Category Archives: Lean Six Sigma

Six Sigma posts

Lean Six Sigma

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We don’t have control, we have choices. The best we can do is improve our method of making choices and hope for good results.

This is the rub. We generally set ourselves up for disappointment and failure because we make emotional choices and don’t get the results we want. We assume that our environment is predictable and that the universe behaves according to a fixed process that coincides nicely with our expectations. The plain truth is that you don’t know what you don’t know. And sometimes, you are not even aware that you don’t know.
This may seem like a bunch of idle chatter, but the concept impacts businesses everyday. This is why Six Sigma and Lean are so important in our global economy. Reducing variability and making processes more predictable improves the quality of our decision making. Less emotion and more critical analysis.
I did an experiment while participating in a March Madness Basketball Pool this past year. I entered three different brackets. One bracket was based upon selecting my favorite teams, one was based upon my “gut feelings” about who would win, and the last I did using statistical data from experts in the college basketball world.
These are the typical decision making strategies seen everyday in business. The emotional decision, the gut feeling, and the critically analyzed decision. In the case of my brackets, the one based on my emotions (favorite teams) fared the worst. The Bracket based upon my gut feelings did marginally better. The bracket based upon statistical research did really well.
This is the point behind Six Sigma and Lean. Moving toward data based decisions.  It doesn’t  mean that using gut feelings is always bad. There is a time and place for everything. When properly implemented, Six Sigma and Lean will reduce variation in your processes and make them more predictable. This in turn increases the quality of our choices.

Change Leadership

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All management strategies and paradigms, from old school to Lean, have one element that is the same. That element is people. People are not pawns on a game board, they are not machines and they don’t always follow management’s vision.

In fact, the people side of management is never clear cut, and is nearly always messy. Everyone has their motives for doing the the things they do. Not everyone has the same goals in mind.
Failure to address the human element will undermine any effort that management may take to change the culture in a business. The reason is that culture is all about the human element. You can’t dictate attitudes and motives, nor can you just ask for change.
Here is the secret. All change, all improvement, Lean or otherwise, must be lead. It is experienced together with others. Let me give you an example. Years ago, when hurricane Hugo came through South Carolina, I was managerially responsible for an industrial waste treatment facility. All retention ponds were filling and the plant could not keep up.  The state had given me permission to by-pass the rain water directly to the river in order to keep other contaminated water contained.  This required the re-routing of a 12 inch fiber cast pipe while the hurricane was in full swing. I had a staff of 5 technicians on duty that night. All had families in the storm’s path and all were worried.
This was a time for action, so I  said what needed to be done, grabbed my tool bag, and headed out the door into the weather. I didn’t ask anyone else to go, but everyone followed me into the storm. We fought the weather for more than two hours and got the job done.
After that night, I had a minimum of 15 to 20 workers from around the company volunteering to work with me on a daily basis. We had a reputation for action and a “can do” attitude. In this case strong leadership resulted in strong follow ship. The culture began to change because the employees saw the management team change.
My point is this. If you want to change the culture in your work space, let the change begin with you. If you want to implement a Lean movement, let the change begin with you. Exercise strong leadership and you will get strong follow ship.
Strong follow ship leads to a shared vision. A shared vision leads to less resistance to change.

Project Time Estimates

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Why is it that projects more often than not come in behind schedule and over budget? This question drives business executives crazy. Why shouldn’t there be an even split between on time project delivery and late project delivery? These are valid questions.

The answer lies in statistics and human nature. Let’s deal with statistics first. When events are independent, like in rolling a pair of dice, all possible results are independent of each other.  For example if I roll a set of two dice 20 times, I will get 20 results that range from two to twelve.  If I plot these results in a frequency plot, I will get a normal distribution (a bell curve for you non-statistical types). If I roll the dice another 100 times, I will get the same distribution. Why? Because the probability of getting a pair of 2’s on roll one of the dice is exactly the same as the probability of getting a pair of 2’s on rolls two, three, four, etc.  I could bore you with a discussion of the central limit theorem at this point, but let’s not.

Instead, let’s change the rules of dice rolling and magnetize the die so that if die one comes up 2, die number two will come up 2 also. Now the result of each roll of the dice is no longer independent. Instead the resulting sum is dependent upon whether one of the die comes up two or not. The resulting distribution of 100 rolls will be skewed instead of normal. What does this have to do with projects meeting time and budget goals?  Let me explain.

If you look at a project map, a Gantt chart for example, you will see that the tasks in the project are not independent.  They depend upon each other. For example, let’s say that task three cannot start until task one and task two are finished. This means that task three’s start time is not independent. It is dependent upon the finish time of tasks one and two. So, a delay in either task one or two will result in a late start of task three. Since there is dependency between the successful on time delivery of these tasks, the central limit theorem does not apply. Additionally, the dependency tends to push the time line to the right (late delivery).  If we were to run through tasks one, two and three 100 times, the distribution would be skewed to the right (late delivery).

The reason dependency, in this case, skews the time line to the right is related to human nature. Estimators tend to over promise to satisfy the requirement of a bid process (work is rarely awarded to the bidder with the longest delivery time).  Workers tend to wait until the exact start date to begin work rather than start early. Surprises in the task schedule nearly always delay the completion of a task or schedule (how many times have you observed an unforeseen problem shorten the delivery time in a project?).

So what is an executive supposed to do? Most look at a schedule and apply a 70% efficiency factor to it. In other words, assume the time line will be 30 % longer and more expensive than planned. Of course the more you know about a project, its customers, and the quality of your delivery processes, the better you can estimate.

Lean Readiness Assessment

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One of the problems with Lean applications, Six Sigma, Kaizen, 5-S, etc., is that they get applied without an adequate understanding of the target business. The result is a failure of the tool to “take”, and any improvements gained are short lived. Within a few days, things start sliding back to what the “normal” used to be.

The missing step is a readiness assessment. A thorough understanding of the business and its culture must be coupled with a thorough understanding of the Lean tool being used, in order to provide the best chance of success. This readiness assessment takes time to develop, requires good listening skills, and business acumen.

I worked with a business recently that wanted me to lead a Kaizen event at one of their facilities. As part of the agreement, I asked for time to do a readiness assessment before plans were finalized for the event. What I found were two fatal problem areas. First, the management culture was top down, command and control. The employees felt very little empowerment and the senior management team agreed with that assessment. Second, the employees at the target facility did not know what Kaizen was and were only vaguely aware that “some kind of event” was going to take place.

I advised that the senior leadership involved at the targeted facility be trained in shifting from a supervisory management approach to a leadership model of management. I also advised that all employees at the facility be trained in what Kaizen is and what it would mean to them.

These adjustments took three months to complete, at which time I did another readiness assessment. This time all that needed changed was the Kaizen strategy. It needed to be tuned to the targeted business and culture. So we were ready to go, right?

Right! But with one significant development. Of the 10 items that senior management had on their list of needed improvements, only 2 remained.  The other 8 corrected themselves naturally through cultural change and the training that had taken place. Little did this business know that they had just gone through a 3 month Kaizen event that changed both processes and culture.

Here is the clincher. This whole three month process only required about 8 hours of my time as a consultant. The business itself did the heavy lifting. It doesn’t always work out this way, but given the opportunity, most businesses will at least try to make necessary adjustments.  If they don’t, nothing you can do as a consultant will make a difference anyway.

Waste Reduction and 5-S

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Waste can take many forms. There is waste of time, material, human resources, etc., all of which result in a waste of money for the business and its customers. Time and material is easy to understand, even if not always easy to see. The waste of human resources is more insidious.

Everything is interconnected and waste is usually found to be both the result of other waste and the cause of other waste. The ability to see both the big picture and the little picture at the same time is important. Fixing waste in one area that creates waste somewhere else is called sub-optimization and is counterproductive. Solid leadership and a shared vision will save the day in any waste reduction initiative.

There is a relationship between the eight wastes we have all heard about and the 5-S tool we have also heard about. In this brief post, I will try to explain how 5-S can address all seven wastes. Let’s start with a description of the seven wastes.

Seven Wastes:

  1. Transport: Un-necessary movement of material for production.
  2. Inventory: Raw material, work in progress, and finished product not being processed.
  3. Motion: Un-necessary motion of people or equipment.
  4. Waiting: Raw material, work in progress, and finished product not being processed waiting for the next process step.
  5. Over Production: Production ahead of demand.
  6. Over Processing: Poor process, tool or product design that creates activity that is not productive.
  7. Defects: Inspecting for or correcting defects anywhere in the process.
  8. Under Utilization of Human Resources: Under-trained or under-utilized employees

 

5-S is not just a tool to makes things look better. This tool will also make things work better and produce less waste. Like all tools it must be calibrated to the situation. If you understand the wastes being produced in your processes or business, 5-S can be made to target these wastes and wipe them out. So what are the 5-S’s?

5-S

  1. Sort: Necessary vs. un-necessary material, data, equipment, etc. Prevention of cleanliness and mess producing problems. Addresses wastes 2, 5, 7
  2. Set In Order: Place for everything and everything in its place. Addresses wastes 1,3, 4
  3. Shine: Clean work space. Addresses wastes 2, 4, 6
  4. Standardize: Rules to standardize the sort, set in order, and shine efforts across the work space. Housekeeping, inspections, and workplace arrangement are shared and used across the work place. Addresses wastes 1,2,3,4,5,6,7,8
  5. Sustain: Culturalize the standards so as to eliminate the root causes of problems in the other 5-S categories. Addresses wastes 1,2,3,4,5,6,7,8

In order to use the 5-S tool correctly, the improvement team will calibrate it to the processes and areas where it is being applied. Applying 5-S to an office setting will have a completely different look and feel than applying the tool to a manufacturing floor. As the team looks for waste they also adjust the 5-S tool to directly address specific aspects of the work space.

As waste is reduced and the work space becomes more standardized, hidden waste producing activities become more visible. This is why the 5-S tool is considered cyclic.  The new wastes are addressed as they are discovered by the initial 5-S iteration. At the same time, the team will document larger issues that will require a more focused Six Sigma team effort later.

The result is reduced cycle time, reduced inventory dollars, increased productivity, and increased utilization of resources.  The business will see increase profit directly to the bottom line as a result of satisfied customers. This is because the customer’s perceived value of the product or service increases and the inherent value born by the producer decreases.  When you plug these value changes into the profit formula below, good things happen.

Profit = Perceived value (customer) – Inherent value (cost to deliver).

See my book, “Lean and Mean Process Improvement”, for more information.

Cycle Time and Utilization

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In order to improve my on-time delivery of service, do I add resources to my process, or do I try to improve my process cycle time?  The first consideration is that increasing resources increases your cost of operation. Improving cycle time does not. Another way to look at this is to compare your process cycle time with percent utilization of resources.

There is a relationship between variability in cycle time and percent utilization of resources. The source of this variation can be found in quality, rework, employee issues, etc. When variation is high, the percent utilization of resources reflects that variability and can impact on-time delivery, cost, and knowing how to allocate capacity (hiring, capital equipment, etc.).

An example of how this relationship works is displayed in the graph below. As the percent utilization of your capacity increases, task cycle time also increases.  The increase in cycle time is relatively flat at first, but eventually, the curve becomes steep.

The two curves in the graph above represent a 3 sigma level process (high variation) and a 5 sigma level process (low variation).  If a customer’s time to delivery requires process cycle time to be less than 4000 seconds, the 3 sigma curve fails to meet that criterion at about 65% of resource utilization. The 5 sigma curve, on the other hand stays capable of meeting the criterion all the way up to 100% of resource utilization.

A business with a high variability in cycle time will have to add capability much sooner (lower utilization). This is not good for bottom line costs. This clearly demonstrates why lowering the standard deviation in cycle time of the process becomes important.

An additional take away from this chart is that as cycle time or utilization increases, so does the probability of failing to meet on-time delivery targets.  Again, the lower standard deviation (higher sigma level) process has the lowest probability of failing to meet on-time delivery requirements at any utilization percentage.

What this means is that is better to focus first on cycle time in order to improve on-time delivery, as opposed to simply adding resources to a bad process. This is where Six Sigma comes in. A six Sigma process improvement team will address the root causes of variation in the process; thereby improving the utilization of existing resources. This is akin to giving your car a tune up to improve its fuel economy.

Lean Marketing

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Lean principles apply to any process based operation. I cannot think of any process that does not have non-value added components in it that create the opportunity for waste production.  In fact, by definition, a non-value added component in a process is waste.

Let’s take marketing for example and do something called lean marketing. Please remember that in a post of this size, I am leaving a lot to the imagination. Some businesses have marketing programs that start with the product/service and move outward to the customer. They call this customer focused because they do eventually think about the customer. This is not all bad because the customer is a part of the equation. The problem with this approach is that it is self-limiting.  In effect, it allows the product/service to define the target customers and, as a result, becomes growth limited by this boundary. This is the waste of missed opportunity

To balance the marketing equation, the business needs to also think in the opposite direction. That is, starting with potential customers and moving to the product/service. In this approach the potential customers defines the product/service and, as a result, is not limited by an artificial customer segment boundary.

In more detailed terms, in the product first scenario, the business defines the product/service, the price, and how it will be delivered.  Once these definitions are made, the business promotes the product or service to a targeted customer segment. As you can see, the product/service is defining the targeted customer. In a lean marketing program this is phase two, not phase one.

In the customer first scenario, the business connects with potential customers across multiple segments and establishes what the customer’s value (are willing to pay for), customer cost (price they are willing to pay), and how they expect the product/service to be delivered. Here the potential customer is defining the product. In lean marketing, we would now go the product/service side of the equation and build out to the customer.

Additionally, every business needs to realize that with the internet and social media, potential customers can easily compare products and services across multiple suppliers. This means that they can easily find the product or service that best fits their wants/needs. By using the product/service to define the customer, the business self-eliminates from non-targeted potential customers.

If instead, the business first allows potential customers to define the product/service (phase one), the product/service can be tailored to fit different customer segments (phase two).  This in turn allows the marketing program to be tailored to target multiple customer segments. This tailoring takes advantage of the internet and social media by addressing the specific needs of different customer segments.

I look at this as an application of Deming’s “Plan-Do-Check-Adjust” cycle. Define the potential customer’s needs, apply what you learned to the product/service, evaluate market effectiveness, and use the evaluation to find improvement ideas. This process is like a wheel that continually turns over and over again throughout a product/service life cycle. The result is better performance and a longer product/service life cycle by way of waste reduction.

As a final note, this same approach can be applied to a development process. The PDCA cycle, focusing on the customer first, will help to prevent misunderstandings (waste) and missed targets (waste) because the customer becomes a key part of the development process. The more times the PDCA wheel is turned in a development project, the more input the customer will have, the less likely the development team will miss the target. The target in this case is the right product/service being delivered to the customer at the targeted project cost and profit margin.

Value Stream Analysis Case Study

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Value stream analysis is an examination of the sequence of activities required to design, produce and deliver a product or service. It involves an analysis of way pieces of the value stream interact with each other.  Some of these pieces are:

– The people who perform the tasks and their knowledge and skills

– Tools and technology used to perform and support the value stream tasks

– Physical facilities and environment in which the value stream resides

– Organization and culture of the enterprises which owns the value stream

– Values and beliefs that dictate the corporate culture and behaviors of the owners of the value stream

– Communications channels and the way in which information is disseminated

A current project that I have been working on involves the development of firmware for a communication interface device.  We were moving too slowly and costs were piling up due to delays. Since there were three companies involved in the project (owner, firmware development, server/deployment development) the assumption was that finding improvements would be difficult. That is where I came in.

There are three ways for the businesses involved to shorten the value stream and get to market quicker.

  • Hire or move additional programmers into the development team.
  • Change the management of the development stream.
  • Improve the processes in the value stream.

In this case, adding resources is the easiest to do, the most costly, and least effective means of getting the project done faster. Changing the management structure of the project will only work if the new management would change the development process. The last option, process improvement, is the least costly, maybe the most difficult to implement, but also the most effective solution to the time line and cost problems.

As it turned out, two of the possible changes were made. There was a change in management of the project and the new leadership set out to improve the development process. The chart below shows two value streams.

The top map describes how the development project worked at the time of the changes.  The bottom map describes the new process.

In the former process, there were two review steps to quality check the work done by Tech 1. The wait time between steps was not much of a problem, but the second review step created a huge hidden factory.  There are 60 iterations of this process flow required to complete the 60 different communications functions. Each of the iterations could take as much as 215 hours of time to complete.  That would be 537 work days needed to get to completion. If additional resources were to be brought in, the time lie would shorten, but the overall cost of the project would not change.

The new management team elected to make the following changes:

  • Reassign some of the tasks from the firmware developer to the device owner’s engineering team. Specifically the analysis steps.  This is really nothing more that researching each of the functions ahead of time instead of just prior to the development activities. It also lowered the cost of the project to the device owner through the use of their inside engineers.
  • Combine Tech 1’s coding with the review step involving Tech 3. This moved Tech 3 from a part time asset to a full time asset on the project and had them working simultaneously instead of sequentially.
  • Testing the new code would be done on a local server instead of the production server.  This eliminated Tech 4 from the process until the developed code was finished and tested locally.

The result was the empowerment of Techs 1 and 3 to write and review code without the involvement of the deployment team. Coding errors and other unforeseen issues were caught earlier. This made these problems quicker, easier and cheaper to fix.

Another result was the device owner getting out front of the development with research on each of the 60 functions weeks before the project reached those milestones. This effectively moved 8 hours of cost and time from each of the 60 iterations.

Overall, the new process uses 105 hours for each of the 60 functions. The new time line became 262 work days. Between the use of internal engineers and the reduction in work hours, the cost savings was $800,442 dollars.

Old                         New

Work Days          537                         262

Cost                       $1,565,892           $765,450

I will not say that everyone is happy. Delays and finger pointing have damaged the relationships between the owners and the developers. This will not be changed easily. On the other hand, getting the device into a commercially viable state will make everyone happy. The sooner the better in this case.

One major take away from this exercise is that even a simple application of value stream mapping can make a difference.  Never assume that there is no opportunity for improvement.

Value Stream Analysis

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I have been working on a value stream analysis case study. I believe that you will find it useful and thought provoking. We used the VSA to define weaknesses in a process’s work flow, made changes, and documented the improvement that resulted. Cycle time was the metric we were pursuing.

Unfortunately, due to a death in the family, I will not get it finished this week. I apologize, but family does come first. We’ll take more next week.

Finding Sources of Variation

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Typically, the most suspect processes or process steps for introducing variation are manual or judgment oriented in nature.  For example, if an individual applies personal judgment within a process you would expect to see bias or higher variation in the process output. Automated processes will typically have more consistent performance and lower variation.

One of the best ways to find these manual or judgment steps in a process is through the use of a process map. As a process is mapped, decision points are represented as diamonds. This becomes the first place to look for variation.

When mapping a process, information from both the process owners and the Six Sigma team’s observations are used. There are situations where the process as described by the process owners is really from the “as we think it is” or “as it should be” world. The Six Sigma team that falls into this trap is doomed. In these cases, the process owners may know the standardized process, but chose to not follow it.

On a project I worked a few years back, there was too much variation in the concentration of petcoke being blended with the coal burned in a business’s boilers.  The result was either too much petcoke, resulting in a violation of environmental parameters, or too little petcoke which increased the cost of operation.

The fuel feed system was comprised of 2 conveyer belts that fed a third conveyer belt. One of the feeder belts fed coal and the other fed petcoke. The third belt, called the silo belt, fed the boilers.  The concentration of petcoke loaded to the boilers was controlled by the belt speed of each of the first two belts.

Additionally, the silo feed belt was designed to start empty and, as a result, was the last belt to be shut off so that it would be empty when stopped. The two feed belts were designed to be started empty or full.

The process of starting up the fuel feed system was to start the silo feed belt first, the coal feed belt second and the petcoke feed belt last. All belts were to be empty when started. The shutdown process required that the petcoke belt be shut down first, after it was empty. The Coal feed belt was to be shut down second, when it was empty.  The silo feed belt was to shut down last when it was empty.

The first step in the team’s analysis of the variation issues was to compare each shift’s start-up and shutdown processes. The Six Sigma Team did not take for granted that all shifts were compliant with the standardized start-up and shutdown processes, since the computer systems allowed them to change the order of startup and shut down.

What we found was that one of the four shifts shut down the coal and petcoke belts full, and then shut down the silo feed belt when empty. When starting the system up again, this shift would start the silo feed belt first and then both the coal and petcoke belts simultaneously. This shift had a low variation in petcoke concentration (within variation). Much lower, in fact, than all the shifts put together (between variation).

Another of the shifts would first shut down the petcoke feed belt full, then the coal belt full, then the silo belt when empty. On start-up they would start the silo feed belt first, then coal feed belt, then the petcoke feed. This group had the highest within variation in petcoke concentration, but still lower than the between variation of all the shifts put together.

The other two shifts followed the standardized process of start-up and shutdown. Their within variation in petcoke concentration was higher than the first shift, but lower than the second shift.

What the team had found, so far, was that two of the four shifts did not follow the standardized process of operation. Even so, the variation within each shift was within tolerance. The team then matched up emissions logs with the petcoke feed logs over a three week period. What they found was that the interaction of the different shifts created significant swings in petcoke concentration.  This “between” variation turned out to be the root cause of the variation problem.

The solution was to get all sifts to follow the same process. A team meeting with representatives of each shift resulted in an agreement to follow the first shift’s start-up and shutdown processes.  This became the standardized process for the plant’s fuel feed.

The Six Sigma team monitored the fuel feed process for four weeks after the agreement to measure the results. They found all shifts in compliance with the standardized process and a very low variation in petcoke concentration.  The low variation allowed the plant Operations group to incrementally increase the petcoke concentration and thereby reduce the plant’s operating cost.

One conclusion that the Six Sigma team made was that compliance with standardized processes is higher when the process owners were part of the dialog that creates the standardization. Processes are processes, but people are people. Processes are developed to serve the process owners (people) not the other way around.

Another conclusion was that communication between groups needed to be improved. The different groups need to understand why standardization is necessary and they need to know how to recover from unforeseen process upsets. In this case, what is the standardized process for start-up and shutdown when system maintenance required a different shutdown condition than normal? This latter situation required an expansion of the process management plan to include all pre start-up and per shutdown scenarios.