Julian Kalac, P.Eng Lean Six Sigma Master Black Belt

June 2012

Focus and align the flow of ideas, processes, performance and profitability within the business

Learn how to find new opportunities, organize the concepts learned and prioritize and/or defer others

Objectives:

Enable more product launches with shorter lead times

Increase first-time quality and on-time deliveries

Enhance and sustain productivity improvements ◦ Output and “Value-add” per worker ◦ Output and “Value-add” per dollar invested

What:

A process of ongoing, non-static, constantly renewed mindset of adding business value and increased productivity

How:

Trough demonstrated creativity and significant changes getting ideas & turning them into

reality

Where:

in everything we do, enterprise-wide

Risk & Reward

Continuous Improvement •Everyday culture of change in how and what we do •Focus on maintaining & improving process precision, accuracy and discipline •Often savings are not strictly monitored but just put back into the business •Can support & narrow Breakthrough Innov.

Amount of Resources and Activity

Incremental Innovation •Relatively small improvements that are faster, better cheaper, •Savings show up in bottom & top line

Distinctive Innovation •Significant advances and improvements by extending existing technologies/approaches •Adapting “other industry/sector technologies/approaches •Example: “Lean”/JIT/Single-piece-flow/Pull Systems in health care

Breakthrough & Disruptive Innovation •Fundamentally new technologies/approaches •Implementing things previously thought to be not possible •Often a birthplace of Distinctive & Incremental Innovation •Can fuel and clash with Conti. Impr. and process discipline

Supplier “Push”

“Customers gambling in Nevada have figured out how to develop an application for counting cards beyond what Apple imagined”

Customer “Pull”

• New colours • Video features • More memory • Longer battery life • Predictive text

Ideas

Inventions

Innovation

Operations

Production Service

The Ideas-Inventions-Innovation-Operations-Service (IIIOS) Roadmap:

Sales & Marketing

Research & Development

Product Development

Operations

Production

Customer Service

The Hydrogenics Business Flow:

Productive creativity and focused process discipline will lead to a successful sustainable harvest of results

•To help explain the Toyota Production System to employees and suppliers, the “House of Toyota” graphic was created by Taiichi Ohno and Eiji Toyoda. •They chose the house shape because it was a familiar one – and also conveyed stability. •The roof contains the primary goals of TPS: superior quality, cost and delivery through waste elimination

Change Management Teams

TPM JIT

Point-of-Use

Poka-yoke

Pull System and Kanban Cellular and Flow

Autonomation

Standard Work

Self inspection

Visual Workplace

Quick Changeover

Layout

Batch Size Reduction

5S VSM

Continuous Improvement Kaizen Blitz

“Future competition will not be between products and services… … it will be between processes.”

Dr. Robert Gee, National Graduate School

“In order to develop a culture that consistently improves performance, you have to focus not just on the end result (solution focus) but also on how you get there (process focus).” Michael Kukhta, Master Black Belt

PDSA Cycle:

Plan, Do, Study, Act

Plan a step

Take a step

Study the outcome

What worked?

What didn’t work?

What did we learn?

Act on the difference between what you expected & what you got

Keep learning

This Way:

Plan

Do

Act

Check

Plan

Do

Re-Act

Check

Not this Way:

Dr Edwards Demming:

Lack of knowledge… that is the problem

There is no substitute for knowledge

Study

Analyze

Study Analyze

From Dr. Joseph Juran’s teaching: Removal of Special Cause only

brings to system back to where it should have been in the first place

The important problems of improvement commence once you achieve statistical control

“There is here, the same widespread unsupported assumption that the bulk of defects are operator controllable, and that if operators would only put their backs in to it, the plant’s quality problems would shrink materially” ◦ (J. Juran, Industrial Quality Control 1966)

Juran’s Trilogy:

1) Quality Planning

Develop Standards, Designs

Processes & Systems that

enable the possibility of

compliance

2) Quality Compliance

Use the Processes & Systems

to measure performance

to Standards

3) Quality Improvement

Improve Performance to

standards (compliance)

Improve Standards, Designs,

Processes & Systems

SCOR Model

Customer’s Customer

Supplier’s Supplier

Supplier

Internal or External

Customer

Internal or External

Your Company

Plan

Make Deliver Source Make / Repair

Deliver Make Source Deliver Source Deliver Source

Return Return Return Return Return Return Return Return

Plan Plan

Provides Framework for your Transformation / Improvement Projects. • Defining the boundaries / scope of the supply chain . • Evaluate the supply chain’s strengths and weaknesses. • Industry benchmarks, standardized terms, metrics,

Enables a total enterprise view of a supply chain

The systematic elimination of waste and re-alignment of resources to deliver value to the customer faster, better, & more consistently

Lean also is: ◦ Pursuit of excellence

◦ Continuous Improvement of performance and quality

◦ .

◦ Increasing inventory “turns” and throughput

◦ Simplifying and redefining processes

◦ Measuring & monitoring processes

◦ Empowering the workforce

Leading to Leading to Eliminate

Waste Reduced Cycle

Times Increased Capacity

Focus: Eliminate waste, non-value add steps, process constraints and bottle necks that cause problems in work throughput

Approach: Intuitive and broad - “inch-deep, mile wide”

The Five Principles of “Lean Thinking”

1. Define value from the perspective of the Customer

2. Map the value stream

3. Get the stream to “flow” by eliminating waste

4. Allow the customer to “pull” value from the stream

5. Pursue perfection (continual improvement)

MEASURE

•Map/measure the process

•Collect lots of data

ANALYZE •Organize and analyze the data and information to Identify failure modes, problems, root causes

CONTROL •Maintain, monitor and control variation •Preventively fix root causes

IMPROVE •Plan, apply, deploy Improvement Tools •Correctively fix failure modes

DEFINE •Identify standards, metrics, objectives, CUSTOMER PROBLEMS

Define

Measure

Analyze Improve

Control Results

Define

Measure

Analyze Improve

Control Results

σ Use data-driven, measurement-based, statistical methods σ Think critically, deeply and analytically to improve performance σ Eliminate non critical business issues and concerns

σ Focus: Surgical “inch-wide, mile-deep” investigation and resolution σ Approach:

σ Solve problems at the system and root cause level σ Relentlessly pursue drastic reductions in variation then control and manage

whatever variation is left over

Applied projects following the DMAIC Model

In the 1980’s, Engineers and Management at Intel and Motorola - realized that variance reduction and lower defect rates were one of the keys to the success of Japanese competitors

Is “Six Sigma Quality” – 3 DPM – good enough for your process? (e.g. producing semiconductors?)

Dr. Mikel Harry researched these successes in variance reduction and formed them with others into the “Six Sigma” programs that we are familiar with today

“Sigma” Quality Level 1 2 3 4 5 6 7

Cost of Poor

Quality

(COPQ)

$’s

?

% First Pass Yield (FPY) 68 95 99

99

.977

99

.999

66

99

.379

Defects/million (DPM) 690K 308K 67K 6K 230 3.4

“Sigma” Quality Level 1 2 3 4 5 6 7

Cost of Poor

Quality

(COPQ)

$’s

?

% First Pass Yield (FPY) 68 95 99

99

.977

99

.999

66

99

.379

Defects/million (DPM) 690K 308K 67K 6K 230 3.4

Accurate Precise

Processes Processes Process Start

Process Finish

Process Steps

Processes Processes

Organization Customers End-use Customers

Suppliers Sub-

Suppliers

Process Steps

Return Return

Plan

Make Deliver Source Make/Repair

Deliver Make Source Deliver Source Deliver Source

Return Return Return Return Return Return

SCOR Supply Chain Model

Single Piece Flow Just-In-Time Eliminate Waste

•Process parts one-at-a-

time or in small lots

instead of in large

batches or economies of

scale

•Quick changeovers

•Balanced and

continuous flows instead

of stop and start

processing

•Have just the right

amount of inventory you

need, when you need it,

where you need it

•Optimize the amount

of inventory required

•Ensure that your

resources are ready to

support the flow

•Never knowingly pass

on a defect

•Improve the capability

of your processes

•Fix failure modes

when they occur

•Determine and resolve

the deeper root causes

= =

The Toyota Production System

Model by Michael Kukhta Reference: Senji Niwa, from the

Shingijutsu Organization. Niwa-san also worked directly for

Toyota’s Taiichi Ohno (TPS creator) for 18 years.

“Classic Lean” Strength

“Supply Chain Management” Strength

“Classic Six Sigma” Strength

Numbers, words, quantities, values stored sitting in piles or queues waiting for future use

Charts, summaries, spread sheets, etc. that organize the data

Presentations, plans and tools that explain and communicate the information

Processes, organizations and team using the information to improve, manage, build systems and develop cultures

Push the data “up” to become Wise

Always loop back to check the data

Wisdom

Knowledge

Data

Information

Where are you looking from?

The WISDOM TOWER: Changing Perspectives

2) Clearly Define your problem Example: Too many mistakes in purchase request specifications are causing rework rates of 34%, high costs and late deliveries (less than 50% on time) to our customers

1) Find:

•Customer Issues •Performance Reviews •Meetings •New Projects •Failures, Re-work •Projects •Continuous improvement activities •Champions •Stakeholders •Employees •SCOR Maps •Research •Brainstorm •Wait until the crisis hits you •Value Stream Maps

3) Clearly State the Initial Charter for your project (Set targets and timelines!) Example: This first phase of this project – by 3Q 2004 - will identify problems and root causes in the purchase request process, target first pass yield rates of 95%, target a 50% reduction in the Cost Of Poor Quality and increase on-time deliveries to our customers to greater than 90%

4) Link improvement targets to customer needs and organizational objectives

5) Create a Project Charter - Resources, Milestones

What are we Mapping? The flow or path of: ◦ People, Parts, Paper, Information, Electrons (IT, networks, computers)

What status is the Map we are making?

◦ “As Was” – a historical reference or how the process used to be

◦ “Should Be” – the way documentation says it is supposed to be or the way you think it is working

◦ “As Is” or “Current State” - an accurate reflection of how the process is actually working. You must “walk” the process on the ground at the working level to validate the “real” way

◦ “Future State” – a projection of how you would like the process to work ◦ “Utopian State” – the way the process could work if there were no restrictions or

boundaries on time and resources

Represents...

Some Examples are...

This Symbol….

Start / Stop

* Receive Trouble Report * System Operable

Decision Point

Approve / Disapprove Accept / Reject Yes / No

Activity

Process Step or Activity

Connector (to another page or part of the diagram)

A

A

B

Represents direction of flow

Enjoy!

Fill kettle with water &

plug in

Get coffee from cupboard

I’m going to have a

coffee

Instant or

Brewed

Put coffee into mug

Get mug from cupboard

Pour hot water into mug

A

Add cream & sugar

Is it to

taste ?

Yes

No

Instant Brewed

Process Flow Diagram: Morning Coffee Flow Chart

High-Level Process Map

Can show the link from suppliers outside your organization to the customers you deliver your product or service to

Mid-Level Process Map

Can show your organization within the larger organization you work in

Detail-Level Process Map

Show s the process within your organization that you wish to investigate further

Stop

Start Stop

Start

Start

Stop

Stop

Product and Services

Cash/Funding

Information

Customer’s

CustomerSupplier’s

Supplier

SupplierSupplier CustomerCustomerYour Company

PlanPlan

Make DeliverSourceSource Make /

RepairDeliverMakeSourceDeliver SourceDeliverDeliverSource

ReturnReturn ReturnReturn ReturnReturn ReturnReturn ReturnReturn ReturnReturn ReturnReturn ReturnReturn

PlanPlan PlanPlan

VA/NVA Ratio= 46%

DPU = ____

RTYield = _____

SCORE CARD:

I’m going to

have coffee

Fill c.

maker

with

water

Scoop

Coffee

into

c. maker

Get &

place

Filter in

c. maker

Drink

coffee

Is

taste

OK

Brew

coffee

Pour c.

into cup

Add

cream &

sugar

Water Supply

Process Shopping

Process

Electricity

Supply

Process

Eating

Equipment

Supply

Process Tasting

Process

Housekeeping Processes NVA = Non-value Added Time

VA = Value Added Time

VA Time

NVA Time

Temp of Water= ___

Quality of Water= ___

Pressure of Water= ___

Amount of Coffee= ___

Quality of Coffee= ___

Type of Coffee= ___

Defective Coffee= ___

60 sec 30 sec 60 sec 360 sec 10 sec 60 sec

10 sec 10 sec 5 sec 600 sec 30 sec

Is your error in the process or in the way you measure it? Could it be that you actually are “good” but the error in the measurement

system shows that you are not “good”?

Overall Variation

Occurrence-to-

Occurrence ( or Piece-

to-Piece) Variation

Measurement System Variation

Repeatability:

Variation due to gage

or measurement tool

Reproducibility:

Variation due to people or

operators who are measuring

3) Who?

4) When?

5) How Much?

6) How?

2) Where?

1) What?

6) How will you collect it? Sample Data Collection sheet

Data Collection Sheet

Process Name: _____________

Process Step: _____________

Location of Measurements: _____________

Measurement Tool Used: ______________

Measurement System Error: _____________

Measurement Number

Value Units (e.g. inches)

Time of Measurement

Person who measured

1

2

3

4

5

Data Collection Sheet

Create a Data Collection Plan:

The Seven “Muda” (the Japanese word for any activity that consumes resources but adds not value; also known as “waste”)

◦ According to Taiichi Ohno’s enumeration of the types of waste commonly found in physical production of tasks and conversion of activity into services

1. Overproducing ahead of demand

2. Waiting for the next process step

3. Unnecessary transport of materials [and information]

4. Over-processing of parts due to poor tool and product design [extra and over processing documents and approvals]

5. Inventories [of parts, data, information, people, electrons, cash] more than the absolute minimum

6. Unnecessary movement of people [parts, data, information, electrons, cash], during the course of work or processing (looking for things, drawings, technical help, etc.)

7. Production of defective parts [and services]

8. Not Fully Utilizing your People : (The Greatest Waste of All) ◦ Under-Utilizing:

Not applying and harvesting the full capabilities of your employees

Training but not using the capabilities learned Expecting high-performance from untrained or inadequately

trained people ◦ Over utilizing and over-relying on a few employees

Over relying on a select few High overtime\Incessantly increasing time demands Unsteady flow and non-level loaded work- hurry-up and

wait High variation in processes – pressure and stress for people

◦ Uncertainty and conflict versus confidence and trust in the workplace ◦ How are you managing changing business and economic climate? ◦ The organizational culture is different, even within the parts of an organization:

Are you thriving, striving, dormant or dying?

Observation

Ind

ivid

ua

l V

alu

e

464136312621161161

200

150

100

50

0

_X=100.4

UCL=114.0

LCL=86.8

Observation

Ind

ivid

ua

l V

alu

e

464136312621161161

200

150

100

50

0

_X=98.7

UCL=187.5

LCL=9.8

1

Process A shows controlled variation Process B shows uncontrolled variation

A B

Common Causes •Consistent •Often

Special Causes •Sporadic •Sudden

Time Scale

Histogram Frequency

LSL USL

2 4 6 8 10 12 14 16 18 20 y

Unit of time e.g. hours, months

a bar chart for numerical categories bars need not be in descending order shape provides a form of distribution of data central tendency and variability are easily estimated specification limits can be superimposed to estimate process capability

•time •distance •dimension

A method to display the “vital few” from the “trivial many.” These charts are based on the Pareto Principle – 20% of the problems have 80% of the impact. The 20% represents the “vital few.” The Pareto chart helps you to arrange data in order of priority or importance.

90

30

20 10 5

Freq

uenc

y

Categories

Perc

enta

ge

75%

25%

50%

20

180

140

100

60

TITLE

n = sample size

(time period)

LEGEND

REFERENCE INFO

date

initials

source

100 %

Types of Correlation

Strong Weak None

Positive

Negative

Y=f(x) Y=f(x) Y=f(x)

x x x

Method

Time Other

Environment

Criteria

Card Face Down and On Target

EFFECT CAUSES

“Card Drop” Process where the desired output is to drop cards face down onto a target

WHY DOES IT TAKE SO LONG TO MASK PART?

TAPE DOES

NOT STICK

WHY DOES TAPE NOT

STICK?

PART HAS SOAP

RESIDUE

WHY IS THERE SOAP

RESIDUE?

RINSE CYCLE INADEQUATE

POWER WASHER RINSE

CYCLE BROKEN

WHY IS POWER WASHER BROKEN?

WHY IS RINSE CYCLE

INADEQUATE?

OLD MACHINE NOT REPLACED

WHY IS OLD MACHINE NOT

REPLACED

CONGRESSIONAL BUDGET PROCESS IS

FLAWED

Overview of How FMEA Works

Process Step or Input

Potential Failure Mode

Potential Failure Effects

Potential Causes

of Failures

Current Process Controls

Severity Rating (SEV)

Occur-rence Rating (OCC)

Indetect-ability Rating (DET)

Risk Priority Number

(RPN)

What

is the

Input?

What

can go

wrong

with

the

Input?

What

is the

Effec

t on

the

Out-

puts?

How

bad is

it?

What are

the

Causes?

How

often

do they

Occur?

How can

they be

found or

prevent-

ed?

How

well can

they be

prevent

-ed? Where is

our

greatest

Risk?

Item

No. Problem/Opportunity Benefit

Person(s)

Responsible

Due

Date

%

Complete Comments

1

2

3

4

5

6

7

8

Kaizen Event Newspaper

Team: Kaizen Event:

Team/Work Group Members

Wwww, Xxxx, Yyyy, Zzzz

Updated:___/___/___

Display Board for _____ Team

Pareto Diagram Frequency

Histogram Frequency

LSL USL

y

Control Chart UCL

CENTRELINE

LCL

Seiri Seiton Seison Seiketsu Shitsuke Sort Straighten Shine Standardize Sustain

( )

Separate the necessary from the unnecessary

Organize in your layout in a logical sequence

Clean, fix and change your workplace

Build systems and processes to support 5S activities

Ensure that the standardized methods, tasks and techniques are followed

Organize by

frequency

of use

Set

Baseline

Contin-

uously

Improve

Keep?

Place in

Local 5S

Holding

Area

Place in

“Last Chance”

5S Holding Area

Record,

Archive

records

Clean, Label, Tidy

Fix, Map, Paint, File,

Systematize,

Standard

Operating

Procedures

Audit,

Monitor

No

Yes …improve our

workplace

organization

and safety

We want

to:

Allocate

time &

Resources

Develop

5S Plans

&

Standards

Separate

/Sort Keep?

Destroy,

Scrap,

Dispose

No

Yes

Level 1 (Workstation Achievements) ◦ Data and reports (hard & soft) are sorted into piles, sections, drawers and

multiple file locations: Cluttered

Level 2 (Workstation Achievements) ◦ Data & reports are sorted into files, binders and single locations ◦ Metrics, basic labelling, some visual controls ◦ Appearance is cleaner and more organized

Level 3 (Workstation Achievements) ◦ All files, data and reports are organize and labelled ◦ Metrics, information and 5S maps are available and posted ◦ Maintenance of 5S activities, audits of 5S performance

Level 4 (Work Group Achievements) ◦ Common standards for metrics, filing, labelling, file naming ◦ Simple, clear and effective Visual Controls & Driver Measure Boards ◦ Maintenance of Work Group 5S activities, audits of 5S performance

Level 5 (Site and Business Unit (BU) Achievements) ◦ Common standards for metrics, filing, labelling, file naming ◦ Simple, clear and effective Visual Controls ◦ Maintenance of 5S activities, 5S audits

Can usually find

things

Can find things in

a reasonable

amount of time

Can find any file

or doc. In 30

seconds

Close colleagues

can find any file

or doc. In 30

seconds

Any colleague

can find any file

or doc. In 30

seconds

1. Specify value from the standpoint of the end customer by product family.

2. Identify all the steps in the value stream for each product family, eliminating every step and every action and every practice that does not create value.

3. Make the remaining value-creating steps occur in a tight and integrated sequence so the product will flow smoothly toward the customer.

4. As flow is introduced, let customers pull value from the next upstream activity.

5. As these steps lead to greater transparency, enabling managers and teams to eliminate further waste, pursue perfection through continuous improvement.

Cycle Time is the actual production rate – It is the time

between two successive finished items coming out of your production cell.

Cycle Time is dictated by the slowest (longest) operation

in the cell.

40 min

20 min

25 min

15 min

30 min

1

5 4

3

2

•What operation controls the cycle? •What is the Critical Path? •How can you relieve or shift the bottleneck?

Source: Improve Phase 26jul07

Bottleneck ◦ The point which is currently reducing the flow or slowing

the entire process

◦ A managed buffer before a bottleneck is necessary ◦ A bottleneck WILL exist in every process

◦ Bottlenecks move ! ◦ High WIP can mask the bottleneck

◦ Flex to the bottleneck ◦ The people working at the bottleneck take breaks, not the

bottleneck

Pull Systems

Production scheduling method used to link downstream activities to upstream activities

Work begins based upon a demand signal (kanban) from a downstream customer, either internal or external

Avoids overproduction, work backlog, and disconnects within a process

Nothing is produced until the downstream customer signals a need

Takt Time

◦ Drum beat of production

◦ Based on actual internal or external demand

Available production time

customer demand

Takt Time =

Kanban ◦ A signal to produce

◦ An empty square, bin, shelf, cart, or kanban card ◦ Response time should be worked out & agreed in advance

◦ Compensates for inability to pull ◦ Can extend through electronic notification to suppliers

using automatic messaging and triggers

Setup Time ◦ Tool changes & preparation to process first piece

◦ Starts when last piece of previous job is complete; ends when first good piece of next job is complete

Internal set-up: While machine is shut-down ◦ Strive to minimize this as process is not producing parts

External set-up: While machine is working ◦ Maximize through kitting, point-0f use tools/parts and

preparation

Mistake proofing ◦ Eliminate/minimize chance for human error ◦ Poka yoke =

to avoid (yokeru) inadvertent errors (poka)

◦ Detection Poka yoke Notifies of imminent process failure but requires

operator interaction to avoid mistakes

◦ Prevention Poka Yoke Stops the process before failures occur

Does not allow defects to pass through the process

Elements of Lead Time ◦ Lead Time = total process time from initiation to design to

build to ship to payment

◦ Batch & Queue – Accumulate orders, then wait to be processed

◦ Setup time – prepare to process next job

◦ Run time – processing time per unit

Often less than 1% of cycle time

Only value added step of Lead time

◦A cell organizes equipment and operations in a process sequence for a specific output

◦This is opposite “Process centered Islands” where equipment / activities are grouped by functional operations

Bottleneck Management: • Maintain buffer in front of

bottleneck • (never starve the bottleneck

!) • Improve bottleneck operation • Cross train on bottleneck • Creates a visual work place • Continuous Improvement • Cell technical & logistical

support • Balance activities / operations • Focus on balanced, continuous

pull through the cell

•Only after specifying value and mapping the stream can lean thinkers implement the third principle of making the remaining, value-creating steps flow.

•Such a shift often requires a fundamental shift in thinking for everyone involved, as functions and departments that once served as the categories for organizing work must give way to specific products; and a "batch and queue" production mentality must get used to small lots produced in continuous flow.

•“Flow" production was an even more valuable innovation of Henry Ford¹s than his better-known "mass" production model.

Item

No. Problem/Opportunity Benefit

Person(s)

Responsible

Due

Date

%

Complete Comments

1

2

3

4

5

6

7

8

Kaizen Event Newspaper

Team: Kaizen Event:

Kaizen Newspaper

“It isn’t the changes that do you in, it’s the transitions.”

(From: “Managing Transitions: Making the Most of Change” by William Bridges) Time

What is your path? Who is with you? How many are with you?

Ending, Losing, Letting Go

The Neutral Zone

The New Beginning

• “Before you can begin something new, you have to end what used to be”

• “Before you can learn a new way of doing things, you have to unlearn the old way isn’t the changes that do you in, it’s the transitions.”

• “Change causes transition, and transition starts with an ending”