PROCESS MANAGEMENT—LEAN AND SIX SIGMA IN THE SUPPLY CHAIN Chapter 8 Umar Farooq Department of Management Sciences GIK Institute, Pakistan Introduction iPhone-7 APPLE Mi 4 Xiaomi Which product is more reliable? Which product is more Expensive? Lean Thinking • Supply chain management is all about achieving low cost along with high levels of quality and responsiveness throughout the supply chain. • Lean thinking and Six Sigma quality, two important operating philosophies that are central to the success of supply chain management. Lean Philosophy-Origin • Lean Manufacturing is sometimes called the Toyota Production System (TPS) because Toyota Motor Company’s Eiji Toyoda and Taiichui Ohno are given credit for its approach and innovations. Lean Philosophy-History • Mr. Sakichi Toyoda invented the power loom in 1902 and in 1926 founded the Toyoda Automatic Loom Works. • In 1937, he sold his loom patents to finance an automobile manufacturing plant to compete with Ford and General Motors. • Sakichi’s son Kiichiro Toyoda was named managing director of the new facility. • Kiichiro spent a year in US studying Ford’s manufacturing system then returned to Japan, and adopted; • The production of small quantities of automobiles, • Using smaller, more frequently delivered batches of materials. • This later was referred to as the just-in-time system within Toyoda. Lean Philosophy-History • Mr. Eiji Toyoda, nephew of Sakichi, too, study in 1936 the Ford’s automobile manufacturing system and learned; • Quality improvement activities • Employee suggestion system • Introduced the Toyota Creative ideas and Suggestion System (TCISS) to support the improvement Program. • The emphasis on this system led Toyota to build a performance indicator on the number of suggestions made by the total number of employees. • In its first year of application, nearly 800 ideas were made while the company has more than 6000 employees • In 1976, this ratio was 10.3 suggestions per employee and then 18.7 in 1980. Lean Philosophy-History • Taiichi ohno, manager in Toyoda corporation, realized during their trips to the U.S. was the tremendous waste everywhere (referred to as muda in Japan). • These wastes of labor, inventories, space, time and processing. • From this came the idea that parts should be produced only as needed by the next step in an entire production process. • This began to be called the kanban system or JIT system within Toyoda. Lean Philosophy-History • The final two notable people in the development of the Toyota Production System(TPM) were Shingo, a quality consultant hired by Toyota, and W. Edwards Deming. • Shingo developed the concept of poka-yoke in 1961. • Poka-yoke means error- or mistake-proofing. • Design processes such that mistakes or defects are prevented from occurring in the first place. • Deming created and discussed his fourteen-point quality management guidelines, as well as his ideas for continuous improvement. • In 1957, introduced their first U.S. car—the Toyopet Crown. • Toyota implemented what they referred to as total quality control (TQC) with their JIT system. • In the first quarter of 2007, Toyota sold more vehicles worldwide than General Motors, ending GM’s 76-year domination as the world’s largest automaker Lean Philosophy • The term lean production essentially refers to the Toyota Production System. • A way to eliminate waste and improve efficiency in a manufacturing environment. • Lean focuses on the value stream and eliminating MUDA, the Japanese word for waste. • Lean manufacturing is the production of goods using less of everything compared to traditional mass production: o Less waste, o Less human effort, o Less manufacturing space, o Less investment in tools, o Less inventory, and less o Engineering time to develop a new product Lean Philosophy • Waste is anything that does not add value from the customer’s perspective. Queues Storage Inspection What is Waste? Lean Philosophy • Lean was generated from the Just-in-time (JIT) philosophy of continuous and problem solving. • Just-in-time is supplying customers with exactly what they want when they want it. • With JIT, supplies and components are “pulled” through a system to arrive where they are needed when they are needed. Lean in Supply Chain • Supply chain management objectives are; • Achieving low cost along with • High levels of quality and • Higher responsiveness throughout the supply chain ❑Lean thinking and ❑Six Sigma • two important operating philosophies that are central to the success of supply chain management The Elements of Lean Production (Cont.) Waste (Muda) Reduction oFirms reduce costs & add value by eliminating waste from the productive system. oWaste encompasses wait times, inventories, material & people movement, processing steps, variability, any other non-value-adding activity. oTaiichi Ohno described the seven wastes. The Elements of Lean Production (Cont.) • Waste (Muda) Reduction (Cont.) Wastes Description Overproducing Unnecessary production to maintain high utilizations Waiting Excess idle machine & operator & inventory wait time Transportation Excess movement of materials & multiple handling Over-processing Non-value adding manufacturing & other activities Excess Inventory Storage of excess inventory Excess Movement Unnecessary movements of employees Scrap & Rework Scrap materials & rework due to poor quality Lean Philosophy Focus to reduce the 7 Types of Waste (Sources of Non-Value-Added Activity) 2. Over production 4. Transportation 6. Inventory 5. Over processing 7. Motion 1. Defects, Rejects, Rework 3. Waiting 1. Defects • Anything that has to be redone, incomplete or incorrect. • Employees probably know what work often has to be redone, Incorrect or incomplete work delivered to the next process (the customer) ➢ Results in rework ➢ Causes of defects: – – – – Weak process control Incorrectly processed order Inadequate education/training/work instructions Misunderstanding of customer needs 2. Overproduction • When too much or more of something is produced (e.g., information) or when something is produced too early and faster, while the downstream customer (internal or external) waits for something else. ➢ Leads to excessive inventory ➢ Causes of overproduction – – – – – Generating reports that are not needed Emails sent to people who do not need to receive them Misuse of automation Long process setup Unbalanced work load 3. Waiting • Waiting for anything – people, task, paper, signatures, approvals, etc. • This idle time is created when waiting for invoices, copier, parts, materials, machines, information, signatures, help, approvals, special task, etc. • Lead to time waste which is money / cost • Causes of waiting: – – – – – Unbalanced workload Too few office machines No clear office protocol Upstream quality problems Waiting for a signature approval 5. Transportation • Transporting time of documents and materials around the office until the next step. There is an opportunity for the process to break as work gets lost, misunderstood, etc. • Minimizing the number of touches in a process is can make a process lean. ➢ Movement of people that does not add value to the product or service ➢ Causes of transportation waste: – – – – – – Poor office layout Processing extra paperwork Office processes that are not located near each other Poor understanding of the process flow Large batch sizes Large storage areas 6. Inventory/backlog Not just an abundance of supply, but also a backlog of work that leads to even greater waste as workers must spend time and effort managing and working around the backlog Any supply in excess of one-piece flow - Often the result of “Overproduction” - Unbalanced workload - Improper scheduling - Unreliable suppliers Examples: - Finished Good Inventory - Work In Process Inventory - Supplies Inventory - Staged or “kitted” Inventory Solutions: - Make to Customer Order - Kanban Pull System - Eliminate Inventory Storage Areas - Identify bottle-neck 7. Motion • Excess motion on the part of the worker. • For example, a poor office layout might require a worker to spend too much time walking between one point to another point where work equipment is located. • Movement of people that does not add value to the product or service. It is a waste in time and effort. ➢ Causes of motion waste – – – – – Poor people/machine effectiveness Poor office layout Inconsistent or no standardized visual work instructions Poor workplace organization and housekeeping Extra “busy” movements while waiting 8. Excess processing • Extra steps or processing that does not add value, from the customer’s perspective (e.g., obtaining too many signatures or double- or triple-checking of work, extra testing). • Effort that adds no value to the product or service from the customers’ viewpoint. Customer is not paying for the waste…The organization cost will increase. ➢ Causes of extra processing: – Product changes without process changes – True customer requirements undefined – Lack of communication – Redundant approvals – Emails sent to everyone Lean Philosophy • Lean was generated from the Just-in-time (JIT) philosophy of continuous and problem solving. • Just-in-time is supplying customers with exactly what they want when they want it. • With JIT, supplies and components are “pulled” through a system to arrive where they are needed when they are needed. Lean in Supply Chain Management • Supply chain management objectives are; • Higher responsiveness throughout the supply chain • Balance the flow of materials with customer requirements • Achieving low cost along with • High levels of quality • Lean Production emphasizes: • • • • Reduction of waste Continuous improvement Synchronization of material flows within the organization Channel integration- extending partnerships in the supply chain ❑Lean thinking and ❑Six Sigma • two important operating philosophies that are central to the success of supply chain management Lean Production & Supply Chain Management ❑Starbucks decided to use lean to improve their daily operations ❑Reduce waste and free up time for its baristas. ❑Allow baristas to interact with more customers and make more beverages in the same amount of time while needing fewer workers and better bottom line for the star bucks. Evolution Stages towards leanness Stage 1- Firm is internally focused & functions managed separately. Performance is monitored based on achieving departmental goals called the silo effect. Silo effect is reactive & short-term goal oriented. Stage 2- Firms have began integrating efforts & resources among internal functions. Stage 3- Firm links first tier of suppliers/customers with firm’s processes. Stage 4- Firm broadens supply chain influence beyond immediate or first-tier suppliers & customers. Lean Production & Supply Chain Management • Stages of SCM Evolution 1: Internal Focused •Functional silos • Top-down management • Internal measures used to monitor performance • Reactive, short-term planning • No internal integration 2: Functional Integration 3: Internal Integration 4: External Integration •Focus on internal •integration of flow •integration with flow of goods in firm suppliers & customers • Emphasis on cost •lean activities for goods & •integration explored reduction nd & 3rd tier information w/ 2 • Realization of suppliers & efficiencies gained •measurement of supplier customers by internal performance & •alliance development integration customer service The Elements of Lean Production The Elements of Lean Firms with a mature lean program will most likely be practicing a significant number of these elements • Waste Reduction • Lean Supply Chain Relationships • Lean Layouts • Inventory & Setup Time Reduction • Small Batch Scheduling • Continuous Improvement • Workforce Empowerment The Elements of Lean Production Key Lean Manufacturing Techniques • 5S • Six Sigma • Cellular Manufacturing • Muda- waste in all aspects of production • Kanban signal card & part of JIT • Poka-Yoke- error or mistake-proofing • SPC- Statistical Process Control The Elements of Lean Production (Cont.) • Waste (Muda) Reduction- 5S • 5S is the name of a workplace organization method that uses a list of five Japanese words: seiri, seiton, seiso, seiketsu, and shitsuke. The Elements of Lean Production (Cont.) The Five S’s Japanese S-Term English Translation English S-Term Used 1. Seiri Organization Sort 2. Seiton Tidiness Set in order 3. Seiso Purity Sweep 4. Seiketsu Cleanliness Standardize 5. Shitsuke Discipline Sustain The Elements of Lean Production (Cont.) MUDA Reduction 5-S • The original Five-S’s came from Toyota and were Japanese words relating to industrial housekeeping. • The Five-S’s tell everyone that everything has a place. • 5S is the building blocks, for a “Kaizen” approach to incremental improvement. • 5S focuses on the elimination of wastes( Muda) in the work environment. • When things are in order, it is easier for employees to find product. • The idea is that by implementing the Five-S’s, o The workplace will be cleaner, o More organized and safer, o Thereby reducing processing waste and o Improving productivity The Elements of Lean Production (Cont.) The Elements of Lean Production (Cont.) The Elements of Lean Production (Cont.)-5S • Sort - All unneeded tools, parts and supplies are removed from the area • Set in Order - A place for everything and everything is in its place • Shine - The area is cleaned as the work is performed • Standardize - Cleaning and identification methods are consistently applied • Sustain - 5S is a habit and is continually improved • Also - Work areas are safe and free of hazardous or dangerous conditions The Elements of Lean Production (Cont.) The Elements of Lean Production (Cont.)-5S • Step 1: Seiri, or Sort • Seiri is sorting through the contents of the workplace and removing unnecessary items. • Look around the workplace to discover and identify items which are not needed and not necessary to complete work. • Classify the items by frequency of use • How to sort out items? An effective method for recording progress is to tag the items not needed. This visual control of the not-needed items is often called red tagging. • What to do with red tagged items? Develop criteria for disposal for not-needed items. • Find a holding area to put red tagged items. • While red tagging, ask these questions: ❖Is this item needed? ❖If it is needed, is it needed in this quantity? ❖If it is needed, how frequently is it used? ❖If it is needed, should it be located here? The Elements of Lean Production (Cont.) See the difference? • Sort - All unneeded tools, parts and supplies are removed from the are The Elements of Lean Production (Cont.)-5S The Elements of Lean Production (Cont.) – 5S • Seiton, or Set in order • Seiton is putting the necessary items in their place and providing easy access. This is an action to put every necessary item in good order, and focuses on efficient and effective storage methods. • Actions: • Make sure that all unnecessary items are eliminated from the workplace. • Taking into account of the work flow, decide which things to put where. • Outline locations of equipment, supplies, common areas and safety zones with lines: • Workers should answer these questions: ❖What do I need to do my job? ❖Where should I locate this item? ❖How many of this item do I really need? Lean Tools & Techniques 5s House Keeping • Seiton, or Set in order The Elements of Lean Production (Cont.) – 5S • Seiton, or Set in order o Divider lines define aisle ways and work stations. o Marker lines show position of equipment. o Range lines indicate range of operation of doors or equipment. o Limit lines show height limits related to items stored in the workplace. o Tiger marks draw attention to safety hazards. o Arrows show direction. The Elements of Lean Production (Cont.) – 5S The Elements of Lean Production (Cont.) – 5S The Elements of Lean Production (Cont.) – 5S • • • • • • Seiso, or Sweep (Clean) Adopt cleaning as a daily activity and as a part of inspection. Clean the workplace before starting of the job and before closing the job. Find ways to prevent dirt and contamination. Identify and tag every item that causes contamination. 5S “owner” check-sheets should be maintained on daily basis. An example of a check sheet The Elements of Lean Production (Cont.) – 5S • Seiketsu, or Standardize • The first three 5S principles have been implemented, it is time to concentrate on best practices for the work cell. • Seiketsu helps to turn it into natural, standard behavior. • Actions: ❖Create procedures and forms for regularly evaluating the status of the first three S’s. ❖Standardize red tag procedures and holding area rules. ❖Standardize procedures for creating position lines, and labeling of all items. ❖Standardize cleaning schedules using the “5S Owner Check Sheets”. ❖Standardize for documenting and communicating 5S The Elements of Lean Production (Cont.) – 5S • Shitsuke – (Sustain) • This is the hardest part of the process. • 5S won’t work if you don’t continue to execute. • People tend to return to old habits unless new ones are instilled and actively managed. • Once you’ve reorganized work areas, cleaned, and created standards, the real work is in 6 months or a year. • Regular meetings, inspections, and real emphasis all help. The Elements of Lean Production (Cont.) Lean Supply Chain Relationships • Suppliers & customers work to remove waste, reduce cost, & improve quality & customer service • JIT purchasing includes delivering smaller quantities, at right time, delivered to the right location, in the right quantities • Firms develop lean supply chain relationships with key customers. Mutual dependency & benefits occur among these partners. • Safety stocks of raw material !!! • Safety stocks of finished goods to avoid stock-outs !!!! • Customers and suppliers can help to define the value added material and activities. The Elements of Lean Production (Cont.) The Elements of Lean Production (Cont.) Lean Layouts • Move people & materials when & where needed, ASAP • Lean layouts are very visual (lines of visibility are unobstructed) with operators at one processing center able to monitor work at another • Manufacturing cells ▪ Process similar parts or components saving duplication of equipment & labor ▪ These similarly processed parts are termed part families. ▪ U-shaped to facilitate easier operator and material movements within the cell. The Elements of Lean Production (Cont.) The Elements of Lean Production (Cont.) The Elements of Lean Production (Cont.) The Elements of Lean Production (Cont.) The Elements of Lean Production (Cont.) Inventory & Setup Time Reduction • Excess inventory is a waste • Just as water hides boat-damaging rocks beneath its surface, so excess inventory hides value damaging problems along the supply chain • But reducing inventory levels causes production problems • Common purpose tools should be used. • Once problems are detected, they can be solved. • The end result is a smoother running organization with less inventory investment. • Another way to reduce inventory levels is to reduce purchase order quantities and production lot sizes. The Elements of Lean Production (Cont.) Relationship between Order Quantity, Lot Size, and Average Inventory When order quantity/lot size Q = 100, avg. inventory = 50; when Q is reduced to 50, avg. inventory falls to 25. 100 50 avg. inventory for Q=100 25 avg. inventory for Q=50 Time The Elements of Lean Production (Cont.) Small Batches Scheduling • Small batch scheduling drives down costs by: • Reducing purchased, WIP, & finished goods inventories. • Allows to detect and catch defects before its too late. • Makes the firm more flexible to meet customer demand. • Small production batches are accomplished with the use of kanbans. • Kanban (Sign or Billboard) is a permission slip or authority to pull the material from upstream supply chain partner. • When manufacturing cells need parts or materials, they use a kanban to signal their need for items from the upstream manufacturing cell, processing unit, or external supplier. • That is why a lean system is also known as a pull system. • Kanbans generate demand for parts at all stages of production creating a “pull” system. Original Kanban board, Toyota The Elements of Lean Production (Cont.) • Small Batches Scheduling Small Lot Size Approach Short setup times AAA BBB CCC DDD AAA BBB CCC DDD AAA 9 product changes Large Lot Size Approach Long setup times AAAAAAAA-----BBBBBBBB ------CCCCCCCC----- 3 product changes Time The Elements of Lean Production (Cont.) • Lets see what is Kanban bin System • A Kanban (a light, flag or sign) Pull System Output area Input area Input area Output area Final assembly line External supplies Mfg. Cell A Work cell A Mfg. Cell B Withdrawal Kanban Production Kanban Movement of matl. into Work cell A creates a movement kanban to the external supplier Movement of matl. to input area of Work cell B creates a production kanban to Work cell A Movement of matl. into Work cell B creates a movement kanban to Work cell A Movement of finished component to assembly line creates a production kanban to Work cell B The Elements of Lean Production (Cont.) A Kanban Pull System • Inventories are not allowed to accumulate beyond the size of each container and the number of containers in the system. • When containers are full, production stops until another production kanban is encountered. • To determine the number of containers or kanban card sets: # of containers = DT(1 + S) C Where: • D = the demand rate(number of units to be produced) of the complete assembly line; • T = the time for a container to make an entire circle through the system, from being filled, moving, being emptied, and returning to be filled again; • C = the container size, in number of parts; and • S = the safety stock factor, from 0 to 100 percent. The Elements of Lean Production (Cont.) A Kanban Pull System-Example • The assembly line demand is twenty of Part 1 per hour for Work Cell B, and the standard container used for this part holds five Part 1’s. If it takes two hours for a container to make a circuit from Work Cell B to the assembly line and back again, and if it is desired to carry 10 percent excess of Part 1 in the system, then find out the number of containers needed in the system? # of containers = DT(1 + S) C • D = the demand rate of the assembly line; • T = the time for a container to make an entire circle through the system, from being filled, moving, being emptied, and returning to be filled again; • C = the container size, in number of parts; and • S = the safety stock factor, from 0 to 100 percent The Elements of Lean Production (Cont.) A Kanban Pull System • Assembly line demand = D = 20 parts-1/hour • Container Size = C = 5 parts • Time for container to complete a circuit = T = 2 hours • Safety stock = S = 10% # of containers = # of containers = DT(1 + S) C 20×2 (1 + 0.1) 5 # of containers = 8.8 or 9 containers The Elements of Lean Production (Cont.) A Kanban Pull System • We can also calculate the maximum inventory of the system. • The maximum inventory for this system would then be the total number of containers times the container size. Maximum Inventory = Number of Containers × Container Size • Find out the maximum Inventory of previous example Maximum Inventory = 9× 5 = 45 parts1 The Elements of Lean Production (Cont.) Continuous Improvement (Kaizen) • Lean systems are never-ending work in progress • Compact layouts are designed to allow work to flow sequentially and quickly. • Purchase orders and production batches are small. • Suppliers struggle to deliver frequently and on time. • Workers strive to maintain output levels while spending more time during the day, setting up machines for small production runs. • Continuous approach to reduce process, delivery, & quality problems, such as machine breakdown problems, setup problems, & internal quality problems is called Kaizen means “Change for Good”. Workforce Commitment • Managers must support Lean Production by providing subordinates with the skills, tools, time, & other necessary resources to identify problems & implement solutions. Lean Systems and the Environment Lean green practices: • Reduce the cost of environmental management. • Improved environmental performance. • Increase the possibility that firms will adopt more advanced environmental management Carbon-neutral- offsetting the carbon footprint of a firm’s operations . Lean systems has a strong relation with environmental improvement. The Origins of Six Sigma Quality Six Sigma • What is meant by Sigma? • Sigma- standard deviation. •Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects. • Pioneered by Motorola in 1987 • In the 1980s, a senior engineer at Motorola, Mikel Harry, was experimenting with problem solving using statistical analyses. • A statistics-based decision-making framework designed to make significant quality improvements. • Near quality perfection (the statistical likelihood of non-defects 99.99967% of the time) •Motorola saved more than $ 15 billion in the first 10 years of its Six Sigma effort. The Origins of Six Sigma Quality Learning Curve The Origins of Six Sigma Quality Six Sigma Metrics- Defects per Million Opportunities (DPMO) Improvement Needed Good Virtually Perfection # of std dev above the mean % of defect-free output DPMO 2 69.15 308,537 2.5 84.13 158,686 3 93.32 66,807 3.5 97.73 22,750 4 99.38 6,210 4.5 99.865 1,350 5 99.977 233 5.5 99.9968 32 6 99.99966 3.4 SIX SIGMA How good is good enough? 99.9% is already VERY GOOD But what could happen at a quality level of 99.9% (i.e., 1000 ppm), in our everyday lives (about 4.6)? • 4000 wrong medical prescriptions each year • • More than 3000 newborns accidentally falling from the hands of nurses or doctors each year Two long or short landings at American airports each day • 400 letters per hour which never arrive at their destination The Origins of Six Sigma Quality • We can find out the six sigma level by calculating DPMO (Defects per million opportunities). • OFD = Opportunities for a defect to occur or Number of possible causes of defect The Six Sigma Quality • Blake, owner of Speedy Pizza, a home delivery pizza operation, keeps track of customer complaints. For each pizza delivery, there are three possible causes of complaints: a late delivery, a cold pizza or an incorrect pizza. Each week, Blake calculates the rate of delivery “defects” per total pizza deliveries, and then uses this information to determine his company’s Six Sigma quality level. During the past week, his company delivered 620 pizzas. His drivers received sixteen late delivery complaints, nineteen cold pizza complaints and five incorrect pizza complaints. DPMO = DPMO = Number of defects ×1,000,000 (OFD per unit) (Number of Units) 40 (3) (620) ×1,000,000 = 21505 defective pizza deliveries per million pizza deliveries The Origins of Six Sigma Quality Six Sigma Metrics- Defects per Million Opportunities (DPMO) Improvement Needed Good Virtually Perfection # of std dev above the mean % of defect-free output DPMO 2 69.15 308,537 2.5 84.13 158,686 3 93.32 66,807 3.5 97.73 22,750 4 99.38 6,210 4.5 99.865 1,350 5 99.977 233 5.5 99.9968 32 6 99.99966 3.4 The Origins of Six Sigma Quality Six Sigma Metrics- Defects per Million Opportunities (DPMO) Improvement Needed Good Virtually Perfection # of std dev above the mean % of defect-free output DPMO 2 69.15 308,537 2.5 84.13 158,686 3 93.32 66,807 3.5 97.73 22,750 4 99.38 6,210 4.5 99.865 1,350 5 99.977 233 5.5 99.9968 32 6 99.99966 3.4 Elements of Six Sigma The DMAIC Improvement Cycle Define Measure Analyze Improve Control Elements of Six Sigma The DMAIC Improvement Cycle Elements of Six Sigma The DMAIC Improvement Cycle • What is DMAIC? • A logical and structured approach to problem solving and process improvement. • An iterative process (continuous improvement) • A quality tool which focus on change management style. Elements of Six Sigma The DMAIC Improvement Cycle • Define: Identify customers and their service or product requirements. • Measure: Prepare a data-collection plan and determine what to measure and how to measure it. • Analyze: Perform a process analysis using the performance data collected • Improve: Design an improvement plan; then remove the causes of process variation by implementing the improvement plan. • Control: Monitor the process to assure that performance levels are maintained. Elements of Six Sigma Six Sigma Training Levels Levels Description Yellow Belt Basic understanding of Six Sigma Methodology and tools. Role is to be an effective team member on process improvement project teams. Usually works part-time on the six sigma project. Green Belt A trained team member allowed to work on small, carefully defined Six Sigma projects, requiring less than a Black Belt’s full-time commitment. They spend approximately 25 percent of their time on Six Sigma projects of their own or in support of Black Belt projects. Black Belt Thorough knowledge of Six Sigma philosophies and principles. Coaches successful project teams. Identifies projects and selects project team members. Acts as an internal consultant, mentors Green Belts and project teams, provides feedback to management. Master Black Belt A proven mastery of process variability reduction, waste reduction and growth principles and can effectively present training at all levels. Directs Black and Green Belts on the performance of their Six Sigma projects and also provides guidance and direction to management teams Elements of Six Sigma The Statistical Tools of Six Sigma • Flow Diagramso Annotated boxes representing process to show the flow of products or customers. o ovals representing wait periods, connected by arrows to show the flow of products or customers through the process. o Diamond shape represent decision • Check Sheets• to determine frequencies for specific problems. Elements of Six Sigma The Statistical Tools of Six Sigma • Pareto Charts• for presenting data in an organized fashion, indicating process problems from most to least severe. • Cause-and-Effect Diagrams (Fishbone or Ishikawa diagrams)• used to aid in brainstorming & isolating the causes of a problem. Elements of Six Sigma The Statistical Tools of Six Sigma • Process Mapping: First step to evaluate any manufacturing or service process. • Flow diagrams use annotated boxes representing process actions and ovals to represent wait periods, connected by arrows to show the flow of products through the process Elements of Six Sigma The Statistical Tools of Six Sigma • Process Mapping: • Restaurant • Customer arrives at restaurants vicinity and park their cars. They enter into dinning area and ask for a free table. Staff give him a table and brings the menu. Customer select food items and place an order to staff. Staff deliver this order to kitchen and after food get ready serve it to the customer. Customer eats food and pays bill and leave the restaurant. Elements of Six Sigma The Statistical Tools of Six Sigma Process Map for Customer Flow at a Restaurant Elements of Six Sigma The Statistical Tools of Six Sigma • The check sheet is a form (document) used to collect data in real time at the location where the data is generated. • The data it captures can be quantitative or qualitative. • When the information is quantitative, the check sheet is sometimes called a tally sheet. oTo quantify defects by type oTo quantify defects by location oTo quantify defects by cause (machine, worker) Elements of Six Sigma The Statistical Tools of Six Sigma • Check Sheet: Allow users to determine frequencies for specific problems Problem M Tu W Th F Sa Su long wait ////// ///// //////// ////// ///////// ////////// //// // / / /// // cold food Tot %Tot 48 34.0 9 6.3 wrong food ///// // / // ///// /// / 19 13.5 bad server ////// /// ///// / ////// // / 24 17.0 / // / /// / 8 5.7 ///// ///// 15 10.6 ///// /////// 14 9.9 / 4 2.9 141 100 bad table room temp // No parking // other Totals 17 / // 14 23 /// 13 34 33 7 Elements of Six Sigma The Statistical Tools of Six Sigma • Pareto Chart: • The charts are useful for presenting data in an organized fashion, indicating process problems from most to least severe. • It is more fruitful for organization to solve the most severe problems first. • The most of a firm’s problem “events” are accounted for by just a few of the problems. • It is based on the work of Vilfredo Pareto, a nineteenth-century economist. Elements of Six Sigma The Statistical Tools of Six Sigma 60 50 40 30 20 10 0 Series1 long wait bad server wrong food 48 24 19 room no temp. parking 15 14 cold food bad table Other 9 8 4 Elements of Six Sigma The Statistical Tools of Six Sigma • Cause-and-Effect Diagram: oOnce a problem has been identified, cause-and-effect diagrams can be used to aid in brainstorming and isolating the causes of a problem. oIt is also called, fishbone diagrams or Ishikawa diagrams • Four M’s (4 M): oManpower, Machine, Material, Methods oThe four groups of causes are the standard classifications of problem causes oIn almost all cases, problem causes will be in one or more of these four areas. Machinery Material Washing machine breaks Run out of food Late deliveries Not enough tables Cooking delays Inadequate waiting area Too much overbooking Can’t find customers Methods New automated cooking bays Untrained servers, cooks Preference to VIPs No supervision No system for food or drink pickup Needs frequent maintenance Credit card scanner breaks LONG WAIT Understaffed shifts High turnover Poor hiring practices Manpower Elements of Six Sigma The Statistical Tools of Six Sigma • Statistical Process Control (SPC) : •Allows firms to: • visually monitor process performance • compare the performance to desired levels or standards • take corrective action • Firms: • gather process performance data • create control charts to monitor process variability • then collect sample measurements of the process over time and plot on charts. • Control charts are graphic representations of process performance over time, showing the desired control limits. Elements of Six Sigma • Variations: • If the sample means fall within the acceptable control limits and appear normally distributed, the process is in statistical control. Natural variations: • expected and random (can’t control). • When only natural variations are present, the process is in statistical control. (e.g; Environmental or Noise) Assignable variations: • have a specific cause and can be identified and eliminated (can control) •Because of a special cause Variable data: • continuous, (e.g., weight, time and length) Attribute data: • indicate some attribute such as color & satisfaction, or beauty. Elements of Six Sigma The Statistical Tools of Six Sigma • Variable Control Charts : When there are variations in process measures, samples of data are collected and the sample means are plotted onto control charts. • Monitor the stability of the process • Determine whether the process is stable and ready to be improve • x-bar chart: tracks central tendency of sample means (Process Mean) • R-chart: tracks sample ranges or the variation within each sample. (Process Range) Steps: 1. Gather data when the process is in control. 2. Calculate the mean & the range for each sample. 3. Calculate the overall mean and average range of all the samples. Use the x-means to calculate the upper & lower control limits. 4. Use the means & control limits to construct x-bar and R control charts. 5. Collect samples over time and plot. Elements of Six Sigma The Statistical Tools of Six Sigma k R k x x = i =1 k i R = i =1 i k where k indicates the number of samples and i indicates the specific sample Elements of Six Sigma The Statistical Tools of Six Sigma The Hayley Girl Soup Co., a soup manufacturer, has collected process data in order to construct control charts to use in their canning facility. They collected 24 samples of four cans each hour over a 24-hour period, and the data is shown below for each sample Gather data when the process is in control. Calculate the mean & the range for each sample. k R k x x = i =1 k i R R = xmax - xmin = i =1 k i R = (Max – mini = 12.2 - 11.6) Calculate the mean & the range for each sample. k R k x x = i =1 k i R = i =1 k i Calculate the overall mean and average range of all the samples. Use the xmeans to calculate the upper & lower control limits. x R For x-bar UCLx = x + A2R LCL x = x - A2 R Find out the control limits of x-bar and R control charts. For R-chart UCLR = D4 R LCLR = D3 R where A2, D3, and D4 are constants based on the size of each sample A2, D3, and D4 values table Find out the upper and lower control limits for both the x -chart and the R-chart, for a sample size of four Find out the control limits of x-bar and R control charts. For x-bar UCLx = x + A2R LCL x = x - A2 R For R-chart UCLR = D4R LCLR = D3R X = 11.96 R = 0.39 Find out the upper and lower control limits for both the x -chart and the Rchart, for a sample size of four X = 11.96 R = 0.39 Use the means & control limits to construct xbar and R control charts. Elements of Six Sigma The Statistical Tools of Six Sigma • Once a good set of control charts have been created and samples from the process are being statistically monitored, then; 1) Collect samples of size 4–5 periodically (depending on the type of process and ease of data collection). 2) Plot the sample means on both control charts, monitoring whether or not the process is in control. 3) When the process appears out of control, use check sheets, Pareto charts and fishbone diagrams to investigate causes and eliminate process variations. 4) Repeat steps 1–3.