Strategic Six Sigma

©2002 by Business Strategies, All rights reserved.

Strategic Six Sigma

Business Improvement using Strategic Six Sigma

Strategic Six Sigma - 2©2002 by Business Strategies, All rights reserved. [email protected]

Goals

♦ At the end of this presentation the audience should be able to:

Explain how Six Sigma can be used to improve business resultsExplain how Strategic Six Sigma can help implement a strategic or operational planExplain how Strategic Six Sigma incorporates other management initiatives


Six Sigma

Six Sigma is a methodology for pursuing continuous improvement in customer satisfaction and profit

Six Sigma is about putting Results on Financial Statements


Six Sigma

♦ All work we perform is a process♦ The important outputs are called Key Process Output Variables or

KPOVs♦ The important inputs are called Key Process Input Variables or

KPIVs♦ Six Sigma is a Process for identifying factors, KPIVs, that drive

KPOVs

ProcessInput Output

Customer

KPIV KPOV CTQ


Six Sigma

DefineProject

Control

Measure

PassiveAnalysis

ProactiveTesting

KPOV’s are knownOrganizational Wisdom connects KPIV’s to KPOV’s

Define KPOV

Collect observational data to connect KPIV’s to KPOV’sCause and Effect not established

Establish Cause and Effect relationship between KPIV’s and KPOV’sLearn to control KPOV’s with KPIV’s

KPIV’s are understood Control KPIV’s to give desired values for KPOV’s

D

M

A

I

C


Design for Six Sigma

♦ Design for Six Sigma (DFSS)New Product/Process Development

Deliver a product that is right the first time

Business CaseIdeas

Customer

Product/ Process

Development

Mfg. Scale-Up Production


Six SigmaEx

ecut

ive

Stee

ring

Cham

pion

sPr

ojec

t Te

ams

Select Champions

and BB's

Define Operational

Goals

Establish accountability

Select key projects with Leadership

buy-in

Define a project selection process

Identify Team

Members

Facilitate Culture Change

Support BB and Team

Define Communication

Plan

Share BestPractices

Define

Motivate and Sustain Change

Measure Analyze Report

Allocate Resources

Develop Incentive Plans

Improve Control


Six Sigma

♦ High Level Business MetricsCapital UtilizationGrowthRevenueProfitReturn on Assets

Operational Metrics

High Level Business Metrics


Six Sigma

Operational MetricsQuote TimeQuoting MarginClose RateDefect RatesCycle TimeWasteDays Sales OutstandingOn-Time Delivery Product DimensionalInventoryHead CountEtc.

Operational Metrics

High Level Business Metrics


Strategic Six Sigma

The use of Business, Lean, TOC, Six Sigma and DFSS tools to develop and implement a strategic plan

to achieve the goals of the company


Strategic Six Sigma

♦ Operational MetricProduct Yield Loss

Thou

sand

s


Strategic Six Sigma

♦ High Level Business MetricEconomic Profit


Strategic Six Sigma

Executive Planning and Process Identification

Management and BB Prj Selection

Business Goals Strategies High Potential Areas Projects

Inc. Qtrly Profits 15%

Reduce Costs

50%

New Markets

20%

Inc Revenue Streams from

Existing Customers

30%

Executives set business goals and identify appropriate strategy

High level managers can overlap with Executives when identifying strategies


Strategic Six Sigma

♦ Use Corporate Supply Chain map to identify:High Potential areas for strategies

Lean Enterprise can be used as a high potential way to satisfy strategies; reduce cost, retain and gain new customers

Product data

package

Order entry & demand management

Acceptable data packagereceivedSpecified mat’lreceived on-time & completeProduct shippedon-time &complete

Supplier

Mfg. Plant

Freight CarrierDistributor

orCustomer

Productdeliveredon-time &complete

Lab

Correct:-product (perf.)-quality (consist.)-quantity-on-time service-pricing

(RM’s & Comp’ts)-product (perf.)-quality (consist.)-quantity-on-time service-pricing


SupplierA wks

PlantB wks

PlantC1 wks

PlantC2 wks

PlantC3 wks

WarehouseD2 wks

WarehouseD3 wks

WarehouseD4 wks

WarehouseD5 wks

WarehouseD1 wks Customer

or Market

Customer or Market

Customer or Market

Customer or Market

Time from Raw Material to Customer: A + B + C2 + C3 + D5

Time from Raw Material to Customer

Strategic Six Sigma

♦ More detailed Supply Chain map to identify logistical issues between plants and customers


Bottom Up Operational ForecastingB u s in e s s G o a ls S t ra t e g ie s H ig h P o t e n t ia l A re a s P ro je c t s

In c . Q t r ly P ro fi t s 1 5 %

R e d u c e C o s t s

5 0 %C u s t o m e r

L o s s e s

W a re h o u s e In ve n t o ry

R e d u c e P la n t O p e ra t in g E x p e n s e

C re d i t s : W ro n g P r ic in g / P ro d u c t $ 1 3 0 K

L a t e D e l ive r ie s $ 7 2 k

A / R : D S O $ 3 2 0 K

R e d u c e R a w M a t e r ia l C o s t

C o n s o l id a t e W a re h o u s e s $ 5 5 0 K

S m o o t h C u s t o m e r

O rd e rs$ 1 7 5 K

R e d u c e L a b o r C o s t $ 4 0 0 K

R e d u c e E n e rg y E x p e n s e $ 1 2 0 K

R e -a s s e s s S p e c s $ 6 1 0 K

S e c o n d S o u rc e $ 1 8 0 K

C u s t o m e r C o m p la in t s :

Q u a l i t y

W a rra n t y $ 1 1 0 K

R e d u c e Y ie ld L o s s $ 2 0 0 KManagers and BB’s

identify and select projects

Executives can overlap with managers and BB’s when selecting HP areas


Bottom Up Operational Forecasting

New Markets

20%

Inc Revenue Streams from

Existing Customers

30%

Reduce Raw Material Cost

Smooth Customer

Orders$175 K

Re-assess Specs $610 K

Second Source $180 K

Marketing

New Products

New Solutions

Merger

Distribution

Develop New Capabilities or

Products


Strategic Six Sigma

♦ Strategic Six Sigma develops a business plan, executes and provides feedback to the planning process

Stra

tegi

c Pl

anni

ng

Define Measure Analyze Improve Control

Verif

y Im

pact

Return Results to Strategic Planning

Define Measure Analyze Design Verify

Work using DMAIC philosophy


Summary

♦ Six Sigma focuses on putting results on financial statementsMetrics – customer and internalInfrastructure

♦ Strategic Six Sigma can help implement a strategic or operational plan

Control Charts for Business metricsBUOF

♦ Strategic Six Sigma incorporates other management initiativesBUOFUse Six Sigma methods to implement

Documents

Strategic Six Sigma