lean six sigma yellow belt - makeway global · ii. introduction to lean six sigma – pre-course...

www.makewayglobal.com © MakeWay 2020 [v4.1]

Lean Six Sigma Yellow Belt

Pre-Course Reading Material

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- 1 - www.makewayglobal.com © MakeWay 2020 [v4.1]

Getting prepared for your training… Thank you for choosing your training with us. We have created these notes to get you started on your journey into Lean Six Sigma.

Please ensure that you read through this material thoroughly. This is a very intensive course, so this is a head-start that will be of tremendous benefit to you. It will certainly help in your understanding of the topics taught in the classroom. This material is appropriate for those taking the Lean Six Sigma Yellow Belt and/or the Green Belt course.

I. PREPARING FOR THE COURSE

We suggest that you bring everything you need to study with you on the first day; this will typically include: • Pens / Pencils / Highlighters / Page Tabs / Simple Calculator / Ruler etc.

Arrive on time: We start promptly and the intensive nature of the course means that if you miss something you may not have the time to catch up. Additionally, when delegates arrive late it disrupts the flow of the class and is distracting for the other students as well as the instructor. Please make sure you are in the class on time, both at the start of the day and when returning after breaks. Our courses start at 09:00 (or as advised, otherwise) promptly on the first day. Please be on the premises by 08:30 (or as advised, otherwise) so that you have time to get yourself settled in.

Additional Support: If you feel that you need additional support on the course, please contact our team before the course so that your needs can be assessed.

Pre-course preparation We suggest that the following short preparation will optimise your time on the course:

1. Study the notes in the next section

2. Plan your week to minimise distractions and make sure you have everything you need ready for the start of the course.

Evening Work: The training is based around the assumption that you will be able to spend between 1-2 hours each evening reviewing the topics covered on the course, performing additional research and preparing for the exams. Please make sure there is time in your schedule to accommodate this.


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II. INTRODUCTION TO LEAN SIX SIGMA – PRE-COURSE NOTES

Lean Six Sigma is a process efficiency methodology, which is based on a culture of continuous improvement. These notes have been prepared as an introduction to aspects of the body of knowledge required for the Yellow Belt certification. 1.0 WHAT IS LEAN SIX SIGMA? Lean Six Sigma (L6S) is a fusion between ‘Lean’ and ‘Six Sigma.’ Both Lean and Six Sigma consist of philosophies, methodologies as well as tools and techniques. Lean and Six Sigma are highly complementary, so it makes sense to combine them. Together, it is a methodology devised for a collaborative team effort to improve performance by systematically eliminating waste (non-value adding activities) and reducing variation. 1.1 THE LEAN APPROACH Lean is a methodology that focuses on improvement in processes through the elimination of waste (known as ‘muda’ in Japanese, where it originated). It is about delivering value to the customer, whilst eliminating those parts of the process that contributed no value to the end result. Basically, Lean, as it is now referred to, was what was created as the Toyota Production System (TPS) in 1948. It came from the philosophy of “Doing more with less.” The term, Lean Thinking, is usually used to describe the Lean culture.

“All we are trying to do is reduce the time from order to cash.” [Taiichi Ohno]

The ultimate goal is to be rid of waste; hence, the need to ensure a perfect value creation process. Note that Lean is not a cost-cutting exercise. If your focus is to cost costs, one may end up sacrificing quality, which may invariably lead to losing the customer.

1.1.1 Waste (Muda) This is anything in the process that does not add value. Muda (無駄) is a Japanese word meaning “futility; uselessness; wastefulness.” It is worth questioning why it is within the process. From an end-customer's point of view, value-added work is any activity that produces goods or provides a service for which a customer is willing to pay; muda is any constraint or impediment that causes waste to occur. So, the issue is that we discover what the customer would pay for or the essential elements required to run the business of the organisation? Waste elimination is one of the key ways to improve the process and ultimately deliver value to the customer at a significantly lower and competitive price. To eliminate waste, it is vital that one understands what it is and where it can be found within the process. For every muda, there is a strategy to reduce it or eliminate its effect on an organisation so its process(es) can perform optimally.

Customer

places order

TIME

Delivery process Customer

pays


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1.1.1.1 Muda Categories – Traditional (mainly for manufacturing): There are seven categories of unproductive manufacturing practices that were identified by Taiichi Ohno in the TPS in Japan. It is a tool used to categorise muda. Using the TIMWOOD(S) acronym, these are as follows:

1. Transportation – the movement of products between processes can significantly add to the time it takes to deliver value. Some of this excessive movement can cause damage and may result in a loss of quality. Mapping product flows can help to determine a favourable factory arrangement that reduces the need for much transportation.

2. Inventory (Over) – this is the holding up where work in progress (WIP); a direct result of overproduction and waiting. Unnecessary inventory tends to hide problems in the production process and results in such costs as storage, space usage and delayed identification of problems in the output from another process. Achieving a seamless flow between processes can significantly eliminate the need for inventory and improve performance ultimately.

3. Motion – these are related to health and safety issues, which are matters of significant importance to organisations. This waste is identified in instances of bending, stretching, walking, lifting, and reaching out for something. The adequate arrangement (with ease of access) of ‘tools’ and materials will help to reduce the effects of this waste.

4. Waiting – this relates to goods being queued up for action – the fact that they are not moving or being further processed. To eradicate the waste of waiting, it is valuable to have processes linked together to enable them fit into one another – the output from a process feeds in as input to another process.

5. Over-Production – this is the production of goods and services before they are ready to be taken delivery of or used by the customer (internal or external). Overproduction leads to excessive lead times, resulting in high costs of inventory and the accompanying opportunity costs. The counter-activity to overproduction is the Just-in-time (JIT) technique. The idea in JIT is that only what is needed is to be shipped or accepted by another actor (or recipient worker) in the process – it is only created in time for their need.

6. Over-Processing – sometimes referred to as using a sledge hammer to crack a nut, this may be the use of expensive high specification equipment where a simple and least expensive tool will suffice. The right arrangement of the varying processes with an attended and adequate allocation of resources make it easier to ensure that the right tools are employed.

7. Defects (and Rework) – this is a result of churning out defective outputs. These are quality defects that have a tremendous impact on costs to the organisation. Continuous process improvement that engages the relevant employees working in the relevant areas will significantly reduce the impact of waste in an organisation.

8. Skills (unutilised) – this is the waste of human potential (which was not originally part of the Toyota Production System (TPS). It occurs as a result of the separation of the role of management from employees. In some organisations, management’s responsibility is


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seen within managing and directing (as well as innovation), whilst the employee’s role is to simply follow orders and execute the work as planned. Eliminating those of the ‘grind’ makes it difficult to improve processes, as those that do the work are usually best placed to identify problems and develop solutions for them. In manufacturing, this waste can be seen when employees are poorly trained and unable to effectively operate equipment, when employees are given the wrong tool for the job, and when employees are not challenged to come up with ideas to improve the work.

1.1.1.2 Muda Categories – Services (mainly for non-manufacturing): Those redefined wastes for the service (non-manufacturing) industry, have been referred to as DOWNTIME with the following descriptions:

1. Defects – this is where output has churned out errors which may result in rework. The service provided for the customer is defective; it does not meet business or customer requirements. For example, where the service delivered does not meet the desired objective or it is not even delivered at all, or to time.

Quality is ensuring that the customer gets what will meet their desires is key – customer requirements must not be ignored. The ability, not only to define the quality criteria, but to also ensure the adequate quality process is applied, are crucial. It is necessary to get the assessments right so that the adequate tools and techniques are employed to meet the predefined quality criteria. For example, clarity in the number of characters that can fit into one field for an online form being designed – this can lead to missing information.

2. Over-production – this is where one is providing more than what is needed. For example, this not only includes the production of too many unrequired reports, but the volume of reviews and approvals along the line. There may also be excessive documentation or batching of paperwork that is not ready to be acted on.

3. Waiting – this is where the receiving customer is waiting for delivery, service, information, response etc. There is also the waiting for approval, or even those caused by equipment downtime. The mitigation here is understanding when the recipient is ready to receive what is intended and meeting that time. For example, if a design specification is needed to create a report template, the response should be received at the set time.

4. Non-utilised talent (Skills) – this is the waste of human potential (which was not originally part of the Toyota Production System (TPS)). It occurs as a result of the separation of the role of management from employees. In some organisations, management’s responsibility is seen within managing and directing (as well as innovation), whilst the employee’s role is to simply follow orders and execute the work as planned. Eliminating those of the ‘grind’ makes it difficult to improve processes, as those that do the work are usually best placed to identify problems and develop solutions for them. Within the non-manufacturing sphere, it can include insufficient training, not asking for employee feedback, and placing employees in positions below their skills and qualifications.


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5. Transportation – the movement of paper rather than the use of electronic transfer. Also, unnecessary data transfer whereby people are sometimes cc’d on emails that do not concern them.

6. Inventory – this includes being overstocked or out of stock. In this case there may be waiting involved – for example, finished deliverables waiting for attention or stock-outs (queues). This could also be the result of not providing the right thing for the customer (recipient) or services that may not meet the desired quality specifications. Communication and clear quality criteria are key to these aspects of avoidance of incorrect inventory.

7. Motion – this could be where one keeps returning to a queue to check for readiness of the delivery that is expected but being told to come back later. It is also the non-existence of a one-stop or a lack of an understanding for efficient practices in the working environment. To overcome this, processes need to be streamlined and a network of occurrence clearly mapped. The use of an ergonomic space arrangement is desirable. Ergonomic refers to the process of designing or arranging workplaces, products and systems so that they fit the people who need them in their environment.

8. Extra-processing – this is where additional and unnecessary effort is expended more than once, for example, to record information twice along the process map, such as, re-entering sales numbers in the financial accounting module of an 1ERP. A planned integration of the organisation’s processes will eliminate such duplication.

Continuous process improvement that engages the relevant employees working in the relevant areas will significantly reduce the impact of waste in an organisation. In Lean, a good definition of waste could be “…doing anything that a customer does not need or perceive as adding value.” This of course raises the question of “Just who is a customer?”

1.2 THE SIX SIGMA APPROACH Six Sigma is a data-driven methodology for the elimination of defects in the output churned out by any process. Created in Motorola in response to the need to improve the quality of outputs churned out by the production process, its focus is to reduce varied outputs and thereby avoid customers receiving defective products and services. Waste is seen as anything that gives rise to unacceptable deviation (defects).

1 ERP (Enterprise Resource Planning): This is the integrated management of the core aspects of a business process, using software technology. There will be as many defined aspects (or modules) as desired by the business processes. For example, the sales data that are entered in the related sales department feed into the information required by the finance department.

Customers will only accept a certain rage of variation.

This customer wants to receive insurance claims in 4 days from the date of submission for a claim, but will accept a variation between 3 to 5 days

Acce

ptab

le

bolt

leng

ths

6 days

2 days

All processes and systems give out variation. This process delivers based on an agreement of between 3 to 5 days (as represented by the vertical height of the green block)

Variation by process

5 days

3 days

Waste


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1.2.1 DMAIC (pronounced də-MAY-ick) Six Sigma created a realistic and quantifiable goal in terms of its target of 3.4 defects per million operations. It was also accompanied by a methodology, which became a problem-solving strategy made up of four steps: measure, analyse, improve and control. When GE launched the approach, they improved upon it and added the define phase.

DMAIC is a good framework for identifying and then removing some of the waste from an existing process, products and services. There are other frameworks that can be used for creating new products and services.

Define This phase is concerned with setting up the improvement project and understanding what needs to be done (the scope). Things to do include:

• forming the improvement team • identifying where improvement is required in the process • identifying what the customer desires from this process • creating the project documentation

Measure Here, the team investigates how the current process is working (‘as is’) and looks for areas of waste, inefficiencies and high defect levels so that they can develop a picture of where the process could be improved. Things to do include:

• establishing a data collection plan • gathering data

Analyse The data gathered in the Measure phase is examined to identify areas in which it is practical to make improvements and to ascertain what the root causes of the wastes are. Improve In this phase the team decide on the best way to remove or mitigate a root cause and then the team develops, trials and implements the selected solution, ensuring that appropriate levels of training and documentation are included. Control This phase has two main aims: 1. Wrap up the project started in the Define phase

This is basically archiving your project paperwork, working out the potential savings and debriefing the team.

2. Sustain the change This is to ensure that the changes introduced in the Improve phase ‘stick’ and putting an alert mechanism in place to trigger action if the process slips later.


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1.3 THE LEAN SIX SIGMA BLEND The mission statement for L6S, if there were one, is: Producing products which surpass the expectations of the customer in an efficient and waste-free way.

LEAN SIX SIGMA FUSION – TWO RELATED DISCIPLINES

LEAN SIX SIGMA

Focus Improve system efficiency Improve process effectiveness

- Improve work flow - Reduction of variation in outputs

- Stability of processes

Goal Eliminate waste Reduce defective outputs

Emphasis Deliver value to customer Quality to customer

Some Tools 5S, Muda (Wastes), Flow & Pull, Kaizen, Kanban, Daily Stand-Ups, Value-Add Analysis, Value Stream Mapping

Critical to Quality, Defects Per Million Opportunities (DPMO), Failure Mode Effects Analysis (FMEA), Pareto, Statistics

Some Common Tools Cause and Effect Diagrams, Process Mapping, Standardised Work, Visual Controls

The two disciplines of Lean and Six Sigma highly complement one another. However, they do possess their respective philosophies, methodologies as well as tools and techniques.

• The Lean methodology deals with smoothening the process flow and matters of waste that may affect this flow

• The Six Sigma approach seeks to promote operational and business excellence with its attention towards eliminating defects in outputs

Lean is… Six Sigma is…

A passionate belief that there is always a simpler and better way

A never-ending passionate journey to competitive leadership by satisfying customer requirements profitably

A continuous drive to identify and eliminate waste and remove road blocks to improvement

A statistical measure of a process’s inherent ability to meet customer requirements

The empowerment of employees to drive improvement – no blame culture

Trust is also a key factor

A continuous drive to reduce defects and variability

The rigorous application of lean tools and techniques across the whole organisation

Finding and solving route causes to failure

Having a rigorous control methodology


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Thus, the L6S organisation, is…

a visibly professional and functional workplace…

that delivers high quality outputs and outcomes for its customers…

by motivated managers and teams.

With this methodology, the workforce is better involved in a collaborative manner with management and thus, empowered to manage change with the guidance of trained mentors.

Six Sigma helps Lean because… Lean helps Six Sigma because…

Lean does not really have a formal project methodology, whereas Six Sigma has DMAIC.

Lean provides alternatives to DMAIC for less complex improvement areas. For example, Kaizen events can be performed frequently by everyone.

Lean is very loose, whilst using DMAIC allows the improvement team to have a clear set of activities for the Measurement and Analyse phases.

Lean focuses on waste and end-to-end flow. Lean defines waste from the customer’s perspective.

By itself, Six Sigma may take an insular view, optimising a process to meet a local target.

Process sigma levels are reached more rapidly by also considering waste

Lean does not consider the problems with variation; however, Six Sigma adds statistical modelling tools to track down and investigate variation.

Following the common practice of taking the comprehensive toolkit of the Lean philosophy and injecting it into the more structured and statistically based methodology of Six Sigma, it gives us a structured and fact-based improvement approach that provides a huge set of tools and techniques. 1.3.1 Key Principles of Lean Six Sigma Below are the key principles that guide the operation of the L6S methodology.

1.3.1.1 Focus on the customer; not the business process This is the crux for serving the needs of the client/customer (i.e. the recipient of an output/outcome). An organisation that is customer-focused has developed a significant contributor to the overall success of its business. The effort here is to make everyone within the business process think of customer satisfaction first.

1.3.1.2 Identify and understand how the work gets done (Value Stream) Clarity is required for the flow of information and/or materials to provide value to the customer – what we think is happening may be different from the reality. It is not unusual to involve an external observer to document the step-by-step work that really gets done.

1.3.1.3 Manage by fact (not by opinion) and reduce variation It is worthwhile using data to justify one’s decisions. This is the test that is required to gather data, see what the system is churning out and use these as a basis for managing the process flow. Collect data before and after the improvement has been carried out.


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1.3.1.4 Eliminate waste wherever possible Once one understands the flow, it is worthwhile to take a further objective look at it. Ask questions such as: why are we going this loop and not the shorter route? This helps to manage, improve and smoothen the process flow, to achieve removing non-value-added activities.

1.3.1.5 Trust and empower your people It has been said that the best people to understand the workings of a system are those working directly with it. It is important to involve them and trust their judgment as part of the decision-making process.

1.3.1.6 Improve systematically No process is perfect, and should it by any chance be, it cannot stay that way unless it is constantly on the review radar. So, do not to wait for problems to occur. The question to consider is: can we do this better? This is the system or culture that must remain in a L6S enterprise.

1.3.2 The Costs of Lean Six Sigma Both Lean and Six Sigma are licence- and royalty-free. Anyone is free to use its concepts. However, there are other costs; prudence suggests the importance of matching these costs to the presumed benefits.

1.3.2.1 Training and consulting costs This is where the employees attend a L6S training course, or the training company may conduct the teaching sessions within the premises of the client’s company. The training organisation may also provide consultancy services to help embed the learning that was provided within the actual working environment of the client organisation.

1.3.2.2 Culture change This is harder to quantify, but L6S is indeed a culture change, particularly, that of trust and empowerment. The entire organisation, from the top echelon of management right through to the delivery cadre needs to buy into this culture.

1.3.2.3 Non-productive time This is the cost of not serving customers. It includes the time spent attending training or working to eliminate waste.


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2.0 PROCESSES A process can be considered to consist of just three things: 1. Inputs – Various things come into the system (relevant department in the organisation).

In L6S we often refer to inputs as ‘X’s. 2. Outputs – The process takes the inputs and transforms them into something else,

including stuff that the customers want. In L6S, we often refer to the outputs of a process as ‘Y’s.

3. The last part is really the one in the middle and refers to the transformation itself (this is also known as an X). It concerns the work or procedures that change what comes in to what goes out.

The relationship between X’s and Y’s is shown by the formula f(X) = Y, which simply states that variance in your inputs and how you transform them directly relates to variance in the outputs. So, for example, if you use a person to work with a new software, the result of the analysis will differ from that achieved with the old software. If each packer has their own routine, then the time taken to dispatch an order will also vary proportionately.

Now we have processes sorted, let us get back to Customers!


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3.0 WHO IS THE CUSTOMER? The customer is anyone that consumes or desires the output of a process. This may either be an internal customer that requires the output from a process, which they then adds further value to. It may also be an external customer who purchases the output of the organisation’s process and desires to reap a value therefrom. A customer’s need or requirement is termed as the voice of the customer.

Further, the external customer could also be a direct or indirect customer. A direct customer is one who receives output from the selling organisation’s process, and generally, these are the route to the company’s revenue as they are paid for supplying the goods and services. An indirect customer may be one who does not receive or benefit from the organisation’s services, but has a vested interest in what is being done (for example, regulatory bodies or government agencies).

Customers are further referred to as cash-customers (those who pay for services and may have a contract in place) or commissioning-customers (who determine what is required of the process, but do not necessarily pay for it). The needs of the cash-customer are the foremost as they make the business survive.

There is also the part in which terms of the process is determined by what the aims, objectives and strategy the business is trying to attain. This pursuit can be termed as the voice of the business (VoB). So, the operational process needs to be aligned to the VoB.

A customer takes an output from a process. This can be ‘true’ (end user) customers, downstream colleagues, senior managers needing to make decisions on business intelligence or regulatory compliance etc. Both the VoC and VoB consume output from a process. The output(s) from a process is referred to as the voice of a process (VoP).

There is always the tension between the VoB and the VoC – customers want top quality for very little prices and promptly, whilst the business desires to charge as much as the market can pay within a competitive environment.

VoC

Internal Customer

External Customer

- True/End Customer

VoB Analytics Compliance/Audit Profit!

WASTE!

Proc

ess

Out

puts

(V

oice

of P

roce

ss –

VoP

)


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4.0 VALUE – WHAT DO WE MEAN? Value only becomes relevant at a specific price and point in time based on the customer’s perspective. Value represents the customer requirements, which is also referred to as the voice of the customer, basically, what they are willing to pay for. In addition, they need to be able to afford it.

Value can be categorised as follows.

Value term What it means

Value Add (VA)

This feature, task, process step or output is worthwhile in the view of the customer and they would be willing to pay for it

Business Non-Value Add (BNVA)

This feature, task, process step or output is worthwhile in the view of the business (it is necessary in some way to run efficiently or legally etc), but it does not directly add value in the eyes of the customer

Non-Value Add (NVA) Waste

Neither business or customer judges this feature or task or output as worthwhile


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