INTEGRATED PERFORMANCE MANAGEMENT
Achieving Outcomes via Results Oriented Processes
Edina, MN
ph: 612-201-4881
fax: 612-454-5058
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It is important for leaders to understand business improvement methodologies such as Six Sigma and LEAN and how to integrate these tools into an overall business improvement strategy. Limited resources can then be allocated to the highest impact areas thus avoiding the pitfall of trying to solve every problem in the company.
Below are brief descriptions of basic LEAN and Six Sigma principles with links to additional information.
A Culture of Quality and Continuous Improvement
Achieving maximum, sustainable benefits from a LEAN or Six Sigma quality initiative requires more than eliminating defects, variation or waste. A top to bottom cultural shift is required starting with senior managers and executive boards, and percolating down to the front line. There must be a commitment to root out ineffective activities regardless of how long "we've always done it that way". The rationale and relevance of efficient, repeatable and reliable processes must be accepted at a personal level throughout the organization. The bottom-line message is that long term job security and job satisfaction are directly tied to the success of the organization. Organizational success hinges on the efficiency and effectiveness of individual workers at every workstation in every process and ultimately on customers' satisfaction.
Beyond analyzing and re-engineering core processes, a parallel effort is necessary to create an environment of ownership and continuous improvement. Continuous improvement compels every individual to seek out new best practices and identify ways to provide more value to customers. After a cultural shift occurs, starting at the top, maximum and sustained benefits will be realized from process improvements and the organization will be well postioned for success both in today and tomorrow's global, performance driven climate.
LEAN Basics
The LEAN methodology targets the elimination of seven types of waste:
Examples
DEFECTS Service level below customer expectations, rework or scrap,
INVENTORY Waiting customers, work in process, partly done services
OVERPRODUCTION Batch production, production before needed, global emails
WAITING TIME People waiting for work, trying to look busy
MOTION Non-value-added reaching, walking, switching computer screens
TRANSPORTATION Unnnecessary movement of products, materials, paperwork
PROCESSING Oversized equipment, extra non-valued steps for customers
While some types of waste are easier to identify than others, each is a drain on valuable human and/or capital resources.
Creating a Value Stream Map is a critical early step in a LEAN analysis. It is a visualization and communcation tool which focuses on the value that the customer receives from the process pulling in material and information flow, inventory build-up and time lags. The five key concepts of LEAN embodied in Value Stream Mapping are:
VALUE: Exactly what are customers willing to pay for? Who is the end-customer? What are they buying?
VALUE STREAM: ...is “everything that goes into” creating and delivering the “Value” to the end-customer.
FLOW: Flow challenges us to reorganize the Value Stream to be continuous… “one by one, non-stop”.
PULL: Pull challenges us to only respond “on demand” to our downstream customers.
PERFECTION: Perfection challenges us to also create compelling quality (“defect free”) while also reducing cost
A LEAN Event (a.k.a. Rapid Improvement Event) is an intense exercise in process improvement leveraging Lean principles. Characteristics of a typical event are:
- Team activity (6-9 people including the functional owner, facilitator and people who "do the work")
- Seven week cycle (including prep and follow-up)
- Focused on a specific topic with clear measurements and targets
- Agreed-upon approach (based on Lean principles)
- Accountability for impact by the end of the Event
Six Sigma Basics
Six Sigma is a highly disciplined process that focuses on developing and delivering near-perfect products and services. At first glance the pursuit of perfection may seem unrealistic, but consider how little tolerance there is for imperfection in areas such as healthcare, airline and food safety.
The Six Sigma methodology is characterized by
- Genuine focus on the customer
- Data-based decision making
- Process focus
- Proactive management to prevent problems
- Pursuit of perfection
Why "Sigma"? The word is a statistical term that measures how far a given process deviates from perfection. The central idea behind Six Sigma is that if you can measure how many "defects" you have in a process, you can systematically figure out how to eliminate them and get as close to "zero defects" as possible. To achieve Six Sigma Quality, a process must produce no more than 3.4 defects per million opportunities. This means near flawless execution of key processes.
There are five phases to Six Sigma process improvement:
Define the Customer, their Critical to Quality (CTQ) issues, and the Core Business Process involved.
- Define who customers are, what their requirements are for products and services, and what their expectations are
- Define project boundaries the stop and start of the process
- Define the process to be improved by mapping the process flow
Measure the performance of the Core Business Process involved.
- Develop a data collection plan for the process
- Collect data from many sources to determine types of defects and metrics
- Compare to customer survey results to determine shortfall
Analyze the data collected and process map to determine root causes of defects and opportunities for improvement.
- Identify gaps between current performance and goal performance
- Prioritize opportunities to improve
- Identify sources of variation
Improve the target process by designing creative solutions to fix and prevent problems.
- Create innovative solutions using technology and discipline
- Develop and deploy implementation plan
Control the improvements to keep the process on the new course.
- Prevent reverting back to the "old way"
- Require the development, documentation and implementation of an ongoing monitoring plan
- Institutionalize the improvements through the modification of systems and structures (staffing, training, incentives)
- From GE's DMAIC Approach
Useful Web Sites
Additional Resources
Implementing Six Sigma. Forest W. Breyfogle III. New Jersey: Wiley & Sons, 2003
Lean Thinking. James P. Womack and Daniel T. Jones. New York: Simon and Schuster, 2003.
Lean Solutions. James P. Womack and Daniel T. Jones. New York: Simon and Schuster, 2005.
Edina, MN
ph: 612-201-4881
fax: 612-454-5058
info
