Profit thru Quality

profit thru quality

profit thru quality
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.

profit thru quality
KAIZEN-The Concept
Masaki Imai
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KAIZEN-The Concept
profit thru quality

KAIZEN
INNOVATION
KAIZEN-The Concept
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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

KAIZEN-The Concept
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KAIZEN-The Practice
Management Group Individual
Tools
Seven QC Tools
New Seven Tools
Professional Skills
Seven QC Tools
New Seven Tools
Common Sense
Seven QC Tools
Involves
Managers and
Professionals
QC Circles Everyone
Target
Systems and Process Group Work area Individual work area
Implementation
Cost
Small investment Mostly inexpensive Inexpensive
Results
New System and
Facility improvement
Improved work
procedures
On the spot
improvement
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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
KAIZEN-The Practice
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Group Oriented Kaizen- SMALL GROUP ACTIVTIES
Informal, voluntary small groups, organized within the company
Carry out specific improvement activities
Many forms:-
QC circles, Suggestion Groups, Workers group
QC Circlesthe most famous
Emphasis on problem solving in the work area
Advantages of QCC
Sense of teamwork
Improved communication
Improved morale
Acquire new skills
Labor-Management relationship improved

KAIZEN-The Practice
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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
Suggestions normally covers:-
Savings in energy, material and other resources
Improvement in working environment
Improvements in machines, processes, jigs and tools
Improvements in customer services


KAIZEN-The Practice
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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.

profit thru quality
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
KAIZEN
INNOVATION
INNOVATION
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KAIZEN and INNOVATION
KAIZEN INNOVATION
1. Effect
Long-term and business as
usual
Short term and dramtic
2. Pace
Small Steps Big Steps
3. Time frame
Continuous and Incremental Intermittent and non-incremental
4. Change
Gradual and constant Abrupt and volatile
5. Involvement
Every-one Selected champions
6. Approach
Collective group efforts, systems
approach
Individual ideas and efforts
7. Mode
Maintenance and Improvement Scrap and Rebuild
8. Effort Orientation
People Technology
9. Practical Requirements
Little investment but great
efforts to maintain
Large investment but little effort
to maintain
10. Advantage
Works well in slow growth
economy
Better suited in fast growth
economy
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Another comparison of Innovation and KAIZEN
Innovation KAIZEN
Creativity
Individualism
Specialist-oriented
Attention to great leaps
Technology-oriented
Information: closed, proprietary
Functional (specialist) orientation
Seek new technology
Line + staff
Limited feedback
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
profit thru quality
profit thru quality
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.

About Six Sigma
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Six Sigma Philosophy
Know Whats Important
to the Customer (CTQ)

Reduce Defects (DPMO)

Center Around Target
(Mean)

Reduce Variation
(Standard Deviation)
?
GE Company Proprietary
November 1998
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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.

SIX SIGMA-Definitions
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SIX SIGMA DEFINATIONS
If your yield is Your DPMO is. Your Sigma is
30.9% 690 000 1
69.2% 308 000 2
93.3% 66 800 3
99.4% 6 210 4
99.98% 320 5
99.9997% 3.4 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
For every 300000 letters
delivered
3,000 misdeliveries 1 misdelivery
For every week of TV
broadcasting per channel
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 Annual Savings
General Electric $2.0+ billion
JP Morgan Chase *$1.5 billion (*since inception in 1998)
Motorola $ 16 billion (*since inception in 1980s)
Johnson & Johnson $500 million
Honeywell $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.
profit thru quality
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
Defects
Process Capability
Inadequate
Design
Margin
Inadequate
Process
Capability
Unstable Parts &
Materials
Defects Acceptable
Premise of 6 Sources of variation can be:
Identified
Quantified
Eliminated or Controlled
LSL USL
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Define
Control
Improve Analyze
Measure
Define the problem and customer
requirements.

Measure defect rates and document
the process in its current incarnation.

Analyze process data and determine
the capability of the process.

Improve the process and remove
defect causes.

Control process performance and
ensure that defects do not recur.

Common sense doesnt mean commonly done or when done, done well.
Six Sigma Methodology
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Control
Define Measure Analyze Improve

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


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



Collect data on
size of the
selected
problem,
identify key
customer
requirements,
Determine key
product and
process
characteristic.

Analyze data,
establish and
confirm the
vital few
determinants of
the
performance.
Validate
hypothesis


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




Project Phases
Six Sigma Methodology
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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 Improved delivery performance
Level 1 CTQ Timely delivery
Level 2 CTQ On time delivery to schedule
Level 3 CTQ 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 Timely delivery
Project Y measure 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.
Specification limits LSL = -60 minutes
USL= +60 minutes
Target Scheduled time or zero minutes deviation
Defect Delivery earlier or later than 1 hour.
No. of defect
opportunities per unit
1 opportunity for a defect per scheduled delivery of
freight.
profit thru quality
Define - SIPOC Diagram
Supplier
Stores Manager
Input
Stores Order
Process Steps (high
level)
Receive order
Plan delivery
Dispatch Driver with goods
Deliver goods to stores
Receive delivery
Output
Received freight with Documents
Customer
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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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.
Improve
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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.
Control
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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.
profit thru quality
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
profit thru quality
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).
What Makes Six Sigma Different?
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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

profit thru quality
profit thru quality
Six Sigma & Kaizen- The Difference
KAIZEN SIX SIGMA
Quality Improvement YES YES
Continuous Improvement YES YES
Approach Improve Existing System
Human Based
Improve Existing System
Statistical Method
Improvement Framework-
DMAIC
Implementation Simpler and Low cost Difficult and High Cost
RELIES UPON GROUP
DYNAMICS
FIXED PLAN OF
IMPLEMENTATION
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Kaizen Six Sigma
Japanese Origin Western Origin
Culture Methodology (or Culture)
Kaizen Umbrella Road Maps
Continuous Improvement Immediate Perfection
Mistakes as Possibility for Improvement Reducing Variation and
Defects
Long-term Results Short-term Results
Possible
Every Possible Improvement Prioritising Projects
Providing Quality Ensuring Profitability
Participation of Every Single Employee Creation of Project
Teams
Profit thru Quality