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Implementing Lean/Six Sigma in Complex Industries: A Case Study at Endicott Interconnect Technologies, Inc.September 6, 2007

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Implementing Lean/Six Sigma in Complex IndustriesA Case Study at Endicott Interconnect Technologies, Inc.

Brad VanBrunt, Vice Terence T. Burton, PresidentPresident , Quality And Business Excellence

Terence T. Burton, President

The Center for Excellence in Operations, Inc.Bedford, New Hampshire Endicott, Ney YorkSponsored by

Agenda

Part I: Endicott Interconnect Technologies Part II: Lean/Six Sigma Strategy Part III: Five Essential Success Factors

Sponsored by

EI Corporate ProfileLeading supplier of complex, highperformance electronic packaging solutions utilizing a vertically integrated approach

A tradition of technical innovation former IBM Microelectronics Division November 2002 spin-off as an entrepreneurial, independent company Located in Central New York 1,800 employees 1.6M sq. ft. manufacturing and lab floor space 2006 revenue $220M 4-5% of revenue spent on R&D3

Mission Statement: To provide leading edge first and second level packaging and assembly solutions that bring value and competitive differentiation to our customers.

Vertically Integrated Provider with Broad Skill SetPrinted Circuit Boards Multi-Layer PCBs Complex Backplanes Products Semiconductor Packaging Wire Bond PBGA CoreEZ HyperBGA Complex Assembly Solutions PCB Assembly Hybrid Assembly Mechanical Assembly/Test Precision Equip. Manufacturing / Services / Other Custom Design & Manufacturing Physical Design Reliability Test & Modeling Materials Engineering

CoreEZ and HyperBGA areregistered trademarks of Endicott Interconnect Technologies, Inc.

4

EI - Highly Differentiated Products & CapabilitiesPCBs Broad competency set World class quality and reliability High density-fabrication leading edge PCB Precision layer-to-layer registration 20:1 plating aspect ratio Unique high-speed boards with high performance cores Talented engineering team Test and analysis capabilities

Semiconductor Packaging Advanced flip chip and wire bond substrate technology Organic substrates - light weight High frequency applications Thin, low profile fits easily in tight board-toboard spaces Full strip line structures with low coupled noise Outstanding thermal and electrical performance High reliability (2-10 times ceramic) Superior System-inPackage solutions

Complex Assembly Complex, mission critical assembly Ability to manage large military contracts as the prime contractor Leading edge assembly processes Module assembly capability Full hybrid assembly, backplane, chassis and system build Focused New Product Initiative to production launch Extensive test capabilities Outstanding service and delivery performance 5

Agenda

Part I: Endicott Interconnect Technologies Part II: Lean/Six Sigma Strategy Part III: Integrate and Win Big

Sponsored by

Objective: Grow from a good company to a great company Challenge: Deploy Lean/Six Sigma successfully as the enablerInnovation2000 1990 1980 1970 1960 1950 1940PDCA Toyota Production System (TPS) EVA ABC ERP SCM SRM Business Process Reengineering (BPR) Total Quality Management (TQM) Scientific Inventory Management Quality Control CirclesHouse of Qua lity

CRM Triz Theory of Constraints MRP MRP II

PLM Six Sigma

Lean/Six Sigma Lean

Just In Time (JIT)

Same box, different ribbon

n Kaize ss Expre

dt oa eR Thma Sig Six Box in a

ean oL

1930 1920Control Charts

Value Stream

Statistical Quality Control

Avoid the Tornado of Improvement and fad improvement programs 2007 by Endicott Interconnect Technologies, Inc and The Center for Excellence in Operations, Inc. (CEO)

Small and Mid-Sized Organizations

Problems with the traditional top-down approach to Six Sigma

6

Dedication of full time resources as Master Black Belts, Black Belts Dedication of full time resources as Master Black Belts, Black Belts

Potential of $Millions in up-front investment with a Potential of $Millions in up-front investment with a 1 to 2+++ year payback 1 to 2+++ year payback

Training of the masses based on accepted ratios (versus true Training of the masses based on accepted ratios (versus true requirements) as the first step requirements) as the first step Too much focus on Belts and not enough focus on Results Too much focus on Belts and not enough focus on ResultsMad Belt Disease Mad Belt Disease

2007 by Endicott Interconnect Technologies, Inc and The Center for Excellence in Operations, Inc. (CEO)

Small and Mid-Sized Organizations

Problems with the traditional top-down approach to Six Sigma

6

Speed of deployment is too slow Smaller and mid-sized Speed of deployment is too slow Smaller and mid-sized organizations want and need results NOW! organizations want and need results NOW! The large scale Six Sigma deployments of GE, Honeywell, The large scale Six Sigma deployments of GE, Honeywell, Caterpillar, etc. are an overkill Caterpillar, etc. are an overkillNot affordable, not sustainable, not necessary to achieve significant Not affordable, not sustainable, not necessary to achieve significant results in smaller/mid-sized enterprises results in smaller/mid-sized enterprises

Bureaucratic hierarchy with layers of Champions, Master Black Bureaucratic hierarchy with layers of Champions, Master Black Belts, Black Belts, Green Belts, Yellow Belts (Counter to how small Belts, Black Belts, Green Belts, Yellow Belts (Counter to how small and mid-sized organizations work) and mid-sized organizations work) Organizational Complexity, Politics, and Culture Organizational Complexity, Politics, and CultureSimplified in Smaller and Mid-Sized Organizations Simplified in Smaller and Mid-Sized Organizations 2007 by Endicott Interconnect Technologies, Inc and The Center for Excellence in Operations, Inc. (CEO)

Leadership

Degree of Six Sigma Deployment

Full Scale Deployment Partial Deployment15-25 Projects (4-6 months) $1.5 Million + Additional Savings 20-25 Projects (4-6 months) $3-5 Million + Additional Savings

No-Nonsense Execution Strategic Improvement Competencies

Pilot2-3 Projects (6-8 weeks) Six $200K Sigma Savings Support

Deep Knowledge of Business Processes and IT Six Sigma Applications Expertise

Most organizations accomplish this inside of a 12 month window

Six Sigma Education

CEOs Scaleable Six Sigma Methodology 2007 by Endicott Interconnect Technologies, Inc and The Center for Excellence in Operations, Inc. (CEO)

What is Business ExcellenceBusiness Excellence is a philosophy of Improving Business Excellence is a philosophy of Improving HOW we improve in EVERTHING we do as an HOW we improve in EVERTHING we do as an organization: organization:Create a solid foundation and business/leadership process Create a solid foundation and business/leadership process for managing improvement initiatives. for managing improvement initiatives. Deploy more robust improvement tools for solving our Deploy more robust improvement tools for solving our critical business problems: critical business problems:6 Sigma 6 Sigma Lean Lean Kaizen (Quick strike / /teaming) Kaizen (Quick strike teaming)

Use a disciplined methodology (DMAIC) that is EIs Use a disciplined methodology (DMAIC) that is EIs common language of improvement. common language of improvement. Build a culture that strives for total employee involvement, Build a culture that strives for total employee involvement, increased competitiveness, growth, and profitability. increased competitiveness, growth, and profitability. Invest in the future of EIs most valued resource --Our Invest in the future of EIs most valued resource Our people. people. 2007 by Endicott Interconnect Technologies, Inc and The Center for Excellence in Operations, Inc. (CEO)

Business Excellence DMAIC FoundationDefinef ne Be it

Ca lib ra te

Control

O pt im ize

Kaizen Lean 6Take Action

Measuree riz te ac ar Ch

Improve

Analyze

2007 by Endicott Interconnect Technologies, Inc and The Center for Excellence in Operations, Inc. (CEO)

Business ExcellenceOperations and Technology Excellence Transactional Business Process Excellence

Integrating Kaizen, Lean, and Six SigmaKAIZEN LEAN SIX SIGMAQuality Process Perfection Statistical Engineering Variation Reduction KPIV/KPOV Controls Complex Variation

Basic Improvement Value Stream Management Quick Strike Speed, Velocity Containment Cycle Time Incremental Improvement Waste Elimination Flow, Balance Synchronization Standardization

The Foundation (DMAIC): People working together with shared values and a common language of total business improvement 2007 by Endicott Interconnect Technologies, Inc and The Center for Excellence in Oper

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