Adding Real Business Value Through
Simple Process Improvement
Marc Gunning
ASQ Certified Six Sigma Black Belt
June 2013
Why I am Here – Presentation Objectives
I believe each of us has the opportunity to
create a positive ROI though continuous process
improvement
• Discuss tying Process Improvement to the
organizations financial and business objectives
• Demonstrate accelerated process
improvement
• Demonstrate the use of the core process
engineering tool set
Improvement
- what is it? -
“Improvement is accomplished by;
– better methods,
– better techniques,
– better machinery
– and by people continually finding better ways
to do their job and to work together as a team.
I will never see the day when there is no
room for improvement.“
- Dave Packard, 1957
3
What is a process?
• A series of interrelated steps consisting of
resources and activities that transform inputs
into outputs and work toward a common end.
The Certified Six Sigma Black Belt Handbook second edition, T.M. Kubiak and
Donald W. Benbow
Six Sigma Model for Improvement
1 - Three questions set
the charter of the
project
2 - Plan-Do-StudyAct steps occur in
each phase
What are we trying to
accomplish?
How will we know a change
is an improvement?
What changes can we make
that will result in improvement?
3 - The activities are organized into standard project phases (DMAIC)
Define
Phase 1
Measure
Phase 2
Analyze
Phase 3
Improve
Phase 4
Control
Phase 5
Model for improvement = 3 questions + PDSA + DMAIC
TOOLS
Define
Improvement Plan/Three Questions
SIPOC Diagram
Critical to Quality
Measure
Process Flowchart
Data Collection Plan
Analyze
Cause and Effect/Fishbone Diagram
Pareto Chart
Time Series/Run Chart
Process Map Analysis
Affinity mapping
Improve
Process Flowchart
Data Collection Plan
Control
Process documentation
RACI
Control Charts
Dashboards
MOC
Project Scope
What are we trying to accomplish
How will know / measure we are successful
Measure
What Actions can / should we take
Current State
Future State
Identifying Opportunities to Create Business Value
Executive & Entity
Key Performance
Indicators
Shareholder Value
Earnings
Capitol
• Revenue Growth
• Cost Reduction
• Return on equity
Stakeholders
• Customer Satisfaction
• Employee engagement
Market Expansion
New Tooling
Risk reduction / compliance
Improve Service Levels
Business Initiatives
Operating KPI
Process / Function
Opportunities
Revenue
growth
Sales
New tool deployed
on time
OP’s / IT
Reduce Customer
Incidents
Customer
Operations
Critical to Quality
Identify our ability to deliver on the customer / business
requirements for a product or service
1st Level 2nd Level
Time to Market
Quality:
3rd Level
•
•
•
•
•
•
•
Milestones on time
Revenue
Growth
Market
Acceptance
# of customer trials
Customer Satisfaction
Need
(General)
Requirement
(Specific)
Performance
Features
Time
Reliability
Durability
Uniformity
Consistency
•
•
•
•
•
•
•
Serviceability
Aesthetics
Personal interface
Flexibility
Harmlessness
Perceived quality
Usability
Transaction Costs:
•
•
•
•
Turn around Time
Rework
# of Iterations
Verification / inspection cycles
SIPOC
Suppliers
Inputs
Process
Outputs
Customers
• The product
• Who receives the
& activities are
or service
product or
required?
from the
service?
• Who provides
•What resources
the inputs?
• The transformation
process
Name of process
STOP
START
Step 1:
Step 2:
Step 3:
Step 4:
Step 5:
Process: A series of interrelated steps consisting of resources and activities
that transform inputs into outputs and work toward a common end.
The Certified Six Sigma Black Belt Handbook second edition,
T.M. Kubiak and Donald W. Benbow
RACI Definitions
• Responsible for implementation: Has the duty and obligation to do the
work. Also, must exercise independent judgment and raise appropriate
issues.
• Accountable decision owner: Has the authority to decide and is the
recipient of any consequences; the ultimate decision maker. Also has the
responsibility to learn from Responsible and Consulting parties.
• Consulted: Stakeholder with expertise, experience, and interests who must
be given the opportunity to influence plans and decisions prior to
finalization by the “accountable’ or “responsible” party.
• Informed: Is informed of progress, key decisions and deliverables by the
“responsible” party; it’s necessary for them to know in order to collaborate
well.
April 9, 2015
11
Authority to Make a Change
Knowledge necessary to make informed change
Yes
No
Yes
Responsible, Accountable
Responsible, Consulted
Accountable, Informed
Informed
No
12
Swim Lane
Ajax
Sales
Ajax
Operations
S/W Office
S/W
Warehouse
Truck
Sheppard/Wood Receiving Process
Deliver Truck at Dock
* Physical Inventory
* Bill of Lading/Docs
Verify
Documentation
Warehouse
Inventory
Update S/W
system
Send
Scanned
Doc to Ajax
Update Ajax
System
Place
Fulfillment
Order
Sheppard/Wood Example
Identifying Opportunities to create Value
Sheppard/Wood Example
S/W Customer (AJAX)
Executive & Entity Key
Performance
Indicators
Shareholder Value
Earnings
• Protect & Grow
Revenue
Capitol
• Leverage existing
assets
Stakeholders
• Market Share
Product Extension
Ajax’s Business
Initiatives
Operating KPI
Process / Function
Opportunities
Eliminate HAZMAT Risks
Close & deliver on
every deal – 100%
New Product
Capabilities
Sales & Ops
Zero defects
inventory mgmt.
Operations
Poka-yoke
inventory pick
system
Eliminate
discrepancies
between Supplier
and Vendor
Inventory Mgmt
Systems
100% fulfillment
Sales
Establish
priority delivery
service
Project Scope
What are we trying to accomplish
Improve the accuracy and timeliness of inventory information to Ajax to
improve Ajax fulfillment and eliminate Hazmat risks
How will know / measure we are successful
Measure
S/W and Ajax systems 100% accurate to actual
Current State
Future State


Ajax 98%
S/W 100%

Ajax 100%
S/W 100%
Timeliness of inventory info to Ajax Sales

Monthly

Weekly
Eliminate possibility of shipping wrong products

Manual / voice
verification

Poka-yoke

What Actions can / should we take
1. Define and Analyze current state process (SIPOC & RACI)
Supplier
Input
Process
Output
Ajax
Supplier
* Bill of Lading
* Physical Inventory
Truck at Dock
Receive Truck
Truck
BoL
Package Labels
Trigger all Hazmat
Verify product for compliance compliance
Custo
mer
R
A
C
I
* Original
Mfg
* Ajax
* S/W
S/W
Original
Mfg
S/W
S/W
S/W
Warehou
Warehouse se
Ajax
S/W
S/W
Warehou
Warehouse se
Ajax
Wareh
ouse
Ajax
Wareh
ouse
S/W
BoL
Warehouse Physical Inventory
Warehouse Inventory
Product Stored
BoL + Pakage Label
S/W Office Physical Location
Update S/W Inventory
System
Electonic Record of
Ajax @ S/W
S/W
S/W
S/W Office Office
eMail or Phone
communicaiton based on Update Ajax Inventory
S/W Office S/W Electonic Record
System
Electronic Record of
Ajax Inventory
Ajax
Ajax Office
Sum of Electonic Record
of Ajax @ S/W
Monthly update of Ajax
S/W Office Physical Inventory
inventory @ S/W to Ajax
* Record for Ajax
reconciliation
* Records for Invoicing
* Record for Ajax Sales
of availability
Ajax
S/W Office
* Ajax customer demand
* Ajax knowledge of
availabel inventory
* eMail or Phone request Trigger Ajax inventory
Ajax Sales for Fulfillment
pull/ship to Ajax customer
* Fulfillment to Ajax
customer
* Adjustment to
inventory
S/W
Ajax
Supplier
Input
Process
Output
Custo
mer
Ajax
Supplier
Truck at Dock
Receive Truck
* Bill of Lading
* Physical Inventory S/W
Truck
BoL
Package Labels
Verify product for
compliance
Trigger all Hazmat
compliance
S/W
BoL
Warehouse Physical Inventory
Warehouse
Inventory
BoL + Pakage Label Update S/W
S/W Office Physical Location
Inventory System
eMail or Phone
communicaiton based
on S/W Electonic
Record
eMail w/ Scanned
Update Ajax
S/W Office BoL
Inventory System
Product Stored
S/W
Ajax
R
Electronic Record of
Ajax @ S/W
S/W
S/W
Office
Electronic Record of
Ajax Inventory
Ajax
* Record for Ajax
reconciliation
Monthly Weekly
* Records for
update of Ajax
Invoicing
inventory @ S/W to * Record for Ajax
Ajax
Sales of availability Ajax
Ajax
Office
Sum of Electonic
Record of Ajax @
S/W
S/W Office Physical Inventory
* Ajax customer
demand
* Ajax knowledge of
availabel inventory
Trigger Ajax
* eMail or Phone
inventory pull/ship to
Ajax Sales request for Fulfillment Ajax customer
* Fulfillment to Ajax
customer
* Adjustment to
inventory
Ajax
A
* Original
Mfg
Original * Ajax
Mfg
* S/W
S/W
S/W
Warehou Warehous
se
e
S/W
S/W
Warehou Warehous
se
e
S/W
Office
S/W
S/W Office
C
I
Ajax
Warehous
e
Ajax
Warehous
e
Swim Lane
RACI
Process
Ajax
Sales
Ajax
Operations
S/W Office
S/W
Warehouse
Truck
Sheppard/Wood Receiving Process
Deliver Truck at Dock
* Physical Inventory
* Bill of Lading/Docs
Verify
Documentation
Inputs/Outputs
Warehouse
Inventory
Update S/W
system
Send
Scanned
Doc to Ajax
Update Ajax
System
Place
Fulfillment
Order
Transition Cycle
HIGH PERSONAL
CONTRIBUTION
DANGER
Denial
it will be over soon
this won’t happen
apathy
numbness
minimizes the change
Ignores the change
Resistance
sense of loss of control
concerned with abilities
future contribution unclear
Finds fault with changes
lack of focus or direction
Withdrawals
blaming
Commitment
teamwork
satisfaction
clear focus and plan
cooperation
balance
clear vision of the future
Exploration
sees possibilities
willing to exploring
alternatives
feeling “ I can make it”
high creativity and energy
“TOO” many new ideas
unfocused work
start “being” in the future
Management of Change Cycle
Denial
Resistance
Exploration
Commitment
Performance
New Process
Launch
Time
Communicate/Train
Workshop/
Listen
Facilitate
Encourage/
Motivate
Control
Thank You