Lean Six Sigma

What is Six Sigma Nowadays, Six Sigma is considered as a systematic method of eliminating defects anything that does not conform to customer expectations from a product or process... Wh

LEAN SIX SIGMA

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Presentattion Group:

– Lean

– Six Sigma

– Lean & Six Sigma

(Combining Agile – Lean & Six Sigma)

Lean Overview

What is Lean

 Lean is a strategy that

focuses on the

elimination of waste so

each step in a process

creates value for the

The Lean Principles [1]

1 Determine value – what does the customer want?

2 Use the pull system – to avoid overproduction

3 Institute one-piece flow – make the work flow

4 Level out the workload – to the rate of customer demand

5 Stop and fix problems – immediately to get quality

6 Standardize – to support improvement

7 Use visual controls – so that no problems remain hidden

8 Use only reliable technology – that support the people and the

process

9 Compete against perfection – not competitors

(Lean Six Sigma – Chap 2 – page 31)

Lean Production V.S Mass Production

From: If you build it, they will come (Mass Production)

To: When they come, build it fast (Lean Production)

7 Kinds of Waste

 Inventory - unneeded stock or supplies

 Overprocessing - filling out extra paperwork

equipment

 Waiting - delays in diagnosis and treatment

Lean Process

The Five S’s

5S

Sort

hten

hten

Straig-Shine

rdize

rdize Sustain

Six Sigma Overview

What is Six Sigma

 Nowadays, Six Sigma is considered as a systematic method of eliminating defects (anything that does not conform to

customer expectations) from a product or process

Six Sigma DMAIC Model

Define Six Sigma Charter

Define Six Sigma Charter

Measure

Analyze Improve

Control

Benefits of Six Sigma

Reduction in defects

Decrease in costs

Improvement in customer satisfaction

Reduction in process variation

Improvement in process capability

Lean Six Sigma

Overview

What is Lean Six Sigma

 Lean Six Sigma is a methodology that maximizes shareholder value by achieving the fastest rate of improvement in customer satisfaction, cost, quality, process speed and invested capital

 The fusion of Lean and Six Sigma are required because:

– Lean cannot bring a process under statistical control

– Six Sigma alone cannot dramatically improve process speed or

reduce invested capital

Why Lean Six Sigma

 2 sources of cash flow

– External Customer: give money for products.

– Internal Processes: save money by cutting unnecessary

works or wastes

Lean Six Sigma Principles

 Specify value in the eyes of the customer.

 Identify the value stream and eliminate

waste / variation.

customer.

perfection

Which Business Function Needs Lean Six Sigma?

As long as there is a process that produces an output, whether

it is a manufactured product, data, an invoice, etc…, we can apply the Lean Six Sigma Breakthrough Strategy!!!!

6 Sigma Methods

MFG.

DESIGN SERVICE

Lean Six Sigma – Two Complementary Approaches

 Six Sigma…

• Emphasizes need to recognize opportunities and eliminate defects

• Recognizes that variation hinders ability to reliably deliver high-quality services

• Requires data-driven decisions and incorporates a comprehensive set of standard

tools for effective problem solving

• Provides a highly prescriptive cultural infrastructure effective in obtaining

sustainable results (continuous improvement through an empowered workforce)

 Lean…

• Focuses on maximizing process velocity

• Provides tools for analyzing process flow and delay times at each activity in

process

• Removes non-value added steps in process

Opportunities Both Within and Between Process Steps

Step A Step B Step C

Customer

A Three Step Process

Value-Adding Transformations Occur WITHIN Process Steps

Value-Adding Transformations Occur WITHIN Process Steps

Lean Six Sigma Objective

• Shift Process Average

Benefits of Lean Six Sigma

 Achieve total customer satisfaction and improved

operational effectiveness and efficiency

– Remove wasteful/non-value added activities

– Decrease defects and cycle time, and increase first pass

yields

 Improve communication and teamwork through a

common set of tools and techniques ( a disciplined,

Lean Six Sigma

Why is Agile? [1]

Agile is an iterative and incremental approach to project delivery, encompassing methodologies such as Scrum and extreme Programming (XP).

(Project Focused)

Why is Agile? [2]

Key Agile principles are:

 Iterative & Incremental Delivery

 Self Organization

How do we map the principles of Lean onto software?

overproduction

 One piece flow – Make the work "flow," one

piece at a time; minimize interruptions.

 5S (Sort, Straighten, Shine, Standardize, Sustain)

– eliminate the 7 speed bumps

5/7 speed bumps that Lean addresses

Over production Divide project into small modules and develop into fully functional, tested,

and releases in a short time

Excess inventory Code is immediately valuable

Helps prevent delivered a lot of unnecessary code

Defects Lead to repair, rework, or scrap

Demonstrated Successes

Agile & Lean Six Sigma have both proven their mettle

in the respective domains :

 Agile Project Execution: Improved time-to-market,

collaboration and customer satisfaction

 Lean Six Sigma Process Improvement: Better process

controls, higher efficiency and effectiveness

However, they still tend to operate independently

Customer Value &

Repercussions of Independence [1] Customer Value:

Right Price Right Time Right Time Right Product Right Product

Customer Value &

Repercussions of Independence [2]

 Within Agile projects:

 No quantification of project value

 Customer difficulty in providing “grounded” requirements

 Inconsistent alignment with highest-priority process needs

 Within Lean Six Sigma projects:

 No incremental delivery of business value

 Limited scope of analysis and opportunity for

Problem Definition vs Solution Execution

 Lean and Six Sigma

 defining the problem

 Do the right projects.

 Agile

 crafting the solution

 Do the right projects right.

Contributions of Agile & LSS

Encourages continuous

improvement

Encouraging constant inspecting and adapting

Looks to minimize risk Brings risk to light faster through

iterative development and prioritization

Looks to minimize inventory and

storage

Minimizes work in process

Agile is the way to implementing Lean Six Sigma principals.

Three Combined Approaches

Three possible approaches for combining Lean Six

Sigma and Agile:

 Approach 1: Initial Approach

 Approach 2: Integrated Approach

 Approach 3: Whole of Life

Lean Six Sigma & Agile

Death of the Project:

Platform-based operational approach Death of the Project:

Platform-based operational approach

Approach 1 – Initial Approach

Approach 2 – Integrated Approach

Approach 3 – Whole of life

Three Approaches, One Set of Goals

 Improve execution speed of process improvement

initiatives

 Tighten feedback loops in process management and

improvement efforts

 Support incremental improvements with a process

designed around iterative delivery

Transactional Six Sigma

Transactional Lean Six Sigma

 For the last few decades (and the foreseeable future), the

race for productivity and profitability has been led by

technology More and more, processes are being integrated into a company’s application systems

(Lean Six Sigma – Chap 5 – page 157)

 So any improvements make

on process also bring related

system into maintenance

Process or Technology? [1]

 “The way you get quality is to define a set of processes and

procedures and make sure they are implemented

everywhere.” – Larry Ellison (CEO of Oracle)

 “People ask the wrong question when they automate a

company or process: Will this bunch of software allow us to

[do] things the way we [do] them today ? The right question is will this allow us to [do] things the way we should [do]

them?”

( Lean Six Sigma – Chap 5 – page 158)

Process or Technology? [2]

Streamline Process

Streamline Process

Build System

Build System

Resolve post-

Resolve post-

Prevent creeping complexity

Prevent creeping complexity

The Dirty Thirty Process [1]

 Most new application systems

arrive at around 2.5 sigma—over a

15% error rate This is not because

the IT department did a crappy job

of testing, but because it’s almost

impossible to specify every

condition that you’ll encounter

when developing a new application

for a large company

(Lean Six Sigma – Chap 5 – page 164)

The Dirty Thirty Process [2]

 Information systems invariably fail to capture all of the

requirements necessary to facilitate smooth processing of all transactions So every system is designed with places to

capture the “fallout” and turn them over to people for

The Dirty Thirty Process [3]

“Software is rarely released ; it escapes ”

 The Dirty Thirty method focused on the fine-tuning of

delivered software, including 4 following steps:

(Lean Six Sigma – Chap 5 – page 164)

Revise

Service Order Case Study [1]

 Problem: Service order fallout from a phone company’s

information systems was running at 17% (at 30,000 errors per month) This caused problems with activation, fulfillment, and billing of wireless phones as well as customer disconnect rate (also called “churn rate”) almost twice the industry average

 Objective: To cut this level of rejects in half (9%) by the end of

the year

(Lean Six Sigma – Chap 5 – page 164-165)

Service Order Case Study [2]

Quantify the cost

 There were over 30,000 errors per month, which, at an

average cost of $12.50 to fix (wage cost only), cost $375,000 per month Over 50 temporary workers had been hired to

deal with the 2-month backlog of unfixed errors

(Lean Six Sigma – Chap 5 – page 165)

Understand pareto pattern [1]

 There were over 200 different transaction error codes, but only six of them (3%) accounted for over 80% of the total rejected transactions Two affected service directly; four affected the customer’s records

(Lean Six Sigma – Chap 5 – page 165)

Understand pareto pattern [2]

Analyzing the dirty thirty [1]

 Using all of the online systems, investigated the root cause of each rejected transaction.

 Keep the team reviewed all of the information and agreed on the cause of the rejected transaction Gradually, a pattern will reveal itself

Analyzing the dirty thirty [2]

Revise & Modify

 Once the team had identified the root causes, we would stop analyzing and defining the new requirements The systems

analyst would then convey these to the programming staff for implementation

(Lean Six Sigma – Chap 5 – page 169)

Analyzing the result [1]

 Result

• From 17% error rate reduced to 3% in just 6 months

• 100% elimination of top five error buckets

• $299,000 per month in savings

 Cost

• Three days of planning

• Six half-day team meetings

• Two minor software releases

(Lean Six Sigma – Chap 5 – page 169)

Analyzing the result [2]

 Until software engineering finds ways to prevent all of the

possible defects inherent in software development, the Dirty Thirty process will provide a simple way to tune up a system release and move the application ever closer to Six Sigma

performance

(Lean Six Sigma – Chap 5 – page 169)

 It also helps system analysts get an insight of how their

requirements and designs inappropriate and experiences to recreate better ones

Thanks for your attention

Answer & Question

[1] Jay Arthur, Lean Six Sigma, Mc GrawHill, 2007

[2] Jay Arthur, Six Sigma Simplified – Breakthrough

http://www.sixsigmaonline.org/six-sigma-training-c ertification-information

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