Innovation and Incremental Improvement

1. 6σ &
Kaize
n
Profit thru Quality

2. profit thru quality

3. KAIZEN-The Concept
 Kaizen….means improvement
 Ongoing improvement
 Involves everyone
 Both Managers & Workers
 Kaizen Philosophy
 Our way of life need to be constantly improved
 Working life, social life, home life
 Kaizen embodies
 Productivity Improvement
 Total Quality Culture
 QC Circles
 Zero Defects
 …..etc.
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4. KAIZEN-The Concept
Masaki Imai
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5. KAIZEN-The Concept
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6. KAIZEN-The Concept
KAIZEN
INNOVATION
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7. KAIZEN-The Concept
 Process Oriented Approach
 Leads to Improved Results
 Focus on the process improvement without loosing sight of the
expected results.
 People Oriented Approach
 Focus on ….
 Discipline
 Time Management
 Skill Development
 Participation and Involvement
 Morale
 Communication
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8. KAIZEN-The Practice
Management Group Individual
Tools Seven QC Tools Seven QC Tools Common Sense
New Seven Tools New Seven Tools Seven QC Tools
Professional Skills
Involves Managers and QC Circles Everyone
Professionals
Target Systems and Process Group Work area Individual work area
Implementation Small investment Mostly inexpensive Inexpensive
Cost
Results New System and Improved work On the spot
Facility improvement procedures improvement
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9. KAIZEN-The Practice
 Just In Time- Management Oriented Kaizen
 Exact number of required units brought to each successive stage
of production at the appropriate time
 The advantage of JIT
 Shortened Lead Time
 Reduced time spent on non-process work
 Reduced inventory
 Better balance between processes
 Problem clarification
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10. KAIZEN-The Practice
 Group Oriented Kaizen- SMALL GROUP ACTIVTIES
 Informal, voluntary small groups, organized within the company
 Carry out specific improvement activities
 Many forms:-
 QC circles, Suggestion Groups, Workers group………
 QC Circles…the most famous
 Emphasis on problem solving in the work area
 Advantages of QCC
 Sense of teamwork
 Improved communication
 Improved morale
 Acquire new skills
 Labor-Management relationship improved
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11. KAIZEN-The Practice
 Individual Oriented Kaizen- SUGGESTION SYSTEM
 Individual provides suggestion on how to improve his work area.
 Helps the individual to be Kaizen conscious.
 Also helps in….
 Workers to speak out.
 Opportunity for management to help workers.
 An valuable opportunity for two way communication
 Suggestions normally covers:-
 Savings in energy, material and other resources
 Improvement in working environment
 Improvements in machines, processes, jigs and tools
 Improvements in customer services
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12. KAIZEN- Implementation
 Seven Conditions for Successful Implementation of
Kaizen Strategy
 Top management commitment
 Top management commitment
 Top management commitment
 Setting up an organization dedicated to promote Kaizen
 Appointing the best available personnel to manage the Kaizen
process
 Conducting training and education
 Establishing a step-by-step process for Kaizen introduction.
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13. profit thru quality

14. Figure 2.2 Ideal pattern from innovation
Time
Figure 2.3 Actual pattern from innovation
Time
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15. INNOVATION plus KAIZEN
rd
St anda
New KAIZEN
INNOVATION
dard
Ne w Stan
KAIZEN
INNOVATION
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16. KAIZEN and INNOVATION
KAIZEN INNOVATION
1. Effect Long-term and business as Short term and dramtic
usual
2. Pace Small Steps Big Steps
3. Time frame Continuous and Incremental Intermittent and non-
incremental
4. Change Gradual and constant Abrupt and volatile
5. Involvement Every-one Selected champions
6. Approach Collective group efforts, Individual ideas and efforts
systems approach
7. Mode Maintenance and Improvement Scrap and Rebuild
8. Effort Orientation People Technology
9. Practical Requirements Little investment but great Large investment but little effort
efforts to maintain to maintain
10. Advantage Works well in slow growth Better suited in fast growth
economy economy
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17. Another comparison of Innovation and KAIZEN
Innovation KAIZEN
Creativity Adaptability
Individualism Teamwork (systems approach)
Specialist-oriented Generalist-oriented
Attention to great leaps Attention to details
Technology-oriented people-oriented
Information: closed, proprietary Information: open, shared
Functional (specialist) orientation Cross-functional orientation
Seek new technology Build on existing technology
Line + staff Cross-functional organization
Limited feedback Comprehensive feedback
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18. profit thru quality

19. About Six Sigma
 Six Sigma Was Developed at Motorola in the 1980’s As a
Method to Improve Process Quality.
 It Was First Used to Improve Manufacturing Process
Capability and Then Migrated to Business Processes
Capability
 Companies That Have Deployed Six Sigma: Bank of
America, Motorola, GE, IBM, Kodak and Many More
 The Basic Premise Is, All Processes Have Variation.
Variation Is the Enemy.
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20. Six Sigma Philosophy
?
 Know What’s Important
to the Customer (CTQ)
 Reduce Defects (DPMO)
 Center Around Target
(Mean)
 Reduce Variation
(Standard Deviation)
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GE Company Proprietary
November 1998

21. SIX SIGMA-Definitions
• Business Definition
 A break through strategy to significantly improve customer
satisfaction and shareholder value by reducing variability in every
aspect of business.
• Technical Definition
 A statistical term signifying 3.4 defects per million opportunities.
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22. SIX SIGMA DEFINATIONS
If your yield is… Your DPMO is…. Your Sigma is…
30.9% 690 000 1σ
69.2% 308 000 2σ
93.3% 66 800 3σ
99.4% 6 210 4σ
99.98% 320 5σ
99.9997% 3.4 6σ
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23. SIX SIGMA-Definitions
 In brief, Six Sigma is a process control method to
improve the quality of products or services in a
continuous manner.
 This method uses six standard deviations of a normal
distribution as the limits of customers’ acceptance of the
system’s products.
 This method is applicable to manufacturing as well as
service industries.
 With six sigmas, only 3.4 defects per million are allowed,
or an acceptable level of 99.9997% is required
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24. Six Sigma Performance
With 99 % Quality With Six Sigma
Quality
For every 300000 letters 3,000 misdeliveries 1 misdelivery
delivered
For every week of TV 1.68 hours of dead air 1.8 seconds of dead air
broadcasting per channel
Out of every 500,000 4100 crashes Less than 2 crashes
computer restarts
Source: The Six Sigma Way by Peter Pande and Others
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25. Who is Implementing Six Sigma
 At least 25% of the fortune 200 claim to have a serious
six sigma program - Michael Hammer.
 Financial - Bank of America, GE Capital, Electronics -
Allied Signal, Samsung, Sony
 Chemicals - Dupont, Dow Chemicals
 Manufacturing - GE Plastics, Johnson and Johnson,
Motorola, Nokia, Microsoft, Ford.
 Airline - Singapore, Lufthansa, Bombardier
 And hundreds of others in Americas, Europe, Sub
Continent.
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26. Six Sigma Results
Company Annual Savings
General Electric $2.0+ billion
JP Morgan Chase *$1.5 billion (*since inception in 1998)
Motorola $ 16 billion (*since inception in 1980s)
Johnson & Johnson $500 million
Honeywell $600 million
Six Sigma Savings as % of revenue vary from 1.2 to 4.5 %
For $ 30 million/yr sales – Savings potential $ 360,000 to $ 1.35
million.
Investment: salary of in house experts, training, process redesign.
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27. Key Concepts of Six Sigma
 At its core, Six Sigma revolves around a few key
concepts.
 Critical to Quality: Attributes most important to the customer
 Defect: Failing to deliver what the customer wants
 Process Capability: What your process can deliver
 Variation: What the customer sees and feels
 Stable Operations: Ensuring consistent, predictable processes to
improve what the customer sees and feels
 Design for Six Sigma: Designing to meet customer needs and
process capability
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28. Dissecting Process Capability
 Premise of 6σ Sources of variation can be:
 Identified
 Quantified
 Eliminated or Controlled
Unstable Parts &
Inadequate
Inadequate Materials
Design
Process Margin
Capability
LSL USL
Defects Acceptable Defects
Process Capability
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29. Six Sigma Methodology
Define
Define the problem and customer
requirements.
Control Measure Measure defectcurrent incarnation.
the process in its
rates and document
Analyze process data and determine
the capability of the process.
Improve the process and remove
defect causes.
Control process performance and
ensure that defects do not recur.
Improve Analyze
“Common sense” doesn’t mean “commonly done” or when done, done well.
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30. Six Sigma Methodology
Project Phases
Define Measure Analyze Improve Control
 Identify,  Collect data  Analyze  Improvement  Establish
evaluate and on size of data, strategy standards to
select the selected establish  Develop maintain
projects for problem, and confirm ideas to process;
improvement  identify key the “ vital remove root  Design the
 Set goals customer few “ causes controls,
 Form teams. requirements determinants  Design and implement
, of the carry out and monitor.
 Determine performance experiments,  Evaluate
key product .  Optimize the financial
and process  Validate process. impact of the
characteristi hypothesis  Final project
c. solutions
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31. Six Sigma – Case Study
Service Organisation
Background
 M/s Alpha Inc. manages out bound cargo from a distribution
centre to different stores.
 Deliveries made on trucks - owned and hired.
 Customers dissatisfied at delivery schedules.
 Leadership decision to deploy Six Sigma;
 Team of 1 Black Belt and 3 Green Belts formed
 Sponsor of the project – Distribution Manager
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32. Define - Critical to Quality (CTQ)
 Focus on customers generating annual revenue of USD
400,000/-.
Customer needs Improved delivery performance
Level 1 CTQ Timely delivery
Level 2 CTQ On time delivery to schedule
Level 3 CTQ Delivery within +/- 1 hour of scheduled
delivery time
Current process sigma level - 2.43 or 175889 DPMO
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33. Define - Goal Statement
 Reduce number of delayed deliveries by 50 % by 31st
December Y 2002 to better meet customer requirement
of timely delivery defined as within +/- 1 hour of
scheduled delivery.
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34. Define - Performance Standards
Output unit A scheduled delivery of freight
Output characteristic Timely delivery
Project Y measure Process starts when an order is received
Ends when goods are received & signed for at
customers desk.
Process measurement – Deviation from scheduled
delivery time in minutes.
Specification limits LSL = -60 minutes
USL= +60 minutes
Target Scheduled time or zero minutes deviation
Defect Delivery earlier or later than 1 hour.
No. of defect 1 opportunity for a defect per scheduled delivery of
opportunities per unit freight.
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35. Define - SIPOC Diagram
Supplier Stores Manager
Input Stores Order
Process Steps (high Receive order
level) Plan delivery
Dispatch Driver with goods
Deliver goods to stores
Receive delivery
Output Received freight with Documents
Customer Store Manager
• Detailed process maps drawn
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36. Measure and Analyze
 Driver and Distance identified as key factors influencing
delivery performance.
 Driver selected for focus.
 Potential root causes as to why Driver influenced the
time:
 Size of the vehicle
 Type of engine
 Type of tyres
 Fuel capacity
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37. Improve
 Experiments designed and conducted using truck type
and tyre size.
 Findings:
 Larger tyres took longer time at certain routes where area
was cramped and time lost in maneuvering.
 High incidence of tyre failures since tight turns led to stress
on tyres thus increasing number of flat tyres.
 Team modified planning of dispatch process by routing
smaller trucks at more restrictive areas.
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38. Control
 Test implementation.
 Process sigma level up from 2.43 or 175889 DPMO to 3.94
or 7353 DPMO.
 Performance still fell short of best in class 4.32 or 2400
DPMO.
 Improvement led to significant customer satisfaction.
 Process continually monitored and data on new cycle times,
tyre failure collected as per defined methods and frequency,
analysed and monitored.
 Customer satisfaction measured and monitored.
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39. Key Lessons Learnt
 Define
 Difficulty in identifying the right project and defining the
scope;
 Difficulty in applying statistical parameters to Voice of the
Customers;
 Trouble with setting the right goals;
 Measure
 Inefficient data gathering;
 Lack of measures;
 Lack of speed in execution;
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40. Key Lessons Learnt
 Analyse
 Challenge of identifying best practices
 Overuse of statistical tools/ under use of practical knowledge
 Challenge of developing hypotheses
 Improve
 Challenge of developing ideas to remove root causes
 Difficulty of implementing solutions
 Control
 Lack of follow up by Managers/ Process Owners
 Lack of continuous Voice of the Customer feedback
 Failure to institutionalize continuous improvement.
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41. Key Lessons Learnt
 “ Define “ ranked most important step but gets the lowest resource
allocation
 Project scoping and its definition is critical to its success/ failure;
 “Measure” is considered most difficult step and also gets the highest
resources
Source: Greenwich Associates Study Y 2002
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42. What Makes Six Sigma Different?
 Versatile
 Breakthrough improvements
 Financial results focus
 Process focus
 Structured & disciplined problem solving methodology using
scientific tools and techniques
 Customer centered
 Involvement of leadership is mandatory.
 Training is mandatory;
 Action learning (25% class room, 75 % application)
 Creating a dedicated organisation for problem solving (85/50
Rule).
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43. Benefits of Six Sigma
 Generates sustained success
 Sets performance goal for everyone
 Enhances value for customers;
 Accelerates rate of improvement;
 Promotes learning across boundaries;
 Executes strategic change
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44. profit thru quality

45. Six Sigma & Kaizen- The Difference
KAIZEN SIX SIGMA
Quality Improvement YES YES
Continuous Improvement YES YES
Approach Improve Existing System Improve Existing System
Human Based Statistical Method
Improvement Framework-
DMAIC
Implementation Simpler and Low cost Difficult and High Cost
RELIES UPON GROUP FIXED PLAN OF
DYNAMICS IMPLEMENTATION
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46.  Kaizen Six Sigma
 Japanese Origin Western Origin
 Culture Methodology (or Culture)
 Kaizen Umbrella Road Maps
 Continuous Improvement Immediate Perfection
 Mistakes as Possibility for Improvement Reducing Variation and
Defects
 Long-term Results Short-term Results
Possible
 Every Possible Improvement Prioritising Projects
 Providing Quality Ensuring Profitability
 Participation of Every Single Employee Creation of Project
Teams
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47. Profit thru Quality