Implementing Lean Six Sigma

Lean Six Sigma has often been regarded as a methodology that would propel your organization to realizing significant savings and growth. If you are then an organization planning to implement or integrate lean six sigma into your processes, Air Academy Associates suggests that you consider the following 10 input factors:

1. Get executive ownership/leadership alignment.
2. Establish an effective support infrastructure.
3. Integrate existing business improvement initiatives.
4. Select the right full-time people and projects.
5. Integrate training materials and software.
6. Have a financial and implementation accountability.
7. Establish a reward and recognition system.
8. Encourage an enterprise-wide knowledge sharing.
9. Establish a customer and supply chain.
10. Be ready to manage change and cultural upheavals.

The first three on the list leads to a better appreciation of customer value and human resource. The 4th up to the 6th factors lead to a faster top-line growth. Seventh to 10th facilitates bottom-line growth and cultural change at a lower cost.

Once you have worked up these factors, next step would be to examine closely the stages of implementation. Implementation involves three phases:

1. Initialization phase determines the extent of the chief executive’s understanding and support. This is crucial as this is the part that signals the organization to proceed or not. However, once it’s a go, you nee to develop a series of policies, guidelines and rules with the help of the deployment leader, one or more steering committees and selected corporate functions which include finance, human resources, quality, communications and others.

2. At the Execution phase, you now select the people who will play key roles in the implementation process, select initial projects, and start the training.

3. Assessment phase needs to look into the following:

a. Ensure that the key elements of the organization?s Lean/Six Sigma implementation plan are occurring in a timely fashion.
b. Address any gaps in performance to ensure timely benefit realization.
c. Promote knowledge, discipline, accountability and alignment of management.
d. Promote early self-sustainability.

LEAN / SIX SIGMA IMPLEMENTATIONS

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New Six Sigma Software Is The New Green Belt Tool

The Six Sigma software called inREALTime is making it easy to run a system done by the Green Belt thanks to Hertzler Systems. Hertzler has been responsible for the success of many companies by helping them manage data in real time. Now Hertzler again made history by packaging its previous softwares into a MINITAB plug.

With the MINITAB plug, you can run inRealTime Green Belt tool and you are ready to process your data. The steps are very easy. You run it from the MINITAB Tools Menu and you’ll be able to automate procedures for:

1. Keyboard/gage data entry
2. Update charts in MINITAB
3. Spot trends, alarm out of control conditions
4. Avoid losing hours of productivity

Six Sigma Software Plugs MINITAB into Factory Data inRealTimet

Filed under: Tools/Toolkits

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Enjoying the Benefits of Six Sigma

It has often been said that an organization embracing the Six Sigma methodology enjoys lots of savings and profits. There is however a price to pay. Charles Waxer said in his article, “it takes money to save money using the Six Sigma quality methodology. You can’t expect to significantly reduce costs and increase sales using Six Sigma without investing in training, organizational infrastructure and culture evolution.”

Waxer’s question was “How much financial commitment does Six Sigma require and what magnitude of financial benefit can you expect to receive?” To get the answer, he did extensive research, investigating the companies themselves–getting it from the horse’s mouth so to speak. He went to four companies that according to him were the ones who invented and refined Six Sigma, thus most mature in their deployments and culture changes.

The four companies are: Motorola, Allied Signal (merged with Honeywell), GE, and Ford. Waxer put side by side the Six Sigma cost and savings by company. The results are quite interesting. It shows a 1.2-4.5% of revenue. And to any CEO or CFO that is significant. For a $30 million a year company, that can translate into between $360,000 and $1,350,000 in bottom-line-impacting savings per year.

With these figures, who woudn’t want to invest in Six Sigma initiatives?

Six Sigma Costs And Savings

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Overview of the Lean Six Sigma Market

Two months ago, BPTrends, the primary source for business process information and news, published a report summarizing their overview of the lean six sigma market in the summer of 2005.

The summary has three major points: (1) the technologies that define the market; (2) a description of the Lean Six Sigma market itself; and (3) the size of the Lean Six Sigma market.

The technologies are:

1. ISO 9000 and its variations, an international standard quality certification
2. TQM, a quality management program
3. CMMI (Corporate Maturity Model Integrated), an IT quality program
4. SCOR (Supply Chain Operations Reference), a business process framework developed by the Supply Chain Council (SCC)
5. HPT (Human Performance Technology), a set of models and techniques developed by the International Society for Performance Improvement (ISPI) to analyze human performance problems
6. BPM (Business Process Management), a general approach to managing Six Sigma efforts

The Lean Six Sigma market according to the article revolves around training and consulting companies. Thefore the market is not considered big for now. There are more than 100 Six Sigma training and consulting companies listed in Quality Digest magazine’s annual list of Six Sigma Service companies, but most are small consultancies. There are also some small software companies that provide products that are used by Six Sigma practitioners, which can be roughly divided into four groups: 1) Statistical tools, 2) Data collection and analysis tools, 3) project management tools and 4) process modeling tools.

Each of the six leading Lean Six Sigma Consultancies has between 50 and 100 employees. Each gives between 250 and 500 training courses a year, usually in conjunction with projects that they help companies accomplish. All six are privately held, but each makes between $15 million and $20 million. Each is growing by over 10% a year. Thus, the six leading companies, taken together, are earning between $90 and $120 million a year. Assume that all the other Lean Six Sigma consultancies, the assorted software vendors, and corporations committed to Lean Six Sigma spend or earn about $100 million a year. That would yield a total Lean Six Sigma market of between $190 million and $220 million.

Filed under: Lean Six Sigma

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Six Sigma at Aleris International, Inc.

Aleris International, Inc., a company that engages in the recycle of aluminum and zinc and manufactures aluminum sheet, zinc oxide, and zinc dust, is among the many companies now enjoying the benefits of Six Sigma.

In the third quarter of 2005, it posted again significant financial results. Because of this, Management decided to continue with its Six Sigma initiatives. The following are some of the benefits and savings:

*Net income totaled $31.5 million or $1.01 per diluted share for the third quarter 2005 compared with a reported net loss of $0.3 million or $(0.02) per diluted share in the third quarter of 2004. A reduction in the expected 2005 effective tax rate contributed $0.17 per share.

*Third quarter 2005 adjusted earnings per share were $0.82 utilizing the previously forecasted tax rate and compared to $0.14 in the prior year on a pro forma basis.

*The Company’s growth strategy accelerated since the end of the second quarter with the August 31 completion of the Tomra acquisition, the October 3 completion of the ALSCO Holdings, Inc. acquisition and the proposed acquisition of selected assets of the Ormet Corporation announced November 7.

*Net debt was reduced by $17.6 million during the third quarter, including the utilization of $17.4 million of cash to acquire Tomra during the quarter. Strong cash flow from operations has driven down net debt by $85.8 million since December 31, 2004. Pro forma for the acquisition of ALSCO, net debt to EBITDA excluding special items on a last twelve month basis is 1.9x at September 30, 2005 compared with 3.0x at year-end.

Aleris Announces Significantly Improved 3Q 2005 Net Income of $31.5 Million

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Six Sigma in the Public Sector

Six Sigma often talks about improving a process to satisfy a customer. A process is easy to check when you are in the manufacturing business. In the public sector however where “product” takes the form of “service,” evaluating the process is quite confusing. But that was before when the public/service sector would shout, “but we don’t have a process!” Yet, with the onset of Six Sigma, the concept of “process” has become easy to define.

The public or service sector organizations just need to keep in mind the following basic principles:

1. All work is a process.
2. Understand what the customer wants and deliver it.
3. Get it right first time, every time.
4. Aim at prevention not detection.
5. The customer wants nothing to go wrong.
6. Focus on value adding not cost-adding.

A generic model for a process is that of SIPOC: Suppliers-Inputs-Process-Output-Customers. This tool may not be as useful in transactional processes such that happen in the public/service sector. But according to the article by onesixsigma, the important thing is to identify the process, or how your organization does its business.

And once a process is identified and agreed then the actions within the process that add value can be evaluated. Then your organization can determine which actions are wasteful. It is commonly accepted that there are seven or eight areas of waste:

1. Waiting for a decision or a document to arrive
2. Transporting documents from place to place (it is amazing how far documents travel in an organization)
3. Overproduction – how many reports are sent out that are never read?
4. Inappropriate processing – checking and rechecking information and documents
5. Unnecessary inventory – storing things just-in-case
6. Unnecessary motion – wandering around the building to find things
7. Correction / Defects – not getting it right first time and having to redo the task
8. Not utilising human resources – failure to involve those closest to the process in making improvements

Any organization who can reduce or even avoid these wastes, is well on its way to Six Sigma.

Improving Service and Public Sector Organisations

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Textron’s Six Sigma Way

Textron, 194th of the Fortune 500 companies, is one of the world’s largest and most successful multi-industry companies. One of its famous brands is the Bell Helicopter and Cessna Aircraft. For 82 years, customer is always first at Textron. And to serve their customers better, they launched the Textron Six Sigma, “a disciplined, data-driven process designed to eliminate waste, reduce variation and drive growth throughout our company.”

The company began its Six Sigma journey in 2002.

The result: the company has trained 600 Black Belts and more than 2,000 Green Belts to lead Six Sigma projects throughout its businesses. It also implemented rigorous Design for Six Sigma and New Product and Service Introduction standards under which new products and services are being brought to market.

Using DFSS, the company identifies what its customers need and is able to deliver it a lot better. Furthermore, through Six Sigma, Textron is able to do the following successfully:

1. Grow and Innovate. At a Textron Fastening Systems (TFS) distribution center, a Textron Six Sigma team identified an innovative solution to solve shipment issues to one of its largest automotive customers.

2. Reduce Variability. For example, if it takes 50 minutes on average to manufacture a particular product component, it could take as little as 30 minutes or as long as 70 minutes.

3. Eliminate Waste. The Textron Six Sigma focus on waste elimination, also called Textron Six Sigma Lean, is through an important mapping tool called Value Stream mapping. By using Value Stream mapping Textron Six Sigma teams identify multiple opportunities (Textron Six Sigma Lean Kaizen events or projects) to reduce waste.

Textron Six Sigma

Filed under: Manufacturing

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Six Sigma Manufacturing at Intercim

Intercim is a leading organization that helps electronic manufacturers improve their productivity and quality through efficient operational processes and improved quality management.

Recently, it adopted a new program that can work well together with Six Sigma manufacturing. The system is called Intercim MES and this entry will talk about how MES facilitates Six Sigma Manufacturing.

It is already a common knowledge that increasing process capability through continuous process improvement is the driving force for a business to achieve Six Sigma manufacturing. Now with the Intercim MES, an organization will be able to collect and process the data that is necessary to do the following:

1. Determine that a process is “in-control.”
2. Support continuous improvement of that process to reduce the PPM defective to a level that is cost effective and consistent with the business plan.
3. Drive all manufacturing processes to Six Sigma.

The Intercim MES minimizes data entry time and data entry errors with flexible user configuration, auto-population of fields from integration interfaces, and unattended data collection. More importantly, it can provide on-line SPC information, which enables operators respond immediately to any data collection or need. As a result, they can determine SPC trends and out-of-specification events that occur at their workstation. Also, an analysis of production data will make clear the process capability, which will give emphasis on continuous process improvement efforts on the most critical areas in the manufacturing process.

In other words, the Intercim MES will enable a manufacturer to do the following:

1. Accurately maintain and manage data collection across the factory
2. Determine the capability of manufacturing processes
3. Improve the capability of manufacturing processes by reducing variability
4. Improve the capability of manufacturing processes through corrective actions
5. More rapidly and cost effectively achieve a Six Sigma manufacturing environment
6. Supports application of Six Sigma concepts to other business areas of the company through timely and accurate information
7. Communications throughout the Supply Chain on manufacturing status to support information based decisions throughout the supply chain.

Six Sigma Manufacturing and Intercim’s MES

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Six Sigma for Single-Business Processes

Dr. Elena Averboukh, a professor at the University of Kassel, Germany and who works internationally as a Master Black Belt for manufacturing, transactional, design and e-business companies, writes in her article that Six Sigma can be used to improve single-business processes.

She further suggested that to present and measure single-business process, you start with defining the following:

1. Processes to be improved,
2. Their boundaries, and
3. The units, which result in the process performance and deliver the value to the process customers within a single-business company.

Once you have defined the processes, the boundaries and the units, you then select and prioritize a set of indicators. These indicators quantify the high-level process performance metrics and their targets.They also reflect both the number of different types of defects that are recognized during the processes such as Defect per Unit (DPU) or Defect Per Million Opportunities (DPMO), and the duration and/or costs of value-added (VA) versus non-value-added (NVA) process steps of developing and/or delivering the so-called Cost of Poor Quality (COPQ).

Six Sigma Trends: Upgrade for Supply Chains and Solution Providers

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