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Six Sigma a Way to Reach Operational Excellence and Get out of the Crisis

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Six Sigma a Way to Reach Operational Excellence and Get out of the Crisis Six Sigma a way to reach Operational Excellence and get Out of the Crisis Alessandro Brun – Politecnico di Milano [email protected] About Myself SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Concorde One of the 20th century's great symbols of technological achievement… SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Concorde • One of the 20th century's great symbols of technological achievement… • … perhaps the most famous passenger jetliner in history. • But it was also commercially flawed. Its engines were dirty and painfully noisy. It was banned from flying supersonic over the United States because of the sonic boom. SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Concorde • Concorde was effectively blocked from entering the crucial U.S. market when airlines in this country, including TWA and Pan American, canceled orders. • "Looking back at the entire program, from beginning to end, if you knew then what you know now, then Concorde would never have been built," Bannister. SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Concorde • On 25 July 2000, Air France Flight 4590 crashed in Gonesse, France, killing all 100 passengers and 9 crew members. • According to the official investigation conducted by the French accident investigation bureau (BEA), the crash was caused by a titanium strip that fell from a Continental Airlines DC-10 that had taken off minutes earlier. The metal fragment punctured a tyre on Concorde’s left main wheel bogie during takeoff. • Prior to the accident, Concorde had been arguably the safest operational passenger airliner in the world in terms of passenger deaths-per-kilometres travelled with zero. SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Operations and Supply Chain Excellence Today, competition is Supply Chain vs Supply Chain, no longer firm vs firm. Supply Chain Strategy should identify Critical Success factors to gain a competitive edge. EFFECTIVENESS EFFICIENCY In addressing In resources market needs utilization SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Out of the Crisis! “A product, or service, possesses quality if it helps somebody and enjoys a good and sustainable market.” “We have learned to live in a world of mistakes and defective products as if they were necessary to life. It is time to adopt a new philosophy in America.” SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Noteworthy approaches to solve the “Efficiency-vs-effectiveness” trade-off? SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Noteworthy approaches to solve the “Efficiency-vs-effectiveness” trade-off? SIX SIGMA10 – a way to reach Operational Excellence and get Out of the Crisis Noteworthy approaches to solve the “Efficiency-vs-effectiveness” trade-off? SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Noteworthy approaches to solve the “Efficiency-vs-effectiveness” trade-off? SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Noteworthy approaches to solve the “Efficiency-vs-effectiveness” trade-off? SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis In search of new paradigms? “Quality – Cheap Prices – Service” In this service centre we offer • … While-U-Wait service … • … High quality repairs … • … at the best price in town! Please pick two out of three. SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis What about the market? SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis The times they are a-changing Supply Chain performances are even more critical, due to some recent trends: • Customer centric approaches – Variety increases (explodes!) • Shorter product life-cycles • Shorter delivery Lead Times • “Trading Up” – lower sostituibility (cfr. “Trading Up: The New American Luxury”, di M.Silverstein e N.Fiske) • Low Labour Cost Countries competition • Increasing regulations • Growing ethical/social responsibility SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Six Sigma • WHAT IS SIX SIGMA? Six Sigma is a managerial approach aimed to create processes capable of delivering what the customer wants. It was developed by Motorola in the 80’s as a way to improve quality of manufacturing processes. A decade later, GE transformed Six Sigma into a powerful and pragmatic company-wide process improvement program, to obtain drastic improvements in both operations and business (“transactional”) processes. • Basically, Six Sigma consists in: focusing characteristics of the product/service that are critical to customers (CTQ) defining adequate technical specifications for CTQs in order to achieve customer satisfaction improving capability of the processes whose output is a CTQ reducing their variability and other causes of errors or defects in order to meet technical specifications SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Six Sigma and the quest for more capable processes 18 SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Six Sigma and the quest for more capable processes Process out-of-Target Excess variability Low-variability, Centered process SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Six Sigma quality levels – an analogy Sigma Level of a DPMO process (Defects per Million Opportunities) 6 3.4 Sweet Fruits Process Redesign 5 233 “Process Entitlement” Bulk Fruits 4 6,210 Process characterization and improvement 3 66,800 Low-hanging Fruits Seven basic tools 2 308,000 Ground Fruits Logic and intuition Increasing the s level of a process requires exponential improvements in terms of quality SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Costs of Poor Quality (COPQ) - Inspection - Warranty Traditional Quality Costs: - Scrap - Tangible - Rework - Easy to Measure - Rejects - More Setups Hidden Costs: - Expediting Costs - Lost Sales - Intangible - Late Delivery - Lost Opportunities - Difficult to Measure - Lost Customer Loyalty - The Hidden Factory - Excess Inventory - Long Cycle Times - Costly Engineering Changes For most companies, COPQ can be as high as 15% of total sales SIX21 SIGMA – a way to reach Operational Excellence and get Out of the Crisis Costs of Poor Quality (COPQ) vs Sigma Level 50% 45% 40% 35% 30% 25% 20% 15% 10% Cost of Quality % Sales % Quality Costof 5% 0% 2 3 4 5 6 Sigma Level SIX SIGMA22 – a way to reach Operational Excellence and get Out of the Crisis Six Sigma dimensions Customer Process A Process B Vendor Define Measur Analyze Improve Control e Driven by custom er needs Process Map Analysis LSL US L Led by Methodology Senior Mgmt Upper/Lower • specification • •• •• • limits •• • •• • • Organization Tools •••• • • • • • Regression 35 100% 30 80% 25 20 60% 15 40% 10 20% 5 Process variation 0 0% Enabled by quality L K A F B C G R D Frequency Cumulative Frequency team Pareto Chart SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis Roles of Six Sigma expert They identify key business issues and assist Executive the champions in identifying critical projects sponsorships that are tied to the key business issues They define the projects and keep track of Champions the team's progress They provide coaching, training and statistical Master Black expertise to Black Belts Belts They are responsible for implementing the Six Sigma projects Black Belts They are team members who maintain their regular jobs but are assigned to one or more Green Belts teams given their know-how or background on the selected projects Quality Management 24 SIX SIGMAMario – a way Cappetta to reach Operational Excellence and get Out of the Crisis Project Phases D Focusing the process object of improving Define Measuring current process’s performances M Measure Identifying the causes of the problem A Analyze I Removing the causes of the problem Improve C Verifying that the results of the project have been realized Control SIX SIGMA25 – a way to reach Operational Excellence and get Out of the Crisis Six Sigma and Lean are two complementary approaches • Lean and Six Sigma integrate each other, making Lean Six Sigma a powerful general purpose process improvement methodology to reach Operational Excellence SIX SIGMA LEAN THINKING Main focus of the methodology Improving process quality - create Improving process quality – processes capable of delivering what the the “right” process will bring to the “right” customer wants. results Goal Reducing variation and aligning Reducing variation, eliminating wastes processes to target and avoiding overburden Cultural context in which it was Western (USA) Eastern (Japan) originated Type of improvements sought after Project-by-Project Day-by-Day Organization and roles Strongly formalised hierarchy of highly Informal organization – everybody qualified improvement experts (GB, BB, should contribute MBB, …) Approach to improvement actions Top-Down Bottom-Up identification and implementation Tools Abundant use of sophisticated statistical Mainly relies on simple visual tools tools SIX SIGMA – a way to reach Operational Excellence and get Out of the Crisis .
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