Intro

Introduction to the Tools of Lean

and Six Sigma (“LSS”)

Yellow Belt Training

Building new skills to improve quality and management practices across HBD

Module 1 Yellow Belt Training 1

 What You Should Learn Today Intro

• How We Will Teach

• What is Lean Six Sigma?

• Key Aspects of Lean and Six Sigma Improvement Methodologies

• Overview of HBD’s Lean Six Sigma Implementation

• Prior Projects’ Areas of Focus

• DMAIC Methodology Overview

• Tools to be Learned as a Yellow Belt

Module 1 Yellow Belt Training 2

 How We Will Teach Intro

• Focus for Approx. 60 Minutes in Class

• Deliver Pre-Class Reading Materials (“Pre-Work”)

• Introduce Key Concepts for Recognition and Everyday Usage

• Provide Real-life Examples and Opportunities for Discussion

• Encourage Participation by All

• Quiz Students to Encourage Learning and Memory Recall

• Ask for Immediate Feedback and Benefits & Concerns (“B’s & C’s”)

Module 1 Yellow Belt Training 3

 Why Teach Me This Stuff? Intro

• Culture is common thinking.

• Thinking drives behavior.

• Behavior drives results.

• Results create opportunities and security.

The Lean Six Sigma curriculum combines the discipline and

analytical tools of Six Sigma with the time-based focus of Lean. Our
goal is to build and enhance skills among employees that can
improve quality and strengthen management practices across HBD.

Module 1 Yellow Belt Training 4

 Why Teach Me This Stuff? (con’t) Intro

• The tools and methodologies in Lean Six Sigma are useful not
only in LSS projects, but in everyday tasks. These include:
– Understanding Customer and Stakeholder Needs
– Identifying, Analyzing and Presenting Key Business Information
– Brainstorming on, Deciding upon, and Solving Complex Issues
– Revising and Simplifying Production-Related Processes
– Streamlining Administrative Processes and Support Tasks
– Understanding Variation
– Managing Cross-Functional Projects

• The more you understand what these tools are and the
underlying philosophy behind them, the better you will be as an
active team member in future projects.

Module 1 Yellow Belt Training 5

 What is Lean Six Sigma? Intro
For HBD, Lean + Six Sigma = Profit Power!
Per-Unit Profit = Per-Unit Price – Per-Unit Cost;
Net Profit = Sales – Product Costs – Overhead Expenses

Lean Six Sigma offers you the power to

transform operations into flexible, efficient plants
needed to profitably survive and thrive
in a competitive business landscape.

Capability Analysis: Roll Order Entry Time Efficiency - After Close-out

Target
Process Data LSL USL
USL 100.000
Target 40.000 Within
LSL 30.000
Mean 38.123 Overall
Sample N 171
StDev (Within) 23.2791
StDev (Overall) 28.5440

Potential (Within) Capability

Cp 0.50
CPU 0.89
CPL 0.12
Cpk 0.12

Cpm 0.41 -50 -25 0 25 50 75 100 125

Overall Capability
Pp 0.41 Observed Performance Exp. "Within" Performance Exp. "Overall" Performance
PPU 0.72 PPM < LSL 491228.07 PPM < LSL 363570.43 PPM < LSL 387986.25

PPL 0.09 PPM > USL 0.00 PPM > USL 3929.62 PPM > USL 15087.61
Ppk 0.09 PPM Total 491228.07 PPM Total 367500.05 PPM Total 403073.86

Module 1 Yellow Belt Training 6

 The Money Map Intro

The Money Map -- Where Do YOU Play a Role in this System?

Prices Paid By Customers
Profit (or Loss) =
– Costs To Manufacture Products & Manage The Business
(Unit Prices x
= Profit Available To Reinvest In Jobs And Plants
Volume Sold) –
Costs Incurred
From "What Customers Want"
Quality Products and Effective Solutions
Competitive Prices and Low Cost of Interaction
On-Time Deliveries and Reliable Promise Dates
Accurate Pre-Sale Information and Post-Sale Services
Supplier Chosen And Prices Paid

To "How HBD Makes Products for Sale to Customers"

Sales and Marketing Effort
•Productivity
Product Designs and Technical Specifications •Efficiency
Raw Materials and Inputs from Suppliers
Production Labor and Conversion Energy •Quality
General Management and Administration
Post-Sale Billing, Collection, and Customer Support •Speed
Products Manufactured And Business Costs Paid •Flexibility
Equals "How HBD Makes Profits to Prosper in its Businesses"

Module 1 Yellow Belt Training 7

 Key Aspects of Lean Intro

• Lean is Not New

– Popularized by Toyota more than 30 years ago.
– Many of its tools and concepts have been around for decades.
• Lean is Both Methodology and Philosophy
– Lean aims to eliminate ‘waste’ (in Japanese, “muda”) in every area of a
business, including production, customer relations, product design,
supplier networks, and factory and business administration.
– Its goal is to incorporate less effort, less inventory, less time to develop
products, and less space in order to become highly responsive to actual
customer demand and to produce top-quality product in the most timely,
efficient and economical manner possible.
• Lean Focuses on Customer-Defined Value
– A process step ‘adds value’ if the activity adds form, fit or function to the
product that is desired by the customer, and the customer is willing to
pay you to conduct that activity.

Module 1 Yellow Belt Training 8

 Key Aspects of Lean, con’t Intro

• Toyota Defines Seven Key Types of Muda (Waste)

– Overproduction: Producing more than demanded or before it is
needed, e.g., stored materials or inventories.
– Inventory or Work-in-Process (WIP): Material between operations due
to large lot sizes or long process cycle times.
– Transportation: Material movements, by definition, add no value to
products, as they do not affect form, fit or function.
– Processing Waste: Unnecessary or inefficient process steps simply
add cost and time.
– Motion: Effort to move workers and machinery or to transport materials
adds cost and delay.
– Waiting: Long changeover times, slow processing times, and materials
handling tasks limit opportunities to make on-time deliveries.
– Defective Products: Items that fail to meet customer specifications are
pure waste, e.g., returns, rework, scrap, and warranty costs.

Module 1 Yellow Belt Training 9

 Key Aspects of Six Sigma Intro

• Six Sigma is Not New

– In existence for more than 20 years; at HBD since 2002.
– Many of its tools and concepts have been around for decades.
– Six Sigma packages the tools and concepts into a clear and systematic
roadmap for process improvement.
• Six Sigma is a Methodology
– The ‘DMAIC’ problem-solving methodology is a disciplined thought
process and tool guide used to solve business issues.
– Define / Measure / Analyze / Improve / Control / (and Verify).
• Variation is Bad (‘Evil’)
– For most processes, a repeatable and predictable result is crucial.
– Six Sigma is designed to identify the key sources of variation and drive
them out of the process, by understanding the key inputs, processes
and outputs of business activities. “Fix the process to get good results.”

Module 1 Yellow Belt Training 10

 Key Aspects of Six Sigma, con’t Intro

• Six Sigma has a Customer Focus

– Processes and problems must be viewed from the customer’s
perspective.
– Internal customers (i.e., downstream departments) can be just as
important as external customers (i.e., those who pay the bills).
• Six Sigma is Not Just for Manufacturing or Large Businesses
– Success can be found in all types of companies and all kinds of
processes – including at HBD.

• AND…Six Sigma and Lean are Not Mutually Exclusive

– Without a basic understanding of both methodologies, you risk trying to
‘use a screwdriver to drive a nail.’
– Ask, ‘What tool or technique is most useful to help solve my problem?’

Module 1 Yellow Belt Training 11

 Overview of Intro
HBD’s LSS Implementation
• LSS supports HBD’s long-standing corporate strategies
– Customer Satisfaction
– Marketing Excellence
– Working Capital Management
– Cost Reduction and Containment
• LSS was introduced into HBD in 2002, first with the Executive
Office and General Managers and then locally at the plants
– 88 individuals in all 17 business locations trained in LSS (at 7/30/07)
• Projects have successfully touched both production and back-
office (paperwork) processes
– 112 LSS projects initiated (as of 7/31/07) plus 29 documented kaizens
– Over $6.65MM in hard-dollar and soft-dollar savings, cost avoidance,
new-revenue opportunities, and working capital improvements
• LSS represents one key tool for on-going improvement efforts

Module 1 Yellow Belt Training 12

 LSS Projects’ Areas of Focus Intro

• Cost Reduction
– Product and Unit Costs, Overhead and Period Expenses, Scrap and Rework
• Cost Avoidance
– Regulatory Expenses, Capital Equipment Needs
• Capacity Increase
– Production Availability, Quick Changeovers, Equipment Utilization
• Customer Satisfaction
– On-time Delivery, Quotation and Production Lead-time, Quality, Cost (Pricing)
• Health & Safety
– Ergonomics
• Flow
– Process Speed, Travel Distance, On-time Delivery, Lead-time
• Working Capital Reduction
– Finished Goods, Work-in-Process and Raw Materials Inventories
• New Revenue
– Revised or New Products

Module 1 Yellow Belt Training 13

 Who’s Who in Intro
HBD’s LSS Project Teams
• Corporate Champion (Nelson Law – Dublin, OH)
– Helps identify possible projects; Selects / approves projects for launch
• Team Facilitator (Black Belt or Green Belt)
– Formally-trained team leader who guides team’s analyses and activities
• Project Sponsor
– Process owner with responsibility / authority over process under study
– Accountable for long-term sustainability of project’s gains and results
• Core Team Members (managers, supervisors, operators)
– Cross-functional subject matter experts who “live with the process”;
Mandated to meet regularly to make project progress
• Ad Hoc Team Members (managers, supervisors, operators)
– Additional subject matter experts who may be called upon occasionally
for help
• Supporting Supervisors, Managers & Coworkers of Team
Members
– Not direct part of project team activities; Must plan for / support ways to
allow core team members to meet regularly
Module 1 Yellow Belt Training 14
 Dynamics of Process Improvement: Intro
The Funnel Effect
Project Charter

Define Phase 30 - 50 Inputs Ideas; Guesswork

Measure Phase 10 - 15 KPIVs Data; Information

Analyze Phase 8 - 10 Root Causes

KPIVs

Improve Phase 3-6 Experiments; Changes

Critical
KPIVs
Control Phase Documentation;
KPIV = KeyControls
Process
Input Variable
KPOV = Key Process
Optimized Process Output
Variable
Module 1 Yellow Belt Training 15
 DMAIC Methodology Overview: Intro
The Five Phases of Every LSS Project
• DEFINE
– Define opportunity, project scope, potential benefits and resource needs
• MEASURE
– Determine process map and metrics; Get baseline performance levels;
Define customer requirements for success; Display collected data
• ANALYZE
– Explore root causes of process variation, poor process flow and current
underperformance
• IMPROVE
– Brainstorm and prioritize potential solutions; Pilot-test selected changes;
Select and implement preferred solutions
• CONTROL
– Complete transition back to process owner; Confirm that new process is
stable; Document control plans; Identify and transfer best practices

Module 1 Yellow Belt Training 16

 Yellow Belt Curriculum Objectives Intro

• Through the Yellow Belt curriculum, every employee should:

– Understand that Lean and Six Sigma are all about ensuring quality in
terms of the Voice of the Customer

– Understand how data analysis drives business decisions

– Understand how root cause analysis drives solution implementation

– Understand the basics of metrics to describe overall business health

– Understand the use and presentation of data to develop insights and

achieve goals

– Understand the importance of identifying and controlling process

variation and thus costs

– Understand the application of control mechanisms to sustain changes

Module 1 Yellow Belt Training 17

 Tools to be Learned Intro

• Team Problem Solving and Team Effectiveness (Working in Teams)

– Cross-Functional Teams
– Characteristics of Effective Team Meetings
– Project Charters and Meeting Agendas
• Voice of the Customer (Knowing What is Important)
– Sources of the Voice of the Customer
– Critical-to-Quality Factors and Critical Customer Requirements
• Idea Generation and Grouping (Working with Ideas)
– Brainstorming; Force Field Analysis
– Cause-and-Effect Diagram / 6Ms; Root Cause Analysis / 5 Why’s
– Affinity Diagram; Nominal Group Technique; Multi-voting
• Data Collection, Analysis and Presentation (Working with Numbers)
– Process and Business Metrics
– Data Collection Plan
– Check Sheet, Process Study Log and Other Data Collection Forms
– Data Stratification and Segmentation
– Histogram, Run Chart, Control Chart and Other Graphical Presentations of Data

Module 1 Yellow Belt Training 18

 Tools to be Learned, con’t Intro

• Decision-making Tools (Working with Facts)

– Pareto Analysis; Pareto Chart
– Understanding and Explaining Process Variation
– Cause-and-Effect Matrix and Other Prioritization & Selection Tools
• Speed and Flow Implementation (Ensuring Value)
– Process Mapping and Flowcharts
– Value-Add vs. Non-Value-Added
– 5S / Workplace Organization
– Spaghetti Diagram (Workflow) and Work Cell Layout
– Quick Changeover: Setup and Changeover Reduction
– Pull-based Flow and Replenishment
• Defect Prevention and Mistake-Proofing (Quality at the Source)
– Standardized Work and Best Practices
– Visual Workplace: Visual Aids and Learning Tools
– Poka-Yoke (Mistake-Proofing) Devices
– Preventative Maintenance (Total Productive Maintenance)
– Design Simplification and Parts Rationalization

Module 1 Yellow Belt Training 19

 Continuous Improvement through Intro

Lean Six Sigma (summary)

• Observe processes

• Identify problems and gather data

• Determine root causes of the problems

• Identify countermeasures / solutions, and

• Regularly participate in activities to simplify processes and

eliminate waste, unevenness, and unreasonableness.

And…Practice non-blaming and non-judgmental behaviors, as these are

required for realizing genuine continuous improvement.

Module 1 Yellow Belt Training 20

 Takeaways Intro

• Every person has a hand in generating profit and, in turn, job

security.

• Lean Six Sigma is not solely about statistics or SPC (statistical

process control) but is a very successful method to enable
continuous improvement.

• Lean Six Sigma provides a powerful set of problem-solving

tools and team effectiveness techniques to address complex
issues.

• These proven tools and techniques can be used anywhere –

and we do mean, anywhere!

• Lean Six Sigma emphasizes team-based creativity, analytical

thinking, and data-driven decision-making.

Module 1 Yellow Belt Training 21