Learning Six Sigma Technology - Knowledge Management, Contemporary Management Video Lecture | Contemporary Management - B Com

the world of business is constantly
changing and developing to have a
healthy living business it is essential
to grow and evolve but sometimes that
growing can be too organic and too
chaotic
Kyocera is actually an eeveelution airy
business helping companies to become
fitter and smarter whatever the world of
business creates let us sort it out
welcome to the Lean Six Sigma
introduction elearning course providing
you a high-level overview of the
fundamental concepts of Lean Six Sigma
in this course we will cover the
following topics
what is lean what is Six Sigma
what is Lean Six Sigma what is the
demake cycle who are the key players of
in-lane Six Sigma and when to apply Lean
Six Sigma so let's begin
what is lean lean is the elimination of
all forms of non-value-added work from
the customers perspective in business
transactions and processes the history
of lean has its origin in the 90s of the
19th century Frederick Taylor was an
American mechanical engineer he is
regarded as the father of scientific
management and was one of the first
management consultants Taylor began to
look at individual workers and work
methods to figure out the one best way
to do every job the result was time
study and standardized work then Henry
Ford came into play
he was an American industrialist and the
founder of the Ford Motor Company his
introduction of the Model T automobile
revolutionized transportation and
American industry he fashioned the first
comprehensive manufacturing strategy his
Highland Park plant pioneered flow
production by placing fabrication
equipment in process sequence the result
was a much faster production time and a
much higher production output in the 60s
of last century a man named Tai Chi I
know
developed what today is commonly known
as lean management Anna was a Japanese
businessman and assembly manager for
Toyota he is considered to be the father
of the Toyota Production system which
became lean manufacturing in the United
States he recognized the central role of
inventory and of
helped practical methods to implement
the concept of just in time such as
Kanban he also identified the seven
wastes which need to be eliminated as
the central focus of lean to increase
profitability in business processes in
lean terms value is always defined by
the customer and there are three ways we
can categorize value waste or muda is
typically referred to as a non value
addict tivity essential activities are
called value add activities for which
the customer is willing to pay for
finally there are some activities that
fall somewhere in the middle and we call
these business non-value add activities
these tasks must be completed even if
they are not traditionally defined as
value add an example of a business
non-value add activity would be tasks
required to meet regulatory or legal
requirements these actions are not
defined as adding value to a process
from the customer's point of view but
they cannot be avoided or eliminated
this by chart provides the answer to the
question which of the three value
categories do you think is most commonly
found in a typical business process in a
typical business process whether
manufacturing or transactional a
tremendous amount of the activities are
non value-add most processes are 3% to
5% value add and maybe 10% to 15%
business non value add but the majority
of processes are non value add to
understand lean it's important to know
what is exactly waste or non value add
activities as the central focus of lean
is about the reduction of waste lean
defines seven types of waste these are
motion transportation waiting
overproduction inventory
over processing and rework let's take a
closer look at each of the seven types
of waste the waste of motion typically
refers to the actual movement of a
person this might be unnecessary motion
within a workstation or motion in the
job task that takes too much time to
complete next one is transportation any
conveyance of a product is considered
waste assembly lines shipping and email
I'll move products and services but do
not add value transportation does not
transform a product or service it just
simply moves it the waste of waiting
implies waiting for parts or information
an absence of flow or a delay in the
process is one illustration of waste and
something we want to eliminate the goal
is to be able to respond to the
customer's request with no delays to
services or goods waiting is one of the
largest wastes that can be identified by
lean the next type of waste is
overproduction and that is producing too
much or too soon it's producing to
forecast rather than the manned
overproduction consumes our resources
with things the customer does not need
and has not asked for if we listen to
customer requirements first we can
respond with goods and services that
meet those demands inventory is any type
of supplies and materials that are kept
in a quantity above the minimum to get
the job done
inventory takes up space and ties up
financial resources furthermore too much
inventory in terms of work-in-progress
is a major contributor to long lead
times the waste of over processing is
about any activity that adds cost but no
value many times we do operations that
the customer does not care about or does
not ask for in other words over
processing simply means doing things
that are redundant
finally the last type of waste is called
rework rework is any repair or change to
a product after it's been made or any
correction of something that was not
done right the first time one of the
primary components of lean is value and
something is only valuable if it was
done right the first time after
clarifying the term value and describing
the types of waste we now want to talk
about value stream mapping value stream
mapping is the most essential and
powerful lean management principle and
tool value stream mapping is used to map
and visualize a business process a value
stream contains all actions and process
steps which are required to create a
product or service in addition a value
stream map should include process data
to quantify and demonstrate the process
performance in a graphical way by
creating a value stream map a common
understanding of the current state of
the process is realized furthermore and
most important it helps to identify
waste and opportunities for improvement
this graphic now shows a value stream
map created by using a process mapping
software tool apart from the diagram
itself that represents a process showing
the steps s boxes of various kinds and
their order by connecting them with
arrows you can see that there are
different types of data elements added
to the process map and data is what
separates a value stream map from a
standard process map or flow chart your
goal should be to capture as much data
in terms of process performance metrics
as possible typical value stream metrics
are process lis time cycle times waiting
times and rework or defect rates now
that the process cycle is visualized and
relevant performance metrics are visible
we have a perfect basis to identify
waste in and between process steps as
this is the
purpose of creating value stream maps it
makes it now much easier to clearly
point out weak points along the process
and when we talk about weak points in
the language of lien we talk about the
seven types of waste within the scope of
the waste analysis the process
improvement team should investigate the
value stream map and identify waste in
the process to indicate types of waste
or problem areas in a value stream map
graphic symbols such as an explosion
symbol or simply annotations can be used
and added to the map accordingly this
will mark areas for improvement to focus
on when developing ways and solutions to
reduce the non-value-added time spent in
a process before starting to create your
value stream map here are a few tips to
keep in mind first use sticky notes
instead of using a software tool to
document your process it's easier to
make changes and most important it
contributes to employee engagement and
involvement next use as much space as
you can don't restrict your mapping
activity to a single sheet of paper find
a large piece of butcher paper or a
whiteboard to document your map the more
space you have the more detail you will
be finally always great value stream
maps with a team rarely only one person
has all of the process knowledge to make
sure that the right amount of knowledge
is given you should answer the question
of who is involved in the process when
building the team in order to improve a
business process to the elimination of
waste lean includes a set of principles
and tools as this course is about
providing you with the very basics of
lean the different tools will not be
introduced and explained one after
another what you should know at this
stage is that Lean Thinking is
fundamentally just good common sense
it's about lining up value creating
actions in the best sequence and
conducting these activities
without interruption whenever someone
requests them and performing them more
and more effectively in plain terms this
means that when you realize a process
that flows without interruption and
includes only those actions or process
steps that add value from the customer
point of view you will achieve a lean
process what is Six Sigma Six Sigma is a
statistical based methodology used to
reduce variation and eliminate defects
and business transactions and processes
the history of Six Sigma has its origin
in the 20s of last century
Walter Shu Hart was an American
physicist engineer and statistician
sometimes known as the father of
statistical quality control Xiu hard
introduced the control chart and the
distinction of special versus common
cause variation as contributors to
process problems in the mid 80s of the
20th century Six Sigma was introduced by
Bill Smith at Motorola Smith was an
American engineer and is known as the
father of Six Sigma as a management
concept Six Sigma seeks to improve the
quality of process you puts by
identifying and removing the causes of
defects or errors and minimizing
variation in business processes then in
1995 Six Sigma became well known after
Jack Welch made it a central focus of
his business strategy at General
Electric Welch was chairman and chief
executive officer of General Electric
he said Six Sigma is the most important
initiative General Electric has ever
undertaken a Six Sigma is about reducing
variation and eliminating defects we
need to clarify these terms first we
will answer the question of what is
variation variation is the range of
difference between the statistical mean
and all data points that are used to
calculate the mean
in other words it is the extent to which
process performance varies around the
average in Six Sigma variation is
measured by calculating the standard
deviation for better understanding we
will use an example in the following to
demonstrate what variation means in this
example customers are calling the
customer support of an online retailer
do two different kinds of service
requests the time it takes until someone
from the call center picks up the call
is called hold time the hold time
represents the waiting time in this
process currently the company receives a
lot of complaints from customers one
thing customers complain about is the
inconsistent hold time sometimes it
takes two seconds until somebody picks
up the call other times it takes several
minutes they say the service manager of
the company was surprised when he heard
about this issue he always thought that
the quality of the hold time is
absolutely fine in order to verify the
quality of the hold time the service
manager collected some sample data the
call center system has recorded the
table shows the data collection
consisting of 50 samples representing
the hold times in seconds next the
service manager analyzed the data
collected first he calculated the mean
or average in statistics the mean is a
measure of central tendency that is
determined by adding all values divided
by the total number of values or
observations in this example case it
means that in average a customer needs
to wait 30 seconds until someone from
the call center picks up the call as the
manager recognized this result he felt
good about it he said that an average
waiting time of 30 seconds should be
okay for the customer the
a colleague reminds him of what the
customers actually were complaining
about he recommended the service manager
to calculate the variation of the hold
time in order to understand the real
problem the service manager followed his
advice and measured the variation by
using the formula for calculating the
standard deviation in statistics the
standard deviation is a measure of
dispersion that is determined by taking
the square root of the sum of the
squared differences of each value from
the mean divided by the total number of
values or observations in this example
case it means that each individual value
of the sample data varies or deviates 60
seconds on average from the mean that is
30 seconds this variation or uncertainty
regarding the hold or waiting time
negatively impacting customer
satisfaction as the customer does not
feel the average he feels the variation
and this variation for example results
from really bad experiences like the 200
or 300 seconds of waiting time what the
customer expects is a consistent
performance he can rely on after dealing
with this issue the service manager now
understands the problem and is willing
to reduce the variation to increase
customer satisfaction now that we have
answered the question of what is
variation we need to clarify the term
defect within the scope of Six Sigma a
defect is a measurable product or
service characteristic that does not
meet a clearly defined customer
requirement or in other words any
process performance outside of defined
specifications in Six Sigma defects are
measured by calculating defects per unit
or defects per million opportunities
let's get back to our example case to
better understand defects remember the
initial situation the online retailer
has received a lot of complaints from
customers
in addition to the inconsistency or
variation of the hold time some of the
customers also say that they simply need
to wait much too long until somebody
picks up the call in order to exactly
know what to long means from the
customer perspective the service manager
arranged a survey address to a selection
of customers this survey only included
the question of how long are you willing
to wait when calling our customer
service the result was that in average
customers are getting angry and normally
hang up after one minute of waiting on
the phone by conducting this survey the
company has collected the voice of the
customer and translated the customer
issue and need into a measurable
requirement defined by the customer now
that the service manager knows the
measurable requirement also called
specification limit that is one minute
he again looks at the sample data he
collected to see if the process meets
the customer requirement when going
through the sample data the service
manager identified six values or hold
times that exceeded the customer
requirement of one minute or 60 seconds
as these values are not acceptable to
the customer we call them defects in
order to assess these non-compliant
conditions the service manager measured
the average number of defects per unit
to do this he counted the total number
of observed units and added the number
of defects he identified by simply
taking the number of defects divided by
the number of observations he calculated
the defects per unit another way of
measuring defects or process capability
is to calculate defects per million
opportunities as this is a very commonly
used measurement in the Six Sigma world
it is calculated by taking the defects
per unit multiplied by 1 million divided
by the number of defect opportunities
per unit this measurement indicates how
many defects would arise if there were
one
opportunities in this example case we
have 120,000 defects per million
opportunities assuming that there is
only one opportunity to create a defect
that is when the hold or waiting time
exceeds 60 seconds after performing this
comprehensive data analysis the service
manager has learned new aspects about
his business and now wants to drive and
establish process improvement activities
in his department in a structured way as
a consequence he set up process related
targets for the upcoming new financial
year based on the reduction of variation
and the elimination of defects to
increase customer satisfaction now we
come to the point where we want to
clarify and understand why Six Sigma is
actually called Six Sigma to achieve
this we need to clarify the term Sigma
level as well as defects per million
opportunities the Sigma level is a
measure of process capability broadly
speaking process capability tells you
how good or poor process is performing
the Sigma level is measured in standard
deviations from the process average or
mean to a target or a specification
limit each Sigma level corresponds to a
related defects per million
opportunities value as you can see in
the table below a to Sigma level process
means that this process produces about
300,000 defects per million
opportunities as the Sigma level
increases the number of defects drops
notice that it is not a linear function
one unit of increment of Sigma level
corresponds with a dramatic decrease in
defects per million opportunities when
reaching Six Sigma we reach what this
methodology is all about it's the
ultimate goal of achieving a Six Sigma
level process that is producing only
three point four defects per million
opportunities this quality level is so
high that customers will virtually never
see defects
in addition process capability can be
also described by the percentage of
defect free units this value is the
flipside of defects per million
opportunities corresponding to a Six
Sigma process that is producing three
point four defects per million
opportunities we can also say that this
is a process in which 99.999 7% of the
units produced are statistically
expected to be free of defects in the
following you will begin to get a
feeling for what Six Sigma quality means
and why 99% good is sometimes just not
good enough when looking at air travel
99% good would mean six near fatal plane
crashes per day at most major airports
this is equivalent to a three point
eight sigma process increasing this
quality to Six Sigma would result into
only one near fatal plane crash per year
within surgery
99% good would mean five thousand
incorrect surgical operations per week
on the other hand only two incorrect
ones would occur if the quality is
99.999 seven percent good with regards
to the financial sector a three point
eight sigma process would mean 140,000
in correct financial transactions per
hour in contrast in a Six Sigma process
only 75 transactions would be incorrect
in order to improve a business process
through the elimination of waste lien
includes a set of principles and tools
as this course is about providing you
with the very basics of lien the
different tools will not be introduced
and explained one after another what you
should know at this stage is that Lean
Thinking is fundamentally just good
common sense
it's about lining up value creating
actions in the best sequence and
conducting these activities without
interruption whenever someone requests
them and performing them more and more
effectively in plain terms
this means that when you realize a
process that flows without interruption
and includes only those actions or
process steps that add value from the
customer point of view you will achieve
a lean process what is Lean Six Sigma
Lean Six Sigma is a management concept
used to effectively improve business
processes based on the combination of
the different tools of lean and Six
Sigma organizations face rising cost and
increasing competition every day those
ones that implement Lean Six Sigma
correctly achieve significant benefits
that contribute to competitive advantage
and to changing the culture and an
organization from reactive
problem-solving to proactive problem
prevention specifically the proven
benefits are diverse first Lean Six
Sigma achieves faster processes by
removing all forms of non-value-added
work according to the seven types of
wastes secondly Lean Six Sigma aims to
realize higher quality in terms of
process stability and capability through
the reduction of variation and the
elimination of defects
since the methodology involves a strong
focus on customer needs and requirements
another significant benefit of using the
tools and concepts of Lean Six Sigma is
an increase in customer satisfaction
the primary desired benefit of all
process improvement activities within
the scope of Lean Six Sigma is a
reduction in costs by achieving
streamline processes that are completed
faster and more efficiently less
resources are required resulting in
decreased costs in addition less
variation and defects lead to less cost
of poor quality cost of poor quality
includes costs that arise due to the gap
between the desired and actual product
or service quality on the other hand
Lean Six Sigma increases revenue by
enabling an organization to do more with
less
finally a major benefit of Lean Six
Sigma is an increase in employee
engagement and effectiveness Lean Six
Sigma not only reduces costs and
increases revenue it positively affects
people by engaging them and improving
the way they work by involving employees
in Lean Six Sigma projects they gain a
greater appreciation for the impact of
the work they do on bottom-line business
results as well as an appreciation for
how the work of other employees and
departments also contribute to success
and once employees get comfortable with
Lean Six Sigma skills learn through
trainings or projects they can
proactively continue to improve their
business processes based on a
well-established methodology what is the
d'emic cycle DMAIC or demake is the
data-driven process improvement cycle
used to run Lean Six Sigma projects the
acronym DMAIC stands for the five
interconnected steps or phases that are
define measure analyze improve and
control each phase has a specific
purpose with the overall goal of
implementing effective and permanent
process improvements in the define phase
a project charter is created to clearly
define the business problem objective
project team and high-level project
timeline the purpose of the measure
phase is to determine the baseline
performance of the process in other
words we need to measure how the process
performs today in the analyze phase the
team analyzes data and the process flow
to identify root causes of waste
variation and defects the improve phase
is about generating and evaluating
solutions to eliminate or reduce the
identified root causes the purpose of
the control phase is to sustain the
gains this is achieved by creating or
updating standard operating procedures
and ongoing monitoring of process
performance
based on a control plan in this view you
see that in all phases different tools
and templates are available that can be
used to accomplish the individual phases
at the end of each phase a checkpoint or
gateway highlighted and read in this
graphic needs to be passed in order to
get to the next phase over the years
demake has gained credibility as an
improvement method that is easy to apply
suitable for teams and effective at
delivering performance improvement who
are the key players within Lean Six
Sigma when deploying Lean Six Sigma
individuals across all business
functions and levels in the organization
need to place specific roles for a
successful implementation of this
methodology the most important ones are
sponsor champion black or green belt
process owner and the project team let's
see how the role of each one of the key
Lean Six Sigma players is defined the
role of the executive sponsor is
incredibly vital and important for the
success of the Lean Six Sigma initiative
these people are typically members of
senior management or board members and
actively support the implementation of
Lean Six Sigma in the organization they
provide the necessary budget and
resources required for the program and
individual projects champions are
probably the single most important role
within Lean Six Sigma
they take the vision and the direction
from executives and establish
organizational goals that need to be
addressed by using Lean Six Sigma in
addition they also identify and
prioritize project ideas which then are
assigned to the black and green belts as
department head or manager of an area
champions are responsible for the
success of projects within their
department or division once a project
has been started they provide motivation
and consultation and assist the black or
green belt and the team in removing any
issues and barriers that might stop the
project from being successful
black and green belts are professionals
who act as project leader of Lean Six
Sigma projects they also serve as
teachers and mentors of the team members
the most important role and
responsibility of a black or green belt
is to deliver a solution to a business
issue to the process owner while black
belts are mostly 100% dedicated
resources - Lean Six Sigma and
responsible for large-scale projects
green belts are traditionally only
dedicated part-time within companies and
manage small to medium scale projects
another key player is the process owner
the process owner is a professional who
is responsible for the business process
that is the target of a Lean Six Sigma
project one of the most important and
significant roles that the process owner
has is to assist in the implementation
of the solution that is delivered by the
black or green belt and to control the
improved process after the project has
been closed
he also assists with the identification
of future project opportunities because
he is the one that usually knows the
process intimately and feels the pain of
any issues we have in our processes
finally the team members help the black
or green belt to execute a project they
assist with things like data collection
experimentation and other tasks
associated with implementing the project
the main reason why these people are
incredibly important and need to be well
selected is because they provide the
process expertise needed to analyze a
process appropriately ideally team
members have received a training on the
concepts and basic tools of Lean Six
Sigma at a very introductory level prior
to their active involvement in a product
when to apply Lean Six Sigma when facing
a business problem the following
criteria should be met to successfully
apply Lean Six Sigma the problem is
linked to a business process a business
process is a repetitive sequence of
activities or tasks that produce a
specific service or product for a
particular customer
the process runs frequently meaning that
the process takes place on a regular
basis and not once a year the more
frequently the process runs the more
benefits can be generated over a certain
period of time there is no known
solution for the problem if you know the
solution
you don't need Lean Six Sigma just do it
the root cause of the problem is not
known as Lean Six Sigma is a
problem-solving methodology focusing on
identifying the root causes for given
problem it only makes sense to apply the
tools and concepts if this job still
needs to be done there is data available
data availability is critical to the
speed and success of Lean Six Sigma
projects it's also the most essential
condition to be met when applying Lean
Six Sigma without data we cannot measure
and without being able to measure we
cannot quantify and evaluate the process
performance before and after
improvements have been made course
review in this course you have earned
that Lean Six Sigma is a data-driven
approach used to effectively improve
business processes about value stream
mapping and the seven types of waste
lean wants to eliminate about the
essence of Six Sigma and the meaning of
variation and defects about the process
improvement cycle d'emic and the purpose
and contents of the five phases about
the different responsibilities and roles
that are relevant within Lean Six Sigma
and finally what criteria need to be met
to apply Lean Six Sigma successfully
thank you for listening and attending
this course