Operational Excellence

Practical Implementation of Lean Principles, Six Sigma Quality and Reliability Centered Maintenance

Ronald Morgan Shewchuk

2

Copyright 2015 by Ronald M. Shewchuk All rights reserved. The names of companies, personnel, products and/or services presented within the case studies are fictitious and are used solely for illustrative purposes. Any similarity to existing companies, personnel, products and/or services is purely coincidental.

3

Contents

Preface ........................................................................................................................................... 10 Chapter 1 - Introduction .............................................................................................................................................. 11 

1.1  Lean............................................................................................................................. 11 1.2  Six Sigma .................................................................................................................... 11 1.3  Integrating Lean and Six Sigma .................................................................................. 12 1.4  Does Lean Six Sigma Apply to Me? ........................................................................... 14 1.5  Can I Afford to Implement Lean Six Sigma in my Company? .................................. 14 

Chapter 2 – Getting Started ......................................................................................................................................... 15 2.1  Operational Excellence Deployment Plan .................................................................. 15 2.2  Define .......................................................................................................................... 16 2.3  Measure ....................................................................................................................... 24 2.4  Analyze ....................................................................................................................... 25 2.5  Improve ....................................................................................................................... 26 2.6  Control ........................................................................................................................ 37 

Chapter 3 – Process Mapping ...................................................................................................................................... 40 3.1  Process Definition ....................................................................................................... 40 3.2  Process Flow Diagram (PFD) ..................................................................................... 40 3.3  Supplier Input Process Output Customer Diagram (SIPOC) ...................................... 40 3.4  Swim Lane Map .......................................................................................................... 40 3.5  Spaghetti Chart............................................................................................................ 42 3.6  Value Stream Map ...................................................................................................... 43 

Chapter 4 – Value Stream Mapping ............................................................................................................................ 46 4.1  Introduction ................................................................................................................. 46 4.2  Definitions................................................................................................................... 47 4.3  Voice of the Customer ................................................................................................ 47 4.4  Select a Product Family .............................................................................................. 48 4.5  Select a Value Stream Leader ..................................................................................... 49 4.6  Select the Value Stream Team .................................................................................... 49 4.7  Walk the Process Backwards ...................................................................................... 50 4.8  Draw the Current State Value Stream Map ................................................................ 51 4.9  Define Lean Metrics and Targets ................................................................................ 51 4.10  Create Kaizen Improvement Plan ............................................................................... 52 4.11  Use DMAIC Process to Facilitate Improvements ....................................................... 54 4.12  Draw the Future State Value Stream Map .................................................................. 56 4.13  Case Study I: ABC Molding Co. ............................................................................... 56 4.14  Case Study II: National Health Co. ............................................................................ 62 

Chapter 5 – 5S + Safety ............................................................................................................................................... 66 5.1  Introduction ................................................................................................................. 66 5.2  Sort .............................................................................................................................. 66 5.3  Set in Order ................................................................................................................. 72 5.4  Shine ........................................................................................................................... 73 5.5  Standardize .................................................................................................................. 73 5.6  Sustain ......................................................................................................................... 75 

Chapter 6 – Process Control ........................................................................................................................................ 80 

4

6.1  Introduction ................................................................................................................. 80 6.2  Standard Deviation and Variance ............................................................................... 80 6.3  Normal Distribution .................................................................................................... 82 6.4  Central Limit Theorem ............................................................................................... 84 6.5  Sampling Plan Design ................................................................................................. 84 6.6  Normality Testing ....................................................................................................... 90 6.7  Data Transformation for Normality ............................................................................ 93 6.8  Distribution Identification ........................................................................................... 96 6.9  Statistical Process Control ........................................................................................ 101 6.10  Process Capability ..................................................................................................... 116 

Chapter 7 – Measurement System Analysis .............................................................................................................. 125 7.1  Introduction ............................................................................................................... 125 7.2  Instrument Detection Limit (IDL) ............................................................................ 126 7.3  Method Detection Limit (MDL) ............................................................................... 127 7.4  Measurement System Analysis – Variables Data ..................................................... 128 7.5  Measurement System Analysis – Attribute Data ...................................................... 137 7.6  Improving the Measurement System ........................................................................ 143 7.7  Long Term Stability .................................................................................................. 144 7.8  Metrology Correlation and Matching ....................................................................... 145 

Chapter 8 – Process Improvement Tools ................................................................................................................... 146 8.1  Introduction ............................................................................................................... 146 8.2  Defect Characterization ............................................................................................ 146 8.3  Cause and Effect Diagram ........................................................................................ 148 8.4  Hypothesis Testing.................................................................................................... 154 8.5  Correlation Analysis ................................................................................................. 162 8.6  Response Surface Regression Analysis .................................................................... 168 8.7  Pareto Chart Analysis ............................................................................................... 192 8.8  Failure Mode and Effect Analysis (FMEA) .............................................................. 195 8.9  Process Trouble-Shooting ......................................................................................... 199 

Chapter 9 – Design of Experiments ........................................................................................................................... 201 9.1  Introduction ............................................................................................................... 201 9.2  Definitions................................................................................................................. 201 9.3  Taguchi Loss Function .............................................................................................. 202 9.4  Choosing an Experimental Design............................................................................ 204 9.5  Resolution ................................................................................................................. 205 9.6  Coding and Uncoding Input Variables ..................................................................... 208 9.7  Full Factorial Designs ............................................................................................... 209 9.8  Plackett-Burman Screening Designs ......................................................................... 218 9.9  Central Composite Modeling Designs ...................................................................... 228 9.10  Response Surface Methodology ............................................................................... 236 9.11  Evolutionary Operation (EVOP) ............................................................................... 255 

Chapter 10 – Design for Lean Six Sigma .................................................................................................................. 271 Chapter 11 – Reliability Centered Maintenance ........................................................................................................ 272 

11.1  Introduction ............................................................................................................... 272 11.2  Reliability Centered Maintenance Scope .................................................................. 273 11.3  Responsibilities ......................................................................................................... 273 11.4  Definitions................................................................................................................. 274 

5

11.5  Keeping Score – RCM Metrics ................................................................................. 275 11.6  Asset Reliability Criteria ........................................................................................... 277 11.7  Component Classification ......................................................................................... 279 11.8  Categories of Preventive Maintenance ..................................................................... 283 11.9  Types of Preventive Maintenance Tasks .................................................................. 284 11.10  Component Life Cycles ............................................................................................ 285 11.11  Benefits of Condition Directed Maintenance ........................................................... 286 11.12  Types of Condition Directed Maintenance ............................................................... 287 11.13  Preventive Maintenance Task Selection ................................................................... 287 11.14  PM Task Periodicity Considerations ........................................................................ 288 11.15  Root Cause Analysis ................................................................................................. 288 11.16  Reliability Analysis ................................................................................................... 300 11.17  Audit System ............................................................................................................. 310 11.18  Communication ......................................................................................................... 315 11.19  Summary ................................................................................................................... 316 

Chapter 12 – Project Management............................................................................................................................. 317 12.1  Introduction ............................................................................................................... 317 12.2  Project Life Cycle ..................................................................................................... 317 12.3  Project Management Life Cycle ............................................................................... 319 12.4  Project Selection ....................................................................................................... 320 12.5  The Project Manager ................................................................................................. 326 12.6  The Project Team ...................................................................................................... 327 12.7  Work Breakdown Structure ...................................................................................... 327 12.8  Scheduling................................................................................................................. 328 12.9  Resource Identification and Allocation .................................................................... 339 12.10  Resource Leveling .................................................................................................... 339 12.11  Critical Path Management (PERT/CPM) .................................................................. 340 12.12  Project Execution & Control ..................................................................................... 344 12.13  Auditing .................................................................................................................... 344 12.14  Project Closure .......................................................................................................... 344 

Epilogue ...................................................................................................................................... 345 Glossary ...................................................................................................................................... 346 Bibliography ............................................................................................................................... 379 Index ........................................................................................................................................... 383 

6

Figures Figure 1.1 Sources of Waste Targeted by Lean Production 11 Figure 1.2 The DMAIC Process 12 Figure 1.3 Integration of Lean and Six Sigma 13 Figure 1.4 Lean Six Sigma Tool Kit 13 Figure 2.1 Operational Excellence Deployment Plan 15 Figure 2.2 Executive Lean Six Sigma Leadership Training Agenda 17 Figure 2.3 Operational Excellence Steering Team Charter Template 18 Figure 2.4 Operational Excellence Steering Team Charter for Manufacturing 19 Figure 2.5 Operational Excellence Steering Team Charter for Service 20 Figure 2.6 Lean Six Sigma Training Requirements 21 Figure 2.7 Lean Six Sigma Champion Training Agenda 22 Figure 2.8 Lean Six Sigma Metrics for Manufacturing 23 Figure 2.9 Lean Six Sigma Metrics for Service 23 Figure 2.10 Project Prioritization Matrix Template 24 Figure 2.11 Project Prioritization Matrix Example 25 Figure 2.12 Comparison of Lean Six Sigma Roles 27 Figure 2.13 Lean Six Sigma Black Belt Training Agenda 28 Figure 2.14 Lean Six Sigma Green Belt Training Agenda 29 Figure 2.15 Operational Excellence Project Charter Template 30 Figure 2.16 Operational Excellence Project Charter Example for Manufacturing 31 Figure 2.17 Operational Excellence Project Charter Example for Service 32 Figure 2.18 Operational Excellence Project Implementation 33 Figure 2.19 Operational Excellence Project Tracking Template 34 Figure 2.20 Operational Excellence Project Tracking Example 35 Figure 2.21 Operational Excellence Project Review Checklist 37 Figure 3.1 Process Flow Diagram 40 Figure 3.2 SIPOC Diagram 41 Figure 3.3 Swim Lane Map 42 Figure 3.4 Spaghetti Chart 43 Figure 3.5 Value Stream Map – Current State 44 Figure 4.1 Value Stream Mapping Steps 45 Figure 4.2 Product Family Selection 47 Figure 4.3 Process Attribute Data Collection Template 49 Figure 4.4 Value Stream Mapping Template 51 Figure 4.5 Kaizen Improvement Plan Template 52 Figure 4.6 PICK Chart Solution Alternatives 53 Figure 4.7 PICK Chart 53 Figure 4.8 ABC Molding Current State Data Set 55 Figure 4.9 ABC Molding Co. – Current State Value Stream Map 56 Figure 4.10 ABC Molding Kaizen Improvement Plan 57 Figure 4.11 ABC Molding Co. – Future State Value Stream Map 58 Figure 4.12 National Health Co. – Current State Value Stream Map 60 Figure 4.13 National Health Kaizen Improvement Plan 61 Figure 4.14 National Health Co. – Future State Value Stream Map 62 Figure 5.1 House of Quality 64 Figure 5.2 Red Tag Event Steps 64 Figure 5.3 Red Tag – Front & Back 65 Figure 5.4 Defined Areas of 5S+Safety Responsibility 66 Figure 5.5 Red Tag Criteria 67 Figure 5.6 Red Tag Register Example 68 Figure 5.7 5S+Safety Improvement Activity Log Example 68 Figure 5.8 Types of 5S Order 69

7

Figure 5.9 Cleaning/Inspection Methods Checklist 71 Figure 5.10 Steps Required to Standardize 72 Figure 5.11 5S+Safety Job Cycle Chart 73 Figure 5.12 5S+Safety Audit Aspects and Scoring Criteria 74 Figure 5.13 5S+Safety Audit Form 75 Figure 5.14 5S+Safety Audit Result – Radar Chart 75 Figure 5.15 5S+Safety Communication Board 76 Figure 6.1 Normal Distribution 79 Figure 6.2 Effect of Standard Deviation on Normal Distribution 80 Figure 6.3 Effect of Sample Size on Mean Sample Distribution 82 Figure 6.4 Assay Weight % Measurements – Continuous Process 83 Figure 6.5 Normality Testing Steps 84 Figure 6.6 Data Transformation Steps for Normalization 86 Figure 6.7 Active Ingredient Concentration Worksheet 89 Figure 6.8 Active Ingredient Normality Test – Raw Data 90 Figure 6.9 Active Ingredient Normality Test – Johnson Transformation 90 Figure 6.10 Active Ingredient Normality Test – Box-Cox Transformation 91 Figure 6.11 Steps for Distribution Identification 91 Figure 6.12 Control Limit Formulas – Continuous Data 95 Figure 6.13 Coefficients for Control Limit Formulas – Continuous Data 95 Figure 6.14 SPC Rule 1: One or More Points are Outside the Control Limits 96 Figure 6.15 SPC Rule 2: Seven Consecutive Points are on the Same Side of the Centerline 97 Figure 6.16 SPC Rule 3: Seven Consecutive Intervals are Entirely Increasing or Entirely Decreasing 97 Figure 6.17 SPC Rule 4: Fourteen Consecutive Points Alternate Up and Down Repeatedly 98 Figure 6.18 SPC Rule 5: Two out of Three Consecutive Points are in the Same Zone A or Beyond 98 Figure 6.19 SPC Rule 6: Four out of Five Consecutive Points are in the Same Zone B or Beyond 99 Figure 6.20 SPC Rule 7: Fourteen Consecutive Points are in Either Zone C 99 Figure 6.21 SPC Rule 8: Eight Consecutive Points are Outside Either Zone C 100 Figure 6.22 Control Chart Type – Decision Tree 101 Figure 6.23 SPC Chart Generation Steps – Manufacturing Example 102 Figure 6.24 SPC Chart Generation Steps – Service Example 106 Figure 6.25 Process Capability Implications – SPC Chart 110 Figure 6.26 Process Capability Implications – SPC Chart with Upper and Lower Spec Limits 111 Figure 6.27 Process Capability Analysis Steps – Manufacturing Example 112 Figure 6.28 Process Capability Analysis Steps – Non-normal Distribution 115 Figure 7.1 Accuracy vs Precision – The Center of the Target is the Objective 117 Figure 7.2 Measurement System Analysis Steps – Variable Data 120 Figure 7.3 Gage Linearity and Bias Study Steps – Variable Data 126 Figure 7.4 Measurement System Analysis Steps – Attribute Data 129 Figure 7.5 Rules of Thumb for Interpreting Kappa Values 133 Figure 8.1 Defect Characterization Form 136 Figure 8.2 Defect Characterization Form – G397RH Outer Diameter 138 Figure 8.3 Cause and Effect Diagram Analysis Steps 139 Figure 8.4 Cause and Effect Diagram with Cause Prioritization 141 Figure 8.5 Action Plan for Root Cause Validation 142 Figure 8.6 Action Plan for Root Cause Validation with Results 143 Figure 8.7 Steps Required to Compare Means of Two Populations 144 Figure 8.8 Steps Required to Compare Variances of Two Populations 144 Figure 8.9 Sales Volume by Territory for May 145 Figure 8.10 Steps for Hypothesis Testing of Means 146 Figure 8.11 Steps for Hypothesis Testing of Variances 149 Figure 8.12 Types of Linear Correlation 152 Figure 8.13 US Economic Data – 1960 to 2009 153 Figure 8.14 Steps for Correlation Matrix Analysis 154 Figure 8.15 Gross Domestic Product vs. S&P 500 Average Price, 1960 – 2009 156 Figure 8.16 Historical Batch Yields – Chengdu 157

8

Figure 8.17 Effect of Temperature, Reaction Time, Agitation Speed and Catalyst Conc on Yield 158 Figure 8.18 Steps for Response Surface Regression Analysis 159 Figure 8.19 Response Surface Regression Analysis – Continuous Process 173 Figure 8.20 Response Surface Regression Analysis Steps 180 Figure 8.21 Reasons for Dropped Calls – District Nine 181 Figure 8.22 Steps for Pareto Chart Analysis 182 Figure 8.23 Steps for Conducting Failure Mode and Effect Analysis 185 Figure 8.24 Steps for Conducting FMEA 186 Figure 8.25 Failure Mode and Effect Analysis of Unintended Acceleration – Case Study XI 187 Figure 8.26 Process Trouble-Shooting Diagram 188 Figure 8.27 Process Trouble-Shooting Guide 189 Figure 9.1 Process Input/Output with Variable Categories 192 Figure 9.2 Taguchi Loss Function 192 Figure 9.3 Steps for Conducting a Design of Experiments 193 Figure 9.4 Considerations in Selecting an Experimental Design 194 Figure 9.5 Decision Tree for Choosing an Experimental Design 195 Figure 9.6 Minitab 2-Level Fractional Factorial Design Resolution Table 195 Figure 9.7 2-Level Design Resolution Attributes 196 Figure 9.8 Relationship Between Coded and Uncoded Input Variables 197 Figure 9.9 Steps for Creating a Full Factorial Experimental Design 199 Figure 9.10 Steps for Analyzing a Full Factorial Experimental Design 202 Figure 9.11 Steps for Creating a Plackett-Burman Screening Experimental Design 208 Figure 9.12 Steps for Analyzing a Plackett-Burman Experimental Design 212 Figure 9.13 Steps for Creating a Central Composite Experimental Design 218 Figure 9.14 Steps for Analyzing a Central Composite Experimental Design 222 Figure 9.15 Response Surface Methodology Pathway of Steepest Ascent 226 Figure 9.16 Surface Plots for Case Study XIV Factors 227 Figure 9.17 Steps for Optimization via Response Surface Methodology – First Order Equations 228 Figure 9.18 Steps for Optimization via Response Surface Methodology – Second Order Equations 229 Figure 9.19 Surface Plot Generation from Central Composite Design Modeling Equation 230 Figure 9.20 Steps for Generating a 22 Full Factorial Design – Climbing DOE Number One 235 Figure 9.21 Steps for Analyzing 22 Full Factorial Climbing DOE Number One 238 Figure 9.22 Steps for Analyzing 22 Full Factorial Climbing DOE Number Two 241 Figure 9.23 Successive 22 Full Factorial Experiments Conducted in Evolutionary Operation 245 Figure 9.24 22 EVOP Worksheet 246 Figure 9.25A Case Study XVI Phase 1, Cycle 1 – 22 EVOP Worksheet 248 Figure 9.25B Case Study XVI Phase 1, Cycle 2 – 22 EVOP Worksheet 249 Figure 9.25C Case Study XVI Phase 1, Cycle 3 – 22 EVOP Worksheet 250 Figure 9.25D Case Study XVI Phase 1, Cycle 4 – 22 EVOP Worksheet 251 Figure 9.25E Case Study XVI Phase 2, Cycle 1 – 22 EVOP Worksheet 252 Figure 9.25F Case Study XVI Phase 2, Cycle 2 – 22 EVOP Worksheet 253 Figure 9.25G Case Study XVI Phase 2, Cycle 3 – 22 EVOP Worksheet 254 Figure 9.25H Case Study XVI Phase 3, Cycle 1 – 22 EVOP Worksheet 255 Figure 9.25I Case Study XVI Phase 3, Cycle 2 – 22 EVOP Worksheet 256 Figure 9.25J Case Study XVI Phase 3, Cycle 3 – 22 EVOP Worksheet 257 Figure 9.25K Case Study XVI Phase 3, Cycle 4 – 22 EVOP Worksheet 258 Figure 11.1 Timeline of Maintenance Reliability Practices 262 Figure 11.2 Reliability Centered Maintenance Metrics and Benchmarks 264 Figure 11.3 Alternative Reliability Centered Maintenance Metrics and Benchmarks 265 Figure 11.4 Reliability Centered Maintenance Metrics Charts 266 Figure 11.5 Asset Reliability Criteria Template 267 Figure 11.6 RCM Component Classifications 268 Figure 11.7 Consequence of Failure Analysis (COFA) Decision Tree 269 Figure 11.8 Consequence of Failure Analysis (COFA) Worksheet 270 Figure 11.9 Bathtub Curve of Component Reliability 273 Figure 11.10 Preventive Maintenance Task Selection Flow Chart 277

9

Figure 11.11 Appended Consequence of Failure Analysis (COFA) Worksheet 278 Figure 11.12 Root Cause Analysis Template 280 Figure 11.13 Centrifugal Pump CP4826 Failure – Incident Time Line 282 Figure 11.14 Centrifugal Pump CP4826 Failure – RCA Template 283 Figure 11.15 Centrifugal Pump CP4826 Failure – Reality Chart 284 Figure 11.16 Centrifugal Pump CP4826 Failure – Reality Chart with Proposed Solutions 285 Figure 11.17 Centrifugal Pump CP4826 Failure – Solution Prioritization via PICK Chart 285 Figure 11.18 Centrifugal Pump CP4826 Failure – RealityCharting Software 286 Figure 11.19 Centrifugal Pump CP4826 Failure – Apollo RCA Incident Report 287 Figure 11.20 Air Handling Unit Failure Record 289 Figure 11.21 Steps for Reliability Analysis 290 Figure 11.22 Reliability Centered Maintenance Audit Template 299 Figure 11.23 Reliability Centered Maintenance Audit Scorecard 302 Figure 11.24 Reliability Centered Maintenance Communication Board 303 Figure 11.25 Reliability Centered Maintenance Implementation Steps 304 Figure 12.1 Project Life Cycle – Typical Case 306 Figure 12.2 Project Effort Distribution over Time 307 Figure 12.3 Project Management Life Cycle 308 Figure 12.4 Steps for Determining Internal Rate of Return 310 Figure 12.5 Profitability Model Determination 313 Figure 12.6 Work Breakdown Structure 316 Figure 12.7 Steps for Gantt Chart Generation 317 Figure 12.8 Gantt Chart – Rochester Assembly Upgrade 327 Figure 12.11 Activity on Node Network Diagram 328 Figure 12.12 Activity on Arrow Network Diagram 329 Figure 12.13 Steps for Generating Activity on Node Network Diagram 330 Figure 12.14 Network Diagram – Rochester Assembly Upgrade 332

Equations Eqn 6.1 Sample Standard Deviation 77 Eqn 6.2 Sample Variance 78 Eqn 6.3 Population Standard Deviation 78 Eqn 6.4 Population Variance 78 Eqn 6.5 Normal Distribution Probability Density Function 79 Eqn 6.6 Short Term Process Standard Deviation 96 Eqn 6.7 Short Term Process Capability Index 110 Eqn 6.8 Long Term Process Capability Index 110 Eqn 7.1 Total Variance 118 Eqn 7.2 Measurement System Variance 118 Eqn 7.3 % Contribution of Measurement System to Total Variance 118 Eqn 9.1 Taguchi Loss Function 192 Eqn 9.2 Coded Input Variable 197 Eqn 9.3 Uncoded Input Variable 197 Eqn 9.4 Reduced Modeling Equation with Coded Coefficients 225 Eqn 11.1 Weibull Distribution Hazard Function 273 Eqn 11.2 Failure Rate 288 Eqn 11.3 Mean Time Between Failures 288 Eqn 12.1 Net Present Value 309 Eqn 12.2 Internal Rate of Return 310

10

Preface So…you’ve decided to take the plunge into Operational Excellence. But what is Operational Excellence? A General exhibits Operational Excellence on the battlefield. A ballet dancer exhibits Operational Excellence on the stage. In itself, the term Operational Excellence is not sufficiently descriptive. The term Lean Six Sigma is used interchangeably with Operational Excellence. It has the advantage of exposing the origins of Lean from the Toyota Production System for waste minimization and the origins of Six Sigma from Motorola for variation reduction. Together, these continuous improvement programs blend decades of tried and proven techniques for a company to improve its business. The nice thing about Operational Excellence is that its generality allows incorporation of other improvement programs within the company from Sales & Marketing, Customer Development, Strategic Growth, through Reliability Centered Maintenance. Ask yourself these questions…are my processes complex, with multiple hand-offs of material and information? Does it seem like a given transaction involves too many people and takes too long to occur? Do people appear to be operating in a crisis management mode rather than methodically managing their priorities? Most companies exhibit some or all of these traits and thus can enjoy substantial improvements to their profitability by implementing Operational Excellence. People learn through examples. We emulate the successes of others through observation and fine-tune the process design to reap incremental improvements. This is the basis of a Learning Based Management System. Throughout this book you will see numerous case studies which drive home the theory points in practical examples. In addition, templates, charts, forms, drawings, diagrams, etc. commonly used in an Operational Excellence Program are included on a compact disk at the back of the book for your convenience.