Lean Six Sigma for Serviceby Michael L. George

Using Lean Six Sigma for Strategic Advantage in Service

• Services have 30-80% waste– Activities that have no value to the customer

• Service activities are not used to collecting and using data about their processes

• Focus on how the customer perceives value instead of how we are arranged internally

• Shift resources to where their impact is maximized

What is Lean?

• Lean focuses on speed of execution– Velocity of a process is proportional to its flexibility

• Maximize process velocity– Speed acceleration tools

• Optimize work flow– Rapid action Kaizen teams

• Eliminate delays• Quantify and eliminate complexity

– The complexity of the service generally adds more nonvalue added costs than both poor quality or slow speed process problems

• Eliminate non value added steps• 80% delays caused by 20% of the process steps

Indications of Fat

• WIP backlog• Slow processes are expensive processes• Chasing information• Decision loops• Interruptions• Expediting necessary• Work lost in cracks• No visibility of overall process

Little’s Law

• Backlog ties up resources• Lead time= Work in Process/average

completion rate– To increase efficiency, limit the amount of

work you allow into the process– This works for materials, but not for face time

with the customer– Pull system is good control mechanism

• Cap at maximum WIP, create buffer, triage work coming out of the buffer as a pull

Process Efficiency

• Process efficiency = value-add time/ total lead time

• It qualifies how much opportunity exists• Track work items through system and create a

time value map – Does that part of the process add value recognized by

the customer?

• Work to eliminate non value added sections– Less required waste for accounting, legal, or

regulatory requirements

What is Six Sigma?

• Six sigma focuses on accuracy• Recognize opportunities and eliminate

defects based on customer’s value • Eliminate variation• Use statistical tools• Seek documented, repeatable processes

– Infrastructure to support continued progress– Identification of customer critical to quality

needs

Core Elements of Six Sigma

• Management must be engaged

• Allocate resources to high priority projects

• Train everyone

• Eliminate variation– Drives narrower bell curves– 99.9997% +/- 6 standard deviation from the

mean

Invisible Work Cannot be Improved

• Use a value stream analysis to diagram the process flow– Find time traps

• Get agreement on areas of waste.• Establish ownership and create priorities.• Display priorities• Track and display daily performance• Manage expectations

– Communicate– Provide feedback

Customer

Post Solicitation on FBO

Address Inquires

Receive Questions

Post Q&As

OBuyer

OBuyer

Amend Solicitation

Respond to Protests

OBuyer

Receive ProtestValidate protest

Amend if required

Review questions

Draft Notice

Chart6

Upload tech drawings

Refresh bidlibrary

Develop answers

Post notice

Determine need for amendment

Issue CO determination

PCO OBuyer

Solicit Offers

Issue Solicitation

Determine need for amendment

Value is in the Eyes of the Customer

• Customer critical to quality “must haves” are the highest priority for improvement– Next are ROIC and Net present value

Value Based Management

• Price paid is a reflection of value to the customer– How well do your services meet the

customer’s needs– What customer needs are you not meeting– What offerings have no value to customers– How do you compare to your competition– What are world-class levels of performance

Use VOC to Transform

• Align your priorities to your customer’s• Transform customer needs into functional

requirements and then into design requirements– Quality Function Deployment– Segment market, research market, analyze data– Repeat to refine understanding of customer needs

• Define, measure, analyze, improve, control

The goal of VOC

• Contribute at such a high level of service that our work promotes and fosters to continued advancement of the organization’s mission

Lockheed Martin

• Understand value from the customer’s prospective

• Understand where product and service value are created in the organization (value stream)

• Optimize for flow to get to optimal performance• Focus on cycle time and pull

– Shrink process time to the minimum to speed response to customer changing needs

• Achieve Six Sigma quality at lean speed

Rollout Challenges

• Convince folks to devote time to LSS• Understand need for changes in layout• Sometimes lean changes required are

counterintuitive to services– Reduce WIP

• Translate LSS into lingo understood within workplace

• Build an awareness of what waste looks like

Rollout hints

• Give business units the credit • Tailor models to fit• Use a pace that fits organizational readiness• Don’t force it on people– generate pull• Solve problems cross functionally• Speed creates more noticeable improvements

and quicker results• Data gathering and analysis takes time

Identifying Burning Platforms

• Burning Platforms are your biggest competitive or strategic challenges– Here you will create shareholder (taxpayer)

value– Represents your competitive advantage– Compare against world class– Do a value stream and compare value

creation vs value destruction– Measure growth potential also

• Compare investment required vs EV of payoff

Possible Actions

• Shut down processes that destroy value, are unprofitable in the market, where competitors are advantaged

• Invest to improve position of processes where you are competitively advantaged, even though you are currently destroying value and not getting a profit– Should be close to breakeven re economic

profit

Comparing Opportunities

• If you are value neutral, at economic breakeven, yet competitively disadvantaged, weigh the costs of removing waste to the potential EV of being more responsive to the customer

• If you are competitively advantaged and creating value, just monitor to maintain market. – Not as critical to invest– Better opportunities in other value streams

Value added

• The task adds a function or feature that the customer will pay for

• The task provides you a competitive advantage (reduced price, faster delivery, better quality)

• The customer prefers what we will produce over our competitors

Business Non Value Added

• Gotta do these even though the customer will not pay for it

• Required by law or regulation

• Reduces financial risk

• Financial reporting requirements

• Critical to process stability

Non value Added

• Rework, expediting. Multiple signatures, counting, handling, inspecting, setup, downtime, transporting, moving, delaying, storing

• Create congestion, variation, complexity

• Does not consume existing capacity while producing higher revenue

Create Time Delay Diagrams

• Look for time traps• Look for build up in WIP• Consider what are the cost drivers/ failure

modes• Evaluate cost to remove impediment vs

expected value of improvement• Pareto chart is a good tool for comparing

contributions of process corrections toward error rates

DMAIC

• Use these tools to • Define: Value stream map, non value added

analysis • Measure: Process cycle efficiency, process

sizing • Analyze: Constraint identification, Time trap

analysis, Queuing theory • Improve: Kaizen, Process flow improvement• Control: Visual control process

5S = Improve

• Sort

• Straighten

• Shine

• Standardize

• Sustain

• Plus one Safety

• CLEAN UP YOUR DESK

Questions?