Lean Six Sigma for Service by Michael L. George

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Lean Six Sigma for Serviceby Michael L. George
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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

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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

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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

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Littles 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

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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

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What is Six Sigma?

• Six sigma focuses on accuracy
• Recognize opportunities and eliminate defects
  based on customers value
• Eliminate variation
• Use statistical tools
• Seek documented, repeatable processes
• Infrastructure to support continued progress
• Identification of customer critical to quality
  needs

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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

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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

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Solicit Offers
Customer
Amend Solicitation
Chart 6
Address Inquires
Respond to Protests
Issue Solicitation
Review questions
Receive Protest
Receive Questions
Post Solicitation on FBO
Validate protest
Determine need for amendment
Develop answers
Issue CO determination
Upload tech drawings
Determine need for amendment
Post QAs
Draft Notice
Refresh bid library
Amend if required
O Buyer
Post notice
O Buyer
O Buyer
PCO O Buyer
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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

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Value Based Management

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

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Use VOC to Transform

• Align your priorities to your customers
• 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

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The goal of VOC

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

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Lockheed Martin

• Understand value from the customers 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

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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

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Rollout hints

• Give business units the credit
• Tailor models to fit
• Use a pace that fits organizational readiness
• Dont force it on people generate pull
• Solve problems cross functionally
• Speed creates more noticeable improvements and
  quicker results
• Data gathering and analysis takes time

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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

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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

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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

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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

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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

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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

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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

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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

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5S Improve

• Sort
• Straighten
• Shine
• Standardize
• Sustain
• Plus one Safety
• CLEAN UP YOUR DESK

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Questions?