Lean Six Sigma in Your Factory 1

A Tale of Two Factories

Every company has two factories:

1. The Main Factory that markets, sells, invoices, and delivers your product or service. This factory uses the formula:

Quality + Speed = Profit

2. The Fix-it Factory that corrects all of the mistakes in the Main Factory. There's always an "overt" Fix-it factory where you measure defects and delay, and there's a hidden Fix-it factory that corrects things without anyone ever knowing.

The Fix-it factory uses the formula:

Defects + Delay = Lost Profit

The Fix-it factory may consume 25-40% of every dollar spent, money that could be used to grow a business or improve profits.

Create a Master Improvement Story

The first step is to create a master improvement story that focuses on the Fix-it Factory. The master improvement story answers the question "What's Important?" It identifies the key areas for improvement, measurements, targets, and the effects of those improvements. The best tool for documenting this is the tree diagram.

You'll find two versions in the QI Macros SPC Software for Excel:

1) a basic tree and

2) a "balanced scorecard."

Here is an example of the balanced scorecard tree.

The Balanced Scorecard

The "balanced scorecard" approach uses four key areas to help organize the improvement story. They are:

1. Financial Growth
2. Customer Satisfaction
3. Learning and Growth
4. Quality

Financial growth and customer satisfaction are effects of providing better quality products faster at a lower cost and higher perceived value. Learning and growth focus on employee skill development and the availability of information systems to support learning. Quality focuses on breakthrough improvements in cycle time, defects, and cost.

You can view examples of various measurements for service, manufacturing, healthcare, or IT on our website at http://www.qimacros.com/scorecard.html. If you are struggling to determine what your key measurements are or what chart to use to track them we can help you via our phone, email or onsite coaching services. See Lean Six Sigma coaching at http://www.qimacros.com/consultform.html.

Laser-Focus Using a Few Key Tools

After you have determined "What's Important?" the next question is "What's Broken?" To succeed at Six Sigma, laser-focus every team you start. This means that leadership will want to work with an improvement expert to develop the first few elements of a successful improvement story:

1. Line graph showing defects (preferably in parts per million) or delay over a period of time. This answers the questions: "Where are the defects? Where are the delays?"

   

2. Pareto chart(s) showing 1, 2, or 3 "big bars" that contribute 50-60% of the problem identified in the line graph. This answers the question "Where's the Mother Lode?" Use the 4-50 Rule: 4% of any business creates over half of the waste and rework. Find it and fix it.

   

3. Write a Good Problem Statement. Use the first big bar on the pareto chart to write your problem statement. A sample problem statement is: During the first 6 months of 2006, time code errors accounted for 47% of the incorrect paychecks, which was 2 times higher than the next highest contributor and resulted in 78 employee complaints.
4. Cost of Quality Analysis showing how much this portion of the Fix-it Factory costs and what the benefits will be. These four steps should take no more than 3-5 days using existing data. Each of these charts and worksheets are available in the QI Macros SPC Software for Excel. Download a 30 day evaluation copy

Time: It rarely takes more than 2-3 days to analyze all of a company’s data and develop a master improvement story that identifies the 4% of the business causing over 50% of the waste and rework. If you have teams that have been meeting for weeks or even months, check their problem statement. If you need help getting these teams focused or coming up with actionable problem statements consider our Jump-Start Coaching.

More detail see in Down Load My File here

How to build Lean in your Warehouse ?

Lean can not be separated from Seven Wastes.

I mentioned Lean Manufacturing is largely about eliminating waste.
As it turns out, there are seven (really eight) primary wastes that Lean seeks to eliminate.

The seven (eight) wastes identified in Lean Manufacturing are activities identified and categorized as “non-value adding” events, or processes that limit profitability in a company.

First identified by Taiichi Ohno of Toyota, the “Seven Wastes” are as follows:

1. Overproduction: Making more parts than you can sell.
2. Delay: Waiting for processing or parts sitting in storage.
3. Transporting: Taking parts and materials to various storage locations and from process to process.
4. Over-Processing: Doing more “work” to a part than is required.
5. Inventory: Committing money and storage space to parts not sold.
6. Motion: Moving parts or people more than the minimum needed to complete and ship them.
7. Making Defective Parts: Creating parts that cannot be sold “as is,” or that must be reworked etc.
8. Untapped Human Potential: Failing to tap into the creativity, abilities and talents of your workforce.

We considered that this waste often has a far greater impact on companies than all other wastes combined. More detail see in our next articles Re-Engineering Warehouse