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Solving Business Problems

A structured approach with

Six Sigma and Lean

Anand SrinivasanVineeti Consultants

www.vineeticonsultants.in

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General Overview• Business Problems – what we faced then and now• Business problem resolution and improvement tools evolution• Overview of structured techniques -TQM, Six Sigma , Lean• Enterprise Strategy to Six Sigma Projects – the cascade• Six Sigma DMAIC methodology• Lean methods • Some of the common tools used in Six Sigma and Lean• Lean Six Sigma benefits so far and potential• Typical Six Sigma Projects in different domains• Six sigma deployment factors• Conclusion

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Business Problems – then and now• The business problems of the yesteryears were about achieving

the quality targets, controlling cost ,robustness of products, developing technology

• The business issues today are lack of trained resources, meeting global customer expectations, rapidly changing market requirements, managing global supply chains, reduced product/ service life cycles

• Large organizations have leveraged quality systems, technology and automation – medium and smaller companies have been selective and big opportunities exist for these companies to scale up, while larger companies are facing renewed cost pressures

The significant problems we have today, cannot be solved at the same level of thinking with which we created them Albert Einstein 

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Evolution of Improvement techniques

• The earliest initiatives for continuous improvement and raising productivity were Statistical Process Control Techniques (SPC) 1920s

• These were followed with more specific quality controls tools till the 1970s (Juran techniques, DOE, Robust Design, mistake proofing)

• Business Process Restructuring (BPR) emerged in 1980s as the management tools for reorganizing from vertical set up to Strategic Business Units

• Total Quality Management (TQM) based on the Deming principles and others was introduced in 1980s and was adopted widely in 1990s with International standards as reference( ISO 9000 stds)

• Six Sigma and Lean techniques were adapted by global organizations in the 1990s and have resulted in tremendous savings and productivity improvements for organizations till today

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Total Quality Management

• Quality cannot be inspected into each product, quality has to be built into each process ( Edward Deming )

• Inspection was replaced by Process Control Systems where the reduction in variation and consistent output was achieved by focusing on the inputs

• Deming’s 14 principles of quality management, combined with works of Joseph Juran, Philip Crosby and others formed the basis of the transformation of the management principles to put the customers interest first and adopt a humanist approach to quality.

Improve Quality

Costs reduce because of less waste, mistakes,

…

Productivity Improves

Capture market with

better quality and lower

price

Stay in Business

and provide more jobs

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Evolution of Six Sigma methods

Six Sigma philosophy states that we need quality in everything – organizational goals, processes, people, culture – not just in inspecting parts and services

• Six Sigma methodology– A business management strategy and methodology– A statistical powerhouse to help you better produce your

products

• Six Sigma seeks to1.  Improve the quality of process outputs by identifying and

removing the causes of defects (errors) 2. Minimize variability in manufacturing and business processes.3. Match the outputs of the process, product or project to the

customer requirements

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Opportunities for structured improvement and growth techniques

Utilize data and facts to challenge myths and look beyond the obvious Improve end to end process understanding, rather than piecemeal

approach Relating the Voice of Customers and Voice of Business to the

deliverables of the organization Utilizing simple tools to document baseline and quantify improvements

with simple metrics Blending Risk management and Change management techniques to

ensure sustainable solutions Help to deliver solutions for the short term while developing the road

map and plan for sustainable long term growth

It is capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts. Sir Arthur Conan Doyle

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What is Six Sigma performance

• With performance at 2 Sigma:– 69.146% of products/services meet customer requirements

with 308,538 defects per million opportunities• With performance at 4 Sigma:

– 99.379% of products/services meet customer requirements … but still 6,210 defects per million opportunities

• With performance at 6 Sigma:– 99.99966% - As close to flaw-free as a business can get, with

just 3.4 failures per million opportunities

6 Sigma is a measure of variability. It is a name given to indicate how much data falls within the customers’ requirements. The higher the process sigma, the more of the process outputs, products and services, meet customers’ requirements – or, the fewer the defects.

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Six Sigma – Statistical definition

• Customer requirement lays down the Lower Spec Limit (LSL) and Upper Spec Limit (USL)

• The process – based on the technology, quality levels, inputs , operator expertise and other factors produces results/ outputs within its lower control limit and upper control limit – resulting in its standard deviation ( lower the better)

• If the process Standard Deviation, sigma, is low enough that 6 x sigma is still within the Customer spec limits, then the process is defined as being at Six Sigma level of performance

6 Sigma

UpperSpec

LowerSpec

UpperControl

LowerControl

3 Standard Deviations

Target

Process Center

Why only 6 Sigma and not even more ?

Statisticians have determined that most common processes in our daily life will need

6 Sigma or lower levels of performance

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Six Sigma Problem solving• Six Sigma has a large and varied set of tool sets for

solving various sorts of statistical or analytical problems • Six Sigma methodology works on the principle of

converting business issues to statistical problems so that statistical solutions can be obtained using the tools and techniques and translated back to Business solutions.

Business Problem

Business Solution

Statistical Problem that can lead to

Statistical Solution

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Strategy Cascade Leading to Six Sigma projects

Six Sigma Projects Individual and Team Goals

Strategic Areas of ImprovementKey Processes and functions Project Portfolios

SBU/ Division Strategy and GoalsStrategic goals Critical Success Factors

Enterprise StrategyVision Mission

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Strategy Cascade Leading to Six Sigma projects

Enterprise & Division Goals

Benchmarking Data

Industry Best Practices

SWOT Analysis

Internal Performance

Data

Six Sigma Projects