Strategic Planning Document – Confidential and Proprietary – Preliminary Draft – For Discussion Purposes Only. The opinions, interpretations, and conclusions

Strategic Planning Document – Confidential and Proprietary – Preliminary Draft – For Discussion Purposes Only. The opinions, interpretations, and conclusions contained in this presentation are preliminary in nature and included for discussion and strategic plan development purposes. They are not necessarily the final opinions, interpretations, or conclusions of Alliant Energy, IPL, or WPL.

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Lean Six Sigma at Alliant Energy

Larry HeckertLSS Master Black Belt


Agenda

• Alliant Energy’s Journey• Six Sigma Overview• The Move to Lean• Lean/Lean Culture

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We are an energy-services provider.

Our customers…Interstate Power and Light (IPL)

– 527,000 electric– 234,000 natural gas

Wisconsin Power and Light (WPL)– 457,000 electric– 179,000 natural gas

Alliant Energy – Who We Are


Generation Portfolio


Lean Six Sigma Timeline

Green Belt Wave 1

2003 2004 2005 2006 2007 2008 2009

LSS Basicsfor all employees

2010

Black Belt Wave 1

Full-TimeBlack Belts &

Decentralization

LSS Approval(Six Sigma emphasis)

Training internal

2011

Lean curriculum

Lean Emphasisapproval


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Breadth and Depth

Trained 323

(76%)

Not Trained

101(24%)

Management & Leadership(Green Belt, Black Belt or Executive Trained) Black Belts 55 Lean Green

Belts 106

Six Sigma Green Belts

419

580 Belts Trained

Trained1412(36%)

Not Trained2545(64%)

All Alliant Energy Employees(LSS Basics & up)


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Six Sigma Basics

• Many factors cause the output of a process to vary– Inconsistent results– Output may not meet customer’s requirements (defects)

• Using Six Sigma, sources of variation are:– Identified– Quantified– Eliminated or Controlled


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Six Sigma Basics

Inputs

• Processes have many inputs

• Inputs influence the output in different ways

• To improve a process, we need to understand the relationship between inputs and the output

• Improving key inputs has the greatest impact on our output

ProcessY = f(x) Y

OutputX1

X2

X3


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DMAIC Methodology

DefineWhat’s the problem?How does the process work today?

DefineWhat’s the problem?How does the process work today?

MeasureCan I trust my data?What are the potential Key Process Input Variables (KPIVs)?

MeasureCan I trust my data?What are the potential Key Process Input Variables (KPIVs)?

AnalyzeHow do we know we have found the most important input variables?

AnalyzeHow do we know we have found the most important input variables?

ImproveHow can we improve the key inputs?

ImproveHow can we improve the key inputs?

ControlEnsure it stays fixed.How can we control the key inputs?

ControlEnsure it stays fixed.How can we control the key inputs?

CharacterizationCharacterization

OptimizationOptimization

Delivering Results

Delivering Results


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Shift to a Lean EmphasisOur Six Sigma Experience

– Application - Reduce variation or finding root causes– Projects typically 6 months or longer– Relies on data/technology for certain analyses– Limited impact on “the way we work”

Lean– Easily applied to any process– Continuous improvement focus– Low-tech, hands-on approach– Focus on immediate or short-term improvements


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Lean

Let’s consider an example

A philosophy that emphasizes• Reduction of wasteful activities, • Getting products or services to flow, and involving• Continuous improvement, made by• The people who do the work, using• Experimentation


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Lean in Auto Racing


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Lean Principle – Precisely specify the value of a specific process as defined by the customer

Each activity or task in a process is identified as:• Value-Added

– Transforms the deliverables of a process in such a way that the customer is willing to pay for it

– Done right the first time

• Waste– Uses resources but doesn't contribute to the product or service– Customer wouldn’t want to pay for it (or wouldn’t if they knew about it)– Note: Some waste may be required (regulatory, legal, etc.)

Goal = Eliminate or reduce the waste!


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Customer-Defined Value

– First step of a Lean effort is to define the “voice of the customer” in meaningful and measurable terms

Cost Safety Delivery

Quality

Critical To Satisfaction

A critical mistake is assuming we know what the customer wants!


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The Eight Types of Waste

Wastes The Simple Explanation…

Defects It doesn’t meet customer expectations

Overproduction Producing too much and/or too fast

Waiting Idle time when resources are not available

Non-Value-Added Processing Any effort that adds no value to the product or service

Transportation Unnecessary movement of materials, products, or information

Inventory More materials on hand than are required to do the work

Motion Excess movement of people within a process

Employees Underutilized Not using people to the best of their unique abilities


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Lean Principle – Identify the Value Stream for each process and challenge all of the steps that do not add value (waste)

Value assumes you are creating something of value that a customer is willing to pay for

Stream refers to a sequential flow of activities needed to create an output and deliver it to the customer

Value Streams identify all of the steps currently required to move products or services from beginning to end


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Making the Process Visible


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Generation Value Stream Map


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Lean Tools to Address Opportunities

• Value Stream Map identifies opportunities– Quick Hits (Just do it!)– Focused Lean Events

• RI Event• 5S (Workplace Organization)• 2P – Process Preparation

– Six Sigma Project (Variation)

Bursts become opportunities


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Lean Building Blocks

Setup Reduction

Standardized Work Batch Reduction Teams

Quality at Source

5S System Visual Facility Layout

POUS

Cellular/FlowPull/Kanban

Continuous Improvement

ValueStreamMapping

TPM


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What does a Lean Culture look like?

• Knowing what it looks like allows us to move our culture in the right direction

• Four basic concepts:

1. Every activity is structured

2. Every customer-supplier is clearly connected

3. Every flow path is simple and specific

4. We improve through experimentation


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Horizontal vs. Vertical


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Lean Thinking1. Get rid of old, traditional concepts and assumptions2. Accept no excuses - Look for ways to make things happen3. Say “No” to status quo and assume new methods will work4. Don’t expect or worry about perfection, but look to continuously improve –

starting now5. The primary cost of Lean events is effort – not capital6. If something is wrong, fix it on the spot7. Empower everyone to think of ways to solve problems. Good ideas come

when the going gets tough.8. Before making decisions, ask “Why” five times to get to the root cause9. Look for wisdom from 10 people rather than one10. Improvement has no limits. Never stop trying to improve.


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Lean Six Sigma at Alliant Energy

Documents

Strategic Planning Document – Confidential and Proprietary – Preliminary Draft – For Discussion Purposes Only. The opinions, interpretations, and conclusions