Barriers of Adopting Statistics by Firms
Adopting Lean Methodology
46th Annual Meeting of Decision Sciences Institute
Seattle, WA.
Discussion Points
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My Background
Lean Six Sigma Methodology
The Problem
Define
Measure
Analyze
Improve
Control
My Background
• Bachelor’s & Masters in Business Administration from
India (1996)
• Worked in GlaxoWellcome India in its export
department & started own consultancy firm (2000)
• Ph.D. in Supply Chain & Logistics from University of
Maryland, College Park
• Worked in University of Kentucky, Lexington; Indian
Institute of Management Indore; Qatar University,
Doha and Central Washington University, WA.
My Background
• The Lean Six Sigma / Operational Excellence bug at KY thanks to
Toyota, Georgetown.
• Faculty advisor and as an independent consultant for supply chain,
inventory management, and lean and six sigma management
projects: ThyssenKrupp (4), Fastenal (2), Procurement & Contracts
(CWU) (8), Pexco (5), Center for Advanced Manufacturing of Puget
Sound (8), Hopunion (1), Wildcat Shoppe (1), Genie Industries (3), C
H Robinson (1), Liberty Bottleworks (1), Lexmark (8), Humana (4),
United Technologies (4), Valvoline (4), Brown-Forman (4),
O’Charley’s Restaurants (4), Ryder Systems (3), Tempur-Pedic (3),
Alltech (2), Brunswick Boat Group (1), Kyocera (1), and Vascor (3),
LeanCor (1), Kaba Mas (1), Lexington Fayette Urban County
Government (1), Papa Johns (1), Ryder (3), Sylvania (1), ACS (1),
Central Bank (1), Hitachi Automotive Products (1), and Scientech
Technologies Pvt. Ltd. (2) among others.
Lean Six Sigma
Methodology
• The objective of every organization is to
increase revenue / profitability / customer
service levels and reduce costs. Lean Six Sigma
is an effective methodology (way of life) to
reduce costs.
• Benefits of both Lean (eliminate wastes) and
Six Sigma (reduce defects).
Lean / Six Sigma
• Focus on improving processes to achieve
positive business results
– Reduction in costs
– Increase in quality
– Improvements in customer satisfaction
• A process is a collection of interacting
components that transform inputs into
outputs.
Six Sigma
Philosophy
• Cause – Effect relationship
Y = f(X)s
• Variations exist in nature
– Common cause (random) variation
– Special cause (assignable) variation
• Eliminate Special cause variation
• Eliminate defects through use of statistics rather than
through inspection
• Doing business that focuses on continuous improvement
of processes (Repetitive processes)
The Need for Lean
“When capable people with good intentions
meet bad processes, bad processes win 9
times out of 10.” - General Jim Mattis (CWU ‘72)
• “We get brilliant results from average people
managing brilliant systems. Our competitors get
average results from brilliant people working
around broken systems” – Fujio Cho, Chairman
Toyota Motors
The 7+1 Wastes
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T – Transportation
I – Inventory
M – Motion
W – Waiting
O – Over-production
O – Over-processing
D – Defects
T – Talent (under-utilized)
6 Sigma: Doing Things Right
Lean: Doing the Right Things
The Problem
Lean Six Sigma
Fusion
Lean
Six Sigma
Focus
Improve system efficiency
- improving work flow
- stability of processes
Improve process effectiveness
- Reduction of variation
Goal
Eliminate Waste
Reduce Defects
Emphasis
Value to customer
Quality to customer
Tools
VSM, 5S, Kaizen, Flow & Pull, Takt FMEA, Statistics, DPMO, Pareto,
Time, Kanban, 8 wastes, Value Add DOE, CTQ
analysis
Common
Tools
Cause & effect diagrams, visual controls, standardized work, process
mapping
Define
Purpose & Deliverables (Y)
• Articulate the business problem (current state)
• Articulate the business opportunity (future state)
• Determine scope of the problem
– What is in scope
– What is definitely out of scope
• Build the team
• Prepare data collection plan
Define: Concepts &
Techniques
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Voice of Customer (VOC) & CTQ – 6 Sigma
Project Charter - Tie
A3 Thinking - Lean
Team roles & responsibilities - Tie
SIPOC - 6 Sigma
Customer Perception
Measure
Purpose & Deliverables (Y)
• Identify available data and its accuracy
• Identify critical measures of inputs and
outputs
• Execute data collection plan
• Describe the process with data and facts
Measure: Concepts &
Techniques
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Genchi Genbutsu (Observe the practice) - Lean
Process Maps – Tie but….
Calculate Yield Throughput – 6 Sigma
Categorize activities as value added / non-value
added / business value added - Lean
• Value Stream Maps - Lean
• Compute Takt time - Lean but…….
Measure: Concepts &
Techniques
• Compute Descriptive Statistics - 6 Sigma but….
• Appropriate Control Charts (Control limits) 6 Sigma
– Process capability (specification limits) - None
– Run charts - None
• Validity of the measurement system
– Gage R&R - 6 Sigma
Analyze
Purpose & Deliverables (X)
• Find out the root causes
• Establish causal relationship
Y = f(X)s
Analyze: Concepts &
Techniques
• Lean strives towards stability of the processes.
• Do not confuse stability with capability.
• Customers normally feel the instability of the
internal processes
Analyze: Concepts &
Techniques
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5 “Why” Analysis - Lean
Pareto Analysis - Tie
Fishbone Diagram - Tie
Cause & Effect Matrix - Tie
Failure Mode and Effects Analysis (FMEA) Lean
• Hypothesis testing - 6 Sigma
• Regression - 6 Sigma
Improve
Purpose & Deliverables (X)
• Move the “causes” or Xs in the
favorable direction
• Establish guidelines, policies, counter
measures on the Xs
Improve: Concepts &
Techniques
“Stop production so that production never has to stop.”
- Lean Proverb
SPC is based on the fact that defects will happen. Therefore
we have powerful statistical tools to measure the defects.
Lean goal – To detect mistakes and prevent defects. There is a
big difference between mistake and defect. People will make
mistakes, however a mistake becomes a defect when it is
passed on to the next step (internal / external customer) in
the process.
Improve: Concepts &
Techniques
• Jidoka (Autonomation) - Tie
• Poka Yoke - Lean
• Brainstorm - Tie
• Visual management - Lean
• 5S (Sort, Set, Shine, Standardize, Sustain with
Safety) - Lean
• Design of Experiment (DOE) - 6 Sigma
Control
Purpose & Deliverables (Y)
• Make Standards visible and simple
• Train and teach new standards
• Institute & monitor discipline of process
• Measure and verify outcomes
• Plan Do Check Act implementation
• Transfer ownership to process owners
Improve: Concepts &
Techniques
• Control charts with process capability and run
chart - 6 Sigma
• Measure & Monitor the Xs - Tie
• Dashboard of future metrics - Tie
• Documentation - 6 Sigma but……
• Audit - None
Way Forward
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Call it “Operational Excellence”
Have the operators practice the Lean
techniques while the managers need to be
more data driven
Introduce descriptive statistics to the
operators
Firms will be more “Lean” or “Six Sigma”
oriented based on their culture – Hire the
right people.
Thank You