Practical Process Improvement-LSS

Practical Process
Improvement using
Lean and Six Sigma
A 1-day workshop for the OR Society
Facilitated by Ian J Seath
1 2011 Copyright ISC Ltd.

What you will learn
How Lean and 6-Sigma differ, yet are complementary
approaches for process improvement
How to set-up and define a process improvement project
How to use appropriate tools to map, measure and
analyse business processes
How to design a Lean, value-adding process
How to engage key stakeholders and staff to ensure
effective management of process change
An introduction to the tools and techniques for defining, measuring,

analysing and improving business processes using methods from the
Lean and 6-Sigma toolkits.
Is that an active banana or
an inactive banana on your
desk?

What is a Process?
Processes take INPUTS, do WORK to them, and produce OUTPUTS for

CUSTOMERS
Input Process Output
They exist to achieve performance OUTCOMES (for the benefit of

customers or stakeholders)

Focus of improvement
Cheaper Happier
Customers
Efficient Effective
Less Waste Better
More More Reliable

Responsive Flexible
Capable
& Agile
Faster More Capacity

In two sentences
Lean:
Driving out waste by using TIME as a competitive
weapon
Six Sigma:
Driving out waste by reducing VARIATION

Whos using Lean and Six
Sigma?
Recent examples of service or back office programmes have
delivered significant benefits including:
Probation
Centrica Drug Testing
Utility Call Centre Programme
Home Office Capacity increased to
Considerable real
benefits in call handling Claim process capacity 110% of target
increased by 130% O2
ING Value Stream
Programme
Foreign Exchange
Bolton Hospital Processing 25% reduction in time
spent on non-value-
Pathology Lab Increased straight- adding activity in store
through processing from
Sample testing time 70% to 95%
reduced from 24 to 2
hours
Evolution of Lean Thinking
1991
Lean Thinking
Lean Enterprise
Lean Concepts
Toyota Production
System

Lean: Time as a competitive
advantage
ALLOCATION
& CUSTOMERS
PLANNING WRITTEN
ACK ENQUIRIES
RECEIVED
MEMO SIGN SIGN SIGN

OFF OFF OFF
SORTING
ANALYSIS RESPONSE AGREEMENT
ACTION
4 hrs 24 hrs 8hrs 16 hrs

1.5 hrs 4 hrs 4 hrs 24 hrs 1 hr 8 hrs .5 hr 16 hrs
ELAPSED TIME = 59
hrs
V.A. TIME =
7 hrs
V.A.RATIO =
9 2011 Copyright ISC Ltd. 4%
20M_16
Evolution of Six Sigma
Encompassing
Existing
Support Techniques
Problem Structure
Solving
Statistical Toolkit People
Process Project
Measurement Skills
Control Zero Based
Defects Black (DMAIC)
1980s Belt
Approach
2000
2011
Statistics Holistic

Six Sigma provides a
common basis for
comparison
Which of these processes is performing best?
Accounts receivable
35 days sales outstanding (DSO)
Call answering
10 rings on average
Customer service
89% satisfied, or very satisfied
Invoicing
99% accuracy
Checkout queue
3 minutes on average

6 Sigma: Customers feel the
Variance, not the Mean
On average
Supplier On
ouraverage
rope is
2our
cmrope
thickis!
2 cm thick !
Thats good
Customer
Thats good
to know!
to know!

Lean and Six Sigma
Lean SixTQM
Sigma
on steroids
Evolved from the Toyota A statistically-based approach
Production System to process improvement
Focus on identifying and Requires support from Black
delivering customer value Belts for implementation
Managing horizontal value Achieves improvement through
streams (& systems thinking) project activity, chosen by
Aligning capacity to demand management; often based on
and creating flow ROI potential
Engaging front-line staff in An evolution from Zero
daily improvement Defects thinking of the 1990s
Using visual management to Aiming for fewer than 3.4 ppm
track performance defects
Managers go and see

Tools/Techniques
Six Sigma
SIPOC Lean
Voice of the Customer The Seven Wastes
House of Quality (QFD) 5S
Process Mapping Poka Yoke
Design of Experiments Value Stream Mapping
Statistical Process Control Kaizen
Taguchi Standardised Work
Sampling & Data Collection Visual Management
Statistical Analysis Flow: Push & Pull
Failure Modes Effect Analysis Just-in-time
DPMO/Sigma/CPK Takt time
Value Add Ratio

Improvement approach
Six Sigma: Define Measure Analyse Improve Control
Understand
Reduce Implement Improve
Where are we now? current
waste improvement continuously
performance
Lean: Current State VSM VAR Waste/Flow Future State VSM

Process Improvement
(DMAIC)
Define
Agree the problem/opportunity for the Process Improvement Project
Identify the process customers and what they want
Define the As Is process map
Agree what data is needed to quantify the performance of the process

Measure Identify how the data will be collected
Collect the data
Analyse the performance of the process using the data

Analyse Assess the process using qualitative information
Identify the root causes of the performance of the process
Identify, select and test possible To Be process improvement ideas

Improve Develop plans to implement the selected improvements
Implement the new process
Assess the performance of the new process

Control Ensure the required performance can be sustained
Review the project and apply learning for the future

DMAIC is rarely linear
Measure
Define Improve Control
Analyse

Stage 1: Define
Purpose: Outputs:
To translate a perceived Completed Project Proposal
problem or opportunity into a SIPOC Process Definition
do-able project Process Map (As Is')

To ensure the customers
Analysis of Customer
needs are identified at the start Requirements
of the project
To establish a high-level
understanding of the process

Process Definition (SIPOC)
Inputs Outputs
Process Name What does

What triggers
the process
the process?
produce?
Suppliers Customers
Who Who
supplies the receives the
inputs? outputs?

Process Definition (expanded
SIPOC)
Purpose:________________________________
Inputs Outputs
Process Name
Owner:______________________
Suppliers Boundaries Customers
Start-point: End-point:
Include: Exclude:

Case study part 1

Sequence Map
Opportunity/
need for
improvement Convene/
Define Define
Brief
Problem Process
Team
Draft
Walk-through Sign-off
High-level
Process Map
Map
Identify Identify Problem

Customer Problem List
Requirements Areas

Swim-lane Map
Need for Employee Line Manager Travel Office Travel Agent
Business
travel
Identify
Requirements
Complete
Approve Investigate
Booking
Travel Options
Form
Select
Advise
Preferred
Traveller
Option
Provide
Book
Tickets &
Tickets
Itinerary
Tickets &
Itinerary
Collect
Tickets

Lean: Value Stream Map
PLANNING
ROLLING FORECASTS
MRPII +
MANUAL CUSTOMERS
PURCHASE FIRM
SYSTEMS
ORDERS ORDERS
400 products
40,000 ca./ month
4 week leadtime
50% service level !
SUPPLIERS
work work manual work work

order order intervention order order
MIXING FORMING FINISHING PACKING
5 btc/ 8 hrs 1 btc/ 2 hrs 1 btc/ 12 hrs 1 btc/ hr

2 shifts 2 shifts 3 shifts 2 shifts
5 variants 25 variants 100 variants 400 variants SHIPMENT
3 8 machines 30 machines 15 machines
machines c/o = n/a c/o = n/a c/o = 1 hr
c/o = n/a FOM = FOM = ABC? w/e
ABC ? + 12 hr cure FOM = 25/wk
4 wks .5 wks 2.5wks 1 wk 75 ca / btc 6 wks
4 wks 1.6 hrs . 5 wks 2 hrs 2.5wks 12 1wk 1 hr 6 wks
hrs
ELAPSED TIME = 14w
2d
V.A. TIME =
16.6 hrs
V.A.RATIO = 3%
Case study part 2

The Voice of the Customer
Processes exist to meet the requirements of customers (recipients
of the outputs) and to achieve specific outcomes
Customers arent interested in your organisations structure; what
they see, and feel the effects of, are your processes.
Key questions:
Who are the Customers?

What do they want?
What is most important to them?
How happy are they with what theyre getting?
How do they measure your performance?
What improvements would they like to see?

Stage 2: Measure
Purpose: Outputs:
To identify key data that will Facts; i.e. quantified process
enable process performance to performance data

be quantified
To develop methods of
measurement
To gather data to quantify
process performance

Three types of Process
Measure
Internal Measures The measures you need will
Time, Volume, Cost depend on:
Desired process outcomes
Output Measures
Quality, Delivery, Success (Process Definition)
Customer requirements
Satisfaction Measures
Known problems
Perception
Known improvement priorities
You may need a larger set of

measurements to help diagnose
Performance
problems in a process than you

would need to manage it on a day-
to-day basis
Time
Source: Total Customer Service: Davidow & Uttal

Checksheet example:
Reasons for Delayed Court
Reports
IIII IIII I IIII IIII II IIII IIII IIII IIII IIII
II II I I
IIII IIII IIII II II
II I
III II I
IIII I
I I

Concentration Diagram
This shows fields

which have
missing information,
incorrect details,
invalid data etc. and
quantifies those
problems.

Traveller Time Log
example for Expenses
Claims process
Process Step Date/Time arrived Processing Time Date/Time sent
1. Receive & Log
Form
2. Validate
information
3. Calculate Vat
amount
4. Authorise Claim
5. Set up Bank
payment
6. Notify claimant
7. Update Ledgers
8. File receipts and

Form
2011 Copyright
ISC Ltd. 31
Collecting Soft Data
Face-to-face Written
Interviews Questionnaires
Focus Groups Report/Score Cards
Exit Polls Analysis of existing
Verbal data
Telephone Interviews Complaints
Process Mapping Market Research
Sequence and Swim- Market Intelligence
lane Maps (e.g. field staff)
Process Walk-through

Stage 3: Analyse
Purpose: Outputs:
To assess and understand Identification of waste
process performance data Agreed root causes of process

To evaluate, qualitatively, the performance
performance of the process
To identify root causes of
process performance

Waste
Waste is anything that does not add value to
your product or service
Eliminating waste gives you more resource to
meet your customers requirements
Waste will always be present, so there is always
something that you can do to improve your
performance
Identifying all the waste in your processes forces you to
compare your operation against perfection.....and this is not
a comfortable experience!

The Seven Wastes
Waste Examples
People Waiting Waiting for stuff to arrive, Waiting for people to make a decision
Over- Producing extra copies just in case; Sending two people, when
production one would be enough
Rework & Correcting errors in reports, databases, plans, documents , Dealing
Failures with complaints, Paying compensation claims, Operating a
Helpdesk
People Moving Travelling to and from meetings, incidents, interviews
Over- Doing any steps that are unnecessary; Checking the quality of
processing somebody elses work; Keying the same information into multiple
databases; Gathering the same information from a
client/victim/suspect on different Forms
Inventory Cupboards full of stationery in every office; Stores of obsolete
brochures, forms, posters; Piles of files on desks (work in progress)
Transport of Moving files around between locations; Moving files to and from
materials archives

Value Add
Every activity in a process either adds value or cost.
Value Add is determined firstly from the Customers perspective.
There may also be Business Value Adding activities.
Everything else is Waste.
Real Value Add Business Value Add

Those activities which a Those activities which you
customer would expect you have to do in order to

to do for them in producing Stay legal
the output Be compliant
Ask Could we invoice the Manage the organisation
customer for having done Challenge: Would we get
this activity? locked up, shut down, or
fined, if we didnt do this
activity?

Data Handling Tools
Monthly Caseload
80
70
New Procedure
60
50
x 40
30
20
10
0
Apr-05 Jun Aug Oct Dec FebApr-06 Jun Aug Oct Dec FebApr-07 Jun Aug Oct Dec FebApr-08 Jun Aug Oct
UCL LCL Proc ess Avg

Pareto Analysis
The Pareto Principle suggests that a small number of
causes (the vital few) will typically account for a large
proportion of effects. The remaining causes (the trivial
many) only account for a small part of the problem.
20%
This is also known

as the 80:20 rule
80% 80%
20%
Effects Causes

Pareto Diagram: Reasons for
Delayed Court Reports

Cost Cycle-time Analysis
XXXXXX YYYYYY ZZZZZZ AAAAAA
Input
Do A Processing Time
and Cost
Delay Time
Do B Approve C Do D
Do F Do E
Do G Do H
Output
Do I

Cost/Cycle-Time Analysis
Example
.B. In this example, Cycle-time is the gap between the completion of one activity and the start
f the next activity. It has no cost associated with it.

Case study part 3

A one-sigma process
1
Customer requirement (max. 160)
Distribution Mean
This is a picture of a normally
distributed process with a
mean value of 100
This area represents defects

or errors.
The customer requirement lies only one standard deviation

away from the mean of the distribution
Could be: time to process an offender in custody
errors in CRB checks
cycle-time from receiving case files to delivery of service
database errors addresses, personal details, etc.
A four-sigma process
4 A Six Sigma approach is all about
trying to reduce the variability in
processes such that errors and
The process has been defects are reduced.
improved (tightened)
Many organisations processes
run at a 3 sigma or 4 sigma
performance level.
95%....99% levels
The customer requirement lies four standard deviations


A six-sigma process is world
class 6
The process distribution

is very tight relative to
customer requirements.
Virtually defect free.
The customer requirement lies six standard deviations


Sigma and error levels
Yield (Error Rate) DPMO Sigma
30.9% (69.1%) 690,000 1
69.2% (30.8%) 308,000 2
93.3% (6.7%) 66,800 3
99.4% (0.6%) 6,210 4
99.98% (0.02%) 320 5
99.9997% (0.0003%) 3.4 6

Stage 4: Improve
Purpose: Outputs:
To identify, select and test An improved process, in place
potential improvements to meet and operating

the project and customer
requirements
To plan implementation of
improvements
To implement an improved
process design

The Principles of a Good
Good processes are based on the idea that you only do
Process
what you need to do to meet the customers requirement

Any activity should start and finish as late as possible
This increases the relevance of what is done, reduces cycle times,
etc, but makes the system very reliant on getting things right first time
Throughput time for any individual item (piece of paper,
information or item) processed is very short
i.e. if we clock any individual or document through a process, it takes
the minimum possible time to go through all the stages
There a minimum of work in progress, and therefore little
queuing between stages (this means no paper on desks, no
big queues in e-mail Inboxes, or queues of items at any
stage)
The different stages are designed to be balanced in their work input
and output
The Principles of a Good
Process
People are multi-skilled and able to operate various parts
of the process depending on demand
People see it as normal that their roles may change from day to
day
Systems are designed with job flexibility in mind
Almost no transport between stages, movement reduced
to a minimum
Systems are error-proofed to ensure quality
People are involved in identifying and preventing errors rather than
finding better ways to check for them
Teams own the process and are responsible for improving
all aspects of its performance
All wastes are identified and reduced to a minimum

Designing a To Be Process
Agree the required levels of performance
Define the inputs and outputs
Draw a high-level Sequence To Be map with maximum
Real VA activities
Drill-down to provide additional detail
Challenge all Business VA activities to minimise these
Carry out a desk-top walk-through to confirm the
process will produce the outputs
Finally, decide what people and other resources (e.g. IT)
will be needed to operate the process

Design Options
Removing Non-VA
Triage and Simplification
Automation/Technology
Parallel vs. Sequence
Multi-skilling
Adding/removing Features/Functionality

Case study part 4

Develop an Action Plan
Actions to
implement
Actions to WHAT WHEN WHO
solutions
implement
solutions Action Form Team AC
Communicate DF
Plan
Action Train AC
for
Plan DG
Run Pilot
Actions to change
for Assess Pilot AC
ensure
Actions to change Plan Roll-out DF
success Get Approval DG
ensure &
reduce
success &
risks
reduce
risks

Stage 5: Control
Purpose: Outputs:
To ensure the performance of Project Completion Report
the re-designed process can Updated Process Definition
be sustained and continuously Template

improved Process Measurement Plan

Appoint a Process Owner
A single, named individual who is responsible for managing and
improving the performance of the process to meet customer needs
and achieve business outcomes
In the Control phase this will involve...

Ensuring measurement systems are in place to quantify and report
performance
Regularly reviewing the process in light of customer and business needs,
and identifying further improvements needed (maybe including external
Benchmarking)
Addressing areas of under-performance and ensuring corrective actions
are taken
Maintaining the skills and capabilities of those who have to manage,
operate and improve the process

Control Charts
Control charts allow us to see if what is
happening to a process is outside what we
would normally expect to see.
D
S
3
Upper Control
D
S
2
Limit
D
S
1
D
S
1
Lower Control
D
S
2
Limit
D
S
3

Continuous Improvement
Benchmark
Celebrate vs. Leaders
Success
Set
Performance
Targets
Review Performance Identify

vs. Targets Improvements
Measure Process Implement

Performance Changes

Project Completion Report
What did you set out to achieve?

What did you achieve?
How did you achieve it?
What worked well?
What didnt?
What learning can be transferred elsewhere?
Have you celebrated your success?

Ensuring Success: Force Field
Analysis
What are all the things that will help us
implement successfully?
What are all the things that might hinder
successful implementation?
Include actions in your Plan to build on Include actions in your Plan to minimise,
these or eliminate, these

Ian J Seath, Director
Improvement Skills
Consulting Ltd.
www.improvement-skills.co.uk
ian.seath@improvement-skills.co.uk
M: 07850 728506
@ianjseath

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Practical Process

1 2011 Copyright ISC Ltd.

An introduction to the tools and techniques for defining, measuring,

3 2011 Copyright ISC Ltd.

Processes take INPUTS, do WORK to them, and produce OUTPUTS for

Input Process Output

They exist to achieve performance OUTCOMES (for the benefit of

4 2011 Copyright ISC Ltd.

More More Reliable

5 2011 Copyright ISC Ltd.

6 2011 Copyright ISC Ltd.

8 2011 Copyright ISC Ltd.

MEMO SIGN SIGN SIGN

4 hrs 24 hrs 8hrs 16 hrs

10 2011 Copyright ISC Ltd.

11 2011 Copyright ISC Ltd.

12 2011 Copyright ISC Ltd.

13 2011 Copyright ISC Ltd.

14 2011 Copyright ISC Ltd.

Lean: Current State VSM VAR Waste/Flow Future State VSM

15 2011 Copyright ISC Ltd.

Agree what data is needed to quantify the performance of the process

Analyse the performance of the process using the data

Identify, select and test possible To Be process improvement ideas

Assess the performance of the new process

16 2011 Copyright ISC Ltd.

Define Improve Control

17 2011 Copyright ISC Ltd.

problem or opportunity into a SIPOC Process Definition

do-able project Process Map (As Is')

understanding of the process

18 2011 Copyright ISC Ltd.

Process Name What does

19 2011 Copyright ISC Ltd.

Suppliers Boundaries Customers

20 2011 Copyright ISC Ltd.

21 2011 Copyright ISC Ltd.

Identify Identify Problem

22 2011 Copyright ISC Ltd.

23 2011 Copyright ISC Ltd.

work work manual work work

MIXING FORMING FINISHING PACKING

5 btc/ 8 hrs 1 btc/ 2 hrs 1 btc/ 12 hrs 1 btc/ hr

25 2011 Copyright ISC Ltd.

Who are the Customers?

26 2011 Copyright ISC Ltd.

enable process performance to performance data

27 2011 Copyright ISC Ltd.

You may need a larger set of

problems in a process than you

Source: Total Customer Service: Davidow & Uttal

28 2011 Copyright ISC Ltd.

IIII IIII IIII II II

29 2011 Copyright ISC Ltd.

This shows fields

30 2011 Copyright ISC Ltd.

8. File receipts and

32 2011 Copyright ISC Ltd.

process performance data Agreed root causes of process

33 2011 Copyright ISC Ltd.

34 2011 Copyright ISC Ltd.

35 2011 Copyright ISC Ltd.

Real Value Add Business Value Add

customer would expect you have to do in order to