Six Sigma and Lean Six Sigma for Municipal Government

THE WATERSCONSULTINGGROUP, INC.

TMHRA Mid-Year Conference 2009June 4, 2009

Presented by: Stacy Waters Principal and Executive Vice President for:

Presented by: Stephen DeasFounder and President for:

For more information about this presentation or related services, contact us at 800.899.1669 or via email at swaters@watersconsulting.com

©2009 Quality Minds, Inc.

Since 1976, the firm has provided consulting services in the area of human resources consulting with a primary focus in the disciplines of compensation, strategic management, performance and executive recruitment. services nationwide to a variety of organizations in the public and private sectors including:

•Educational institutions (school districts and higher education)

•Healthcare

•Cities, counties, other local government agencies

•Utility and transit authorities

•Government-related retirement systems

•Professional associations

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A Brief Overview:The Waters Consulting Group, Inc.

THE WATERSCONSULTINGGROUP, INC.

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A Brief Overview:Quality Minds, Inc.

Human capital development and process improvement firm located in Charleston, SC. Areas of specialty include:

•Process and Quality Improvement

•Lean Tools and Techniques

•Lean Six Sigma

•Safety Improvement

•ASQ Certifications

•Process Mapping

•Statistical Process Control

• What is Six Sigma?

• What is Lean Six Sigma?

• How is Six Sigma used to improve local government?

• What can Human Resource leaders do to champion or contribute to

Six Sigma initiatives in the organization?

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Session Outline

• Industry:– Started in mid 1980’s at Motorola

• Documented over $16 billion in savings because of six sigma projects

• Government:– Google “municipal governments using six sigma” or “cities using six

sigma” and find on the front page:• Fort Wayne, Indiana (2000): Mayor introduced six sigma as the sole

process for improving government administrative and civic services– Google “Fort Wayne government six sigma” and you get 23,300 hits

• Buffalo, New York (2008): Municipal Housing Authority used six sigma to improve the 72 step process for reserving a park shelter (46/72 steps were identified as waste)

• Hattiesburg, Mississippi (2008): One project involved simplifying the cost it takes to tear down a building

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A Short History Lesson

General Overview of Six Sigma,

Lean, and Lean Six Sigma

Philosophy Six Sigma Lean

Customer Focused Top project priority is with customers

Give the customer what he wants, when he wants it

Organization Development Six Sigma can change work cultures

Organization is more aware of wasteful activity

Human Capital Development Internal employees are thoroughly trained to lead projects

Workers see jobs differently, workers respect work environment more

Results Oriented Projects have quick completion times and, as much as possible, are measured using financial criteria

Waste is eliminated from business processes, work becomes quicker and more efficient

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Philosophies of Six Sigma and Lean

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Six Sigma

Waste

Waste

eliminated

Efficiency improvement

Improved business processes

Customer Complaints

Incapable processes

Excessive costs

Poor quality of service

Lean

D

M

A

IC

Six Sigma is a mechanism for becoming lean

Lean Six Sigma Visualized

Customer “Wants” Vs. Production

What the Customer Wants

What we ProduceExceeds what

customer wants

Fails to meet minimum

requirement

σ Sigma is a measure of variation

Here, the variation in our product or service is such that we fail to meet what the customer actually wants

The Six Sigma methodology systematically improves work processes to reliably meet the customer’s requirements.

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The Context of Six SigmaSystems and Processes

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System (A series of processes that work together for a definite purpose)

Municipal Government (Human Resources)

P1 P2 P3 (Hiring)

P4 P5 P6 P7 P8

P3 Step 1 P3 Step 2 P3 Step 3 P3 Step 4

Human Resource Processes

Inputs Outputs

The Role of Systems and Processes

Supplier Inputs Process Output Customer

Who supplies each input?

What does this process need in order to produce good output?Job requirementJob descriptionResumesInterviewersInterview processCandidates

What are the steps that are followed to hire someone?

What is the output of the process?

A new employee

Who are the internal and external customers of this process?

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In short, six sigma methodology identifies the key inputs that drive success of outputs. Once identified, actions are taken toimprove the inputs in order to improve the outputs.

The Hiring Process as an Example

Process Project

Hiring/Recruitment Recruitment; on-boarding, etc.

Safety Reducing injuries at work

Performance management Implementation; timeliness; consistency; introduction of technology to drive the system

Performance reviews Implementation; timeliness; consistency; introduction of technology to drive the system

Retention Absenteeism reduction; employee engagement; the grievance process; exit interview process; etc.

Compensation and benefits Annual market review; classification analysis; introduction to technology to drive the system; appeals process; etc.

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Some Potential HR Projects & Processes

Six Sigma Leadership

Leadership Support makes the Difference:• Deming’s 85/15 Rule: 85% of problems in any organization are within the

system and are the responsibility of leadership while only 15% lie with the worker

• Systems are made of processes. Processes are used by workers to produce products and/or services. If the system is bad, the processes are bad and consequently service and/or product will be bad.

• Specific Support Needed for Six Sigma Success:

• Careful planning and implementation

• Proper resources allocated

• Commitment beyond low hanging fruit

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Leadership’s Role in Deployment

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Executive Sponsors

Overseer of Six Sigma Program

BB

GB

BB

GB

Select projects, knock down barriers, be the leadership representative for project team

(BB) Black belts manage projects. This is typically a full time job/responsibility.

(GB) Green belts are black belts in training. Green belts are usually not full time positions

For Example: City Manager, City Council, Mayor

For Example: Department Heads, Quality Enhancement Director

Process Owners

Traditional Six Sigma Leadership Structure

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Linking Projects to Goals and Organizational Performance

Strategic Level(project selection is the responsibility of leadership)

Department Level

Division Level Division Level

Department Level

Projects should come from the “hopper”

Project Hopper

Leadership must consistently review department level

indicators and create the “project hopper”

City Manager, City Council, Mayor

Human Resources

BenefitsCompensation

Sources for ProjectsCustomer complaints-should always be priority #1Internal issuesCost driversEmployee surveysPerformance reviews

Human Resource Leadership for Six Sigma

HR Leadership in Six Sigma

SSupplier

IInput

PProcess

OOutput

CCustomer

Human Resources

Human Resources

Human Resources

Human Resources

Human Resources

Recruitment of skilled people

Management of culture change

Rewards and Recognition

Training for team effectiveness

Retention strategies for keeping talent

The Six Sigma Process within your organization

Successful projects with wonderful results

Highly trained people

Effective teams

A different culture

Internal customers

Public

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Recruitment and Retention of Skilled Talent

Training for Team Effectiveness

Rewards and Recognition

Champion and Manage Culture Change

• Find the right people .

• Build a competency model .

• Create job descriptions.

• Develop a retention strategy. Automate the process with technology.

• Determine whether and how to make appropriate adjustments in level and compensation.

• Create a strategic compensation plan that will better support Six Sigma.

• Help project teams work together more effectively.

• Training and/or coaching in team effectiveness skills.

• Act as a resource for Black Belts. Become a Black Belt.

• Help reduce any uncertainty and anxiety about Six Sigma.

• Draft a change management communications plan that addresses the people side of the Six Sigma rollout .

• Help create a "case for change“.

• Counsel Six Sigma Leaders.

A Focus on Continuous Improvement

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Acquire basic knowledge of the DMAIC method,

supporting tools, roles, jargon, and even simple statistical

methods

Take the lead and apply Six Sigma successfully within the Human Resource function

Gather data that supports the people side of Six Sigma.

Meet with senior leaders to discuss their business goals and identify where Human Resources can provide very specific and measurable help.

Strengthening HR’s Leadership in Six Sigma

The Six Sigma ProcessDefine

Measure

Analyze

Improve

Control

Two Levels of Six Sigma

• Basic– Most projects can be successful using basic tools in

each of the five steps

• Advanced– Some projects will need to use advanced tools.

(Puts heavy emphasis on Black Belt.)

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SSupplier

IInputs

PProcess

OOutput

CCustomer

Team MembersTeam Members

Team Members

Black Belt

Team MembersTeam Members

Leadership

Team Members

Project ScopeProject Goals

Due Dates

Tools

IdeasObservations

Mentor

Process Importance

Develop a definition of the improvement opportunity

A project charter

Measure phase

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It is important to develop a clear and thorough definition of the opportunity for improvement.

Define Phase

• What are Stakeholders?

• Those who could be impacted by the results of the project

• Those that must support any change proposed in the project

• Who Could Stakeholders be?

• Managers of the process

• People working in the process

• Internal and External Customers of the process

• Suppliers to the process

• Finance support of the process

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Identifying Project Stakeholders

• Operations – Quality Technician– Receiving– Product Technician– Process Engineers– Tool Setters

• Operations Management – Team Leader– Superintendents– Purchasing– Accounting/Controller

• Plant Management – Plant Manager– Engineering Manager– Quality Manager– Production Manager

• In general, the overall perception of scrap as a plant issue is the same between levels of the organization. We did see evidence of differences within levels of the organization.

• Actual measured scrap performance is not fully understood between levels of the organization and within levels of the organization

• A percent scrap goal is set for the plant but not for each department

• There are diverse opinions and ideas on what causes scrap and how to prevent scrap

• Based on the answers to the questions, the process for handling, reporting, reviewing, and fixing scrap is not well defined and understood. (what to do, who does it, when is it done, how is it done) For example, there were different answers on who enters scrap into the system.

• Incoming material is not verified

• The accounting of scrap must improve and provide more detail

• The feedback suggests that more emphasis should be placed at catching problems at the source.

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Feedback

Project: Improve the process for handling, recording

and analyzing scrapped material in the plant

Example : The Project’s Stakeholders

• A written document that defines the project team, team leader, project mission, process scope, business case for project, goals for projects, and time frames for project.

• Charters can be created by top management or teams can create their own charter

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The Project Charter

SSupplier

IInputs

PProcess

OOutput

CCustomer

Black Belt

Team Members

Team LeaderBlack Belt

Define Phase

Black BeltTeam Members

Tools

Data

Video RecorderSoftware

Project Charter

Stop WatchIdeas and opinions

Measure the process’performance

A map of the process

A current state of performance

Analyze phase

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Once you identify the process to be improved, study and document the process to understand its current state of performance

Measure Phase

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Order liquid dextrose

Supplier ships liquid dextrose

Floralife receives liquid dextrose

Store liquid dextrose

Receive customer order

Based on customer order, create a production job

Add 150g water to tank

Put 5140 lbs of dextrose in tank with water

Fill tank to 80% of capacity with water

Measure chemicals

Turn blender on for 5 minutes before adding chemicals

Add chemicals to tank

Mix chemicals and dextrose in tank for 1 hour

Is PH ok?

Make adjustments

Fill containersCap containersLabel

containersMove to finished goods

Store in finished goods

Ship from finished goods

No

Yes

Outside Tank

Inside Tank

A Process Map: “What We Do”

SSupplier

IInputs

PProcess

OOutput

CCustomer

Black Belt

Black Belt

Black BeltMeasure phase

Tools

Forms

SoftwareCurrent state of process performance

Analyze the process to determine root causes

A root cause statement

Improve phase

Once you measure the process, analyze the results of the measurement to establish tangible opportunities for improvement.

Analyze Phase

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Liquid

Improving

Methods

Machine

Other

Organization

Workplace

Material

Production

Make ev e ry i tem ev e ry shi ft

Crea te schedule comp l iance measures

On time d e l iv e ry <100%

Get pre -printed jugs

Need automatic fo ld ing bo xes

Pa rt b in for caps

Put fin ished product close r to tab le

Need be tte r a ir conditione r

Work a rea too clutte red

More v isua l management

Use d i ffe rent room to store chem ica ls and labe ls

Redu ce floor space neede d

L ine sy stem (hoses)

Sepa ra te reports by l iquid and powder

Incl ine conv ey or for hea t sea l/labe le r

Stop p ins a t capping sta tion

Tape machine for boxes

Dire ct fi l l v e rsus drum

easie r

Modify tab le a t end to ma k e loading conta in e rs

Ge t new fi l l machine

Need be tte r sy stem for cleaning dextrose l ines

Need conv ey or sy stem and pa l le tize r

Improv e equipment re l iab i l i ty

Hav e own a ir pre ssure sy stem

Need fi l l sta tion tha t can fi l l d i ffe rent size s

Im prov e e fficiency o f labe le r

Need PM sy stem

Two people pack in g

De fine ro le s o f ope ra to rs

Use incl ined feed tab le for l oading conta ine rs

Improv e e rg onom ics

Ge t an accumato r sy stem for ga l lons

Conv e rt capping to a n exte rna l ta sk

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Fishbone Diagram: A simple but powerful tool for summarizing the results of a brainstorming session.

Examples: Tools for the Analyze Phase

1 2 3 4 5 T

Put finished product closer to table

2 1 1 2 2 8

Inclined feed table to load

5 4 5 5 5 24

Modify table at end

3 3 2 1 3 12

Direct fill vs drum

1 2 3 3 1 10

Part bin for caps

4 5 4 4 4 21

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Examples: Tools for the Analyze Phase

Nominal Group Technique: A simple but powerful tool for prioritizing ideas generated in a brainstorming session.

Improve

SSupplier

IInputs

PProcess

OOutput

CCustomer

Team Members

Team Leader

Team MembersLeadership

Analyze Phase

Black Belt

Ideas

Focus

PatienceTime

Root cause statement

Tools

Improve the process by attacking the root cause(s)

(Plan-Do-Check-Act)

An improved process or a solved problem

Control phase

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Take actions on the tangible improvement opportunities from the Analyze Phase.

PDCA Cycle of Improvement

Do

Check

Act

Now you must decide what actions to take as a result of your check. The options typically include: •Adopt the change•Abandon it and go back to the drawing board•Run it through the cycle again using a different area, running a larger scale trial, or making the trial more complex.

PlanTo improve processes, first find out what areas need improvement. Based on what you learn, plan a change or test.

Once you have a plan, carry out the change or test on a small scale

After completing the Do phase, check to see if the changes or tests are working (What did you learn? What went right? What went wrong? What does the data mean?)

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SSupplier

IInputs

PProcess

OOutput

CCustomer

Black BeltTeam Members

Leadership

Improve phase

ToolsIdeas

Follow up

Improved process

Control the improved process to sustain the improvement

A stable and predictable process

Internal and/or external customers of the improved process

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Implement controls to sustain the process improvement. If you do not, the process may revert back to previous performance levels.

Control

Using Six Sigma to Increase Performance in City Government:

Fort Wayne, Indiana – Six Sigma Introduced in 2000

MayorExecutive Council

(Deployment Team)

Quality Enhancement

Director

Master Black Belt

10 black belts were trained and each had to complete a City-approved project each year.

Side Note: The mayor was first elected in 2000. A

significant theme in his campaign was “reforming government”. Six Sigma

was his mechanism.

Fort Wayne’s Six Sigma Structure

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• City Challenges– More people, more territory– Revenue down– Demands for service up– State and federal mandates

up– Tornadoes, terrorism, floods

• Questions Posed– Who is your customer?– Is your service improving?– How do you measure

improvement?– Show me the data

1999 2006 % Change

Population 190,000 252,000 33%

Non-public safety employees

936 950 2%

Miles of roads

850 1200 41%

Square miles

79 109 39%

More Services, Fewer Employees

From City Leadership

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Project Results CommentReduce amount of late garbage pickups

Reduced amount of late garbage pickups by 50%

Also improved relationship between city and contractor

Reduce time to repair potholes Reduced average pothole repair time from 2 days to 3 hours

Improved communication and increased repair capacity

Improve business permit accuracy and approval time

Approval time reduced by 300% More business was attracted to Fort Wayne

Improve efficiency of waste water treatment processes

Efficiency improved 300% beyond goal, city avoided $1.7 million purchase of new equipment

Improve process for managing street light inventory

Process improved such that $500,000 was saved and freed for other areas

Reduced street light inventories to optimal levels by establishing proper tracking and control practices

Other Notable Results:

1. 2005 City Budget ($229,539,522): 5% savings due to projects ($11,476,976)2. From 2000-2005, 60 projects completed by city workers

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Other Fort Wayne Projects & Results

Typical Benefits of Lean Six Sigma

• Internal Benefits– Reduced claims filed– Overtime reduction– More positive public image– Higher morale– Positive change in culture and effectiveness

• External Benefits– Safer organizational initiatives– Improved customer service– Improved relations with neighborhood associations– Overall better local, regional and even national image

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• On the next page, describe a work process for your city, town, department, or division that needs to be improved

• Write the general steps to the process in the P column

• Write the critical output of the process in the O column

• Write the internal and external customers of the process in the C column

• Write the critical inputs to the process in the I column

• Write the suppliers for each input in the S column

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A Quick Workshop

Congratulations!

You just mapped a process and are on your way to process improvement using the basic techniques of Six Sigma.

Name:___________________________________________ Organization Name:___________________________________________Email:___________________________________________

SSupplier

IInput

PProcess

OOutput

CCustomer

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Process: ___________________________________________

General Description of Opportunity for Improvement: ____________________________________________

Process Mapping

Six Sigma and Lean Six Sigma for Municipal Government

THE WATERSCONSULTINGGROUP, INC.

TMHRA Mid-Year Conference 2009June 4, 2009

Presented by: Stacy Waters Principal and Executive Vice President for:

Presented by: Stephen DeasFounder and President for:

For more information about this presentation or related services, contact us at 800.899.1669 or via email at swaters@watersconsulting.com