our project, but they will also provide us a roadmap on which to pursue our improvement opportunities which will be included in a Final Project Charter that provides the LSS Team its official “marching orders”. Even though during strategic planning the senior leadership analyzed the enterprise’s mission, it did so at such a high level that it becomes difficult to relate the mission statement to the day-to-day activities at the process and activity level of the organization. In addition, the products/ services and customers identified during strategic planning were limited to external customers and broad categories of products and services the organization will produce. To effectively solve a process or activity performance problem, the LSS team must be able to clearly define the problem in a level of detail that will allow for consistent analysis and sustainment of a solution over time. Many times LSS teams go after projects that are either too broad in scope or too vague in definition. So, during this first step of the Define phase, the LSS team must clearly identify the three key elements that make up the scope of the LSS project: 1) A defined customer, 2) a defined product and/or service, and 3) a general idea of what it will take to produce that product and/or service. This looks very simple, but there’s much more to developing a definition of scope than just creating a lot of words. The definition of scope must be based on a logical analysis of each of these elements. Here’s a simple way of making sure you include each of these key aspects:

We provide (Product/Service) to/for (Customer) ,

by/through (Process) .



2.3.1. Conduct Customer Needs Analysis: Identifying Customers and Defining their Requirements So, let’s start with step one – determining who the customer really is. While the interests of all stakeholders in the organization must be accounted for, the starting point is to determine who the customer is. Without a clear understanding of customers and their specific needs, no other stakeholder interests can be served. One way to discover who the customer is is to ask the question, “who are we here to serve?” This sounds like a simple question, but in really it is very difficult to answer. For example, is your customer the higher headquarters to whom your organization reports? Is your customer the organization to whom you provide your services? Is your customer the resource provider who funds your annual budget requirements, but for whom you do not provide a product or service? The more that is known about our customers, individually or as groups, the more effective are our Lean Six Sigma efforts. Once you have identified your customer (s), it now time to define the customer’s critical requirements. There are two aspects of a customer’s requirements which have to defined. The first is to determine how our organization perceives our customer’s requirement and the second is to determine how the customer perceives their requirements. When customer requirements are being defined, we must clearly understand the difference between our estimates of customer needs and the REAL needs of the customer. It is not unusual to discover that many of our pre-conceived perceptions of our customer’s needs are just simply incorrect. One way to bridge this gap in perception is to define our process’ performance objectives in customer terms. To facilitate this understanding of our customer’s true requirements we need to define characteristics in terms critical to quality (CTQ), critical to cost (CTC) and critical to service (CTS) measures. By creating a common way of defining performance, we can insure that our efforts to produce our products/services are in fact producing what the customer truly needs. 2.3.1.1. Gather the Voice of the Customer (VOC) So, how do you accurately define the customer’s real requirements? By clearly defining both the customer’s general needs and specific requirements, we can narrow down the requirements that are the most important to the customer, thus most important to us. Establishing the Voice of the Customer (VOC) can be accomplished in four basic steps. First, identify your customers. Before we can determine the specific requirements that our product or service must satisfy, we have to know for whom we are producing these products or services. As we mentioned earlier, this seems like a simple task, but in reality it is one of the most difficult assignments the LSS team will have to complete.



One way to identify your customer is to use a simple, yet powerful tool called the Customer vs. Product/ Service Matrix. The Customer vs. Product/Service Matrix can be developed identifying which products and services are provided to what customer. The first step is to list the various products and/or services you produce (within the scope of the LSS project) across the top of the matrix. Then you can simply ask, “For whom do we produce this product or service?” to identify the customers you serve. When identifying those customers, however, it is sometimes helpful to separate them into two groupings: Primary Customers and Other Customers. This will be useful in the eventual prioritizing of their needs. For each product or service, identify the specific customer and enter them on a single row in the left-hand column of the matrix and enter an “X” in the cell where the column and row intersect. Continue doing this for all of the products or services you have listed in the top row. Once you have completed this exercise, you should have a matrix similar to the one shown below. It is important to note, however, that you may not have captured all of the customers you serve through this identification process. One of the key benefits of this kind of assessment is identifying those products or services you produce which do not have a customer directly tied to it or after the matrix is complete finding out that you have other perceived “customers” who you have not identified a product or service for them. You may discover that these “customers” are not customers at all, but they are stakeholders with a different interest in your organization than to be the recipient of your products or services. One example of this type of mis-identified customer is an organization’s higher headquarters. They certainly have a stake in the outcome of your organization, but you were not created to produce a product or service for them.



The second step in identifying the VOC is to clearly define and prioritize the true requirements of the customers you have just identified. Customer surveys and interviews are useful in providing the necessary data you will need to accurately determine the customer’s needs and translating them into definable requirements from which your products and services are designed and developed. It will also be from these surveys and interviews that you will assess the performance criteria that is most important to your customer. The Customer vs. Need Matrix is prepared to identify products and service needs that your customers care about. Customers are again identified in the left column and customer needs are identified in the top row. Indication can be made in each block as to the relationship between customer and need:

"V" or Numerically, ‘9’ - indicates very strong relationship "S" or Numerically, ‘3’ - indicates strong relationship "W"or Numerically, ‘1’ - indicates weak relationship A third matrix, the Product vs. Need Matrix, is created to show the relationship between the existing products/services and each of the customer needs identified in the previous step. In this matrix, the team will identify each product/service down the left side and each need across the top. The same “V, S, W” symbols are used to denote the varying levels of relationships. An illustration of the Product vs. Need Matrix is shown below.



"V" or Numerically, ‘9’ - indicates very strong relationship "S" or Numerically, ‘3’ - indicates strong relationship "W"or Numerically, ‘1’ - indicates weak relationship Now that we have a clear definition of who the customer is and the products and services we provide for them, it is critical to define the criteria by which the customer judges our performance in producing those products or services. To more clearly define the specific performance criteria our customers demand, we must assess each of the more general needs expressed in the Customer vs. Needs Matrix to determine each need’s specific performance metric and the priority level the customer assigns to it. The final step in establishing the VOC is to translate the customer’s needs into specifications which define what the requirements of our products and services must satisfy. Before we define the performance criteria, let’s first provide a context for discussion by looking at the concept of performance management. If there is one major business concept that has come to the forefront of organizations in both private industry and government it is Performance Management. For any organization to be successful, it must be able to clearly define what success means. Over the last twenty years organizations have spent millions of dollars on new information technologies hoping to find that one system that will tell them how successful they really are. Most are still looking!



It is very important to understand that success can only be measured once it is clearly defined. If you ask ten different organizations how they measure success, you will get ten different answers. In fact, you will get even more answers to that question the deeper you go into any of the ten. One of the most critical aspects of any process improvement effort is the definition of customer success, since our success is directly tied to our customer’s success. It is one of the most critical analyses performed, but it is the one that is most often left out of process improvement projects. The first step to clearly defining the performance criteria your customer expects is to define what you and your customer mean by success. • Define the Process Vision.

Vision describes a desired end state, an "Image of Future Success". It defines where an individual, team, or organization wants to see himself/herself or itself at the end of some predetermined period of time. This "planning horizon" can be anywhere from a few months to several years out. Each process vision statement is unique and it is this uniqueness that makes the vision so powerful and motivating.

• Define Process-Level Goals and Objectives.

Once the process’ vision, its destination, is clearly understood, the journey toward that destination begins. But how do you know if you are on the right path? We develop goals and supporting objectives to guide the LSS team during its analysis. So, what are goals and objectives? One way to look at goals is that they are high-level "what is going to be accomplished" and objectives are the more specific and detailed "how are we going to measure whether or not it has been accomplished". So, given the emphasis on measuring the LSS team’s progress toward its future, we have defined a goal as:

Goals are intangible. They describe a future state, but do not define specific measures. That is the role of the Objective. Objectives, like goals, must support the achievement of the mission and the furtherance of the vision. Objectives are characterized by four things: (1) relate to a stated goal, (2) provide a means of measuring the progress toward the goal, (3) a specific target to achieve, and (4) a timeframe for which the target will be achieved. An objective is very specific and when all four elements are defined, it a very important measure of performance.

A high level statement of intent, that when accomplished, moves an individual, team, or organization closer to its vision.



• Conduct Performance Gap Analysis and prepare breakthrough objectives. Once the process goals and objectives have been defined they must be analyzed to determine if there is a “gap” between where the organization is now (Baseline Performance) and where the customer expects the organization to be (To-Be Performance). This gap in performance is called the Breakthrough Objective and is one of the critical inputs to a Lean Six Sigma project. With this information, LSS teams can work out the details of how to achieve the breakthrough objectives because they now know what level of performance the organization is trying to achieve and when it must reach it.

A Breakthrough Objective would be stated: “Reduce the error rate of advise provided to call-in customers from 40% to 10% by the end of FY 2006.”

Once we have our list of performance objectives, we need to begin an analysis that will help us determine the most important performance criteria to our customer. We do this by using a Customer Need vs. Performance Criteria Matrix. Each need is analyzed to determine the specific performance metric that best captures the satisfying of that need. These performance metrics should include reflect the three elements of performance, namely time, cost, and quality, sometimes referred to as critical to service (CTS), critical to cost (CTS), and, critical to quality (CTQ). Remember, the performance metrics identified in this matrix are those that are important to the customer, not the producer. Here’s an illustration of the Customer Need vs. Performance Criteria Matrix.



It is also wise to test customer requirements and needs against the organization’s mission statement. Identify inconsistencies. For example: What customer needs cannot be supported within the existing product line or mission? What products/services or missions are no longer

supported by customer needs? 2.3.2. Define the Top-Level As-Is Business Process Now that the LSS team has a clear idea of the Voice of the Customer by identifying who they are and the products and services produced for them, it must define the business process that is currently being performed to produce them. Processes are identified and defined from a multi-functional perspective, independent of individual functions or departments which make up the organization's structure. However, when defining the process, since it will cut across multiple functions or departments, it is very important to include all functional/department managers in the discussion. As we discussed in Chapter 1, an understanding of the concept of business process management is crucial to the successful implementation of continuous process improvement (CPI) in any organization. LSS projects will be most effective only when they are integrated into the overall fabric of the enterprise and directly support its strategic goals and objectives. Focusing LSS projects around processes which integrate into an enterprise-level process architecture will ensure the results of those efforts completely support the strategic direction of the organization. A few rules for identifying and defining the process include:

• Processes are independent of organizational structure.

• The output of a Process is a product and/or service produced for a customer external to the organization.

• The naming convention for core business processes is verb-name such as "Design

Project" or "Maintain Aircraft".

• Well-defined processes will have a logical structure.

The Process Development Matrix - A Tool for Identifying Processes. There are many different methods and tools used to identify the processes in the enterprise. One such tool is the Process Development Matrix. The Process Development Matrix (PDM) is a tool that was introduced into the LSS methodology as a means of structuring our thought process. The PDM was designed in support of the concept of Process Management. As we learned in Chapter 1, the Process Management Model (PMM) describes the existence of a customer with a certain need to be filled. The assumption is that the product your organization provides will fill



that need. Both of these elements of the PMM are identified and defined earlier, but the specific end-to-end process has not yet been identified. The PDM is designed to help you identify the activities that are necessary to be accomplished to produce a major product or service for an external customer. Here's how the Process Development Matrix works. Notice that the PDM is divided into several columns. The first column, labeled "Life Cycle", shows four life cycle stages. Any product or service your organization produces will go through a series of life cycle stages from the initial requirement from the customer through the final disposition of the product or service. The next series of columns allow the analyst to take each major product or service produced by the organization, through the four life cycle stages. By doing this for each major product or service, you have now identified the first level of activities that, together, make up the process that is needed to be performed to produce a product or service. Map Core Processes against As-Is organization structure. Once the core processes have been identified and defined, the organization must now determine the relationship of those processes to the enterprise, within the context of the organization's structure. This mapping of the processes against the existing structure of the organization gives senior leaders an enterprise-wide view of where work is being done and the interfaces that exist within the organization. Without a doubt, this is the most explosive and controversial matrix in the Framework methodology. It is here where existing "stovepipes" in the organization are exposed. These "stovepipes" typically become boundaries where work is performed with regard to the rules set forth in the "stovepipe", not with regard to the needs of the customer.

© 2006 MHTC, Inc.

Key Productor Service

LIFE CYCLE

REQUIREMENTS

ACQUISITION

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Define the High-Level As-Is Business ProcessThe Process Development Matrix

Process:Process: REPAIR PART

© 2006 MHTC, Inc.

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Here's how the Process vs. Organization Matrix works. The matrix is divided into several columns, and of course, several rows. The first column shows the Core, Mission-Driven Processes that were identified and defined on the Process Development Matrix (PDM). Each major, core process will be shown on a separate row of the matrix. Each subsequent column will be labeled with the name of each "first-level" organizational element that represents the top of the enterprise's organization structure. Since, at this time the matrix is trying to capture the "As-Is" environment within the organization, only those organizational elements that are currently identified on the organizational chart are to be included as headings. The object of this exercise is to identify the relationships of each of the enterprise's organizational elements to each of its core processes. These relationships are assigned in accordance with the organizational element's level of involvement in the activities that make up the core process. Each level is assigned a notation. The levels of involvement that are associated with the organizational element are: "D" for Decision-Maker. The "D" will go to the organizational element that has the most involvement in the process and that has the responsibility of making the majority of the "day-to-day" operational decisions that affect the output of the process. Each core process should have only one "D". If more than one decision-maker has been identified, the enterprise must resolve this conflict. "M" for Major Involvement. The "M" will go to an organizational element that has major involvement in the process, but doesn't have the decision-making responsibility for the process. "S" for Some Involvement. The "S" will go to an organizational element that has a limited involvement in the process. They may be in a support role, or provide limited expertise to the process. There are three things that an analysis of the Process vs. Organization Matrix identifies: 1) The organizational elements that must participate in any LSS effort. Any organizational element that is deemed the decision-maker (or process owner) for the process, indicated by a "D" or has major involvement in the process, indicated by an "M", must have full-time representation on the Lean Six Sigma Team. Other elements that provide limited resources and have limited impact on the process, indicated by an "S" on the matrix, can be brought in by the team and interviewed as subject matter experts, but normally are not on the core LSS Team.

© 2006 MHTC, Inc.

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Define the High-Level As-Is Business ProcessThe Process vs. Organization Matrix

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2) The existing culture of the organization. If, for example, the decision-maker for the process is always the top executive in the organization, this may indicate the enterprise's leadership is not quite as willing to delegate authority to lower levels in the organization. If the decision-maker, however, is identified as the next level down in the organization, then authority for managing the activities within the process will be the responsibility of the ones that are executing those activities. 3) Whose Viewpoint the Activity Model will be developed from. A very important outcome of this analysis is the determination of the view of the process that will be improved. If there are many organizational elements that have either a "D" or an "M" for a single process on the matrix, the viewpoint may need to be elevated to the next level up in the enterprise's organization chart. If there is a single organizational element that seems to have the majority of the involvement in the process, and they have been identified as the decision-maker, they will represent the viewpoint for the process for which it is the owner. The Process vs. Organization Matrix is a tool that allows the enterprise to see where it needs to concentrate its LSS effort. It is a way to get an overview of how the organization structure affects the ability of the process to be performed effectively. It shows, very vividly, the distinction between business processes (which cut horizontally across the organization structure) and functions (which are vertical, causing stovepipes in the structure). Much efficiency can be gained, and a great deal of effectiveness can be realized by simply understanding, then eliminating the walls that have been built up between the organizational elements on the organization chart. The Process vs. Organization Matrix is a way to focus in on those problem areas that impede the enterprise's progress toward its vision. 2.3.3. Conduct High-Level Stakeholder Analysis (including SIPOC Analysis) Stakeholder Analysis is a way to identify stakeholder expectations (outcomes), important measures of performance, and the gaps between expectations and actual performance. Performance in terms of satisfying customer requirements is a dominant theme in process improvement. However, there are other stakeholders in the success of the process whose needs must also be satisfied. Stakeholders can be defined as any person/organization or group of persons/organizations who have an interest in the outcome of a process, activity, or enterprise. Stakeholders can be customers, higher authority, resource providers, suppliers, employees, partners, stockholders, and others. Factors that need to be considered in stakeholder assessment:

• There are multiple stakeholders in the performance of a process, and each has an explicit or implied right to expect certain benefits from the process.



• Each stakeholder’s interest in the process may be at cross-purposes with the interests of other stakeholders. Satisfying the needs of one stakeholder may be at the expense of the others unless all are considered together.

• The planning process must define a system of key indicators for each activity that

provide data relating to performance on an on-going basis with respect to stakeholder interests.

• The planning process must establish target values or goals for each indicator that

provide standards of performance for the activity with respect to each stakeholder.

• Methodologies, techniques and tools must be established that can be used to achieve an optimum balance in satisfying multiple stakeholder interest in performance.

The following are the steps in conducting the Stakeholder Analysis: 1. Identify who your stakeholders are in the following categories:

Customer: A person/organization outside the process that receives and uses the outputs (products or services).

Higher Authority: Any organization that is outside the process that imposes constraints or controls on your organization. Constraints include standards, goals, requirements, and specifications.

Resource Provider: Any agency that is outside your organization that provides the facilities, machines, staffing, supplies, and funding needed to support the process.

Supplier: Any external organization that provides materials (raw materials, components, subassemblies) or data that will be transformed into a product or service of higher value.

The Performance Cells can be modified as necessary. For example, if the customer is the resource provider, they can be combined into one category of stakeholder. On the other hand, you might have different groups of customers who will have differing requirements. You will want to separate these customer groups into different categories. 2. Identify the interests and requirements of your stakeholders in the performance areas listed below. This information can be gathered by interviewing the stakeholders directly or by sending them a questionnaire.

Standards: A performance measure that assesses how well a product or service meets established standards imposed by higher authority. These standards might be prescribed by law, regulation, directives, etc. It can be a measure of quality, and effectiveness, and efficiency.



Quality: A performance measure that assesses how well a product or service matches customer requirements or desires. It is a measure of effectiveness.

Costs: A performance measure that addresses how efficiently an process consumes its funding in delivering products and services. It is a measure of efficiency.

Time: A performance measurement that assesses how efficiently a process uses time in delivering products and services. There are four types of time values: operations time, which measures the time spent adding value to the work in progress; delay time, which measures the amount of time work is stacked in queues or inventories; non-value added time associated with management, oversight, inspection, compliance, etc.; and quality rework time. Time is a measure of efficiency. Typical Customer Interests:

1. High quality (Quality) 2. Prompt service (Time) 3. Low prices (Cost) 4. Alternative sources 5. Custom products (Quality) Typical Higher Authority Interests: 1. Conformance to product standards (Standards) 2. Adherence to rules and regulations (Standards) 3. Off-the-shelf components (Standards) 4. Oversight and review (standards) 5. Avoidance of custom products (Standards) Typical Resource Provider Interests: 1. Low costs (Cost) 2. High return on investment (Cost) 3. No waste/scrap (Cost) 4. High performance (Quality and/or Time) 5. Low overhead (Cost) Typical Supplier Interests: 1. Complete specifications (Standards) 2. Sufficient lead times (Time) 3. Prompt payment (Time) 4. No rejects (Quality)

5. Partnerships 3. Each performance expectation (outcome) must be quantified as much as possible. It is critical not only to identify what the interests of the stakeholders are but what are the important metrics of their expectations. This can be extremely challenging. However, without knowing the degree



to which expectations need to be met, it will be impossible to formulate adequate process metrics and objectives. Once the Stakeholder Analysis is completed, the LSS team can now begin to provide more detail to the scope of the effort. Using all of the data that has been gathered up to this point, the team will conduct a SIPOC Analysis and create a SIPOC map. SIPOC stands for Suppliers, Inputs, Process, Outputs, and Customers and is one of the most fundamental tools used in Lean Six Sigma. The intent of the SIPOC exercise is to clearly define the interrelationships between all of these elements of what is called a “Value Chain”. You will use the SIPOC map to build an organized and controlled view of the work process and set the foundation for applying all of the other tools of the DMAIC model. The following information will be used to populate the SIPOC map:

• The process and activities identified on the Process Development Matrix. • The Stakeholders identified on the Process vs. Organization Matrix and during

Stakeholder Analysis. • The customers, products/services produced, and their expected performance requirements

identified during the Voice of the Customer (VOC) analysis. • Inputs (Ys) that are required by the process to produce the defined outputs. • Key enablers that provide energy or resources consumed by the process.

The resulting map may look similar to the one below.



Even though this example doesn’t include the performance requirements defined by the customer, it certainly gives the team a very good picture of just where the process starts and ends, who is involved, the specific activities performed, and who the customers are. More detail can be added if you wish, but it is important to note that at this point we are not attempting to go into any measure of depth of analysis. We are simply trying to get a cursory understanding of the scope of the project by understanding the process and all of its interfaces. 2.3.4. Conduct High-Level Value Stream Analysis Another very valuable tool in the Define phase is a Value Stream Map. A value stream encompasses all the planning, execution, products, and services that go into a process to create value for a customer. With the mission, vision, and strategic plan in place and communicated to the workforce, the first task is to align the processes to support that direction. The best way is through a value stream mapping process that helps illustrate the opportunities for improvement. Value stream mapping typically includes development of a current state map, which highlights existing opportunities, and a future state map that identifies the greatest potential leverage points for improvement prospects. Value stream analysis will also help guide the sequencing of efforts in addressing process inefficiencies, especially the waste associated with wait times. The value stream analysis should encompass an entire enterprise to make it as valuable as possible. The enterprise could be a major functional area, such as depot maintenance, or it could focus on a major product line. However the enterprise is defined for a particular CPI effort, it is important to engage knowledgeable representatives and stakeholders from every element of the enterprise so that a coordinated solution is achieved. 2.4. Document Project Plan and Final Project Charter By this point we should have a very good idea of the scope of the effort, the basic performance problems the team will be addressing and the level of work that will be involved. The next step is to update the original Project Charter and document a Project Plan that will guide the LSS team through the rest of the DMAIC model. Define Process Improvement Project. A process improvement project is an expensive and risky undertaking. The project will consume not only funding resources, but also huge amounts of intellectual capital of people whom otherwise would be doing something else. For these reasons, process improvement projects must be commissioned and directed by the senior leader based on the criticality of the breakthrough objectives in the strategic plan to the success of the organization. The chief output of this part of the Define phase is a project plan that will include complete process improvement project cost, time and staffing estimates with contingencies. The process improvement project should be formally inaugurated with an assigned executive sponsor and champion with a letter to precede that specifies initial funding and planning objectives. All of



this is captured through the use of an LSS Team Charter. The Charter lays out the expectations, roles and responsibilities of those involved in the process improvement effort, the performance objectives, deliverables, team members, and the estimated cost of the effort. Select/Confirm Process and Project Manager. The first and most important decision that is made is the selection of the project manager. The project manager should be either an LSS Black Belt or a Senior Process Improvement Facilitator experienced in project management, knowledgeable of the process to be improved, and equipped with superlative communications and team skills. Validate Process vs. Organization Matrix. The planning activities described above should have produced a Process vs. Organization Matrix. This matrix must be reviewed and confirmed by the project manager because it will be the basis for staffing the LSS team and coordinating all process improvement actions and communications. The matrix shows the relationship of the process to the functional or departmental elements that support or perform the process. It also indicates the level of responsibility and involvement of each functional/departmental element in the process. The matrix should be reproduced in wall chart form and posted in the project room for easy reference. Identify Functional/Department Management Considerations. One of the first duties of the project manager is to develop an understanding with each of the functional managers involved in the process. They should agree on the current status of the process with respect to strategic and business plans, and accept of the improvement objectives and goals described in the strategic and business plans. It is not enough that these plans have been reviewed and accepted by higher authority; they must also be endorsed by the process owner who will most likely be a manager of one of the functional units. Each function/department manager should understand and concur with the following:

• Process baseline status as indicated by Stakeholder Analysis and SIPOC map or other means

• Validity of the Process vs. Organization Matrix.

• Assignment of improvement objectives with respect to the process

• Degree of participation required of the functional manager and a preliminary list of

candidates for assignment to the improvement team

• The initial project charter that launched the LSS project



• The proposed method of designing the process improvement project—especially how

communications will occur and project status will be reported

• Specific considerations expressed by the functional managers with respect to the process and the improvement project.

Finalize Problem Statement. At this point, the project manager should have the data necessary to accurately define the problem. A detailed problem statement is created that will clearly articulate the scope and depth of the problem defined in terms of process performance. Note that we recommend completion of this task before the actual process improvement team is formed, because the project manager should achieve this understanding with the functional managers to optimally staff the improvement project. Select/Train Cross-Functional Process Improvement Team. At this point it is possible to select staff members to work on the process improvement plan. This must be done with the full cooperation and support of the functional managers, and with reference to the process map. Staff members should be trained in process improvement skills including change management and technology deployment. Until the project plan has been reviewed and approved and resources are made available to continue the project, it is only necessary to have a small team of people who are highly knowledgeable of the process and LSS concepts and tools. These team members should be process and activity managers who understand both the outputs of the process and the primary customer groups who benefit from these outputs. Develop the Project Plan. Finally, the project plan itself is constructed. Everything that has been done to this point in the methodology and all of the data that have been gathered and analyzed are input for the project plan. The project plan, in general, should include the following sections:

• Project purpose and Problem Statement which will include the process vision performance objectives, attributes, and strategies.

• Statement of purpose describing the intended project, brief historical statement,

authority for the project, and a summary of the time frame and estimated costs.

• Benefits to be obtained in the project as they relate to the strategic and business plans, stakeholders, and performance measures.



• Critical success factors for the project.

• Work breakdown structure showing the major tasks to be completed

• Organizational breakdown structure showing all functional participants

• Resource assignment matrix showing how the tasks in the work breakdown structure

will be resourced

• Schedules and milestones in Critical Path format

• Detailed budgets and cost estimates

• Resource allocation plan including labor, contract requirements, facilities, and equipment

• Project management plan showing how the project will be managed, how problems

and issues will be resolved, the degree of project communications and status reporting, and document management.

The project management plan should be the basis for the decision to proceed with the project immediately, delay project initiation, or cancel the project. It should be written in a way that facilitates that decision so that the decision itself will be acceptable to the project team and their functional sponsors. It other words, the project plan should be a true representation of the findings and analysis of the project team members. The project team may feel that a briefing package should be developed to communicate the results of the project team and ask for a specific recommendation. 2.4.2. The LSS Project Charter The project charter, as has been discussed earlier, becomes the “marching orders” for the LSS Project Team. It describes the problem being addressed, provides a background on why the project needs to be done, it defines the benefits to the organization. The basic outline for an LSS Project Team Charter is: 1. Designation of the LSS Team. 2. Problem Statement. 3. Background. 4. Benefits.



5. Authority and Responsibilities, Team Members 6. Goals, Objectives, and Deliverables. 7. Timelines – Major Milestones. 8. Methodology – Approach to Process Improvement. 9. Resources. 10. Project Interfaces. 11. Transition to Implementation of LSS Initiatives. Different managers may want to see different elements of the charter, but for most projects this outline will work well. Even though the charter is important as the authority for the LSS team to proceed with the study, it is also an invaluable analysis that helps the team fully understand the whole effort and the ramifications if the project is not successful and the benefits if it is.


MHC-2002

Part I

Appendix B Chapter 2 Slides

Defining the Performance Problem


Mountain Home Training & Consulting, Inc. (MHTC)Mountain Home Training & Consulting, Inc. (MHTC) II-1


MHC-2002

Part I

Chapter 3

Measuring the Baseline


Chapter 3 Measuring the Baseline

“Unless you include measurement and numbers in your knowledge, you’re bound to the world of gut-feel, guessing, and marginal improvement.”

Lord Kelvin

The most important phase in the DMAIC model is that of Measure. It is more than just defining the “What?” and “How?” we produce our products and services, but it is also the “How do we know we are doing it right”. All three questions are critical to a successful LSS project, but the question, “How do we know we are doing it right?” is sometimes the most difficult to answer but is also the most valuable. As we discussed in the previous chapter, performance management is about knowing how well we are doing with confidence. Critical decisions are being made every day across the Government using faulty data. It is a systemic and almost epidemic problem! So it is no wonder that one of the central themes of Lean Six Sigma is measurement. Measurement provides the rigor and discipline that has been missing in so many process improvement efforts. Many times we overlook the very solution we are searching for because we haven’t had the data that would focus our attention toward that solution. Taking measurements is simply a matter of using information and data to quantify the relationship between inputs, outputs, and error in any given system or process. Several years ago English novelist, journalist, sociologist, and historian H.G. Wells made a comment that I believe summed up the need for structured thinking in everyday life when he said, “statistical thinking will one day be as necessary for efficient citizenship as the ability to read and write.” He said that over 120 years ago. Have you noticed the rise in the use of data as a way to justify everything from political decisions to buying a car? Measuring the correct data to give you the expected answer will enhance your organization’s decision-making tremendously. So, how do we begin?


Green Belt CertificationGreen Belt CertificationChapter 3Chapter 3

Lean Six SigmaCertification Series

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3.1. Defining the Process – Introduction to Process Modeling and Mapping The first step in the Measure phase is to fully understand the process under study. There are two very important tools that the LSS team can use to help them dissect the process into much smaller, more easily analyzed pieces. These two tools are process modeling and process mapping. Each has its own role to play in the defining of the As-Is process. We will look at each separately. 3.1.1. Introduction to Process Modeling What is process modeling and why do you need to do it? First let's define what a model is. A MODEL is a representation of a complex reality. MODELING is the act of developing an accurate description of a process. Given these definitions, PROCESS MODELING is the act of developing an accurate description of the activities performed by a process or system. When we model a process, we can easily see the interrelationships of the specific activities that make up a process at any level of detail we desire. This allows us to critically analyze each activity (task) that makes up the process in our search for improvement opportunities. Because the facts about activities are displayed in both graphical and narrative form, this analysis can be objective, rather than subjective. If there are problems with an activity, these problems will be highly visible. Process models are hierarchical in nature. This means that we can start with a high-level view of our process, then successively break it down (decompose it) into layers of increasing detail. Why do we build both baseline (AS-IS) and target (TO-BE) process models? A baseline (AS-IS) activity model provides an accurate description of the way activities are currently performed. In addition to providing a means for bounding, validating, and analyzing activities, the model helps us identify and define accurate performance measures including critical to quality (CTQ), critical to cost (CTC), and critical to service (CTS) metrics. Without such a baseline, it is impossible to analyze alternative methods of performing the activities. A target (TO-BE) activity model provides a description of how the activities will be performed in the future. The boundaries of the target activity model should correspond to the boundaries of the baseline activity model (or differences should be clearly delineated). Performance measures for the target activity model are estimated to compare to the baseline activity model.



What is IDEF? The industry standard for process modeling is IDEF 0. It has been proven effective and easy to use by individuals throughout the commercial and government sectors. IDEF is an acronym for Integrated Computer-Aided Manufacturing (ICAM) DEFinition Language. It is a structured technique for business process analysis that has a long history of successful application in both the manufacturing and service sectors. The U.S. Federal Government initiated the ICAM Project through which IDEF was created. The mission of the project was to develop methods for improving manufacturing productivity through a systematic application of rules enabled by computer technology. More simply put develop a standard language that would enable the automation of industrial processes without regard to the organization. The basis for IDEF development was Structured Analysis and Design Technique (SADT). IDEF has since evolved into approximately 14 methods. IDEF models capture and graphically illustrate the processes and data requirements and the dynamic interactions between them. IDEF 0 describes the activities, interaction between activities, and information/resources that perform the activities that make up the processes of an organization. IDEF 1X describes the data requirements of the activities shown on the IDEF 0 models and IDEF 3 allows for the development of simulations. The IDEF Modeling Techniques, although rooted in manufacturing, are applicable to any type of enterprise. They are not limited to the manufacturing arena or to systems development projects. The “IDEFs” emphasize an organized, systematic, and disciplined approach to process analysis. As has been mentioned before, there are two forms of process models. The first is the AS-IS model, which shows the current (baseline) structure of a business process. The second is the TO-BE model, which shows the objective (target) structure of a business process. The difference between each form can be thought of as a set of improvements. Therefore the AS-IS model plus improvements equals the TO-BE model. IDEF0 Components Now let's look at the component parts of a process model. Each of the components presented below are applicable to both AS-IS and TO-BE models. The components are:

© 2006 MHTC, Inc.

Measuring the BaselineIntroduction to Process Modeling

The IDEFs

• IDEF 0– Operations, processes, functions, activities

• IDEF 1– Information requirements

• IDEF 1X– Data Requirements

• IDEF 3– Simulation



Project Orientation: Context, Purpose, AND Viewpoint.

• The CONTEXT establishes the subject of the model as part of a larger whole. It creates a boundary with the environment by describing external interfaces.

• The PURPOSE establishes the intent of the model or the goal of communication it

serves. Purpose embodies why the model is created (performance levels, implementation design, customer operations, etc.).

• The VIEWPOINT determines what can be "seen" within the context, and from what

"slant". It states the author's position as an observer of or participant in the process for the benefit of an audience.

Working Diagrams:

• Context Diagram is a single diagram that illustrates the highest level activity and its information or materials.

• Node Trees graphically portrays activities in a hierarchical format. • Decomposition Diagrams represent refinements of an activity by showing its lower level

activities and their information relationships. • FEO (For Exposition Only) Diagrams are used to focus attention on a particular

portion of a node tree, context, or decomposition diagram Arrows: Inputs, Controls, Outputs, AND Mechanisms (ICOMS). • INPUT - Information or material used to

produce the Output of an activity. • CONTROL - Information or material that

constrains an activity; Controls regulate the transformation of Inputs into Outputs.

• OUTPUT - Information or materials

produced by or resulting from the Activity. • MECHANISM - Usually people, machines, or existing systems that perform or provide

energy to the Activity.

© 2006 MHTC, Inc.

Inputs, Controls, Outputs, Mechanisms (ICOMs)

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Difficulties of IDEF0 Process modeling

• Complexity of diagrams. • Distinguishing and separating the "As-Is" from the "To-Be". • Distinguishing and separating different Viewpoints. • Identifying and distinguishing between Controls and Inputs. • Establishing the proper boundaries for the Model.

Process models have many uses. Process models (AS- IS form) help us understand what we are actually doing to carry out our organizational mission and business objectives. Individuals that actually operate in the process, working in facilitated teams develop these models. Understanding our Processes From this understanding, we can develop improvement options or alternatives that will add value to the process and/or lower the cost of the process. With this information, TO-BE models are constructed, which test and/or illustrate the proposed changes. This way it is possible to simulate the proposed set of changes to verify their effectiveness. Data Models Process models are also required to develop data models, which we'll discuss next. Since ICOMs show data flows between activities, they are critical in gaining a full understanding of how to structure data resources and information systems. Aid in Activity-Based Costing Process models identify the activities that, when performed, consume costs. As inputs are transformed into outputs, producing products and services for the organization’s external customers, costs are exposed through the use of mechanisms that enable the process and certain inputs which become part of the product or service, such as consumable supplies. Once the costs of the activities are identified, the organization can monitor these costs on a periodic basis to determine whether or not they are within competitive guidelines.

© 2006 MHTC, Inc.

Process Modeling -- USES

Understand our ProcessesDevelop Improvement Opportunities/AlternativesConstruct TO-BE ModelsAssist in Developing Data ModelsAid in Activity-Based CostingProvide Documentation for BCAsInternal/External Communication

Understand our ProcessesDevelop Improvement Opportunities/AlternativesConstruct TO-BE ModelsAssist in Developing Data ModelsAid in Activity-Based CostingProvide Documentation for BCAsInternal/External Communication




Supporting Documentation Process models provide supporting documentation for briefings, presentations, and development of a Business Case Analysis (BCA). Communication Finally, process models are wonderful vehicles for employee and contractor orientation and training purposes. A model can simplify the explanation of a very complicated process in just a few slides. An IDEF0 Example. To explain Process Modeling, or IDEF0, let's go through a simple illustration of “Painting a Car”. The first level of process modeling we'll discuss is called a Context Diagram. This shows the scope of the activity and the major inputs, controls, outputs and mechanisms for this activity. Here is an example of the Context Diagram for the process of Paint Car. For our example, the Input is a “Requirement for Painted Car” which comes from the external customer. The Controls may include budget constraints, Regulations & SOPs, and Inventory Levels. The Output is what you expect to receive at the completion of the process, in this case a Painted Car. Finally, the Mechanisms that support the process are all of the Personnel, Facilities, and Equipment involved in painting cars. Also note that the context diagram specifies the viewpoint in the lower right corner of the visual. This process is being modeled from the point of view of the Owner, Ed’s Paint Shop. Do you think the activity might be modeled differently if it were being done from the point of view of someone at a lower level in the organization, such as the Chief, Supply Branch? The next step in process modeling is to decompose the context diagram into the specific activities that must be completed to requisition a part. In IDEF0 this is called creating a Node Tree. Building a node tree is like building a Work Breakdown Structure (WBS) that project managers use. In our example, Paint Car has been decomposed into four activities: Determine Requirements, Acquire Supplies, Apply Paint, and Distribute Supply Item. For the purposes of this exercise, we will stop at this first level of decomposition. However, do you think it might be possible to decompose any of these activities further?

© 2006 MHTC, Inc.

PaintCar

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Define the High-Level As-Is Business ProcessProcess Modeling -- Context Diagram



Node trees provide a way to rapidly identify a sequential series of steps, or activities, that are performed in the business process. Each entry in the node tree is given an identifier. The top entry, which represents the process, is called the "A-0" node. This node represents the context diagram for the model. All of the nodes directly below the "A-0" node are numbered sequentially, such as A1, A2, and A3. If further levels are needed, an additional level of numbering is used, such as A11, A12. These numbers would represent the nodes below the A1 entry. Once the node tree has been created, we can build a Decomposition Diagram of our model using ICOMs. First, we array four boxes in a descending, stair step fashion. This arrangement facilitates drawing the lines, which represent the ICOMs, on the diagram. It does NOT necessarily indicate the sequence of events or the time required for each activity, however. Once the boxes are drawn, we create the inputs, outputs, controls and mechanisms for each box, thereby creating a set of ICOMs for each activity. Notice that the output of the Determine Requirement activity (A1) is Service Requirements which becomes the control for the Acquire Supplies activity (A2), Apply Paint (A3), and Close Out Transaction (A4). Next, notice that other controls are shared by more than one activity, such as regulations and policies. The mechanisms, Personnel & Facilities, support all four activities while Equipment only supports Apply Paint (A3). This simple example of IDEF modeling illustrates several of the features of a typical process model. Some key points to remember about IDEF modeling are:

• Analysis of the model must reflect a single viewpoint.

• The ICOM is the working element of the IDEF diagram.

• IDEF diagramming follows a structured approach from the A-0 level through decomposition to the lowest level needed for the analysis.

• The first time through the development of a process model does not need to be perfect. Subsequent iterations of the model will continue to improve the model’s accuracy at all levels.

© 2006 MHTC, Inc.

Node Tree

PaintCar

Determine Customer Requirement (A1)

Acquire Supplies (A2)

(A0)

Distribute Supply Item (A4)

Close out Transaction (A5)

A-0 Paint Car

Viewpoint: Owner, Ed’s Paint Shop

Define the High-Level As-Is Business ProcessProcess Modeling -- Node Tree Diagram

© 2006 MHTC, Inc.

A0 PaintCar Viewpoint: Owner, Ed’s Paint Shop

Define the High-Level As-Is Business ProcessProcess Modeling -- Decomposition Diagram



• Process modeling is a technique that works well in a team environment to facilitate making decisions and reaching consensus on the working relationships of the business process.

Activity modeling using IDEF0 is a proven method for use in any process improvement effort. These techniques are appropriate for both major process redesign projects involving new or redesigned information systems, and more limited LSS improvement projects. Modeling provides a clear, consistent, structured approach to analyzing the workings of business processes (AS-IS) as well as a technique to develop, test and implement improved business processes (TO-BE). As with many other techniques, IDEF Modeling has been refined through years of practice and has been proven to be one of the most economical and effective ways of describing processes within the context of process improvement. 3.1.2. Introduction to Process Mapping In the preceding section we addressed in detail the Process/Activity modeling technique IDEF 0. While much has been written in recent years about Process Mapping and its value to many process and quality improvement initiatives there exists a gray area between Modeling and Mapping. In this respect we will try to more clearly draw the line. Additionally, process mapping draws on the fundamental concepts of Flowcharting to describe the tasks and operations required to perform activities. In this section we will answer some basic questions to familiarize you with the concepts and practice of using process maps and flowcharts to gain detailed insight into a process under study. What is a Process Map? Process Maps provide a graphic representation of the tasks and operations performed by an organization to produce some internal or external output. The use of many standard flowcharting symbols makes the technique useful in describing in detail how specific activities are accomplished. By simultaneously showing the flow of tasks and operations and their movement between the functions (organizational elements) the Cross-Functional relationships are highlighted for analysis.

© 2006 MHTC, Inc.

A Process Map is a drawing that shows how a group of people or an organization (function or

element) gets a particular task done.

Define the High-Level As-Is Business ProcessProcess Mapping – The “How” of Process Analysis



What do we Map? Focus on specific ACTIITIES that show a high potential to contribute to improvement. Many organizations in their process improvement efforts have created detailed flowcharts from an enterprise level down to operations level. These flowcharts are quite often hard to follow and make identifying specific improvement opportunities difficult. Since we have already identified “WHAT” activities the process does with our IDEF 0 model, we can now select those activities of interest with improvement potential to determine “HOW” they are accomplished. The Uses and Benefits of Process Mapping Process Mapping allows the team to narrow the scope of analysis to a specific activity or set of activities. In doing this the team can dig into the details while still maintaining the overall process view provided by the IDEF 0 model. Using swim lanes to highlight the organizational boundaries across which the tasks and operation flow provides insight into just how work is accomplished. By looking into the tasks, handoffs between functions, reviews, quality checks, delays, approvals, decision nodes, etc. opportunities to significantly improve the process can be found. Define Process Mapping Purpose and Scope As with building the process model the selection of which activities to map depends on the purpose of the investigation. The breakthrough objectives outlined in the strategic plan should bring this purpose into focus and keep the effort within clearly defined bounds. Clear Purpose. The purpose should state what the desired outcome will be. Objectives such as reduction of cost, improved quality and/or reduction in cycle time must be balanced. Stating the purpose clearly will help the team determine what data is required and the best methods to gather the data. Limit the Scope. To prevent the data gathering and analysis from drifting into analysis paralysis a clearly defined scope is necessary. At this level of inquiry the focus is on how activities are performed. The sequence of events and the decisions along the route become critical to analysis. When the scope is allowed to expand beyond the stated purpose, time and effort are wasted. Components of a Process Map. A process map is made up of diagrams and symbols (Syntax) and specific labeling conventions (Semantics). Along with the diagrams a glossary of all new terms and their definitions keeps everyone on the same page. To ensure the map communicates

© 2006 MHTC, Inc.

Benefits of Process Mapping

• Narrows the scope• Provides greater detail• Gives a cross-functional perspective• Answers the question “HOW”• Identify opportunities to improve

– Redundancy– Bottlenecks– Non-Value Added Tasks

Define the High-Level As-Is Business ProcessProcess Mapping – The “How” of Process Analysis



well a narrative may be required that describes the process. Diagrams (Syntax/Semantics). A process map begins with diagram labeled with the process/activity name identifying what is being mapped. The map is laid out into swim lanes for each of the functions that participate in the activity under study. The swim Lanes may be arranged horizontally or vertically. Most flowcharting software provides the capability to select the orientation and number of swim lanes required. The function in which the activity originates will normally be placed in to top swim lane in horizontal orientation and left most swim lane in vertical orientation. Flowcharting Symbols (Syntax/Semantics). Flowcharting symbols are used to describe the process/activity beginning with a start terminal in the upper left of the diagram. Additional symbols are added from left to right and top to bottom. The symbols are connected by arrows showing the path of the process/activity. In some instances where concurrent tasks take place parallel paths will be required. The graphic above shows some of the basic symbols. Additional symbols may be used if more detail is required. Each symbol must be uniquely labeled to enable the process map to communicate clearly. Glossary. Define each symbol on the process map. This will ensure that whoever uses the map for analysis will have the same point of reference. Just as with the IDEF 0 model try to avoid jargon and undefined acronyms or abbreviations. Definitions that explain unique requirements of a particular action such as competencies, training or certification will enhance understanding. Also, decision criteria such as thresholds, ranges or limits add to the rigor of the process map. Narrative. One objective of the process map is communication. The diagram with its symbols should speak for itself; however, as complexity increases a narrative that describes the process will help the reader understand better. The narrative should walk the reader through the process. Types of Process Maps. While some writers include IDEF 0 as a type of process map we prefer to distinguish it as a model that describes What is done in the process. With that distinction made we will discuss two basic types of process maps, Relational Process Maps and Cross-Functional Process Maps.

© 2006 MHTC, Inc.

Departments (Organizational Elements/Units)

Symbols:Start, Activity, Decision,

etc.

Activity Flow:Arrows

Define the High-Level As-Is Business ProcessProcess Mapping – The Basics of Process Mapping

© 2006 MHTC, Inc.

Arrow/ConnectorArrow/Connector

Define the High-Level As-Is Business ProcessProcess Mapping – Basic Process Mapping Symbols



Relational Process Maps. You have already been exposed to a basic Relational Process Map with the Process to Organization Matrix (POM). A Relational Process Map graphically shows the functions involved in the process/activity being mapped. The bold lines show the major relationships between the functions involved in the specific process/activity. Smaller arrows can be added to show that other relationships exist between these functions. They are left out here for clarity. Cross Functional Process Maps. The most common and widely used is the Cross-Functional Process Map. These use swim lanes and flowcharting syntax to detail a specific process/activity across functional boundaries. Building Process Maps. First it is important to clearly define the activity or part of the process model to be studied. This includes validating the purpose and scope of the mapping project. Identify Organizational Functions Involved. Use the Process to Organization Matrix to identify the functions that are involved in the process/activity being mapped. Create Functional Diagram. Once the functions are identified lay out the diagram to describe the process. In preliminary interviews or discussions determine which function starts the process. Functional Swim Lane Diagram. This diagram is the foundation of the process map. Ensure the function that starts the process/activity is topmost for horizontal swim lanes or left most for vertical orientation. Flowchart the Process. Starting in the upper left of the diagram insert the first terminal symbol labeled start. Add activity and decision symbols as necessary in the appropriate functional swim lane. Connect the activity and decision symbols with arrows to show the path and sequence of events. If an activity is performed jointly by more than one function the activity box should be expanded to reside in all the functional swim lanes. When added detail is necessary, insert additional flowcharting symbols that may show input/output, delay, storage or transportation. The real challenge is to accurately portray how the process/activity works. To ensure accuracy data gathering needs to involve all the functions. Across Swim Lanes. Not only will some activities transcend functional boundaries as in A below, decisions B may drive activities whose connectivity crosses functional boundaries C to D. In the IDEF 0 modeling process a For Explanation Only (FEO) diagram was used to explain

© 2006 MHTC, Inc.

Define the High-Level As-Is Business ProcessProcess Mapping – Cross-Functional Process Map



a particular aspect of the model. Where an activity in a process map needs extra clarification, a flowchart of that activity may be used to show the internal detail of its tasks and operations. The cross-functional team approach supports identifying these characteristics and communicating them in the Cross-Functional Process Map. Cross-Functional Teams. We recommend that a team of subject mater experts (SMEs) from all functions involved be formed to build the process map. Using group interview techniques such as story boarding identify the steps taken to perform the process/activity. A facilitator may be necessary to keep the session focused. Define Activities and Objects. Define, Define, And Define!!! All symbols of the process map must be defined. The SME members of the cross-functional team are the best source for defining the objects in the map. We recommend definitions be defined as the process is mapped. Prepare Narrative. The narrative is the communication insurance policy for the process map. Team members should describe the process flow from beginning to end in a clear and unambiguous way. 3.1.3. Introduction to Value Stream Mapping Another very valuable tool in process improvement is Value Stream Mapping. Value Stream Mapping (VSM) is a process mapping method used to document the current and future states of the information and material flows in a value stream from customer back to supplier. A value stream is the set of specific actions (value-added and non-value added) required to bring a specific product or service to the customer. Through VSM, a business process is examined from beginning to end. Each step in the process is included in a drawing that acts as a visual representation of the material and information flows. In other words, an end-to-end system map is created; this is called the current state map. A future state map shows how things should work in order to gain the best competitive advantage. The opportunities for improvement at each step that would have a significant impact on the overall

© 2006 MHTC, Inc.

Define the High-Level As-Is Business ProcessProcess Mapping – Building the Process Map

© 2006 MHTC, Inc.

Define the Value Stream MapValue Stream Overview - From Supplier to Customer

TOTAL VALUE STREAM

SUPPLIERS YOUR PLANT OR BUSINESS CUSTOMER TO END USER

View of the entire Supply Chain



production system are highlighted on the future state map and then implemented, creating a leaner production process. The key to VSM is to see the big picture as a sum of the parts. Rather than optimizing one part of one step or “fixing something broken,” you see how that step fits into the overall production process and how changing it will affect the overall process. This provides the opportunity to visualize how different types of changes, or a combination of changes at multiple places in the process, will affect the entire system. The change, or set of changes, that will result in the most efficient production overall can then be chosen. The Three Steps to Value Stream Mapping Step 1. Current State Drawing The current production system is drawn by first conducting a walkthrough of the entire system from beginning to end. During the walkthrough gather information on the shop floor and analyze the current production system. Then draw a basic overview map with process and material flows represented by different symbols on the map. A set of existing symbols can be used or a new set created, but the method of mapping should always be kept consistent within the company to gain better staff understanding and awareness. After the basic production process is understood, more detail is added to the map at each process step creating a comprehensive picture of the current system. Step 2. Future State Drawing Future state ideas will likely arise while gathering information in the first step. You can either keep a running list of these ideas and turn them into a future state map after you have completed the current state map, or draw the future state map alongside the current state map. A key to creating a more Lean future state is identifying areas of overproduction and root causes of waste in the current production system, and finding ways to reduce or eliminate them in the future system. The idea behind creating a Lean value stream is to create only what is needed when it is needed. A few ways to help accomplish this are to use takt time (the rate of customer demand) to synchronize the pace of production with the pace of sales, develop a continuous flow, and level the production mix. Step 3. Work Plan and Implementation In this step, a work plan is prepared based on the future state value stream map that describes specific ways in which the future state map will be achieved. VSM is a tool to identify areas that need improvement in the value stream. As with all process modeling/mapping techniques and tools, by itself, VSM will not produce the desired change. Implementing the Future State Value Stream Map which has eliminated the waste and streamlined the process to get the results they are looking for. Implementation is usually best done in stages since the entire system is affected. One way of doing this is to break the future state map into segments or loops, and implement



changes within one loop at a time. The work plan should also include measurable goals and checkpoints. Once the work plan is implemented a new, more efficient current state is formed. To keep continuous improvement happening in your organization, once a future state becomes a new current state, a new future state map should be drawn, and the cycle continued. An annual value-stream review is a good way to keep things moving. 3.2. Understanding Variance - Variability, Stability, and Capability So far in this course we have discussed various ways of identifying, defining, and capturing information that will help the LSS team understand what is happening within the scope of their project. One of the most important tasks is yet to come – creating an understanding of what makes the process do what it does. We’ve described what it does and how it does it, but now we need to discover “why” it does what it does. With this in mind, the first concept we will address is at the core of LSS process improvement – Variation. As we have discussed earlier in this course, important characteristics are referred to as CTXs, where the C stands for “critical,” the T stands for “to” and the X represents what the characteristic is linked to: quality, cost, and time. A performance scale in some kind of definable unit, such as time, length, size, etc. indicates the measured value of your CTX. It should be the intent of every business to come as close to its performance target as often as possible. For example, if you’re processing travel vouchers, your intent should be to process every voucher in as close to the same amount of time and with zero errors, every time. This is the consistency your customer needs to serve its own customer, and the predictability your organization needs. But what really happens is that most organizations can’t hit the target value perfectly all the time, no matter how good they are or how hard they try. They can get close, but they will always have some variations. In other words, every instance of a product coming off of a production line or every travel voucher coming out of Finance will in some way be different from every other instance. The thickness of a part is never exactly the same. The amount of time it takes to process the voucher varies from instance to instance. The number of errors per batch of vouchers processed can be significantly different. In the world of making products, delivering services, and conducting transactions, there is always a distribution of performance around a target. Normally that distribution takes on the shape you see in the illustration to the right. This “bell-shaped” curve is called the normal distribution. Notice that the shape of the curve is symmetrical about the central line, with just as much area under the curve to the left as on the

© 2006 MHTC, Inc.

Plan and Measure Performance DataUnderstanding Variance

ProcessCenterline

(Target)

LSL USL

Normal Distribution



right of that line. We all know that nothing is really exactly the same day in and day out. Some days it takes you longer to get out of bed than others. Some pharmacy customers get their prescriptions within 15 minutes while others take two or three times as long. Everything varies. What is important to the LSS team is to discover the way in which something varies. The patterns in the variation can expose the cause of problems and point the way towards solutions. The language around variation is what gave rise to the term "six sigma". The Greek work "sigma" is used in statistics to stand for the amount of variation seen in a process, a set of data, or anything you can measure. Variation is what defines the sigma level. Why is variation important? Let’s assume a customer expects a package to be delivered "by noon" (the target). He/she might actually be happy if the package arrives anywhere from 11 am to 1 pm. That range of two hours is considered the accepted upper and lower specification limits or USL and LSL, respectively. If the package arrives after the 1 pm, then the customer will begin to have doubts about the package delivery company’s promise. But, if his/her packages continue to arrive late, then the company may loose a customer. Now, imagine this same scenario playing out all over the country or the world. The amount of defects (the number of packages that didn’t arrive on time) becomes critical to the perception the customer has for his/her supplier. As we just discussed, anything that doesn't meet customer needs is, in effect, a defect. When you compare the process performance against what customer wants, you can see that the process with a lot of variation is going to produce a lot of defects--and disappoint a lot of people, possibly to the point of them finding a new supplier! If your processes have a lot of variation, then your customer will view them as unpredictable. It becomes a crap shoot, sometimes they'll get what they want but a lot of times they won't. The intent of the LSS study is to find ways to eliminate these defects thus reducing the variation. You can tell that the process variation has decreased by the shape of the “bell curve” on the distribution. You will notice in the illustration to the right that the top graph represents the distribution for an organization that begins at a 3 sigma level showing a much wider distribution. Then in the bottom graph you will notice that when they move to a 6 sigma level, the distribution is clustered tightly around the center or target. Such a process rarely misses when it comes to meeting customer needs! Customers will view it as very reliable. In order to have an outcome with very little variation, everything leading up to that point has to

© 2006 MHTC, Inc.

Plan and Measure Performance DataUnderstanding Variance

ProcessCenterline

(Target)

LSL USL

What the Customer will accept

Think about “Patient Wait Time”



work well, too. This includes the entire value stream from customer back through the process to our suppliers. We may need to streamline or redesign that process and its supporting infrastructure to create a process that is more reliable, more predictable, to reach high levels of quality which means eliminating variation. Let’s look at FedEx as an example of how a company based its survival as a business on its ability to reduced variation. It created a new industry because of its ability to reliably meet promised delivery dates. If FedEx’s guarantee of a 10 am delivery time had really meant "any time tomorrow", do you think they would have stayed in business? We keep coming back because we can count on having our packages delivered by the guaranteed time. Compare that to the U.S. Postal Service. Remember the commercials for the USPS’s Express Mail service? They didn’t guarantee a specific delivery time; they said the package would get to you within 2 or 3 days. They built in variance from the beginning, even in their advertising! 3.3. Develop the Measurement Plan Now that we have discussed variation, let’s focus on collecting the kind of data that will accurately show us the process’s variation. This aspect of the Measure phase focuses on identifying and collecting the data necessary to ensure our analysis is based on solid evidence not just opinion. The approach to Measurement Data is broken into three distinct steps:

• Select the measure(s) and clearly define them. • Identify the sources of the data. • Prepare a plan for collection.

Let’s look at each of these steps individually; first, selecting what to measure. What should you measure? Mike George, et. al., in the book “What is Lean Six Sigma?” came up with four typical data types teams find useful:

1. Customer satisfaction (a result measure): Data gathered through surveys or interviews on what customers think about your product or service, and what it's like doing business with your group or organization.

2. Financial outcomes (a result measure): What impact the quality and/or problems have

on revenue, expenses, costs, etc.

3. Speed/lead time (result or process measure): Data on how fast (or slow) your process is. "lead time" is how long it takes for any individual work item to make it all the way from the beginning to the end of the process (when it is delivered to the customer). If measured at the end of the process, speed is a result measure. If measured on individual steps, it becomes a process measure.



4. Quality/defects (result or process measure): How many errors are made, whether the product or service flaws that affect the customer, and so on. Like speed quality can be result measure if the data are collected on the final product or service. But most teams also use it as a process measure, collecting data on what happens within the process.

A tool that is very useful for identifying measures is the CTQ Tree. The CTQ Tree is like a tree diagram where the focus is on drilling down to a specific CTQ characteristic or metric. The illustration below shows a CTQ Tree can be used to get more detailed measures.

Once these metrics have been identified they must be clearly defined in an understandable description of what is to be measured to ensure that anyone who interprets the data comes to the same conclusions. The second step is to identify the data sources. There are two main sources of data available: 1) data that already being collected (may be part of the organization’s balanced scorecard performance management system) and has been in existence for a long enough period of time that it is considered “historical” data; and 2) new data that the team will collect. If historical data is available and is meaningful, then this type of data should be considered first. It is easier to obtain and takes fewer resources to gather and it allows the team to begin using it right away. The third step in data collection is to prepare a plan for collecting the data. This can include either population or sample data. The LSS team will need to develop a data collection strategy that will answer the questions “Who has the data?”, “Where is the data?”, “When is the data

Timely Resolution of Service Disruptions

Time to Restore Service

Disruptions Fixed per Day

Disruption Calls Resolved/Day

Disruption Calls Received/Day

Cycle Time (min) from Call to Service

Resumptions

Emergency Part Delivery Time

Time to Answer Service Call

CTQ Tree

Adapted from the book The Six Sigma WayAdapted from the book The Six Sigma WayPandePande, , NeumanNeuman, and , and CavanaghCavanagh

Timely Resolution of Service Disruptions

Time to Restore Service

Disruptions Fixed per Day

Disruption Calls Resolved/Day

Disruption Calls Received/Day

Cycle Time (min) from Call to Service

Resumptions

Emergency Part Delivery Time

Time to Answer Service Call

CTQ Tree

Adapted from the book The Six Sigma WayAdapted from the book The Six Sigma WayPandePande, , NeumanNeuman, and , and CavanaghCavanagh



reported and to whom?”, and “How is the data currently collected and reported?”. The team must also ensure that the data being collected is repeatable and reproducible over time and it provides for an accurate view of the performance of the process. Now that you have your data collected and clearly defined, the next step in the DMAIC model will enable the LSS team to analyze where opportunities for improvement can be found and develop a plan for implementing those improvements. Just remember, measurement isn’t simply collecting data, it is collecting the right data!


MHC-2002

Part I

Appendix C Chapter 3 Slides

Measuring the Baseline


Mountain Home Training & Consulting, Inc. (MHTC)Mountain Home Training & Consulting, Inc. (MHTC) III-1

Mountain Home Training & Consulting, Inc.www.mhc-net.com • 877-502-HOME • Fax 740-931-2373

leanSixSigma

Certification Program

ACHIEVING BREAKTHROUGH PERFORMANCE

Mountain Home Training & Consulting, Inc.

leanSixSigma certificationadvanced training solutions

Green Belt Certification CourseMHC-2002

2008

Exercise Workbook


2 © 2003 MHTC, Inc.

Class Exercise: RULES

Assignment: List the “Rituals” or “Habits” you consistently follow throughout the day beginning with the time you get up in the morning until you go to bed at night. Examples of someone’s habits may be:

• Get up at exactly 0630 every morning • Brush my teeth • Read morning newspaper


3 © 2003 MHTC, Inc.

Major International Airline: Requisition Part Time Limit: 1 Hour Description of the As-Is Process: When an aircraft comes off the service line for scheduled Preventative Maintenance, an Aircraft Maintenance Technician from the Flight Maintenance Organization performs an initial system diagnostic and walk-around inspection to determine if anything is currently not working. If something is found to be in need of repair and will require a replacement part, the process “Requisition Part” is initiated. Here’s how it works today – The Maintenance Technician determines through his/her inspection that the aircraft requires a new hydraulic hose in the front landing gear. The Technician fills out a reproduced copy of a Form 2005 (in pencil) then forwards the Form 2005 to the Maintenance Office Clerk. The Maintenance Clerk then logs the Form 2005 into his/her Maintenance Parts Requisition “Green” Log Book. The Clerk then types the information from the hand-written 2005 onto a 6-part Form 2005. He/she keeps one copy for the suspense file and sends the rest to the Maintenance Superintendent for approval. The Maintenance Superintendent approves the requisition and sends it back to the Clerk. The Maintenance Clerk then puts the Form 2005 in a envelope for local distribution to Supply. The Typed Form 2005 is received by a Supply Clerk who logs in the requisition into his/her Supply Parts Requisition “Green” Log Book and takes a copy of the Form 2005 for his/her suspense file. The Remaining Form 2005 is then forwarded to the Supply Branch Supervisor’s Secretary who logs it into his/her Requisition “Green” Log Book. The Secretary then brings several Forms 2005 from several different requisition actions to the Supply Branch Chief for approval. The Supply Branch Chief approves the requisition and sends them to back to the Supply Branch Secretary where he/she logs the requisition out and forwards it to the Warehouse. The Form 2005 is received by a Warehouse Clerk who logs the requisition into the Warehouse Requisition “Green” Log Book. The Form 2005 is then forwarded to the Warehouse Supervisor for approval and scheduling. The Form 2005 is then delivered to the Warehouse Technician as part of his/her daily workload and he/she logs the form into his/her Warehouse Floor “Green” Log Book, then checks the inventory printout to see if the part is in inventory. Once he/she locates the part in the inventory, the location (sector, isle, and bin #s) is annotated on the Form 2005 and it is forwarded to the Warehouse Forklift Section Supervisor. The Warehouse Forklift Section Supervisor logs the requisition into his/her section’s “Green” Log Book, then adds the requisition to his/her Forklift Driver’s workload pickup schedule for the day. Once the Forklift Driver finds the Part and removes it from inventory, he/she then logs it out of the section’s “Green” Log Book, and sends it to the Shipping and Receiving Branch. The Form 2005 and the Part is received by the Shipping & Receiving Branch Clerk and logged into the Shipping & Receiving “Green” Log Book. The Clerk then forwards the Form 2005 and part to the Shipping & Receiving Branch Chief. The Branch Chief assigns the Form 2005 and Part to a Shipping Technician for packaging and shipping of the Part. The Shipping Technician consults


4 © 2003 MHTC, Inc.

the Shipping regulations for proper packaging and shipping procedures for this specific Part. Once the Part is packaged it and the Form 2005 is then forwarded to the dock where a courier picks up the Part and delivers it to the Flight Maintenance Organization. The Part and the Form 2005 are received by the Maintenance Clerk and is logged out of the Maintenance Parts Requisition “Green” Log Book and he/she clears the suspense file. The Part is then delivered to the Maintenance Technician for repair of the aircraft. The remaining copy of the Form 2005 is then filed in the Flight Maintenance Organization’s Parts Requisition records for that specific aircraft. Given Data:

As-Is Process Time: Seven (7) Days As-Is Process Cost: $50.00 per requisition (does not include the cost of the part itself) As-Is Process Quality Measure – Percentage of the time the Maintenance Technician receives the correct Part from inventory: 70% Breakthrough Objective #1: Reduce the time it takes to requisition a part from seven (7) days to 1 Hour by the end of Calendar Year 2006. Breakthrough Objective #2: Reduce the cost of requisitioning a part from $50.00 to $12.50 by the end of Calendar Year 2006. Breakthrough Objective #3: Increase the accuracy rate of parts requisitioned from 70% to 95% by the end of Calendar Year 2006. Environment: Competition is becoming more important with the rumor of a new airline coming into the international marketplace with a much faster maintenance turnaround time and less cost, thus creating a more profitable airline. In addition, two (2) unsolicited proposals have been received by senior management from organizations who claim they can provide parts requisition services much cheaper and faster.

Group Assignment:

Define the “Voice of the Customer” for this exercise. Be sure to review the Given Data closely to help you define performance requirements.


5 © 2003 MHTC, Inc.

Class Exercise: Steps it takes to “Build a Building” Assignment: List below the steps you believe it would take to “Build a Building”. Step #1: _______________________________________________________

Step #2: _______________________________________________________

Step #3: _______________________________________________________

Step #4: _______________________________________________________

Step #5: _______________________________________________________

Step #6: _______________________________________________________

Step #7: _______________________________________________________

Step #8: _______________________________________________________

Step #9: _______________________________________________________

Step #10: _______________________________________________________


6 © 2003 MHTC, Inc.

Class Exercise: It’s a Matter of Scope – Is it a Process or Activity?

Assignment: Annotate beside the each of the Processes/Activities below whether it is at the Process level or at the Activity level. [For each Process/Activity there is a brief description of the scope in which the Process/Activity is performed.] Process/Activity Process or Activity Level 1. Manage Budget Scope: Corporate CEO/Organization Director

2. Produce Silverado Pickup Scope: Plant Manager

3. Manage Supply Chain Scope: Supply Chain Manager

4. Build Foundation Scope: General Construction Contractor

5. Recruit Personnel Scope: Human Resource Director

6. Construct Facility Scope: General Construction Contractor

7. Pay Employee Scope: Finance Office


7 © 2003 MHTC, Inc.

Class Exercise: Culture Change Debate Assignment: You are confronted with significant change in the organization. While many people are resistant to change, others welcome the change. Your assignment is to take a look at both sides of this very important issue in process improvement. Group #1: List all of the reasons why change shouldn't happen? Group #2: List all of the reasons why change must happen? Your List:


9 © 2003 MHTC, Inc.

Class Exercise: Creative Thinking – The Pebbles Story Background: The Pebble Story.. Many years ago, when a person who owed money could be thrown into jail, a merchant in London, England, had the misfortune to owe a huge sum to a money lender. The money lender, who was old and ugly, fancied the merchant’s beautiful, teen-aged daughter so he proposed a bargain. He said that he would cancel the merchant’s debt if he could have the merchant’s daughter for himself. Both the merchant and his daughter were horrified at the proposal. So, the cunning money lender proposed that they let providence decide the matter. He told them that he would put a black pebble and a white pebble into an empty money bag, then the girl would pick out one of the pebbles. If she chose the black pebble, she would become his wife and her father’s debt would be cancelled. If she chose the white pebble, she would stay with her father but the debt would be cancelled. But, if she refused to pick out the pebble, her father would be thrown into jail and because she would have no financial support his daughter would then starve to death.. Reluctantly, the merchant agreed to the deal. They were standing on a pebble-strewn path in the merchant’s garden. As they talked, the money lender stooped down to pick up the two pebbles. As he picked up the pebbles, the girl, sharp-eyed with fright, noticed that he picked up two black pebbles and put them into the money bag. He then told the girl to pick out the pebble that was to decide her fate and that of her father. Instructions: Imagine that you are standing on that path in the merchant’s garden. 1. What would you have done if you had been the unfortunate girl? 2. If you had to advise her, what would you advise her to do? 3. How did you reach your solution (briefly explain your thinking)?


10 © 2003 MHTC, Inc.

Class Exercise: Performance Management (Picking the Right Measures)

Exercise: Customer Perspective – Who are the best companies/organizations and for what are they known?

Assignment: Answer the following questions:

1) List organizations (either public sector or commercial sector, or both) that you consider to have poor customer service.

2) What are the characteristics of their service that makes you feel they have poor customer service?

3) List organizations (either public sector or commercial sector, or both) that you consider to have exemplary customer service.

4) What are the characteristics of their service that makes you feel they are good at serving their customer?

5) How can you convert those characteristics to measures of performance?

Organizations with POOR Customer Service Organizations with EXEMPLARY Customer Service Organization Name: __________________________ Characteristics of Service:

Organization Name: __________________________ Characteristics of Service:





Performance Measures: Measure #1: ___________________________________________________________________ Measure #2: ___________________________________________________________________


11 © 2003 MHTC, Inc.

Exercise: Process Perspective. Do we have the right internal business process producing the right product?

Discussion: The scenario is that you have just walked into a McDonald’s restaurant. Each group will define a set of activities (tasks) that must be performed to provide the product that McDonald’s was created to provide. So, answer the following questions:

1) What is the product or service McDonald’s produces? 2) What are the activities (tasks) that must be performed for McDonald’s to

produce that product or service? 3) As a customer, what characteristics describe what you want the product to

look like when it is delivered to you? 4) How would you turn those characteristics into measures of performance for

McDonald’s?

Process/Activities Product/Service: __________________________

Activity #1: ____________________________________

Activity #2: ____________________________________

Activity #3: ____________________________________

Activity #4: ____________________________________

Activity #5: ____________________________________

Activity #6: ____________________________________

Characteristics of Product/Service:

Performance Measures: Measure #1: ___________________________________________________________________ Measure #2: ___________________________________________________________________


12 © 2003 MHTC, Inc.

Exercise: Financial Perspective. Are we using our financial resources wisely? Are we improving the bottom line of our organization?

Discussion: The scenario is that you are the Comptroller of a government organization. You have to submit your budget request for the upcoming Fiscal Year, as well as the upcoming Strategic Planning session which will look out five years into the future. Answer the following questions:

1) How do you know how much to request in your budget? 2) Is your request quantifiably linked to satisfying your customer’s needs? 3) How do we accurately project our margins? 4) What measures of performance can you define that will help you understand

what should be in your budget request? 5) What measures of performance can you define that will ensure you are fiscally

responsible with the company’s money? Write your answers here:


13 © 2003 MHTC, Inc.

Exercise: Learning & Growth Perspective. Are we, as an organization, creating the competencies that are necessary for our employees to provide the product or service the way the customer needs them? Are we preparing our workforce for changes in the environment that may affect our customer’s needs?

Discussion: The scenario is you are the senior leader of a company that produces computer software for the medical community. You want to make sure your organization continues to be recognized as an innovative, leading edge provider of relevant computer software in support of state of the art advances in medical procedures. Answer the following questions:

1) What would you do to ensure your organization produces software systems that are useful and relevant?

2) What measures of performance would you define that provides you with the information you need to ensure your organization produces software systems that are useful and relevant?

3) What knowledge do you need to ensure you can continue to provide leading edge software to your customer? Where does that knowledge reside?

4) What are ways you can ensure the knowledge you need is available? Write your answers here.


14 © 2003 MHTC, Inc.

Class Exercise: Voice of the Customer Requisition Part

Major International Airline: Requisition Part Time Limit: 1 Hour Group Assignment:

Define the “Voice of the Customer” for the Requisition Part exercise. Be sure to review the Given Data from Chapter 1 closely to help you define performance requirements.

Customer vs. Product Matrix

Prod

ucts

Customers

Customer vs. Need Matrix

Nee

ds

Customers

Product vs. Customer Needs Matrix

Nee

ds

Products

Customer Needs vs. Performance Criteria Matrix

Perf

orm

ance

Crit

eria

(PC

)

Cus

tom

er Im

port

ance

Customer Needs

Priority 0 0 0 0 0 0 0 0 0 0 0 0 0 0


19 © 2003 MHTC, Inc.

Class Exercise: SIPOC Diagram

ASSIGNMENT: Construct a SIPOC Diagram for the Requisition Part exercise: Use the following Matrices/Diagrams for your answer. Process Development Matrix –


LIFE CYCLE

REQUIREMENTS

ACQUISITION

SUSTAINMENT

DISPOSITION




LIFE CYCLE

REQUIREMENTS

ACQUISITION

SUSTAINMENT

DISPOSITION



SIPOC ANALYSIS

Suppliers Inputs Process Outputs Customer

Process:

Enablers:

Page 1


22 © 2003 MHTC, Inc.

Class Exercise: Requisition Part (Document the Process Model) Your Assignment: Build the following IDEF 0 diagrams for the process:

• Context Diagram

• Node Tree

• Decomposition Diagram (1 level of decomposition; take one of the 1st level activities down to a second level of decomposition)

When building your diagrams, remember to begin with the Process Development Matrix (discussed in Chapter 2) to help you define the “drill-down” levels of the model as well as help you define the scope, or Context, for the process. You can use the following pages to assist you with your work.


23 © 2003 MHTC, Inc.

Class Exercise: Requisition Part (Document the Process)


LIFE CYCLE

REQUIREMENTS

ACQUISITION

SUSTAINMENT

DISPOSITION




LIFE CYCLE

REQUIREMENTS

ACQUISITION

SUSTAINMENT

DISPOSITION




25 © 2003 MHTC, Inc.

Class Exercise: Requisition Part (Document the Process) DECOMPOSITION DIAGRAM – Level 1: A0

DECOMPOSITION DIAGRAM – Level 2 for A3


26 © 2003 MHTC, Inc.

Class Exercise: Requisition Part (Document the Process Map) Your Assignment: Build a Process Map for the Requisition Part process:

• Define Swim lanes

• Identify activities and decisions When building your diagrams, remember to begin with the Process vs. Organization Decision Matrix (discussed in Chapter 2) to help you define the “drill-down” levels of the model as well as help you define the scope, or Context, for the process. You can use the following matrix and your group’s flip chart to assist you with your work.


29 © 2003 MHTC, Inc.

Class Exercise: Creative Thinking - Mental Ability Test 1. Do they have a 4th of July in England? _________________________________________ 2. How many birthdays does the average man have? _______________________________ 3. Why can’t a man living in Winston-Salem, North Carolina be buried in a spot west of the Mississippi

River? __________________________________ 4. If you had only one match and entered a room in which there was a kerosene lamp, an oil heater, and

a wood burning stove. Which would you light first? ____________________________ 5. Some months have 30 days, some have 31, how many have 28 days? _____________________ 6. If doctor gave you three pills and told you to take one every half-hour, how long would they last?

________________________________ 7. A man builds a house with four sides to it, and it is rectangular. Each side has a southern exposure. A

big bear wanders by. What color is the bear? ____________________________________________ 8. How far can a dog run into the woods? _______________________________________ 9. What four words appear on every denomination of United States coins? _______________________ 10. How many outs are there in a baseball inning? ___________________________________________ 11. I have in my hand only two United States coins which total 55 cents in value. One of the coins is not a

nickel. Please bear that in mind. What are the two coins? _________________________________ 12. A farmer had 17 sheep. All but nine died. How many did he have left? _______________________ 13. Divide 30 by ½ and add 10. What is the answer? ________________________________________ 14. An archeologist claimed to have found some coins of gold that were dated 46 BC. Do you really think

he did? ________________________________________________ 15. A woman gives a beggar 60 cents. The woman is the beggar’s sister but the beggar is not the

woman’s brother. How come? ___________________________________________

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LSS GB MHC D2002 Part I Course Book With Workbook 28052008 (2008)

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