Lean Six Sigma Nuggets: A Fully Commented Project Documentation

By Uwe H Kaufmann

Lean Six Sigma is a proven worldwide approach for process improvement that consists of tools from two very different methodologies, Lean and Six Sigma.

Developed over decades by Toyota, Lean contains a variety of tools tailored to reduce waste in processes, whereas Six Sigma is a result of Motorola seeking to reduce variation in processes that curb production.

The combined approaches have helped companies save billions of dollars while also boosting revenue. In this guide to Lean Six Sigma success, the author explains the methodology using complete and detailed project documentation.

The main case study describes a finance company that faces client attrition and a decrease in revenue and market share due to process problems. Throughout the book, the project work and the application of typical Lean Six Sigma tools are explained using the case as a guide.
By using a Lean Six Sigma approach, the company ultimately increased client satisfaction and loyalty and achieved a lasting improvement in business results.
Combine the power of two rigorous management practices and boost your bottom line with the lessons in Lean Six Sigma Nuggets.

• Language: English
• Publisher: Partridge Publishing Singapore
• Release date: Jun 12, 2018
• ISBN: 9781543744651

Uwe H Kaufmann

Uwe H Kaufmann is the founder of the Centre for Organisational Effectiveness, a business advisory firm based in Singapore. As consultant and coach with many years of experience, his passion lies in helping organizations become more effective. His clients include multinational organizations in various industries. Since 2002, he has spent about half of his professional life working with government ministries and agencies in Singapore and Asia. He lives in Singapore.

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Copyright © 2018 by Uwe H Kaufmann.

ISBN:               Hardcover             978-1-5437-4464-4

                         Softcover              978-1-5437-4463-7

                         eBook                   978-1-5437-4465-1

All rights reserved. No part of this book may be used or reproduced by any means, graphic, electronic, or mechanical, including photocopying, recording, taping or by any information storage retrieval system without the written permission of the author except in the case of brief quotations embodied in critical articles and reviews.

Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

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TABLE OF CONTENTS

0. Introduction

0.1 What is Lean Six Sigma?

0.2 How Does Lean Six Sigma Training Work?

0.3 Why Has This Book Been Written?

0.4 How Is This Book Structured?

0.4.1 Define: Describing the Problem

0.4.2 Measure: Collecting Data

0.4.3 Analyse: Identifying the Vital Few

0.4.4 Improve: Developing Solutions

0.4.5 Control: Sustaining the Gains

0.5 What Is Provided?

1. Define

1.1 Overview

1.2 Steps

1.3 Objective

1.4 Prerequisites

1.5 Deliverables

1.6 Checklist

1.7 Tips

1.8 Team Dynamics

1.9 Project Steps

2. Drafting the Project Charter

2.1 Objective

2.2 Prerequisites

2.3 Tasks and Tools Used

2.3.1 Task 1: Elaborating the Business Case

2.3.2 Task 2: Describing Problem Statement,

Objective, and Scope of the Project

2.3.3 Task 3: Defining Project Metrics and

Estimating Potential Benefits

2.3.4 Task 4: Selecting the Project Team

2.3.5 Task 5: Scheduling Project Phases

2.3.6 Task 6: Stakeholder Analysis

2.4 Deliverables

2.5 Tips

2.6 Time Needed

2.7 Case Study

2.7.1 Task 1: Elaborating the Business Case

2.7.2 Task 2: Describing Problem Statement,

Objective, and Scope of Project

2.7.3 Task 3: Defining Project Metrics and

Estimating Potential Benefits

2.7.4 Task 4: Selecting the Project Team

2.7.5 Task 5: Scheduling Project Phases

2.7.6 Task 6: Stakeholder Analysis

3. Mapping the High-Level Process

3.1 Objective

3.2 Prerequisites

3.3 Tasks and Tools Used

3.3.1 Task 1: Listing Process Steps

3.3.2 Task 2: Listing Process Customers and Outputs

3.3.3 Task 3: Listing Process Suppliers and Inputs

3.4 Deliverables

3.5 Tips

3.6 Time Needed

3.7 Case Study

3.7.1 Task 1: Listing the Process Steps

3.7.2 Task 2: Listing the Process Customers and Outputs

3.7.3 Task 3: Listing the Process Suppliers and Inputs

4. Understanding the Voice of the Customer

4.1 Objective

4.2 Prerequisites

4.3 Tasks and Tools Used

4.3.1 Task 1: Identifying Customer Segments

4.3.2 Task 2: Gathering Customer Requirements

4.3.3 Task 3: Analysing Customer Requirements

4.3.4 Task 4: Prioritising Customer Requirements

4.3.5 Task 5: Setting Targets

4.4 Deliverables

4.5 Tips

4.6 Time Needed

4.7 Case Study

4.7.1 Task 1: Identifying Customer Segments

4.7.2 Task 2: Gathering Customer Requirements

4.7.3 Task 3: Analysing Customer Requirements

4.7.4 Task 4: Prioritising Customer Requirements

4.7.5 Task 5: Setting Targets

5. Measure

5.1 Overview

5.2 Steps

5.3 Objectives

5.4 Prerequisites

5.5 Deliverables

5.6 Checklist

5.7 Tips

5.8 Team Dynamics

5.9 Project Steps

6. Identifying and Selecting Potential Causes for Data Collection

6.1 Objective

6.2 Prerequisites

6.3 Tasks and Tools Used

6.3.1 Task 1: Generate a List of Potential Process Variables

6.3.2 Task 2: Generating a List of Potential Input Variables

6.3.3 Task 3: Grouping of Potential Causes and

Creating a Fishbone Diagram

6.3.4 Task 4: Selecting Potential Causes for Data Collection

6.3.5 Task 5: Generating Stratifying Factors

6.4 Results

6.5 Tips

6.6 Time Required

6.7 Case Study

6.7.1 Task 1: Generating a List of Potential Process Causes

6.7.2 Task 2: Generating a List of Potential Input Causes

6.7.3 Task 3: Grouping Potential Causes and

Creating a Fishbone Diagram

6.7.4 Task 4: Selecting of Potential Causes for Data Collection

6.7.5 Task 5: Generating Stratifying Factors

7. Analysing the Measurement System

7.1 Objective

7.2 Prerequisites

7.3 Tasks and Tools Used

7.3.1 Task 1: Selecting Measurement Systems for

Measurement System Analysis

7.3.2 Task 2: Measurement System Analysis for Discrete Data

7.3.3 Task 3: Measurement System Analysis for

Continuous Data

7.4 Results

7.5 Tips

7.6 Time Required

7.7 Case Study

7.7.1 Task 1: Selecting Measurement Systems for

Measurement System Analysis

7.7.2 Task 2: Measurement System Analysis for Discrete data

8. Planning the Data Collection

8.1 Objective

8.2 Prerequisites

8.3 Tasks and Tools Used

8.3.1 Task 1: Establishing Requirements for Data Collection

8.3.2 Task 2: Determining Sample Size for Discrete Data

8.3.3 Task 3: Determining Sample Size for Continuous Data

8.3.4 Task 4: Planning Data Collection

8.4 Results

8.5 Tips

8.6 Required Time

8.7 Case Study

8.7.1 Task 1: Determining of Sample Size

8.7.2 Task 2: Planning Data Collection

9. Identifying Patterns in Data

9.1 Objective

9.2 Prerequisites

9.3 Tasks and Tools Used

9.3.1 Task 1: 1. Identifying Patterns over Time, in

Continuous Data

9.3.2 Task 2: Identifying Patterns Related to

Frequency, in Continuous Data

9.3.3 Task 3: Identifying Patterns Related to

Counts, in Discrete Data

9.4 Results

9.5 Tips

9.6 Required Time

9.7 Case Study

9.7.1 Task 1: Identifying Patterns in Data for Result

Variable Y

9.7.2 Task 2: Identifying Patterns in Data for

Potential Causes and Related Conditions

10. Determining Process Results

10.1 Objectives

10.2 Prerequisites

10.3 Tasks and Tools Used

10.3.1 Task 1: Testing Continuous Data for Normal

Distribution

10.3.2 Task 2: Calculating Process Results for

Normal-Distributed, Continuous Data

10.3.3 Task 3: Calculating Process Results of

Discrete or Non-Normal-Distributed, Continuous Data

10.4 Results

10.5 Tips

10.6 Time Required

10.7 Case Study

10.7.1 Task 1: Testing Continuous Data for Normal Distribution

10.7.2 Task 2: Determining the Process

Result for Non-Normal Distributed, Continuous Data

11. Analyse

11.1 Overview

11.2 Steps

11.3 Objectives

11.4 Prerequisites

11.5 Results

11.6 Checklist

11.7 Tips

11.8 Team Dynamics

11.9 Project Steps

12. Analysing the Process to Determine Critical Causes

12.1 Objectives

12.2 Prerequisites

12.3 Tasks and Tools Used

12.3.1 Task 1: Mapping the Process

12.3.2 Task 2: Investigate Interface Problems

12.3.3 Task 3: Discovering Wasted Resources

12.3.4 Task 4: Determining Process Efficiency

12.3.5 Task 5: Calculating Process Bottlenecks

12.3.6 Task 6: Determining Transportation and

Movement Operations

12.4 Results

12.5 Tips

12.6 Time Required

12.7 Case Study

12.7.1 Task 1: Showing the Waste of Resources

12.7.2 Task 2: Discovering Bottlenecks

12.7.3 Task 3: Summary of the Analysis Results

13. Analysing Data to Determine Vital Few Causes

13.1 Objective

13.2 Prerequisites

13.3 Tasks and Tools Used

13.3.1 Task 1: Analysing Continuous Y and Discrete X

13.3.2 Task 2: Analysing Continuous Y and Continuous X

13.3.3 Task 3: Analysing Discrete Y and Discrete X

13.3.4 Task 4: Analysing Discrete Y and Continuous X

13.4 Results

13.5 Tips

13.6 Time Required

13.7 Case Study

13.7.1 Task 1: Analysis of the Influence of X1 on Y

13.7.2 Task 2: Analysis of the Influence of X2 on Y

13.7.3 Task 3: Analysing the Influence of X3 on Y

13.7.4 Task 4: Analysis of the influence of X4, X5,

and X6 on Y

13.7.5 Task 5: Analysis of the Influence of X7 on Y

13.7.6 Task 6: Analysis of the Influence of X8 on Y

13.7.7 Task 7: Analysis of the Influence of X9 on Y

13.7.8 Task 8: Analysis of the Influence of X10 on Y

13.7.9 Task 9: Analysis of the Influence of X11 on Y

14. Analysing the Background for the Critical Causes

14.1 Objectives

14.2 Prerequisites

14.3 Tasks and Tools Used

14.3.1 Task 1: Determining the Driver For Critical Causes

14.4 Results

14.5 Tips

14.6 Time Required

14.7 Case Study

14.7.1 Task 1: Determining the driver for critical causes

15. Improve

15.1 Overview

15.2 Steps

15.3 Objectives

15.4 Prerequisites

15.5 Results

15.6 Checklist

15.7 Tips

15.8 Team Dynamics

15.9 Project Steps

16. Developing Solutions

16.1 Objective

16.2 Prerequisites

16.3 Tasks and Tools Used

16.3.1 Task 1: Generating Ideas for Solutions

16.3.2 Task 2: Develop and Evaluate Solutions

16.4 Results

16.5 Tips

16.6 Time Required

16.7 Case Study

16.7.1 Task 1: Generating Ideas for Solutions

16.7.2 Task 2: Develop and Evaluate Solutions

17. Analysing Risk and Implementing Solutions

17.1 Objective

17.2 Prerequisites

17.3 Tasks and Tools Used

17.3.1 Task 1: Analysing Process Risk

17.3.2 Task 2: Performing Pilot Tests

17.3.3 Task 3: Planning the Implementation

17.4 Results

17.5 Tips

17.6 Time Required

17.7 Case Study

17.7.1 Task 1: Analysing Process Risk

17.7.2 Task 2: Carrying Out Pilot Tests

17.7.3 Task 3: Planning the Implementation

18. CONTROL

18.1 Overview

18.2 Steps

18.3 Objectives

18.4 Prerequisites

18.5 Results

18.6 Checklist

18.7 Tips

18.8 Team Dynamics

18.9 Project Steps

19. Sustaining the Results

19.1 Objective

19.2 Requirements

19.3 Tasks and Tools Used

19.3.1 Task 1: Generating a Process Management Plan

19.3.2 Task 2: Establishing a Control System

19.3.3 Task 3: Demonstrating the Improvement

19.3.4 Task 4: Handing Over the Process

19.3.5 Task 5: Concluding the Project

19.4 Results

19.5 Tips

19.6 Time Required

19.7 Case Study

19.7.1 Task 1: Generating a Process Management Plan

19.7.2 Task 2: Establishing a Control System

19.7.3 Task 3: Demonstrating the Improvement

19.7.4 Task 4: Handing Over the Process

19.7.5 Task 5: Concluding the Project

Epilogue

Literature

Abbreviations

Glossary

0. Introduction

0.1 What is Lean Six Sigma?

Lean Six Sigma is a proven worldwide approach for process improvement that consists of tools from two very different methodologies, Lean and Six Sigma.

Lean has been developed over decades by Toyota and contains a variety of tools tailored to reduce waste in processes.

The objectives of Lean are, amongst others,

• Reduction of turn-around-time

• Reduction of storage costs

• Reduction of work in progress

• Reduction of working capital

• Increase of process efficiency

• Increase of process capacity

• Improvement of throughput of goods and services from customer requirement to delivery

• Motivation of process stakeholders

• Increase in customer satisfaction

• Improvement of organisational results

Six Sigma is a outcome of Motorola’s successful fight of production problems, resulting in customer dissatisfaction in their TV plants in the 80s and focuses on the reduction of omnipresent variation in processes.

The objectives of Six Sigma are, amongst others,

• Reduction of defects and rework

• Improvement of quality and process capability

• Increase in predictability of process results

• Increase in reliability of goods and services deliveries

• Increase of process capacity

• Motivation of process stakeholders

• Increase in customer satisfaction

• Improvement of organisational results

Due to the connection between variation and waste in a bi-directional cause and effect relationship, Lean Six Sigma has been developed to combine the tools of both methodologies into one toolset.

Looking at both approaches from the perspective of the process, it becomes obvious that Lean has a rather macro view, which shows a process from customer request all the way through to delivery. Contrary to that, Six Sigma is often used to analyse and solve specific problems within the process, frequently with a limited scope.

Over more than twenty years, Lean Six Sigma has been contributing to saving billions in dollars of costs as well as to generating additional revenue and income in a variety of organisations in nearly all industries. These organisations have been able to improve customer satisfaction and build stronger customer relationships as they turn around their processes in all stages of value creation. At the same time, they have been developing the next generation of leaders for their organisation whilst challenging them with problems to solve, to the benefit of the organisation. Even governmental ministries and agencies have been able to use this approach to increase customer satisfaction and process efficiency.

Whilst the tools within the Lean Six Sigma toolbox stem from both Lean and Six Sigma, the project management approach containing the phases DEFINE, MEASURE, ANALYSE, IMPROVE, CONTROL is taken from the Six Sigma toolbox. This project management cycle is often called DMAIC.

In addition to improving organisational processes, a Lean Six Sigma initiative often leads to contributing to strategic objectives. When Jack Welch led the implementation of Six Sigma in General Electric in the 90s, he intended and successfully implemented a cultural change for General Electric.

Table 0-1: General Electric’s cultural change supported by Six Sigma

0.2 How Does Lean Six Sigma Training Work?

Lean Six Sigma project leaders are the so-called Green Belts or Black Belts. Green Belt training usually lasts about ten days and is delivered in parallel to the working on an organisation relevant improvement project. The cycle of training and application lasts three to six months. After completing the training, passing the Lean Six Sigma Green Belt exam and delivering impactful business results through the project, a Green Belt certificate is issued.

With this exam, the Green Belt is eligible to join a so-called Black Belt training, which typically lasts another ten days and is also done in addition to working on a more complex project. After passing the exam and completing a project successfully, a Black Belt certificate will be issued. Following this, only a few outstanding Black Belts will go on to pursue the Master Black Belt certification track.

Developing Lean Six Sigma project leaders, especially Black Belts and Master Black Belts, is often a milestone in developing the next generation of leaders for the organisation, as the Lean Six Sigma education and project work equips them with additional tools and skills that will come in handy in their day-to-day work as leaders.

0.3 Why Has This Book Been Written?

Many of the books on the market that cover Lean Six Sigma are written from a high-level perspective covering the philosophy of this management methodology from various angles. Additionally, there are books that describe the tools involved, their application, and their theoretical background in much detail.

Contrary to that, this book explains the Lean Six Sigma methodology using a complete and detailed project documentation. The main case study as well as supporting cases are based on real Lean Six Sigma projects. To protect our clients, we have amended all names and data. The main project describes a finance company who faces client attrition and with this, a decrease in revenue and market share due to process problems. Throughout the book, the project work and especially the application of typical Lean Six Sigma tools are elaborated using this case. At the end, a drastically enhanced process landscape brings increased client satisfaction and loyalty that consequentially leads to lasting improvement in business results.

The idea of this book was borne out of an ever-repeated question by our clients for Lean Six Sigma case studies to support their newly trained and still inexperienced Lean Six Sigma Green or Black Belts. In addition to the training, this book offers a step-by-step guide for working on a project. The reader of this book should be introduced to the basics of Lean Six Sigma to fully appreciate the value of this book.

The objective of this book is to provide a reference project for the work through all phases of the DMAIC cycle. Furthermore, it gives practical hints for the application of rather complex tools without explaining their theoretical background. This book focuses on the application of these tools in the project rather than their theoretical derivation.

As mentioned above, Lean Six Sigma has been developed out of two approaches, Lean and Six Sigma. The core for Lean Six Sigma is still the Six Sigma process improvement approach that is enriched by powerful Lean tools that complement the Six Sigma toolbox. This book does not cover all possible Lean tools; it rather explains most of the Six Sigma tools and adds some Lean tools.

0.4 How Is This Book Structured?

This book is structured following the Six Sigma project cycle DMAC with its five stages: Define, Measure, Analyse, Improve, and Control.

Every chapter contains the following structure:

1. Overview

2. Steps

3. Objective