6 &

Kaizen

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KAIZEN-The Concept

Kaizen.means improvement

Ongoing improvement Involves everyone

Both Managers & Workers

Kaizen Philosophy

Our way of life need to be constantly improved

Working life, social life, home life

Kaizen embodies

Productivity Improvement Total Quality Culture QC Circles Zero Defects ..etc.

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KAIZEN-The Concept

Masaki Imai

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KAIZEN-The Concept

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KAIZEN-The Concept
KAIZEN

INNOVATION

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KAIZEN-The Concept

Process Oriented Approach

Leads to Improved Results

Focus on the process improvement without loosing sight of the expected results.

People Oriented Approach

Focus on .

Discipline Time Management Skill Development Participation and Involvement Morale Communication

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KAIZEN-The Practice
Management Tools Involves Target Implementation Cost Results
Seven QC Tools New Seven Tools Professional Skills Managers and Professionals Systems and Process

Group
Seven QC Tools New Seven Tools QC Circles

Individual
Common Sense Seven QC Tools Everyone

Group Work area

Individual work area

Small investment

Mostly inexpensive

Inexpensive

New System and Facility improvement

Improved work procedures

On the spot improvement

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KAIZEN-The Practice

Just In Time- Management Oriented Kaizen

Exact number of required units brought to each successive stage of production at the appropriate time The advantage of JIT

Shortened Lead Time Reduced time spent on non-process work Reduced inventory Better balance between processes Problem clarification

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KAIZEN-The Practice

Group Oriented Kaizen- SMALL GROUP ACTIVTIES

Informal, voluntary small groups, organized within the company

Carry out specific improvement activities QC circles, Suggestion Groups, Workers group Emphasis on problem solving in the work area Advantages of QCC

Many forms:

QC Circlesthe most famous

Sense of teamwork Improved communication Improved morale Acquire new skills Labor-Management relationship improved

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KAIZEN-The Practice

Individual Oriented Kaizen- SUGGESTION SYSTEM

Individual provides suggestion on how to improve his work area. Helps the individual to be Kaizen conscious. Also helps in.

Workers to speak out. Opportunity for management to help workers. An valuable opportunity for two way communication Savings in energy, material and other resources Improvement in working environment Improvements in machines, processes, jigs and tools Improvements in customer services

Suggestions normally covers:

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KAIZEN- Implementation

Seven Conditions for Successful Implementation of Kaizen Strategy

Top management commitment Top management commitment Top management commitment Setting up an organization dedicated to promote Kaizen Appointing the best available personnel to manage the Kaizen process Conducting training and education Establishing a step-by-step process for Kaizen introduction.

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profit thru quality

Figure 2.2 Ideal pattern from innovation

Time

Figure 2.3 Actual pattern from innovation

Time

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INNOVATION plus KAIZEN

KAIZEN

INNOVATION

KAIZEN

INNOVATION

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KAIZEN and INNOVATION

KAIZEN
1. Effect 2. Pace 3. Time frame
Long-term and business as usual Small Steps Continuous and Incremental Gradual and constant Every-one Collective group efforts, systems approach Maintenance and Improvement People

INNOVATION
Short term and dramtic Big Steps Intermittent and non-incremental Abrupt and volatile Selected champions Individual ideas and efforts Scrap and Rebuild Technology

4. Change
5. Involvement 6. Approach 7. Mode 8. Effort Orientation

9. Practical Requirements
10. Advantage

Little investment but great efforts to maintain

Works well in slow growth economy

Large investment but little effort to maintain

Better suited in fast growth economy

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Another comparison of Innovation and KAIZEN

Innovation Creativity Individualism Specialist-oriented Attention to great leaps Technology-oriented Information: closed, proprietary Functional (specialist) orientation Seek new technology Line + staff Limited feedback KAIZEN Adaptability Teamwork (systems approach) Generalist-oriented Attention to details people-oriented Information: open, shared Cross-functional orientation Build on existing technology Cross-functional organization Comprehensive feedback

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profit thru quality

About Six Sigma

Six Sigma Was Developed at Motorola in the 1980s As a Method to Improve Process Quality. It Was First Used to Improve Manufacturing Process Capability and Then Migrated to Business Processes Capability Companies That Have Deployed Six Sigma: Bank of America, Motorola, GE, IBM, Kodak and Many More The Basic Premise Is, All Processes Have Variation. Variation Is the Enemy.

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Six Sigma Philosophy

Know

Whats Important to the Customer (CTQ) Defects (DPMO) Target

Reduce

Center Around

(Mean)
Reduce

Variation (Standard Deviation)

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GE Company Proprietary November 1998

SIX SIGMA-Definitions

Business Definition A break through strategy to significantly improve customer satisfaction and shareholder value by reducing variability in every aspect of business. Technical Definition A statistical term signifying 3.4 defects per million opportunities.

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SIX SIGMA DEFINATIONS

If your yield is 30.9% Your DPMO is. 690 000 Your Sigma is 1

69.2%
93.3% 99.4% 99.98% 99.9997%

308 000
66 800 6 210 320 3.4

2
3 4 5 6

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SIX SIGMA-Definitions

In brief, Six Sigma is a process control method to improve the quality of products or services in a continuous manner. This method uses six standard deviations of a normal distribution as the limits of customers acceptance of the systems products. This method is applicable to manufacturing as well as service industries. With six sigmas, only 3.4 defects per million are allowed, or an acceptable level of 99.9997% is required

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Six Sigma Performance

With 99 % Quality With Six Sigma Quality
1 misdelivery

For every 300000 letters delivered For every week of TV broadcasting per channel

3,000 misdeliveries

1.68 hours of dead air

1.8 seconds of dead air

Out of every 500,000 computer restarts

4100 crashes

Less than 2 crashes

Source: The Six Sigma Way by Peter Pande and Others

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Who is Implementing Six Sigma

At least 25% of the fortune 200 claim to have a serious six sigma program - Michael Hammer. Financial - Bank of America, GE Capital, Electronics Allied Signal, Samsung, Sony Chemicals - Dupont, Dow Chemicals Manufacturing - GE Plastics, Johnson and Johnson, Motorola, Nokia, Microsoft, Ford. Airline - Singapore, Lufthansa, Bombardier And hundreds of others in Americas, Europe, Sub Continent.

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Six Sigma Results

Company General Electric JP Morgan Chase Annual Savings $2.0+ billion *$1.5 billion (*since inception in 1998)

Motorola
Johnson & Johnson Honeywell

$ 16 billion (*since inception in 1980s)

$500 million $600 million

Six Sigma Savings as % of revenue vary from 1.2 to 4.5 % For $ 30 million/yr sales Savings potential $ 360,000 to $ 1.35 million. Investment: salary of in house experts, training, process redesign.

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Key Concepts of Six Sigma

At its core, Six Sigma revolves around a few key concepts.

Critical to Quality: Attributes most important to the customer Defect: Failing to deliver what the customer wants Process Capability: What your process can deliver Variation: What the customer sees and feels Stable Operations: Ensuring consistent, predictable processes to
improve what the customer sees and feels

Design for Six Sigma: Designing to meet customer needs and

process capability

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Dissecting Process Capability

Premise of 6 Sources of variation can be:

Identified Quantified Eliminated or Controlled

Inadequate Process Capability

Unstable Parts & Materials

Inadequate Design Margin

LSL

USL

Defects

Acceptable

Defects

Process Capability

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Six Sigma Methodology

Define
Define the problem and customer
requirements. easure defect rates and document Measure M the process in its current incarnation.

Control

Analyze process data and determine

the capability of the process. defect causes.

Improve the process and remove

Control process performance and

Improve Analyze
ensure that defects do not recur.

Common sense doesnt mean commonly done or when done, done well.

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Six Sigma Methodology

Project Phases Define
Identify, evaluate and select projects for improvement Set goals Form teams.

Measure

Analyze

Improve
Improvement strategy Develop ideas to remove root causes Design and carry out experiments, Optimize the process. Final solutions

Control

Collect data on Analyze data, size of the establish and selected confirm the problem, vital few identify key determinants of customer the requirements, performance. Determine key Validate product and hypothesis process characteristic.

Establish standards to maintain process; Design the controls, implement and monitor. Evaluate financial impact of the project

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Six Sigma Case Study Service Organisation

Background

M/s Alpha Inc. manages out bound cargo from a distribution centre to different stores. Deliveries made on trucks - owned and hired. Customers dissatisfied at delivery schedules. Leadership decision to deploy Six Sigma; Team of 1 Black Belt and 3 Green Belts formed Sponsor of the project Distribution Manager

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Define - Critical to Quality (CTQ)

Focus on customers generating annual revenue of USD 400,000/-. Customer needs Level 1 CTQ Level 2 CTQ Level 3 CTQ Improved delivery performance Timely delivery On time delivery to schedule Delivery within +/- 1 hour of scheduled delivery time

Current process sigma level - 2.43 or 175889 DPMO

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Define - Goal Statement

Reduce number of delayed deliveries by 50 % by 31st December Y 2002 to better meet customer requirement of timely delivery defined as within +/- 1 hour of scheduled delivery.

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Define - Performance Standards

Output unit A scheduled delivery of freight

Output characteristic
Project Y measure

Timely delivery
Process starts when an order is received Ends when goods are received & signed for at customers desk. Process measurement Deviation from scheduled delivery time in minutes. LSL = -60 minutes USL= +60 minutes Scheduled time or zero minutes deviation Delivery earlier or later than 1 hour. 1 opportunity for a defect per scheduled delivery of freight.

Specification limits Target Defect No. of defect opportunities per unit

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Define - SIPOC Diagram

Supplier Input Process Steps (high
level) Stores Manager Stores Order Receive order Plan delivery Dispatch Driver with goods Deliver goods to stores Receive delivery

Output Customer

Received freight with Documents Store Manager

Detailed process maps drawn

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Measure and Analyze

Driver and Distance identified as key factors influencing delivery performance. Driver selected for focus. Potential root causes as to why Driver influenced the time: Size of the vehicle Type of engine Type of tyres Fuel capacity

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Improve

Experiments designed and conducted using truck type and tyre size. Findings:

Larger tyres took longer time at certain routes where area was cramped and time lost in maneuvering. High incidence of tyre failures since tight turns led to stress on tyres thus increasing number of flat tyres.

Team modified planning of dispatch process by routing smaller trucks at more restrictive areas.

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Control

Test implementation. Process sigma level up from 2.43 or 175889 DPMO to 3.94 or 7353 DPMO. Performance still fell short of best in class 4.32 or 2400 DPMO. Improvement led to significant customer satisfaction. Process continually monitored and data on new cycle times, tyre failure collected as per defined methods and frequency, analysed and monitored. Customer satisfaction measured and monitored.

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Key Lessons Learnt

Define

Difficulty in identifying the right project and defining the scope; Difficulty in applying statistical parameters to Voice of the Customers; Trouble with setting the right goals;

Measure

Inefficient data gathering; Lack of measures; Lack of speed in execution;

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Key Lessons Learnt

Analyse Challenge of identifying best practices Overuse of statistical tools/ under use of practical knowledge Challenge of developing hypotheses Improve Challenge of developing ideas to remove root causes Difficulty of implementing solutions Control Lack of follow up by Managers/ Process Owners Lack of continuous Voice of the Customer feedback Failure to institutionalize continuous improvement.

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Key Lessons Learnt

Define ranked most important step but gets the lowest resource allocation Project scoping and its definition is critical to its success/ failure; Measure is considered most difficult step and also gets the highest resources

Source: Greenwich Associates Study Y 2002

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What Makes Six Sigma Different?

Versatile Breakthrough improvements

Financial results focus

Process focus Structured & disciplined problem solving methodology using scientific tools and techniques Customer centered Involvement of leadership is mandatory. Training is mandatory; Action learning (25% class room, 75 % application)

Creating a dedicated organisation for problem solving (85/50 Rule).

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Benefits of Six Sigma

Generates sustained success Sets performance goal for everyone Enhances value for customers; Accelerates rate of improvement; Promotes learning across boundaries; Executes strategic change

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profit thru quality

Six Sigma & Kaizen- The Difference

KAIZEN Quality Improvement Continuous Improvement Approach YES YES Improve Existing System Human Based SIX SIGMA YES YES Improve Existing System Statistical Method Improvement FrameworkDMAIC

Implementation

Simpler and Low cost

Difficult and High Cost

RELIES UPON GROUP DYNAMICS

FIXED PLAN OF IMPLEMENTATION

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Kaizen

Six Sigma
Western Origin Methodology (or Culture) Road Maps Immediate Perfection Reducing Variation and Defects Short-term Results Possible Prioritising Projects Ensuring Profitability Creation of Project Teams

Japanese Origin Culture Kaizen Umbrella Continuous Improvement Mistakes as Possibility for Improvement
Long-term Results Every Possible Improvement Providing Quality Participation of Every Single Employee

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Profit thru Quality