which continuous process improvement method should i choose? · itls tm a n toc global optimization...

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Which Continuous Process Improvement Method Should I

Choose?

Dr. Reza (Russ) Pirasteh, PMP, MBB, CLM Vice President – Operations Excellence

Stephen Gould Corporation

June 27, 2012

[email protected]

www.iTLS-ISO.com

© 2012 iTLSTM-ISO All rights reserved 1

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Objectives

– Demonstrate the synergetic power of Lean, Six Sigma and TOC when used in logical steps, for continuous process improvement (CPI)

– Introduce integrated Toc, Lean, Six Sigma (iTLS) methodology

– Overview of Lean, Six sigma and Theory Of Constraints (TOC) as applied in integrated Toc, Lean, Six Sigma (iTLS) methodology

– Overview of comparative analysis of Lean, Six Sigma and iTLS contributions

– Overview of the need for iTLS application, study and history

– Brief example of typical iTLS results

– Overview of iTLS implementation steps


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Questions…

• Manufacturing companies can produce at least 25% more, why don't they?

• 25% more projects can be completed in an organization, why aren't they?

• Despite having 25% more finished goods inventory than needed , why do

companies continually lose sales because products are not available to

consumers?

“Bob Fox”


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Why?

• 80% of improvement initiatives fail

• 70% of company employees do not know the company strategies

• 73% of strategies are not owned by employees

• 81% of employees do not feel committed to the organization

• 92% of employees feel that they are working harder than the year before

• Over 50% of the work is waste, (Non-Value- Added or Fake Work)

Source: Fake Work – Gaylan Nielson, 2012 CPI symposium


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Why?

• Lack of focus on what is the value to end users and consequences • Too much Waste and non-value-added activities • Too many Errors & lack of consistency in processes, procedures,

policies … • Competing on the edge of chaos

Typical rage of waste (COPQ as % of Sales):

• Manufacturing: 20-30%

• Services: 30-40%

• Software: 40-65%


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Alternatives?

• In past 30 years great management philosophies have been introduced to continuously improve processes and achieve operations excellence by shifting paradigms and challenging the existing assumptions.

• Over 95% of CPI initiatives are:

– Lean

– Six Sigma

– Theory Of Constraints


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Lean - 7 Muda

Toyota Production System (TPS)

Focusing on reduction of the seven wastes

1. Overproduction

2. Waiting - People, Parts

3. Too Much Inventory

4. Unnecessary Motion

5. Unnecessary Transporting

6. Over Processing

7. Producing Defects or Rework

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WaitingMotion

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Intellect


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Lean

Key lean operation principles include:

1. Value / Hidden Factories / Non-Value – Added

2. value-stream (eliminate waste)

3. Flow

4. Pull

5. Perfection

Source: “Lean Thinking”

Womack and Jones


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TPS - Lean

Enormous amount of effective tools:

– Employee involvement & Respect for people

– Work life culture change

– 5-S and Visual Communication Management

– Value Stream Mapping

– Process Fail Safe and Error Reduction

– Pull Systems, Kanban, Buffer Management

– Kaizen

– SMED

– WCE (measurement system for NVA)

– Takt setting

– ….More…


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Six Sigma…

• Pioneered by Bill Smith at Motorola in 1986

• Originally defined as a metric for measuring defects and improving quality

• Defect levels below 3.4 (DPMO)

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DPMO (Defects

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Opportunities)


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Six Sigma…

• Aimed to manage process variations that cause defects – Unacceptable deviation from the mean or target

– To systematically work towards managing variation to eliminate those defects

Distribution

Spec Limit Spec Limit

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TOC – Theory Of Constraints

– Originated and authored by Dr. Eliyahu M. Goldratt

– Also referred to as "Constraint Management“

– Focus on Throughput

– Throughput is what is being “sold”

– Rate of revenue generation (Throughput) is limited by at least one constraint

– Only by increasing capability at the Constraint overall throughput will be increased

– Focus when dealing with change:

• Why Change?

• What to Change?

• What to Change To?

• How to cause the change?


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CPI Contributions…

• These continuous improvement approaches have shown considerable tangible impact.

– Toyota

– Boeing

– GE

– GM

– Banking & Financials

– Etc…

• How good?


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iTLS Story… A Research to Explore…

• How to optimize profits using CPI?

• There had been little consensus among CPI methodologies

• Many opinions and guesses

• Effectiveness:

– Compare and contrast methodologies

– Evaluate and statistically quantify the impact

• Deployment

– Deploy CPI methodology that yields higher profits

– Systematic deployment globally

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iTLS™® Brief History • 1985 – Learn and apply TQM

• 1996 - Begin to experiment with various combinations of CPI tools

• 1998 - Developed TLS CPI model (no consensus)

• 2003 - Documented for the first time in the world: • Quantified effects of Lean, Six Sigma and TLS

• 2005 – Summarized & documented the designed experiments

• 2006 – Publicized experiment findings – APICS

• 2006 –The First CPI Symposium – Weber University – Introduced iTLS • Scott Jensen

• 2006 – iTLS-Trio model at the Weber University’s CPI symposium • Decided on writing a book to ensure integrity of iTLS and possibly bringing the CPI disciplines

together for universal betterment…

• 2007- Introduced iTLS-Trio model at TOC-ICO (Goldratt - Los Vegas) • Others published books based on my research

• Created the origin of change in TOC models

• 2010 – August “Profitability with No Boundaries” available… • Took us 3- years to publish the book – we needed to be sure …

• Results of implementations fully supported the model

© 2011 iTLSTM-ISO All rights reserved

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iTLS Story… Research Case

• Lean and Six Sigma had been practiced in for several years

• Both approaches had shown that they were able to prompt operations personnel to work on a series of projects that resulted in cost savings and process improvements

• iTLS: an alternative – using synergetic approach

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Experiment Objectives

• Hypothesized approach to measure and validate effectiveness of: – Lean – Six Sigma – Integrated TOC, Lean, Six Sigma (iTLS)

• Analyze results for statistical significance

• Criteria: – Aggregate contribution to verifiable financial savings – Validate savings – US operations were studied


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Experiment & Approach

• Methodology was assigned due to the local preference, experience with a particular methodology and expertise – Data gathered (Time-years): 2.5 – Participating plants: 21

• 11 Six Sigma • 4 Lean • 6 TLS

– Team leaders trained: 211 – Projects completed by all methods: 105

• Each site chose their projects and coached with local experts • Plant size, population, financial standing were mixed


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Comparing Six Sigma With Lean Individual 95% confidence intervals for Mean Based on Pooled Standard Deviations

Level N Mean StDev ---+---------+---------+---------+------

Lean (Log) 8 4.8380 0.6575 (----------------*---------------)

Six Sigma (Log) 19 4.8673 0.5030 (----------*---------)

---+---------+---------+---------+------

4.50 4.75 5.00 5.25

P-Value: 0.622 No Significant difference

µ1 µ2


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Comparing Six Sigma With Lean & iTLSTM Individual 95% confidence intervals for Mean Based on Pooled Standard Deviations

Individual 95% CIs For Mean Based on

Pooled StDev

Level N Mean StDev +---------+---------+---------+---------

Lean (Log) 8 4.8380 0.6575 (-------------*------------)

Six Sigma (Log) 19 4.8673 0.5030 (--------*-------)

TLS (Log) 74 5.3469 0.4445 (---*---)

+---------+---------+---------+---------

4.50 4.75 5.00 5.25

P-Value: 0.000: Highly Significant difference

2 31:oH

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• Plants using iTLS were able to return 12-24X financial benefits compared with the plants that used only one method

• Teams using iTLS were

able to complete more projects

• Return per trained employee was 10-12X higher


Experiment Results

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Experiment Results • iTLS showed 4 X greater

financial benefit (project-to-

project comparison)

• Plants that used iTLS produced 89% of the savings

– 28% of the plants produced – 89% of the benefits


Per Project Financial Return

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Lean Six Sigma iTLS

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Examples of Results Achieved…

– 5% bottom-line profitability improvement – Gold mining - BR

– Improve throughput by 4X (L3)

– $3.8 mil in cost savings in 18 months - Alcon Labs – process ind

– $18 mil reduction in inventories - Telecom

– 24 inventory turns from 7 per year

– Improved supply chain OTD performance from 45% to 99.8% - SGC

– Reduced DPM to < 393 from 37,000 in 4 months

– Achieved supply chain performance with Cpk of 1.67 in 6 months from ~0.8

– $185 mil in cost reductions in 24 months – Telecom

– Fulfillment cycle time reduction from 11 days to <5 globally

– 40% increase in revenue – transactional & sales

– 90% reduction in plating process rework - Appliances


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Some iTLS users…

• Stephen Gould Corporation

• New Beginning

• Sanmina-SCI

• Alcon – Brazil

• in Colombia, that I have advised during the past 3 years:

– Senco Colombiana: bathroom appliances Eurocerámica: Tiles Salamanca: Catering services Arroz Caribe: Rice mill

• L3 Communications

• Sanmina-SCI

• Northrop-Grumman

• Huntsman Cancer Institute

• Dyplast Products

• NavAir

• PECO

• Knight Industries

• Eli Lilly

• AzulK, Columbia

• Votorantim


../../../Videos/Alcon iTls success Story 3.wmv

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iTLS 7 Step Application


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A B C D

A: 120/D Takt: 85/D

B: 100/D

C: 85/D

D: 110/D

A: 200/D

40% improvement

Step 1 Identify the constraint


../../Process Simulator/Demo Model v4.vsd

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Step 1 What is your operation River


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“T” River

• A Multitude of Product Options


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“V” River

• Distribution and Semi-Process Industries


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“A” River

• Typically Fabrication-Assembly Operations


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“I” River

• Assembly & Flow Processes
