Lean & Six Sigma Minali Wadu Mesthri BSc in HR & Leadership - - PowerPoint PPT Presentation

Lean & Six Sigma

Minali Wadu Mesthri

BSc in HR & Leadership (UK) MSc in Business Psychology (UK)

01

Lean Value Vs Waste

Kaizen

02 03 04 05 06

Cause & Effect Six Sigma TQM

—Someone Famous

“Lean aims to eliminate waste in

• rder to focus on creating the most

value possible for customers”

Audi R8 & Driving Style

Iron Man

Run for 05 Km With 01l of gas

Wikram

Run for 15 Km With 01l of gas

The White car used its resources in a more economical way. Exactly the same happen in business. With the same number of people a plant may produce more goods. A hospital can treat more patients. A call center can enter more calls. In a nutshell lean is a methodology to help the companies run like the White car, creating more value for customers using resource more efficiently and less budget. Lean aims to eliminate waste in order to focus on creating the most value possible for customers.

The Value

Values are what the customers are willing to pay for. Customers can get value from a physical good, a service or even an experience. Value is difficult to quantify since it is directly related to customer perception, context and purpose. Ex: You want to buy food and the value you get from the food is a function of your taste or preferences, your hunger and and nutrition. Ex: The value of a health check is a diagnostic and value of hiring a consultant is a piece of advice. When you are willing to pay for a good or a service, it is because you feel that the value you receive is higher than the price you pay

The Value

Customers can have different perception of the value of same good or the same service. Ex: the value of a news article may be entertainment for

• ne person, could be information for another and expert

analysis for yet another. Thus, companies prefer customer segmentation which target different customer profiles with the specific value

• ffering.

When the customers pay the price for a good or a service produced by a company, they pay for every activity performed by each employee of this company.

Value in not created in a moment, but in a stream of activities

Quality & fresh ingredients

Preparation

• f the dough

(by hand)

Bake using a wood fire oven

Serving

Cutting and storing 03 mins to knead the dough 02 hrs doughs to rest

03 mins to cook 01 min to take order 02 mins to ready the table 03 mins to cook 01 min to bring it to the table

What is the cost? A 6$ Pizza in 7mins? Is this realistic?

Select and briefly distinguish a service process you have recently witnessed in your everyday life (buying bread, renting a car, booking a flight ticket, contacting customer service etc. Then describe the process further as follows:

• Break the process down into at least 05 activities
• Identify at least 02 activities in the process that create value and explain why
• Identify at least 02 activities in the process that create waste and explain why
• For the 02 activities that create waste, make short term actionable

suggestions to improve these activities

Classroom Activity

• What is the essence of the Lean methodology?

A.Lean aims to eliminate waste in order to focus on creating the most value possible for shareholders B.Lean aims to eliminate waste in order to focus on creating the most value possible for employees C.Lean aims to eliminate waste in order to focus on creating the most value possible for customers

• It is a rush hour and because of traffic jam, taking the tube would be cheaper and faster than
• driving. In which of the following situations does a taxi ride generate more value than its cost?

A.You are not is a hurry B.You are in a hurry C.You need to make an urgent phone call for an important job

Q&A - Check your understanding

What are the differences between these coins?

Dollar 01 Dollar 2

What are the differences between these coins?

Dollar 01 Dollar 2 These are two dollar spent by a company to create value. They look the same. They are identical in the financial statement as well. But in reality they are very different.

Not every Dollar spent creates value

Good Dollar

This dollar create value for the customers

Bad dollar

This dollar does not create value, this creates waste

Customers pay companies to receive a value from goods and service sold. Therefore, companies transform resources, such as capital and labour into operations, which in turn create the value customer

• requires. Not all the resources are used to produce the same quantity of value.

Do you know?

Creates waste Creates Value

10- 20%

80- 90%

Value vs Waste

It is impossible for a company to distinguish a good from a bad dollar by looking at the financial statement alone. Thus, shareholders and managers do not know how much of their company cost to create a value or waste. Hence, Lean shows the difference between value creation and waste creation with the purpose

• f

increasing value creation by spending more good dollar and reducing waste creation by spending fewer of bad dollars.

The origins of Lean Manufacturing

Video 01

The origin of Lean

After losing World War II, Japan had to rebuild and wanted to win the economic war. At that time USA was sending 80% of all cars worldwide in 1950. Taichi Ohno and Eiji Toyoda both Industrial engineers employed at Toyota designed a strategy to compete Americans with automotive manufacturing. This led to focus

• n

weaknesses such as standardisation, low quality, poor working condition and to focus on innovation.

The origin of Lean - TPS

Toyota Production System (TPS) which designed to be more customised and make high quality cars led that Japan overtook the US in car production in 1980. Lean is a strategy to win in the marketplace. Lean has been wrongly perceived as a simple cost cutting tool. Lean can be applied to all types of context and all types

• f companies.

Ex: A luxury fashion house can reduce the time to launch a new collection. A hospital can reduce the waiting time for its patients.

Waste

What they have in common?

IKEA Apple McDonald

What they have in common? They all use lean principles as a competitive edge to support their strategy.

IKEA Apple McDonald Lean concept of design-to-cost Design-to-transport Design-to-install

Portfolio rationalisation Steve Jobs offered clearer product range by removing 70% of product range. Extreme standardization McDonald cook book = step

• f preparation and

processes are included Same taste around the world

Lean Manufacturing at Volkswagen plant

Video 02

• In the Toyota Production system, which is at the core of lean as we

know it today, was developed as a completely new concept? A.True B.False Q&A - Check your understanding

In companies, operation managers have to design their operating model by focusing these important decisions:

• Decide which activities should be

performing internally

• Decide which activities should be
• utsourced
• Decide which activities should be

performed centrally or locally

• Decide if the different departments

have to be

• rganised

by geography, by product

• r

by function.

Operation Manager & Operating Model & Lean

Lack

• f

consideration for human factor

The myths of Lean Manufacturing

Lack

• f

strategic approach Lean means laying off people Lean is

• nly

for manufacturing Lean is only for certain environments

Lean means cost cutting

Lean

Eliminate waste Applicable for any company Business Sustainability Create Value Value Stream Mapping

• What is the initial purpose of value creation?

A.To make employees productive B.To enrich shareholders C.To satisfy customers

• Lean is only useful for low-cost companies that need to compete on price

A.True B.False

• Lean principles encourage companies to foster cooperation between employees.

A.True B.False

• Lean generally equals cost-cutting.

A.True B.False

Q&A - Check your understanding

Daily Lean practices

Video 03

• Middle

managers have the most important role in a Lean transformation because they are in charge of the daily Lean implementation? A.True B.False Q&A - Check your understanding

What are the problems in operations?

Infrastructure problems Financial & HR problems Technical problems Time Limitations

If you are facing problems,…

Think inside the box and give up? (Waiting resources from somewhere) Work together and do something? (Work with ….. for improvement) Are you a positive thinker or negative thinker?

5S-Kaizen-TQM Approach?

5S

Working environment improvement

Kaizen

Participatory problem solving process

TQM

Maximum use of the capacity of the entire

• rganisation

Stepwise approach for better management & quality of operations

5S-Kaizen-TQM Tree

5S

5S is a philosophy and a way of organising and managing the workspace and workflow with the intent to improve efficiency by eliminating waste, improving flow and reducing process unreasonableness. 1 Sort (Seiri) – eliminate what is not needed and keep what is needed. 2 Straighten (Seiton) – position things in such a way that they can be easily reached whenever they are needed. 3 Shine (Seiso) – keep things clean and tidy; no refuse or dirt in the work area. 4 Standardize (Seiketsu) – maintain cleanliness and order – perpetual neatness. 5 Sustain (Shitsuke) – develop a commitment and pride in keeping to standards.

5S

Benefits of 5S:

• Identify abnormalities
• Promote everyone’s participation
• Improve safety and productivity
• Identify waste and reduce the waste

Kaizen

Kaizen is a problem solving process with existing resources. Kaizen can help a company to create continuous quality improvement culture to meet customer satisfaction and expectation Make things better step by step: Kaizen steps Target is ‘your work’. Kaizen means improvement, continuous improvement involving everyone in the

• rganization from top management, to managers then to

supervisors, and to workers. This philosophy assumes that ‘’our way of life – be it our working life, our social life or our home life – deserves to be constantly improved’’

Kaizen

The essence of Kaizen is that the people that perform a certain task are the most knowledgeable about that task; by involving them and showing confidence in their capabilities, ownership of the process is raised to its highest level.

Kaizen includes;

• Leadership
• 5S & Discipline in the workplace
• Teams & Innovation
• Process and productivity focus

Kaizen as continuous improvement process

• Find root causes of problems

and solutions.

• Improve all kind of operation

management

• Improve quality of services
• Strengthen team work

What Kaizen can do?

Kaizen as continuous improvement process

Kaizen Umbrella

Three Pillars of Kaizen

07 Waste

Standardization Housekeeping

L&D PDCA (Plan, Do, Check & Act)

Waste Elimination

Gemba 5S

Gemba?

• A Japanese term meaning "the real place“
• It refers to the place where value is created. The most common use of the term is

in manufacturing, where the Gemba is the factory floor. Other sites; building site in construction, the sales floor in retail, a car dealership showroom.

Gemba?

• In Gemba Walk, leaders, managers and supervisors are expected to simply observe

and understand process.

• Observe the facts, then ask why things happen the way they do. What is happening at

the place of work? How many people are overloaded and how many are standing idle?

• As

part

• f

the Kaizen methodology, it is supposed to encourage greater communication, transparency and trust between the lower-level of employees and leadership.

• For this reason, it is not appropriate to use a Gemba walk to point out employee flaws,
• r enforce policy - this runs the risk of employees putting up barriers to leadership.

Kaizen & VSD

Video 04

• What is Kaizen?

A.Kaizen is about planning thoroughly a process change a long time in advance. B.Kaizen is about testing quickly a process change without requiring lengthy approval in advance. C.Kaizen is also about seeing failure as opportunities to change for better. Q&A - Check your understanding

Root Cause Analysis

• Root cause analysis is the identification and analysis
• f factors that are contributing to a specific outcome
• r

problem. It is an essential tool for quality improvement.

• Three categories of causes may underlie a problem:

human, physical, and organisational.

• 5 Whys and Fishbone structures are two tools
• Benefits: Identify the root cause, encourage group

participation, uses an orderly, easy to read format and increases group knowledge.

5 Whys

• The 5 Whys is a brainstorming technique used in

Lean.

• It was developed by the founder of Toyota - Sakichi

Toyoda, and it’s based on repeatedly asking the question “why?” until the root cause of a problem is determined.

• It takes five “why?” questions to get to the bottom of

any problem.

• The Wisdom of children and geniuses.

5 Whys in a Restaurant - Case application

• The restaurant owner finds customers stating they are not satisfied with the food.

The problem is being reported by the cashier at the front desk after the customers have paid their bills.

• So, the owner calls in everyone - the front desk staff, the kitchen staff, and the

waiters, and on their whiteboard, he writes down in large font: Why do we have unhappy customers?

• The owner then starts going around the room and first asks the cashier: Why do

you think we have unhappy customers? The cashier says: we don’t have unhappy customers in general, only some customers are unhappy. The

• wner then re-asks the question: Why are some customers unhappy? The

cashier explains that a portion of the customers are unhappy with the temperature their steaks are being served at.

5 Whys in a Restaurant - Case application

• The owner then asks the waiters: Why are steaks being served at the

wrong temperature? The waiter explains that it’s

• nly

since last Wednesday, that some customers have started complaining that their steaks are not warm and slightly underdone.

• The owner then asks the grillers: Why since last Wednesday are some

steaks served not warm enough? The chef explains that on Wednesday they’ve intermittently started to cook some steaks on a brand new grill.

• At that, the restaurant owner stops the meeting and they all go to inspect the
• grill. It is found that the grill’s temperature gauge is not working and that it’s

set to 10 degrees lower than normal. The team has likely come to the root cause of unhappy customers.

• Use 5 Why to find the root cause for

‘Why you did not attend lectures last week’

Class Activity

Fishbone Diagram / Ishikawa Diagram

• Used to identify, explore and display the causes of a particular
• problem. Also called as a cause and effect diagram
• The fishbone diagram was given its name due to its resemblance to a

fish’s skeleton.

• Initially popularized in the 1960s as a quality tool by its namesake,

Kaoru Ishikawa, it has become an important part of many modern-day systems, including Six Sigma.

• Define problem
• Generate main causes of the

problem

• Brainstorm ideas related to the

main causes

• Interpret results from diagram
• Identify

any causes where immediate action can be taken

The steps in constructing a Fishbone Diagram

• Define

a clear problem statement

• Write the problem statement
• n the right side of your paper

(at the head of the fish)

• Draw a line with an arrow

toward the head of the fish – this is the fish’s ‘backbone’

• 1. Define problem (Problem Statement)

• Brainstorm main causes and

connect them to the backbone in ‘ribs’

• There is no specific number of

steps

• r

categories. Some common categories are man, method, machine, environment, measurement and material

• 2. Generate main causes (Categorization)

• Brainstorm

possible causes and attach to appropriate rib.

• Each contributing factor would

fit neatly into a single category, but some causes may seem to fit into multiple categories.

• Keep asking ‘why’ to get ‘mini-

ribs’.

• Finally

interpret results and develop an action plan

• 3. Brainstorm ideas (Contributing factors)

• Use Fishbone Diagram to find the

root cause for ‘Why students are lack

• f reading interest’

Class Activity

Quality process at Toyota

Video 04

• Six sigma is a vehicle for organisational and strategic change.
• Six Sigma is a systematic approach to reduce critical defects defined by the

customer.

• Six Sigma is a disciplined, fact-based methodology using quantitative and

statistical tools to solve business problems.

• Six sigma is a business management process that goes well beyond continuous

improvement.

• When a process operates at six sigma the variation is so small that services or

products are provided 99.9996% defect free.

Six Sigma 6σ

• Processes
• Systems
• Structure
• Culture

Six Sigma is a change programme that targets; Six Sigma improves;

• Quality
• Productivity
• Customer satisfaction

• Sigma (σ) is the Greek symbol used for Standard Deviation of a

population

• Six Sigma is a methodology for eliminating defects in a manufacturing

process.

• Six Sigma was developed by Motorola during the 1980’s and

subsequently adopted and popularized by General Electric (GE) during the 1990’s.

• GE’s famous CEO Jack Welch, a chemical engineer, implemented it

throughout the organization. In his book “Straight from the Gut” he said that he figured that GE had saved $1 billion per year because of it.

The Origin of Six Sigma

The origin of Six Sigma

• Dr. Mikel J. Harry

wrote a paper relating early failures to quality

Motorola launches six sigma program

GE introduces its Six Sigma program and became popular

3M, Raytheon, Boeing, Bank of America, American Express, HSBC, Ford, John & Johnson, Toshiba, Sony, Nissan and Samsung adopted Six Sigma

1985 1987 2000 1995

Six sigma is all about variability

• Measures the same process many times and you will find differences,

we call that ‘variation’.

• There is a variation between every product, every service and

everything.

• If you do not believe me, try this experience
• Put 06 bottles of Pepsi cans right next to each other and see of they

all have exactly the same level.

• Close the doors of the same car one after another and see if they

require the same effort.

Six sigma sets the goal of achieving capability levels of 3.4 defects per million

• pportunities (99.9996%

defect free)

Six Sigma - DMAIC

https://www.youtube.com/watch?v=7_oWjQfQ mZk

Video 05

TQM

Total Quality Management (TQM) is a multi-disciplinary and participatory processes with continuity by all categories

• f staff for realising high quality services.

TQM process (Consist of 5S and Kaizen), should be a part of institutional managerial framework for seeking high productivity and quality of services.

What TQM can do?

Improves quality of the final products or services Making right decision for quality improvement Increases customer satisfaction

Visible growth of organisation

Reduction of cost

Managing whole facility with certain level of quality

• Check sheet
• Control Chart
• Pareto Chart
• Cause & Effect diagram
• Histogram
• Scatter Diagram
• Stratification - categorization of people or things

into different groups or layers.

Basic Quality Control Tools

TQM

https://www.youtube.com/watch?v=42UgAS- U1-o

Video 06

Group Activity – 10 mins (23rd July)

• Team 01 – Lean
• Team 02 – Six Sigma
• Team 03 – Kaizen
• Team 04 – TQM
• Team 05 – JIT
• Team 06 – Supply Chain
• Team 07 – Inventory Management
• Team 08 – Cause & Effect Analysis

CREDITS: This presentation template was created by Slidesgo, including icons by Flaticon, and infographics & images by Freepik.

Thanks!

Do you have any questions? minali@bms.edu.lk

1. https://www.bcg.com/publications/2015/lean-manufacturing-engineered-products- project-business-lean-advantage-large-construction-projects.aspx 2. https://www.bcg.com/publications/2015/two-sides-of-connectivity-how-to-be-more- productive-online-and-offline.aspx 3. https://www.bcg.com/publications/2014/people-organization-human-resources- decoding-global-talent.aspx 4. https://www.bcg.com/publications/2013/leadership-talent-miki-tsusaka-growth- strategies-businesses-need-relearn.aspx

Extra Reading

Toni L. Doolen, Marla E. Hacker, A review of lean assessment in organizations: An exploratory study of lean practices by electronics manufacturers, Journal of Manufacturing Systems, Volume 24, Issue 1, 2005, Pages 55-67, ISSN 0278-6125 Rachna Shah, Peter T Ward, Lean manufacturing: context, practice bundles, and performance, Journal of Operations Management, Volume 21, Issue 2, March 2003, Pages 129-149, ISSN 0272-6963 Fawaz A. Abdulmalek, Jayant Rajgopal, Analyzing the benefits of lean manufacturing and value stream mapping via simulation: A process sector case study, International Journal of Production Economics, Volume 107, Issue 1, May 2007, Pages 223-236

• T. Melton, The Benefits of Lean Manufacturing, Chemical Engineering Research and Design, Volume 83,

Issue 6, 2005, Pages 662-673, ISSN 0263-8762

Extra Reading