Lean Six Sigma
Green Belt Training
A
Workshop Goals
This Workshop will help you learn to:
• Implement a systematic approach to identify, map and
control existing processes.
• Develop upstream and outcome metrics and targets
that track process performance in satisfying critical
customer requirements.
• Utilize methodologies for collecting, displaying, and
interpreting data.
• Apply proven approaches for continuously improving
processes, including DMAIC problem solving, and
Tollgate reviews.
ING Business School
Ref Intro-1a
Agenda
Day 1
09:00-10:45
Introductions / LSS
Overview
10:45-11:00
Break
11:00-12:30
LSS Overview / Define
Phase
12:30-13:30
Lunch
13:30-15:30
Define Phase
15:30-15:45
Break
15:45-17:30
Define / Measure Phase
17:30
Close Day 1 and
Homework assignment
19:00 Dinner
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Day 2
Day 3
Day 4
09:00-10:45
Measure Phase
09:00-10:45
Analyse Phase
09:00-10:45
Control Phase
10:45-11:00
Break
11:00-12:30
Measure Phase
12:30-13:30
Lunch
13:30-15:30
10:45-11:00
Break
11:00-12:30
Improve Phase
12:30-13:30
Lunch
13:30-15:30
10:45-11:00
Break
11:00-12:30
Control Phase
12:30-13:30
Lunch
13:30-15:30
Measure Phase
Improve Phase
Project Presentations
15:30-15:45
Break
15:45-17:30
Analyse Phase
17:30
Close Day 2 and
15:30-15:45
Break
15:45-17:30
Control Phase
17:30
Close Day 3 and
15:30-16:30
Wrap-Up & Evaluation
16:00
Close Programme
Homework assignment
Homework assignment
19:00 Dinner
19:00 Dinner
Administrative Information
• Safety (room, building)
• Breaks and lunch
• Facilities (bathrooms, services)
• Courtesy (mobile phones, blackberries etc)
• ?
ING Business School
Ref Intro-2
Introductions Activity
Introduce a colleague
covering the following
information:
ING Business School
•
•
•
•
Name
Work location
Job responsibilities
Experience prior to
working at ING
• Experience with Lean Six
Sigma
• Expectations of this
workshop
• Something interesting
about you
Ref Intro-3
Ground Rules
•
•
•
•
•
•
Be on time
Follow an agenda
Listen constructively
Defer items to Parking Lot
Ask Questions
Have fun!
ING Business School
Have you
completed the
Pre-work?
ING Business School
Ref Intro-1b
Overview of
Lean Six Sigma
ING Business School
ING Strategy and Lean Six Sigma
Customer Centric
Identify Critical
Customer Requirements
Economic Value
Lean Six Sigma
Improve Persistency
Reduce Operational
Costs
Define Gaps to
Customer Requirements
Increase Sales
Establish Baseline
Metrics
Improve Mix of Business
Execute Improvements
to Close Gaps
Reduce Risk and
Economic Capital
RESULTS
Lean Six Sigma Is “How” to Achieve Strategic Objectives
ING Business School
Ref Overview-1
ING Strategy and Lean Six Sigma
Mission
Set the standard in helping our customers
manage their financial future
Positioning Statement
ING is dedicated to deliver financial services
solutions valued by the customer
Brand Attributes
Delivers on
Promises
Is Easy to Deal with
CustomerCentric
Treats Me Fairly
ING Business School
Executing Strategy with Lean Six Sigma
Strategy Deployment
 Voice of
Customer
 Voice of
Process
 Voice of
Business
 Market
Factors
 Competition/
Benchmarks
 SWOT
Business
Strategic
Objectives
Business
Line
Strategies
Business
Line
Tactics
METRICS
METRICS
METRICS
PROJECTS
Review Process
METRICS
ING Business School
Ref Overview-2
Sources of Lean Six Sigma Projects
Lean Six Sigma projects may be generated
from a number of sources, examples
include…
• VOC – Improve timeliness, accuracy, satisfaction,
control compliance risks, reduce fines
• VOP – Reduce the gap between current performance
and customer specifications
• VOB – Increase sales, reduce expenses, improve
productivity, includes VOE (Voice of the Employee)
Increase employee retention, improve employee
satisfaction
METRICS
ING Business School
Ref Overview-3a
Lean Six Sigma Project Selection
Inputs
 Voice of the
customer
 Voice of the
business
 Voice of
process
Prioritize
Projects
Translate
into project
opportunities
 Strategic Fit
 Economic
Value
 Time/Effort
Known
solution with
supporting
data?
YES
NO
Process Not
Capable – use
DFSS
methodology
ING Business School
Process
Capable – use
DMAIC
methodology
Ref Overview-3b
Implement
solution, follow
lean six sigma
principles
Project Prioritization Matrix
More
detailed
approach
than Prework
Project Title Capital Loss Project
Brief Project Description
DRD Project
Actuarial Reserve
Study Project
Currently the largest item
producing a permanent
Currently, the Tax area
benefit in our tax return is the
provides a large amount of
Currently, the biggest
DRD. Despite the necessity
information that shows the
adjustment made from book
of including this number in
most tax-efficient way to
income to tax income are
our quarterly tax projections,
offset capital losses against
the actuarial reserves.
we have no way to effectively,
capital gains.
accurately and reliably predict
this amount.
Actuarial Tax
Reserve Timing
Project
IM Tax Credit
Project
Currently we receive
Currently IM is working to
estimates of the book-toinvest in Low Income
tax actuarial adjustments
Housing Tax Credits.
as a part of the tax
However, there are
provision, but the actual numerous other tax credits
adjustments are not
that have been identified and
provided until June of the discussed with IM and with
year following.
the business units.
Are there Hard Dollar Savings?
Yes
Yes
Yes
Yes
Yes
Is Solution Obvious?
No
No
No
No
No
Must Criteria
Does the process exist?
Results
Yes
Yes
Yes
Yes
Yes
Pass
Pass
Pass
Pass
Pass
1
2
2
2
2
4
5
1
2
4
5
5
5
3
5
4
4
2
3
2
4
5
4
2
4
3
5
1
3
5
960
5000
80
216
1600
A. Complexity: (1 = High; 3 = Med, 5 = Low)
B. Resources Available: (1 = No, 3 = Not Now, 5 = Yes)
C. Predicted Hard Dollar Savings: (1 = Less than 50K, 2 =
>50K<100K, 3 = >100K <200K, 4 = >200K <400K, 5 =
>400K)
D. Historical Process Data: (1 = Data not Available, 3 =
Some Data Available, 5 = Easy to Collect Data)
E. Linkage to MTP: (1 = Weak, 3 = Medium, 5 = Strong)
F. Project completion: (1 = >12 Months, 2 = >9<12
Months, 3 = >6<9 Months, 4= >3<6 Months, 5 = <3 Months)
Total = (AxBxCxDxExF)
ING Business School
Ref Overview-4
Lean Six Sigma Success Factors
Business
Process
Framework
Quantifiable
Measures &
Results
Committed
Leadership
Incentives &
Accountability
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Customer
& Market
Network
Strategy
Integration
Full Time
Six Sigma
Leaders
• Establishing these
factors provides the
seeds of success.
• They need to be
integrated uniquely to
fit each business.
• They are all
necessary for the
best result.
• The most powerful
success factor is
“committed
leadership”
Ref Overview-5
Lean Six Sigma Failure Factors
• Leaping to the fix – faulty assumptions;
not data based
• Serving the wrong customer – not focusing on
the voice of the “next” customer
• Selecting the wrong projects – not linked to
strategy
• Solution-caused problems – poor sequencing;
stakeholder under-involvement; ineffective
resource planning; absence of change
management; no project closure
Adapted from Six Sigma’s Seven Deadly Sins by James P. Zimmerman
and Dr. Jamie Weiss of Kepner Tregoe
ING Business School
Ref Overview-6
The Evolution of Lean Six Sigma
The foundation for
Lean Six Sigma has
been effectively
applied in a wide
variety of
companies
worldwide
over many decades
Today: American Express, JP
Morgan, Merrill Lynch, Wells Fargo,
B of A , Caterpillar Financial …..
Design for Six Sigma: GE
Six Sigma: AlliedSignal, GE
Six Sigma: Motorola
Reengineering: Michael Hammer
Quality Circles
1970: Zero Defects: Philip Crosby
Japanese Quality methods: Ishikawa, Taguchi
Applied Lean Concepts: Toyota Production System
Statistical methods for business: Juran, Figenbaum
Late 1940s; Statistical methods in Japan; W. Edwards Deming
Statistical Sampling; Walter A. Shewhart
1920 Time and motion studies; Frederick Taylor
ING Business School
Ref Overview-7
What is Sigma?
• The Greek letter σ (sigma) is used in statistics
to describe variation.
• Sigma (σ) represents the standard deviation in
a population.
• Standard deviation is derived from calculating
the average difference between all data points
of a population and the average of that
population.
ING Business School
Ref Overview-9a
Lean and Six Sigma Thinking
Lean Thinking:
Six Sigma Thinking:
• Customer focused
• Identify waste
• Improve process
speed/cycle time
• Specific speed tools –
Value-add analysis;
Kaizen events
• Critical Customer
Requirement (CCR)
focused
• Culture and
infrastructure to sustain
results
• Focus on variation
• Methodology driven –
DMAIC, DFSS
Lean Six Sigma - Blended to Optimize Results
ING Business School
Ref Overview-8
What is Lean Six Sigma?
(cont’d.)
• Measurement
• Measures the variation and defect level in a process or product
• Allows different processes to be compared
• 3.4 defects per million opportunities
ING Business School
Ref Overview-9b
What is Lean Six Sigma?
(cont’d.)
• Measurement
• Measures the variation and defect level in a process or product
• Allows different processes to be compared
• 3.4 defects per million opportunities
• Improvement Methodology
•
•
•
•
Customer-focused
Data and measurement-driven
Focused on reducing defect levels
Results-oriented
ING Business School
Ref Overview-9c
What is Lean Six Sigma?
(cont’d.)
• Measurement
• Measures the variation and defect level in a process or product
• Allows different processes to be compared
• 3.4 defects per million opportunities
• Improvement Methodology
•
•
•
•
Customer-focused
Data and measurement-driven
Focused on reducing defect levels
Results-oriented
• Catalyst for Organizational Change
• Large-scale fundamental change in culture
• Move to a data-driven, customer-centric mindset
ING Business School
Ref Overview-9d
Who is the Customer?
• External
• Purchasers of products and services
• Distributors
• Regulatory entities
ING Business School
Ref Overview-10a
(cont’d.)
Who is the Customer?
• External
• Purchasers of products and services
• Distributors
• Regulatory entities
• Internal
• Other departments
• Management / Shareholders
ING Business School
Ref Overview-10b
Who is the Customer?
• External
• Purchasers of products and services
• Distributors
• Regulatory entities
• Internal
• Other departments
• Management / Shareholders
• Voice of Customer(VOC)
• Information that can be collected from
external/internal customers
ING Business School
Ref Overview-10
What is Variation?
• Variation is the
normal, measured
difference in
process outputs
• Many process
measurements
focus on
averages…
averages don’t tell
the whole story
1
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Process
Customer
Average Requirement
Same Process
Average
5
15
20
10
Days to close loan
Ref Overview-11a
25
30
(cont’d.)
What is Variation?
Process Customer
Average Requirement
• Knowledge of
process variation
and defect levels
provides more
insight into
process
performance
• Less variation
reduces costs,
increases
reliability, and
customer
satisfaction
Same Process
Average
Much Different
Customer Defects
1
ING Business School
5
15
20
10
Days to close loan
Ref Overview-11b
25
30
Sources of Variation
Market
Suppliers
Inputs
Process Activities
Critical Customer
Requirements
Process
Outputs
Defects
Variation occurs in both process inputs
and process activities – people, methods,
materials, equipment, and environment
In-process variation
may lead to defects
in process output
The output (Y) is determined by performance of inputs
and processes (x)…. Y=f(x)
ING Business School
Ref Overview-12
Goal of Lean Six Sigma
Using Lean Six Sigma, we work to reduce variation
and permanently move product or service outputs
inside customer requirements. (Curve A to B)
B
A
Critical Customer
Requirement (CCR)
Defects: Process
output that does
not meet
Customer
Requirements
Product or Service Output
ING Business School
Ref Overview-13
Improve Process Yield
We use Lean Six Sigma to improve process yield.
Process Yield is the proportion of process output that
meets customer requirements.
Critical Customer
Requirement (CCR)
Proportion of
process
output (B) that
meets
customer
requirements =
100%
B
A
Proportion of
process output
(A) that meets
customer
requirements ≈
70%
Produce or Service Output
ING Business School
Ref Overview-14
The ‘Hidden’ Factory (Lean Thinking)
• The hidden factory corresponds to
the resources that today are
directed at creating waste, while they
could be focused on generating high
quality products and services.
• For the typical organization, about
25% to 40% of all work activities
consists of hunting for mistakes,
unnecessary audits, rework,
duplication of efforts and the
performance of unneeded tasks.
ING Business School
.
Rolled Throughput Yield
Rolled Throughput Yield (RTY)
represents a combined yield for each
step or sub-process.
Obtain RTY by multiplying the yield
for each step or sub-process.
STEP 1
ING Business School
STEP 2
STEP 3
STEP 4
Ref Overview-15a
Rolled Throughput Yield
Loan
Documentation
Yield = 95%
Loan
Application
Yield = 91%
Loan
Processing
Loan
Review
Rolled throughput Yield
Yield = 96%
Yield = 96%
=
0.95 x 0.91 x 0.96 x 0.96 x 0.97 = 77.2%
ING Business School
(cont’d.)
Loan
Servicing
Yield = 97%
Rolled Throughput Yield
• RTY can be
calculated on either
the number of items
that make it through
defect-free the “first
time right” or on the
final number of
items that are
defect-free once
errors are corrected
• In most situations, it
makes sense to
base sigma
calculations on First
Time Right
ING Business School
(cont’d.)
(cont’d.)
Process
Step 1
Correct?
No
First Time Right =
Number of items that
make it through errorfree without corrections
Errors
Reworked
Final Yield =
Number of items that
are defect-free AFTER
errors are corrected
Ref Overview-16
Rolled-Throughput-Yield - Activity
1. Appoint a facilitator in your project team to manage the time and
the discussion.
2. Map your selected improvement process high-level (e.g. 6-8
process steps) on a flip chart
3. Make an estimate of the yield rate at each individual process
step

You may have to first consider the criteria for defects and what the definition is
for a defect free step! This may include establishing a target level for a step (e.g.
this step must be finished in 2 hours)
4. Calculate the RTY % of the overall process
5. What is your conclusion?
6. Be ready to share your results in a short presentation.
ING Business School
Process Sigma is a Great Metric
• Focus is on
defects, even one
is a failure for a
customer
• Universal measure
that can be applied
to any product or
service
• Difficult to
motivate people to
improve quality
from 99% to
99.9997%
σ
DPMO
3.0
66,807
93%
3.5
22,750
98%
4.0
6,210
99%
4.5
1,350
99.87%
5.0
233
99.977%
6.0
3.4
99.9997%
Yield
Distribution shifted +/- 1.5 sigma
DPMO = Defects per million opportunities
Sigma Improvement Requires Enormous Defect Reduction
ING Business School
Ref Overview-17
Is Six Sigma Performance Necessary?
1000000
100000
10000
1000
100
DPMO 10
1
0
1
2
3
4
5
6
7
Process Sigma
Is the Airline Industry Focused on the Right Processes?
ING Business School
Ref Overview-18a
Is Six Sigma Performance Necessary?
(cont’d.)
At 3σ, or 93% Yield, there would be:
• >90% of computers would not function
• 10.8 million mishandled healthcare claims
annually
• 54,000 checks lost each night by a single
large bank
• 270 million erroneous credit card transactions
each year in the US
Source: The Six Sigma Handbook 2003, page 61, T. Pyzdek
ING Business School
Ref Overview-18c
Is Six Sigma Performance Necessary?
(cont’d.)
At 4.5 σ, or 99.9% Yield, there would be:
•
•
•
•
•
At least 20,000 wrong drug prescriptions per year
Unsafe drinking water almost 1 hour each month
No telephone service for nearly 10 minutes each week
Two short or long landings at O’Hare airport each day
25,000 lost or incorrectly delivered articles of mail per
hour
• Over 9,000 wrong felony convictions per year
• 50 Newborn babies dropped at birth by doctors each
day
ING Business School
Ref Overview-18b
Setting Sigma Performance Targets
• If the current Process Sigma is greater
than 3.0, a two times defect
improvement goal is set, e.g., improve
from 1,000 DPMO to 500.
• If the current Process Sigma is 2.9 or
less, a ten times defect improvement
goal is established, e.g., 300,000 DPMO
to 30,000.
ING Business School
Ref Overview-19
The Cost of Defects
Activity:
Brainstorm some costs
that you incur as a result
of defects.
ING Business School
Ref Overview-20
Cost of Defects - Examples
• Hidden Factories
• Re-work of defects in processes or products
• Complex workarounds
• Excessive phone calls, emails, faxes and other correspondence as
a result of poor performance
•
Inspections and Audits
• Back-end audits and approvals
• Multiple approval steps
•
Lost Sales and Market Share
• Market product requirements not met
• Service or delivery requirements not met
•
Fines and Other Penalties
ING Business School
Ref Overview-21
Lean Six Sigma Business System
• MTP Planning – the steering
mechanism of the Business
System
• Process Management –
documenting and measuring
process performance
• Problem Solving – using lean,
DMAIC, DFSS, and other
methodologies to close process
performance gaps
• People – recognizing and
harnessing
the exceptional potential of
employees,
suppliers, customers, and
experts
ING Business School
Ref Overview-22
DMAIC vs. DFSS
Lean Six Sigma DMAIC
Lean Six Sigma DFSS
Define Business
Improvement Opportunity
Does Process
Currently Exist?
No
Yes
Measure Current Performance
Measure Market Requirements
Analyze Root Cause
of Current Performance
Analyze Design Alternatives
Develop New Process
Is Current Process
Capable of Meeting
Customer Reqts?
No
Yes
Improve Performance
ING Business School
Control Performance
Ref Overview-23
(cont’d.)
DMAIC vs. DFSS
DMAIC
DFSS
 Define customer requirements and
Define
project goals
 Measure the process to determine
Measure
current performance
 Analyze to identify and validate
Analyze
root causes of defects
 Improve process by eliminating
Design
Improve
causes of defects
 Control and monitor on-going
process performance
Control
Verify
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 Define customer requirements
and project goals
 Measure customer needs and
specifications
 Analyze design options to
meet customer requirements
 Design a detailed process that
meets customer requirements
 Verify that current and future
process meets customer
requirements
Ref Overview-24a
Funneling the Focus of Process Work
Variables
DEFINE
20+
Many
variables
MEASURE
5-8
Important
variables
ANALYZE
3-5
Confirmed problematic
variables
IMPROVE
3-5
Focus of improvement
activities
CONTROL
1-3
Focus of ongoing control
ING Business School
Ref Overview-24b
Project Components: DEFINE
Overall objective: Clarify the Improvement Opportunity
Identify Business
Opportunity/Problem
Identify Outcome Metric(s)
and Target
Valid CCR
Critical
Customer
Requirement
Establish Roles &
Stakeholder Expectations
Clarify Project Boundaries,
Financial Benefit, and
Preliminary Problem Statement
Service
Attribute
Target
Charter & Schedule Project,
Select Resources
Schedule:
Project Schedule Worksheet
Project Theme
Week/Month
Team Members/ % Dedicated
Team Name
Sponsor
Team Information
Planned
1
2
10
3
10
4
10
1
10
Define
Measure
Date Attd. Hours
Meeting Record
Identify Critical
Customer
Requirements
(CCRs)
Outcome
Metric
Date Attd. Hours
Date Attd. Hours
Date Attd. Hours
Analyze
Improve
Control
To Measure Step
ING Business School
Ref Overview-25a
Actual
2
11
3
11
4
11
1
11
2
12
3
12
4
12
1
12
2
1
1
Project
Close
Project Components: MEASURE
Overall objective: Narrow the improvement
opportunity to a specific problem statement.
Plot Outcome
Defect Data
From Define Step
Frequency Plots
Create Detailed
Process Map
F
F
2
F
1
3
F
Stratify Data
Run Chart
Revise
Problem
Statement
Calculate
Performance
4
Pareto Chart
DPMO_____
Yield _____
Sigma _____
Goal _____
Collect Upstream
Data
Check Sheet
Develop Data
Collection Plan
Project ________________________
Data Collection Plan
What questions do you want to answer?
A
Mary
John
Sally
Jim
Data
What
Measure
type/ Data
type
B
C
E
Understand
Variation
Control Chart
UCL
Operational Definition and Procedures
How
Measured
1
Related
conditions to
record 2
Sampling
notes
How/where
recorded (attach
form)
Assess
Financial
Impact (COPQ)
LCL
To Analyze Step
ING Business School
Ref Overview-25b
Project Components: ANALYZE
Overall objective: Identify and confirm the root
causes of the problem statement.
From Measure Step
Identify Value Added &
Non-Value Added Steps
Customer
Confirm Root Causes with Data
Scatter Plots
Continuous
Data
Y
Customer
X
Stratified Frequency Plots
Made the Sale
Made the Sale
Mixed
Data
Brainstorm and Organize
Potential Causes
5
5
5
10
10
15
15
20
20
25
25
25
30
30
30
33 55
5
40
40
45
45
50
50
50
55
55
60
60
>60
>60
Did Not
Make the Sale
Did Not Make the Sale
Cause and Effect Diagram
Level 2 Cause
Contingency Table
Level 3 Cause
Level 1
Cause
Level 1
Cause
Level 2 Cause
Level 1
Cause
Level 1 Cause
Level 2 Cause
Level 1
Cause
Root
Cause
2
ING Business School
Level 2 Cause
Revised
Problem
Statement
Sub Cause
Yes
No
5
55
10
15
20
25
25
30
30
33 55
40
45
45
50
50
50
55
60
>60
Time With Customer
(in minutes)
Time With Customer
(in minutes)
Defect
Root
Cause
1
Present
Not
Present
Attribute
Data
Ref Overview-25c
To
Improve
Step
Project Components: IMPROVE
Overall objective: To identify/implement countermeasures
that will eliminate or reduce the confirmed root causes.
From Analyze Step
Cost/Benefit
Analysis
Identify
Breakthrough
Ideas
Lean
Thinking
Develop Action
Plan
Quantify Pilot
Results
:
Problem Statement
________________________________________
Solution
(s) / Specific Task (s) ____________________________
Task / Project
Who
Due Date Status
Cost/Benefit Analysis
Updated Pareto Chart
1.3 s
Before
Benefit
Approval from Finance
Select
Countermeasures
Recommended
Action
Responsibility
and
Target Date
Action Taken
RPN
Current
Controls
“After”
Severity
Occurrence
Detection
Potential
Cause(s)
Detection
Potential Potential
Failure Effect (s)
Mode
of Failure
RPN
Item or
Process
Step
Occurrence
FMEA
Severity
Problem
Specific
Tasks
75%
After
}
50%
Develop Pilot Plan
Gantt Chart
A2
A3
A4
50%
Improvement
25%
Risk Analysis
Selection Matrix
Solutions
100
%
75%
Cost
A1
Root
Causes
3.1 s
100
%
A2
A1
A3
25%
A4
Update Metrics
Before
3.2 Process Sigma
After
Good
3.6 Process Sigma
IMPROVE changes
implemented
} Improvement
Time
Total Risk Priority Number =
“After” Risk Priority Number =
To Control Step
ING Business School
Ref Overview-25d
Project Components: CONTROL
Overall objective: To maintain the gains.
From Improve Step
Communicate
Results
Standardize
the Process
Standard
Practices
Close
Project
“Y” Outcome Metrics
Trai
n
Good
Cost/Benefit
Analysis
Approval from
Finance
“X” Upstream Metrics
UCL
Celebrate!
Process Control Plan
Response
Response
Send
Receive
RETS
O1
in
LCL
Proposal
Approve
Quote” Letter
Prepare “No
time
not sent on
% proposals
Yes
to on time
responded
not
Zero RFPs
?
OK
A
RFPs > 5 days
Track reasons
?
No
Pricing
basis
approval
Manager’s
response for
prepare
Avg. time to
Add
Prepare
Sales
Specs
U1
Proposal in
Clerk
Each
OK
Forward
& Tracking System)
sent
response
Yes
RETS
to Mgr. in
RETS
sent
response
receipt to
Time from
O1
No
Price
RETS – RFP Entry
Yes
Days
Work
within 3
Complete
approval
for
by Mgr.
submission
RFP rcvd.
receipt to
Time from Each
FIFO
on
Clerk
RFPs
Sales
Work
RFPs > 3 days
Track reasons
U1
?
in RETS
to Quote
Assign RFP
Want
File in RETS
A
Update Cust .
No
in RETS
Log RFP
Send RFP
RFP
Receive
Customer
Sales/Mktg. Rep.
Sales Clerk
Process Customer: Various - External
Timely RFP response
Critical Customer Requirement:
Check
Outcome
Upstream &
Specs.
Target
To Check
To
Checks
Plan
What
When
Who
Response
• Procedure
• Abbreviations
• Cross Ref.
Metrics
Respond to customer request for proposal in timely manner with competitive
c
offer.
Process Description
Revision: 2
Date: 9/18/04
Approved: R.L.Griffin
ING Business School
Daily Management & Control
Other Info.
Outcome Metric:
% of Proposals Not Sent On Time
Process Owner:
Sales & Marketing Manager
Ref Overview-25e
Lean Six Sigma Involves Cultural Shift
• Owns vision,
• Leads change
• Directs, integrates
project w/in business
• Creates business
deployment plan
Project
Sponsor
• Provide project-specific
support
• SMEs (subject matter
experts) provide
support as needed
Executive
Champion
Project Team
Members / SME
Understand vision
All Employees
Process Owner
• Supports Black Belts and
Local Champion
• Sustains and leverage
gains
ING Business School
Green Belts
Apply concepts to their job
and work area
Master
Black Belts
• Full-time
• Train and coach
Black Belts and Six
Sigma Green Belts
Black Belts
• Full-time
• Facilitate problem
solving
• Train and coach
Project Teams
Ref Overview-26
• Help Black Belts
as team member
• Experienced
Green Belts lead
some projects
Lean Six Sigma Roles/Responsibilities
Executive Champion
• Creates the vision and aligns Lean Six Sigma
with business strategy
• Defines strategic goals and measures
• Establishes business targets
• Promotes Lean Six Sigma tools and
methodology
• Helps to remove barriers to success
• Reviews project and team progress
• Attends tollgates during initial roll-out
ING Business School
Ref Overview-27a
Lean Six Sigma Roles/Responsibilities
(cont’d.)
Project Sponsor
•
•
•
•
•
•
•
•
•
•
•
Positions project within business environment
Identifies process owner of improvement projects
Develops preliminary project charter
Defines improvement areas, goals and financial targets
Identifies key SME resources for project team
Positions and kicks off improvement project
Reviews project and team progress
Helps gain organizational support and removes barriers
Helps gain organizational support for solution
Recognizes team and contributing members
Ensures access to data from existing databases
Establishes and certifies savings
ING Business School
Ref Overview-27b
Lean Six Sigma Roles/Responsibilities
(cont’d.)
Process Owner
• Participates in tollgates
• Identifies resources and team members for
project team
• Ensures sufficient implementation resources
• Ensures organization support of solution
deployment
• Evaluates sufficiency of project “controls”
designed to hold gains upon solution
implementation
• Owns process, Responsible for sustaining project
gains
• Removes barriers for the team
ING Business School
Ref Overview-28a
Lean Six Sigma Roles/Responsibilities
(cont’d.)
Master Black Belt
• Expert on Six Sigma tools and concepts
• Trains Black Belts and ensures they are properly
applying the methodology and tools
• Coaches and mentors Black Belts and Green
Belts
• Works high-level projects, many of which are
across divisions or business units
• Assists Champions and Process Owners with
project selection, project management and Lean
Six Sigma deployment and administration
• Removes barriers for the team
ING Business School
Ref Overview-28b
Lean Six Sigma Roles/Responsibilities
(cont’d.)
Black Belt
• Responsible for leading, executing, and
completing Lean Six Sigma projects
• Teaches team members the Lean Six Sigma
methodology and tools
• Assists in identifying project opportunities and
refining project details and scope
• Reports progress to MBB, Process Owners and
Champions
• Mentors Green Belts and team members
ING Business School
Ref Overview-29a
Lean Six Sigma Roles/Responsibilities
(cont’d.)
Green Belt
• Assists Black Belt as team member
• Can lead smaller scope projects
• Reports progress to MBB or BB, Process Owners
and Sponsors
Project Team Members/Subject Matter
Experts (SMEs)
•
•
•
•
Provide process knowledge and understanding
Participate in identifying and gathering data
Identify gaps
Help analyze data and identify solutions
ING Business School
Ref Overview-29b
What is a Tollgate Review?
• A milestone that the project must pass
through at each step (D-M-A-I-C)
• Formal presentation(s) followed by questions
and discussion
• Assess status of project – project control
• Review activities and accomplishments prior to
proceeding to the next phase – alignment with plan
• Revisit Project Charter assumptions
• A tollgate review ends with a Go/No-Go
decision
Tollgate reviews ensure projects deliver desired results.
ING Business School
Ref Overview-30a
Who Attends Tollgate Reviews?
•Black Belt/Green Belt
•Project Sponsor
•Process Owner
•Project Team (Key Members)
•Quality Champion
•Senior Mgmt. Stakeholders
•Other Stakeholders
•Master Black Belt
ING Business School
Required
Required
Required
Required
Recommended
Recommended
As Appropriate
Required
Ref Overview-30b
Why Are Tollgate Reviews Critical?
1. Brainstorm reasons why Tollgate Reviews are
important.
2. At what intervals should Tollgate Reviews be
scheduled? Why?
Discuss ideas
ING Business School
Ref Overview-31
Who is Using Lean Six Sigma?
Manufacturing:
Financial Services:
Services:
Companies across
all regions and
industries
ING Business School
UNIT 1
Define
ING Business School
Define – Learning Objectives
At the conclusion of this unit, you will be able
to:
• Describe actions for launching a Lean Six
Sigma project.
• Identify project stakeholders and
expectations.
• Clarify project scope.
• Define Critical Customer Requirements
(CCRs) to measure a process performance
metric and establish a target for improvement.
• Develop a project charter and schedule.
ING Business School
Ref Unit 1-1
Define – Major Activities
DEFINE
Launch
the
Project
MEASURE
Identify
Stakeholder
Expectations
ANALYZE
Clarify
Project
Scope
IMPROVE
Measure
Customer
CCRs
CONTROL
Develop
Project
Charter and
Schedule
Overall objective: Clarify the Improvement Opportunity
ING Business School
Ref Unit 1-2a
Define – Key Deliverables/Commonly Used Tools
Key Deliverables:
Commonly Used Tools:
• Stakeholder Analysis
• Preliminary Financial
Benefit
• Preliminary Problem
Statement
• Project CCR’s
• Process Outcome
Metric/Target
• Team Charter
• Risk Analysis
• Project Schedule
• Surveys
• Focus Groups
• Interviews
• Stakeholder Analysis
• SIPOC
• In and Out of Scope
Analysis
• Risk Analysis
• Pert Chart
ING Business School
Ref Unit 1-2b
Define – Major Activities
DEFINE
Launch
the
Project
ING Business School
MEASURE
Identify
Stakeholder
Expectations
ANALYZE
Clarify
Project
Scope
IMPROVE
Measure
Customer
CCRs
CONTROL
Develop
Project
Charter and
Schedule
Ref Unit 1-3a
Lead Team Identifies Lean Six Sigma Projects
PLAN
DEPLOY

Analyze current operations, competitive environment,
customer input, employee surveys, benchmark information.

Identify priorities that align with MTP, and that
address local priorities.

Establish metrics with targets for improvement to
measure performance.

Launch projects that focus on priorities.

Coordinate activities in an action plan that defines who
will be doing what by when.

Monitor progress during Tollgates.

Offer Feedback, both positive and constructive, to keep
people informed.

Share Thoughts, Feelings and Rationale so others
can learn from a leader’s knowledge and experience.

Inform Senior Management of progress.

Recommend improvements.

Continuously improve both results and the approach
taken to achieve them.
REVIEW
REPORT
GROW
ING Business School
Ref Unit 1-3b
Lead Team Identifies Lean Six Sigma Projects
(cont’d.)
Approach Options
•Management Action
•Individual Assignment
•Form a Project Team
ING Business School
Methodology Options
•Process Management
•DMAIC
•DFSS
Ref Unit 1-4a
DMAIC for Existing Process Improvement
Define the project’s purpose,
scope and major milestones
Control the process
“maintain the gains &
transition to full
implementation”
Improve
the process
“develop &
pilot solutions”
“clarify the opportunity”
5
1
CONTROL
DEFINE
IMPROVE
MEASURE
4
2
ANALYZE
3
Measure the
current process
performance
“narrow the
problem area”
Analyze potential root causes
“confirm with data”
ING Business School
Ref Unit1-4b
Lead Team Fills Lean Six Sigma Roles
(cont’d.)
Project Roles
•Executive Champion
•Project Sponsor
•Process Owner
•Master BlackBelt
•BlackBelt
•GreenBelt
•SMEs
ING Business School
Ref Unit1-5
Define – Major Activities
Launch
the
Project
Identify
Stakeholder
Expectations
Clarify
Project
Scope
Measure
Customer
CCRs
Develop
Project
Charter and
Schedule
A stakeholder is someone with an interest in,
and/or who may be effected by outcomes
of the project.
ING Business School
Ref Unit 1-6a
Stakeholder Expectations
The Project Sponsor communicates:
•
•
•
•
•
•
The need for change
Desired outcomes
Where performance is now and targets
How performance will be measured
Level of urgency
Related issues to be addressed
ING Business School
Ref Unit 1-6b
Stakeholder Expectations
(cont’d.)
Process
Owner
Internal/External
Customers
SMEs
ING Business School
Project
Sponsor
Project
Team
Lead
Team
Other
Project
Teams
Internal/External
Other
Employees
Suppliers
Ref Unit 1-7
Stakeholder Expectations
(cont’d.)
What stakeholders typically expect:
• On-time delivery
• Resource management
• Accurate cost forecast and control
• Risk Management / Security
• Measurable results / ROI
• Easy to understand /implement
ING Business School
Ref Unit1-8a
Stakeholder Expectations
(cont’d.)
What Project Teams typically expect :
•
•
•
•
Clear goals and deliverables
Resource availability
Time to work on the project
Clear idea as to how performance will be
evaluated
• Positive and constructive feedback
• Support, as needed
ING Business School
Ref Unit1-8b
Activity
Expectations
ING Business School
Ref Unit 1-9
Define – Major Activities
Launch
the
Project
ING Business School
Identify
Stakeholder
Expectations
Clarify
Project
Scope
Measure
Customer
CCRs
Ref Unit 1-10a
Develop
Project
Charter and
Schedule
Clarify Project Scope
The scope of a project is the sum of
activities that a team is committed to
complete in a given scheduled timeframe.
Begin thinking about scope using the highlevel process map you developed in the
PreWork…
Sell
Policy
ING Business School
Review
Application
Underwrite
Policy
Issue
Policy
Ref Unit 1-10b
Clarify Project Scope
(cont’d.)
In and Out of Scope Analysis
nt
re
ur gy
e c olo
Us chn
te
w
y
Ne nalit
tio
c
fun
IN
SCOPE
Redefine
jobs
ING Business School
New IT
platform
OUT OF
SCOPE
Adding
personnel
Ref Unit 1-11
Clarify Project Scope
Preliminary Problem Statement
(cont’d.)
• What is Wrong – state the effect, not why it is
wrong, and not the solutions
• Measurable – how often, how much, and when
• Specific – avoid broad categories, e.g., poor
morale; low customer satisfaction
• How Customers Are Effected – areas of
dissatisfaction
• Objective – does not imply blame or cause
• What Is and What Should Be – gap between
customer expectations and performance
ING Business School
Ref Unit 1-12
Clarify Project Scope
Calculate Financial Benefit
(cont’d.)
• An initial financial benefit of the project
is developed based on the project scope
and preliminary problem statement.
• When determining Financial Impact,
calculate annualized benefits.
• Look for benefits that may accrue from
reducing or eliminating defects in the
process.
ING Business School
Ref Unit 1-13
Activity
Clarify Project Scope
ING Business School
Ref Unit 1-14
Define – Major Activities
Launch
the
Project
ING Business School
Identify
Stakeholder
Expectations
Clarify
Project
Scope
Measure
Customer
CCRs
Ref Unit 1-15a
Develop
Project
Charter and
Schedule
Customer Requirements
Do you remember from the PreWork…
• What are typical customer requirements?
• What are customer requirements categories?
Requirement Categories:
Category
Quality
Explanation
Free of errors, defects, and mistakes
Cost
Delivery
Value exceeds or equals price
Output received when needed
Accountable to shareholders and
communities served
Integrity
ING Business School
Ref Unit 1-15b
Must Haves vs. Like to Have
Separate Must Haves from Like to Haves…
• Ask questions of internal customers
• Negotiate for win/win reasonable
requirements
• Agree on specific, measurable, attainable and
trackable performance levels
ING Business School
Ref Unit 1-16
Who Caught The Fish?
A
ING Business School
B
C
D
E
SIPOC Analysis
SIPOC Analysis Worksheet - Example
Date: 1/04
Process Name: New Business Process
By: Li Chan
Process
Suppliers
Process
Inputs
Agent
Completed insurance applications
Agent
Legible insurance
applications
Suppliers
ING Business School
P
R
O
C
E
S
S
Process Outputs
Process
Customers
Underwriting approval
Agent
Timely response
Agent
Policy issued
Agent/Policy Holder
Inputs
Outputs
Products
Products
Services
Process
Services
Customers
Ref Unit1-17
80/20 Rule
Use the 80/20 rule to identify the 20% of customer
requirements that are most critical.
Review your SIPOC Analysis while
considering the following questions:
• Who is the “next customer” – the direct recipient of
our process output?
• Who are the most critical customers of our process (it
may only be one customer)?
• Who would be most impacted if our process stopped
producing an output?
ING Business School
Ref Unit 1-18
Activity
SIPOC Analysis
ING Business School
Ref Unit 1-19
Critical Customer Requirements (CCR)
A CCR is a description of a product/ service
attribute or characteristic that influences a
customer’s requirement.
To identify CCRs for your process…
• What attribute of my product/service does
the next customer (my key customer) most
care about?
• What attribute of my product/service does
the business most care about?
• Work with your Project Sponsor to rectify
any conflicts.
ING Business School
Ref Unit 1-20
Measure CCRs with Outcome Metrics
• Outcome metrics are “after the fact” “past tense”
measures
• They always focus on defects
• They represent the proportion of total process output
that is not satisfying the customer requirement over a
period of time
• A typical process has 1-3 outcome metrics
Critical Customer
Service Attribute
Requirement
“I want new
insurance policies Turn Around Time
issued quickly.”
ING Business School
Outcome
Metric
% of Policies not
issued on time
Ref Unit 1-21
Tips for Defining Outcome Metrics
•
•
•
•
•
Customer Oriented
Cost Effective
Controllable
Calculable
Consistent
ING Business School
Ref Unit 1-22
System of Metrics
Process A
Region 1
Process B
Process C
Business Line
Region 2
Process D
An outcome metric for
one process should link
to the next higher-level
process – see example
on next slide
Process E
Region 3
Process F
ING Business School
Ref Unit 1-23
Setting Outcome Metric Targets
Sources of Targets
•
•
•
•
Critical customer requirement data
Specifications
Past performance trends
Analysis of potential for process improvement
(Process Sigma)
• Benchmark levels of performance attained by
competitors, or best in class in your
organization
ING Business School
Ref Unit 1-24a
Setting Outcome Metric Targets
(cont’d.)
Tips for Setting Targets
• Use numbers to clarify desired level of
performance
• Be prepared to change target
• Establish a time frame for achieving target
with intermediate targets
• With multiple process outputs, set targets for
each to realize the overall product or service
target
ING Business School
Ref Unit 1-24b
Valid CCRs
Valid CCR
Critical
Customer
Requirement
Service
Attribute
Outcome Metric
Target
“I want my new
policy issued
quickly.”
Turn Around
Time
% of policies not
issued on time
<2% not on time
Note: “On time” means within 5 working days beginning
the day after the policy is received from agent.
ING Business School
Ref Unit 1-25
Valid CCRs
Promise what you can deliver.
Valid target
for 2005
Valid target for
2006, through
2nd Quarter
Valid target for
2006,
end of year
Policy issued within
5 working days of
receipt
Policy issued within
4 working days of
receipt
Policy issued within
3 working days of
receipt
ING Business School
Ref Unit 1-26
Activity
Define Valid CCRs
ING Business School
Ref Unit1-27
Define – Major Activities
Launch
the
Project
ING Business School
Identify
Stakeholder
Expectations
Clarify
Project
Scope
Measure
Customer
CCRs
Ref Unit 1-28a
Develop
Project
Charter and
Schedule
Project Charter Example
Business Opportunity
Business Benefits/Customer Benefits
Over 15% of department resources spent
on answering agent’s inquiry. Improving the
process will enable resource allocation.
Better support to agency will improve
business and increase customer
satisfaction.
Business Benefits:
 More efficient handling of agent’s enquiry
reduce resources, which can be allocated to
improve other daily operations
Customer Benefits:
 Timely service to agent, hence more satisfied
customers.
Key Deliverables
Process Scope




Review and improve agency inquiry
process by Nov 2005.
Answer all agent’s inquiry in less than
5 minutes Turn-Around-Time
(KPI/Target).
Process Control Plan
Training plan for revised process
ING Business School
 Starts when an agent makes an inquiry (by
email or by phone).
 Ends when reply received and no more
follow-up. Services limited to agents only
(internal inquiry not included). The
communication channels include email,
phone, internal memo, and agent’s intranet.
Ref Unit 1-28b
Project Charter
Elements of a Project Charter
•
•
•
•
•
•
Business Opportunity
Business Benefits/Customer Benefits
Key Deliverables
Metric /Target
Process Scope
Project Schedule and Resources
ING Business School
Ref Unit 1-29
Identify and Mitigate Risks
•
•
•
•
•
•
People
Technology
Resources
Cost
Schedule
Environment
Can you think of
others?
ING Business School
Ref Unit 1-30
Identify and Mitigate Risks
(cont’d.)
Risk Assessment Table
Project Risk
Items
Example:
Severe
storm
ING Business School
Potential
Impact
(1-5)
Probability of
Occurrence
(1-5)
Overall Risk
(impact x
probability)
Action Plan
5
1
5
n/a
Ref Unit 1-31
Project Schedule & Resources
• Serves as a record of team participation
• Tracks the number and duration of meetings
• Clarifies a schedule for completing each of the
DMAIC steps
• Facilitates comparison of the planned
schedule with actual time required
• Includes actions to reduce/mitigate identified
risks
ING Business School
Ref Unit 1-32
Project Schedule & Resources (cont’d.)
Project Schedule Worksheet
Project Theme
Team Members/ % Dedicated
Team Name
Sponsor
Team Information
Date Attd. Hours
Date Attd. Hours
Date Attd. Hours
Meeting Record
Date Attd. Hours
ING Business School
Ref Unit 1-33a
Project Schedule & Resources (cont’d.)
Schedule:
Week/Month
Planned
1
2
10
3
10
4
10
1
10
Actual
2
11
3
11
4
11
1
11
2
12
3
12
4
12
1
12
Define
Measure
Analyze
Improve
Control
ING Business School
Ref Unit 1-33b
2
1
1
Project
Close
Activity
Develop Project Charter,
Schedule and Resource
Requirements
ING Business School
Ref Unit 1-35
Project Tollgates
A tollgate occurs at the end of each step in the
DMAIC methodology with the purpose of...
•
•
•
•
•
•
•
•
•
•
Monitor team progress
Identify additional resource needs
Maintain focus
Assist in dealing with sensitive issues
Ensure coordination among all teams
Share best practices
Remove organizational barriers
“See” the business
Check for consistency
Reward and recognize
ING Business School
Ref Unit 1-34a
Define Project Tollgate
Prepare to answer the following questions during
a tollgate review at the end of the Define Step:
A.
B.
C.
D.
E.
F.
G.
H.
I.
What is the problem or opportunity?
Why is this project important to the business?
Who is the project Sponsor
Does the Project Charter address key stakeholder
expectations?
When does the Project Schedule call for the project to be
completed?
What identified risks most threaten the project?
Who is working on this project? Why?
How does the outcome metric measure performance against
CCRs?
How were targets established for each metric?
ING Business School
Ref Unit 1-34b
Unit Summary
Having completed this unit, here are some
questions you should be able to answer:
A. What actions are involved in launching a Lean Six
Sigma project?
B. Who are typical project stakeholders? What do they
typically expect from a project?
C. What is a CCR?
D. What metric is used to measure overall process
performance in satisfying CCRs?
E. How are the Project Charter and Schedule helpful?
ING Business School
Ref Unit 1-38a
Project Components: DEFINE
Overall objective: Clarify the Improvement Opportunity
Identify Business
Opportunity/Problem
Identify Outcome Metric(s)
and Target
Valid CCR
Critical
Customer
Requirement
Establish Roles &
Stakeholder Expectations
Clarify Project Boundaries,
Financial Benefit, and
Preliminary Problem Statement
Service
Attribute
Target
Charter & Schedule Project,
Select Resources
Schedule:
Project Schedule Worksheet
Project Theme
Week/Month
Team Members/ % Dedicated
Team Name
Sponsor
Team Information
Planned
1
2
10
3
10
4
10
1
10
Define
Measure
Date Attd. Hours
Meeting Record
Identify Critical
Customer
Requirements
(CCRs)
Outcome
Metric
Date Attd. Hours
Date Attd. Hours
Date Attd. Hours
Analyze
Improve
Control
To Measure Step
ING Business School
Ref Unit 1-38b
Actual
2
11
3
11
4
11
1
11
2
12
3
12
4
12
1
12
2
1
1
Project
Close