Six Sigma and
Kepner-Tregoe
Manufacturing Excellence
Event in Krefeld,
25th of March 2004
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
1
DMAIC Methodology + KT Tools
Strategy Formulation
Gatekeeper
Situation Appraisal
Performance System Design
Project Selection
5
Control
Project Management
Potential Problem Analysis
Decision Analysis
Potential
Opportunity
Analysis
4
Improve
1
Define
2
Measure
3
Analyze
True Cost
Analysis
Statistical
Process
Control
Managing Involvement
Problem Analysis
Performance System Analysis
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
2
DMAIC Methodology + Strategy
Use KT Strategy
Formulation to
identify critical
products and
customer groups
for future emphasis
Helps ensure that
Six Sigma projects
are targeted
at strategically
critical facets of
the business
03/25/04
Strategy Formulation
5
Control
4
Improve
1
Define
2
Measure
3
Analyze
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
3
DMAIC Methodology + Situation Appraisal
Use KT Situation
Appraisal to help quickly
identify and prioritize
problems or areas of
concern to charter
potential Six Sigma
projects
Use KT Potential
Opportunity Analysis
to focus on where the
most significant benefits
might be, and on how to
promote them and
capitalize on them
03/25/04
Potential
Opportunity
Analysis
Situation Appraisal
5
Control
4
Improve
1
Define
2
Measure
3
Analyze
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
4
DMAIC Methodology + Project Selection
Use KT Project
Selection to identify
which projects working
on which processes have
the greatest benefit
Helps allow you to
build an “Optimal
Project Portfolio” that
you can manage to fit
your capacity and your
needs
03/25/04
5
Control
4
Improve
1
Define
Project Selection
and Definition
2
Measure
3
Analyze
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
5
DMAIC Methodology + True Cost
Use KT True Cost
Analysis to measure the
financial impacts of
performance deviations
Understanding True
Cost puts focus on
financial impact of
variations
SPC measures can fill in
data about the “What,
Where, When, and
Extent” of the issue
03/25/04
5
Control
4
Improve
1
Define
2
Measure
3
Analyze
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
True Cost
Analysis
Statistical
Process
Control
700-20-P564403A
6
DMAIC Methodology + Performance System Analysis
Use KT Performance
System Analysis to
understand the
“people” implications
of current processes
and systems
Analyze the
Performance System
to find “the cause of
the cause” around
human factors
5
Control
4
Improve
1
Define
2
Measure
3
Analyze
Performance System Analysis
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
7
DMAIC Methodology + Problem Analysis
Use KT Problem
Analysis to identify the
root cause of Special
Cause variation. PA
pinpoints differences,
causation
Use Problem Analysis
thinking in Common
Cause situations to
clarify the “Actual,” the
“Should,” and the desired
“Could”
5
Control
4
Improve
1
Define
2
Measure
3
Analyze
Problem Analysis
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
8
DMAIC Methodology + Managing Involvement®
Use KT Managing
Involvement to
ensure appropriate
participation in
solution design
5
Control
4
Improve
1
Define
2
Measure
3
Analyze
Managing Involvement
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
9
DMAIC Methodology + Decision Analysis
Use KT Decision
Analysis when choosing
a course of action or
solution to ensure best
choice, and effective
risk management
5
Control
4
Improve
Decision Analysis
03/25/04
1
Define
2
Measure
3
Analyze
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
10
DMAIC Methodology + Potential Problem Analysis
Use KT Potential
Problem Analysis to
manage possible
threats to the project
or plan. (Can be used
in place of or in
conjunction with FMEA
in many situations)
Potential Problem Analysis
03/25/04
5
Control
4
Improve
1
Define
2
Measure
3
Analyze
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
11
DMAIC Methodology + Project Management
Use KT Project Management
to manage the project, once
the solution has been decided.
Full tool set and methodology
for managing all phases of the
project
Project Management
5
Control
1
Define
2
Measure
4
Improve
3
Analyze
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
12
DMAIC Methodology + The Performance System
Use KT
Performance
Performance System Design
System Design.
New processes
1
5
require new
Define
Control
behavior, and it
needs to take root
2
in a foundation of
4
Measure
Improve
clear signals, visible
3
consequences, and
Analyze
effective feedback
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
13
DMAIC Methodology + Gatekeeper
Use KT Gatekeeper to
monitor performance,
control reintroduction of
variation in both your
Product Portfolio and
your Project Portfolio
Gatekeeper
5
Control
1
Define
2
Measure
4
Improve
3
Analyze
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
14
Summary
Six Sigma provides a proven framework for
improving performance
Kepner-Tregoe provides a set of tools to
implement Six Sigma more effectively
through …
- a clear improvement focus
- a better understanding of the performance
environment
- clearly structured decision making and
problem analysis processes
- more effectively managed improvement
projects
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
15
Appendix A
The Path
to Profitable Six Sigma
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
16
Senior
Management
The Path to Profitable Six Sigma
Goals,
Objectives
Benefits/Costs/Risks
Goals,
Objectives
Updated
Projects
Selected
Operations
Priorities
Guidance
True Costs
Process
Variations
Measured
Improvements
Implemented
Variation
Reduced
Operations
Improved
Improvement
Projects
Quantified ($)
Opportunities
True Cost
of
Variations
Measured
Finance
Results
True
Costs
Gains
Controlled
Priorities
Project Goals/Scope
Change Team
Financial Impacts
Variations
Analyzed
03/25/04
High Value
Opportunities
Improvement
Projects
Defined
Variation
Reduced
Improvements
Implemented
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
True Costs
700-20-P564403A
17
The Path to Profitable Six Sigma
Formulate strategy (leadership)
Link expectations/goals to
strategy (leadership)
Measure sources of variation in
the process
• special cause variation
• common cause variation
Measure True Costs of process
variation
Analyze causes of variation
(technical/human performance)
Define improvement projects
• objectives
• scope of work
• resources
Select highest impact
improvement projects (“the
critical few”)
• eliminate special cause variation
to establish stability and control
• attack common cause variation
for performance breakthroughs
Implement improvements
Control gains, prevent reintroduction of variation
Performance System Design
for sustained success
Review expectations/goals
Repeat cycle
Measure project benefits/
costs/risks
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
18
KT Integrated with Six Sigma
Use KT to formulate strategy
Use KT to select high impact projects
Use KT to increase process stability and capability
by attacking Causes
Use KT to select best solutions/improvements
Use KT to address human performance issues
When Stability and Control are established, use
Six Sigma to attack Common Cause variation
Use Six Sigma to achieve breakthroughs
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
19
Appendix B
Kepner-Tregoe
Rational Processes
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
20
A Brief History of Kepner-Tregoe
Founded in 1958 based upon the RAND research
of Drs. Kepner and Tregoe
Pioneers in the use of rational process-based
thinking skills
Expanding portfolio of industry and functionspecific applications
Dedicated to the belief that “effective action follows
clear thinking”
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
21
Strategy Formulation and Implementation
1. Strategic Intelligence Gathered and Analyzed
2. Strategy Formulated
3. Strategy Implementation Planned
4. Strategy Implemented
5. Strategy Monitored and Updated
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
22
Problem Solving and Decision Making
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
23
Project Management
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
24
Performance System Design
Feedback
How appropriate is the
Feedback and how well is
it used to influence performance?
Situation
Fb
How clear are the performance
expectations and how well are
they understood?
How clear is the signal to perform?
How well does the work
environment support expected
performance?
S
03/25/04
Consequences
How well do the
Consequences encourage
expected performance?
P
R
Performer
Response
How capable is the
Performer to meet
the performance
expectations?
What is the observed
performance?
How does it compare
with expectations?
C+
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
25
True Cost Analysis
How Overhead Rate is Applied
Overhead $ (x 1,000)
900%
$750
$600
$450
Variable
500%
$300
Fixed
400%
($300,000)
$150
A
03/25/04
20
40
60 75 80
Direct Labor $ (x 1,000)
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
100
700-20-P564403A
26
Project Selection
Score projects using weighted objectives/criteria
Min.
Legal
Exposure
Prioritiz ation C rite ria
Criteria Weight
3
Max.
Qualit y
Image
8
Max.
Operating
Margin
7
Max.
Market
Share
10
Score
Score x
Weight
Score
Score x
Weight
Score
Score x
Weight
Score
Score x
Weight
Complete “ xyz” installat ion by
Sept ember 15 for less than $100K
10
30
8
64
7
49
9
90
233
Hire and develop five new programmers
by August 15 for less than $300K
6
18
7
56
5
35
10
100
209
Fix network problem “ efg” by July 30
for less than $10K
2
6
4
32
4
28
10
100
166
T est market “ abc” protot ype by August
1 for less than $20K
10
30
5
40
4
28
4
40
138
Launch promotion “ m” July 15 for less
than $100K
4
12
3
24
10
70
3
30
136
Complete “ hij” by September 10 for
less t han $30K
3
9
10
80
2
14
2
20
123
Complete “ mfg” by September 11 for
less t han $200K
3
9
2
16
10
70
2
20
115
Proje ct State me nts
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
Total wt.
Score
700-20-P564403A
27
Managing Involvement®
Commitment
Without
Participation
Superior
Solution
Information
Structure
Does it make a
big difference
which course of
action is
adopted?
Do you now
have enough
information to
find a superior
solution?
Do you know
exactly what
information is
missing and
how to get it?
yes
no
yes
no
Commitment
Is the
commitment of
others critical to
effective
implementation?
yes
no
yes
no
no
yes
no
ye
s
no
yes
yes
Goal
Agreement
Will the group
commit to a
conclusion
made by you
without their
active
participation?
Is there general
agreement
about goals
between the
group and the
organization in
this situation?
yes
no
yes
yes
no
A1, A2, C1, C2, G2
s
ye
no
G2
yes
no
A1, A2, C1, C2, G2
A1, A2, C1, C2
yes
G2
no
yes C2
no
C1, C2
yes
yes
no
A2, C1, C2, G2
A2, C1, C2
yes
no
03/25/04
yes
no
yes
no
no
no
yes
Is there likely to
be conflict about
alternatives
within the
group?
yes
no
no
no
Conflict
About
Alternatives
yes
no
no
yes
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
C2, G2
C2
G2
700-20-P564403A
28
Volume/Margin Matrix
03/25/04
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
700-20-P564403A
29
A Profile of Strategies for Complexity Reduction
Low Volume,
High Margin
Low Volume,
Low Margin
03/25/04
•
•
•
•
•
•
•
•
Customer Review
Re-price
Inventory
Substitute Spec.
Inventory
Alternate Source
Do Nothing
Drop SKU
• Strategic
Customer Review
• Re-price
• Change
Manufacturing
Process
• Do Nothing
• Drop SKU
High Volume,
High Margin
+
• Customer Review
• Redesign Product
• Process
Improvement
• Redesign Application
• Do Nothing
• Drop SKU
Copyright © 2004 Kepner-Tregoe, Inc. All Rights Reserved.
High Volume,
Low Margin
700-20-P564403A
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