What's Next After Lean Six Sigma?

What’s Next After Lean Six Sigma? Ron Snee Snee Associates, LLC

Roger Hoerl GE Global Research

ASQ Lean Six Sigma Conference Phoenix, AZ March 8-9, 2010

Lean Six Sigma What’s Next?

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ASQ Lean Six Sigma Conference 2010

Agenda The Improvement Imperative Is a new approach needed? Problems not solved by Lean Six Sigma Holistic view of the business and business improvement How problems not solved by Lean Six Sigma are addressed Evolving to an holistic approach Summary


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The Improvement Imperative Global competition and information technology have created the “Improvement Imperative” The need to improve around the globe to remain competitive We must improve all measures of performance Quality(Q), Cost(C) and Delivery(D) QCD is affected by all parts of the business A single improvement focus is helpful but is not enough Reducing waste and cycle time are necessary but not sufficient Reducing variation alone will not make you a winner

Can Lean Six Sigma Deal with These Improvement Needs? Is Another Approach Needed? Lean Six Sigma What’s Next?

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How Do We Know that We Need a New Approach? Guiding theory The Structure of Scientific Revolutions Thomas Kuhn (1962) Discovering the Future - The Business of Paradigms Joel Barker (1985) Paradigm – How things are done – The rules of the game When the rules change the game changes You need a new approach, a new paradigm, when People are messing with the rules Existing methodology cannot solve the problems we are facing


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Why Do We Need a New Approach? True continuous improvement culture is not developing Improvement not seen as a strategic business imperative or function Improvement is focused in operations and less so in other functions Improvement methodology not made part of daily work Improvement opportunities are not being fully realized Improvement efforts tend to be disjointed, rather than integrated Lean Six Sigma projects managed separately – Not part of other improvement initiatives People continue to think of Lean and Six Sigma as separate improvement approaches – many are “choosing sides” Innovation is seen as something different from improvement – A competitor Process management seen as separate from Lean Six Sigma


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Why Do We Need a New Approach? No one has yet “mastered” improvement Persistent assumption is there is one best method for improvement – Constant search for latest fad/bandwagon Few books or articles on improvement, per se – Many on improvement techniques Improvement initiatives and process improvements frequently aren’t sustained Pre-determined solutions are frequently “force fit” to problems for which they are not appropriate – “If all you have is a hammer, every problem looks like a nail.”


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Holistic View of Improvement

“Only the overall review of the entire business as an economic system can give real knowledge.” Peter F. Drucker Business is a System

• Holistic view reduces opportunity for sub-optimization


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A Corporation’s Core Processes Product Processes Requirements Collections and Definition

Design

Translation

Development Manufacturing

Market Segment

Delivery Selling Ordering

Market Place

Distribution Billing Collection Service

Enterprise Processes Planning Financial Personnel Mgmt. Info. Sys. Legal Communications Public Relations

Business Processes Lean Six Sigma What’s Next?

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Operations Have Numerous Opportunities for Improvement R&D

Marketing Information Systems

Product Engineering Process Engineering

Accounting

Operations Services*

Suppliers

Receiving W’house

* Multiple interconnections within these units. Lean Six Sigma What’s Next?

Logistics*

Sales Utilities & Manpower

Manufacturing Process

Finished Product W’house

Customers

Waste 9


Holistic View of Improving the Business A view of improvement as a process that: Works in all areas of the business Works in all cultures - common language and tool set Can address all measures of performance Addresses all aspects of process management: Process Design, Improvement and Control Can address all types of improvement Flow, variation, optimization, robustness…… Management process for improvement exists: Plans, goals, budgets, and reviews Focuses on developing an improvement culture Uses improvement as a leadership development tool


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Holistic Improvement System An improvement system that can successfully create and sustain significant improvements of any type, in any culture for any business Create and Sustain Infrastructure – management systems and resources Continuous improvement culture Leadership development Significant improvements Quality, cost, delivery, customer satisfaction, bottom line Any type Process performance measures Flow, variation, optimization Design, improvement, control Any culture – Function, Country, …… Any business – Manufacturing, service, non-profit, health care, government, ….. Lean Six Sigma What’s Next?

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Holistic Improvement Strategic Success Factors Management Leadership and Involvement

Infrastructure:

≡ Personnel ≡ Mgt Systems

Top Talent

Holistic Improvement Methodology Lean Six Sigma What’s Next?

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What Does Holistic Improvement Look Like? Strategic Level Senior management involvement; led by Chief Improvement Officer (CIO) Creation of improvement culture – Part of Each Job Description Improvement Council (IC) is permanent part of the business planning cycles.

Managerial Level Rigorous, defined system for planning and implementing improvements Process management systems are integrated with the improvement system There is a defined organizational structure to support the improvement system

Operational Level Dynamic “core set” of proven improvement methodologies - LSS, TRIZ, Work-Out, ….. Dedicated experts in core methodologies All employees are trained at a basic level in all core methodologies Additional “non-core” methodologies may be utilized as needed Employees are expected to implement improvements outside of formal projects


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What Holistic Improvement Looks Like Two Critical Elements ≡ Management System for Holistic Improvement ≡ Improvement Project Portfolio


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Management System for Holistic Improvement Process Control, Improvement and Design Integrated

Customers Process Performance Data


Process Improvements

The Process

Feedback

Reports & Information to Management

Process Design/Redesign

Process Adjustments

Periodic Analysis and Reviews 15

Feedback

Improvement Projects

Process Improvement System ASQ Lean Six Sigma Conference 2010

Holistic Improvement Management Reviews Review Team

Review Timing

Process Operators

Continuously/Daily

Process Managers and Staff

Weekly

Site Manager and Staff

Monthly

Business Manager and Staff

Quarterly

Per iodic Management Review at All Levels is Essential for Effective and Sustained Improvement


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Types of Commonly Encountered Improvement Needs Product and Operating Processes Flow of information and materials – Process streamlining Product Quality Product Delivery – Consistency is critical to success Process and Product Cost Reduction Process Variation – Reducing Waste Process Control Process Operating Window – “Sweet Spot” – Design Space Process and Product Robustness

Enterprise Management Processes Employee development, public relations, planning, ….

Project Type Defines the Appropriate Approach and Tools Lean Six Sigma What’s Next?

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Integrated Project Management System Start with project selection - Identify Projects that have highest value Approach that should be used on each project. Portfolio management and project-by-project selection DMAIC framework to guide improvement projects Improvement infrastructure to manage and lead the effort Champions, Master Black Belts, Black Belts and Green Belts Management systems guide and sustain improvement: Project tracking, management review, communication, recognition and reward, etc. The right projects relate to: Business goals Process performance – where the pain is coming from Improvement in flow of materials and information while reducing waste and cycle time Lean Six Sigma What’s Next?

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Organizational Improvement System Improvement is a managerial process just like staffing, budgeting, auditing etc. If you want improvement to happen on a regular and sustained basis, you must have a management system in place to guide and sustain the work Project portfolio contains projects of 3 types: Projects with known solution (e.g. capital projects) Product and Process Improvement projects (no known solution) Infrastructure - improvement initiatives like ISO 9000, new performance management system, ERP system


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Portfolio for Annual Improvement Plan (partial list) Project Increase capacity of Process Z Relocate milling process Secure environmental permits Upgrade DCS software Automate packaging line Increase yield of Process XX Reduce downtime of Mixer M Reduce manuf cost of Product P Improve steam trap performance Install new pump on Line K Reduce Plant B reactor cycle time

Category Product/Process Impvt Capital Infrastructure Infrastructure Capital Product/Process Impvt Product/Process Impvt Product/Process Impvt Product/Process Impvt Capital Product/Process Impvt

All Projects Compete for the Same Resources Lean Six Sigma What’s Next?

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Project Selection and Management Process Yield Studies

BB/GB Follow-Up Projects

Champion Inputs

BB/GB Project Loading Evaluation and Assignment

Process Capability Studies Bus. Leader Inputs

Project Review SVP – 1st Monday of Month

Hold, Reject, or More Info

• • • • • • •

Business Leader Acceptance Lean Six Sigma What’s Next?

Project Work

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Drive Project Speed Examine System Impact Instant Business Feedback Assess Resource Allocation Understand Barriers Opportunity to Stop a Project Identify Additional Projects ASQ Lean Six Sigma Conference 2010

How Holistic Improvement Addresses Unsolved Problems True Improvement Culture Improvement would be strategic and a permanent business function An individual is responsible for creating culture, with metrics to evaluate success Improvement in every job description will expand, broaden improvement efforts

Disjointed Versus Integrated Improvement Efforts All improvements would be under one organizational “umbrella” Permanent IC would mange improvements as a portfolio Diverse improvement types and methods would coexist and be integrated

Ability to “Master” Improvement Permanent infrastructure allows long-term organizational focus on improvement Incorporating new methodologies along with existing approaches minimizes “flavor of the month” bandwagons, and subsequent employee cynicism “Core set” of improvement methods allows deeper thought as to which method is likely to work best for a given problem Learning and enhancement of improvement system (scientific method) results Integrating improvement with process management institutionalizes improvement Lean Six Sigma What’s Next?

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How Do We Get Started? Start Small – Think Big ….. Evolution vs. Revolution Migrate a LSS initiative towards Holistic Improvement Where a Six Sigma Leader and Quality Council exist, work to broaden their scope to improvement in general Integrate potentially competing improvement groups, such as ISO Certification, LSS, and Business Process Improvement Migrate all improvement projects to a common project portfolio. All projects compete for the same pool of resources. Typical project types: process improvement, capital based, and infrastructure enhancement. Project selection decisions made from a common prioritized list are most effective


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How Do We Get Started? Start Small, Think Big ….. Evolution vs. Revolution Institute data-based process management systems Begin with the most critical processes. Link together process control, process improvement and process redesign. Process improvement and redesign will identify improvement projects Ensure critical management systems that enable holistic improvement Recognition and reward Communication Management review Leadership development Project selection, execution and closure Require business units and functions to have a continuous improvement process in place – the business is a system Lean Six Sigma What’s Next?

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Summary Improvement must become a keen focus of organizations looking to compete effectively in the 21st century Lack of understanding of improvement objectives and needed approaches has reduced the effectiveness of utilizing Lean Six Sigma methodologies Holistic Improvement System uses a variety of approaches including: A focus on improvement of the entire business Careful project selection identifying the right projects and the right improvement strategy for each project A robust improvement methodology that can handle the wide variety of problems an organization experiences

Begin with the end in mind

Systematically evolve to holistic improvement


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References Barker, Joel (1985) Discovering the Future - The Business of Paradigms, ILI Press, St. Paul, MN George, M. l. (2002) Lean Six Sigma - Combining Six Sigma Quality with Lean Speed, McGraw-Hill, NY. George, M. L. (2003) Lean Six Sigma for Service – How to Use Lean Speed and Six Sigma Quality to Improve Services and Transactions, McGraw-Hill, NY. Hoerl, R. W. and R. D. Snee (2002) Statistical Thinking – Improving Business Performance, Duxbury Press, Pacific Grove, CA. Kuhn, T. S. (1962) The Structure of Scientific Revolutions. University of Chicago Press, Chicago, IL. Snee, R. D. and R. W. Hoerl (2003) Leading Six Sigma – A Step-by-Step Guide Based on Experience with GE and Other Six Sigma Companies, Financial Times Prentice Hall, New York, NY. Snee, R. D. and R. W. Hoerl (2005) Six Sigma Beyond the Factory Floor – Deployment Strategies for Financial Services, Health Care, and the Rest of the Real Economy, Financial Times Prentice Hall, New York, NY. Lean Six Sigma What’s Next?

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Articles on Holistic Improvement by Snee and Hoerl Hoerl, R. W. and R. D. Snee (2010) “Continuous Improvement Systems – The Next Big Thing beyond Lean Six Sigma”, Six Sigma Forum Magazine, February 2010. Snee, R. D. (2006) “Utilizing a Holistic Approach to Improvement”, Transactions of the ASQ World Conference on Quality and Improvement, Milwaukee, WI, May 1-3, 2006. Snee, R. D. and R. W. Hoerl (2007) “Integrating Lean and Six Sigma – A Holistic Approach”, Six Sigma Forum Magazine, May 2007, 15-21. Snee, R. D. (2007) “Business Improvement Methodology – What’s on the Horizon?” American Society for Quality Statistics Division Special Publication, Spring 2007, 1019. Snee, R. D. (2007) “Getting Better All the Time: The Future of Business Improvement Methodology”, International Journal of Six Sigma and Competitive Advantage, Vol. 3, No. 4, 305-316. Snee, R. D. (2008) “What Improvement System Should Your Organization Use – A Commentary on the Shainin System? “, Quality Engineering, Volume 20, No. 1, 23-26. Snee, R. D. (2008) “W. Edwards Deming’s “Making a New World”: A Holistic Approach to Performance Improvement and the Role of Statistics”, The American Statistician, Volume 62, No. 3, 251-255. Snee, R. D. and E. C. Gardner (2008) “Putting It All Together – Continuous Improvement is better than Postponed Perfection”. Quality Progress, October 2008, 56-59. Snee, R. D. (2009) “Digging the Holistic Approach: Rethinking Business Improvement to Improve the Bottom Line”, Quality Progress, October 2009, 52-54.


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For Further Information, Please Contact:

Ron Snee

Roger Hoerl

Snee Associates, LLC

GE Global Research

[email protected]

[email protected]


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