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Business Process Management 4 - Lecture Notes
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Lecture 1: Lean Enterprise / Lean ThinkingLean → An approach that emphasizes the smooth flow of items synchronized to demand so
as to identify waste.
Costs you reduce by being efficient
- working hours
- transportation costs
- material costs (less waste)
- manufacturing cost
Six Sigma →A disciplined methodology of improving every product, process, and
transaction. improvement of product/service/quality → reduction of defects/variation
There is a difference between defects and defective product
Defect: when one aspect of the product/service does not meet the requirements
Defective Product: When a product does not perform as it should
What is lean six sigma?
Quality + speed
How can we make our process as efficient as possible?
Effective
→ Reduce variation and defects
In the graph, the green process is better than the blue because the
green one has less variation
Six Sigma reduces variation through the reduction of process standard
deviation.
Efficient
→ Reduce waste, lean value-added steps
History of Process Improvement
1920s: Hawthorne experiments (E Mayo, Western electric US) showed how worker
productivity could be improved by worker participation.
1950s: W. Edwards Deming taught methods for statistical analysis and control of quality to
Japanese engineers and executives (origin of TQM)
1968: Kaoru Ishikawa’s reduction of the philosophy contributed to Japan’s ascendancy as a
quality leader
1970s: Taiichi Ohno, Toyota (Father of JIT) House of quality
JIT → Just in Time Principle
The planning of materials in time for production, to make sure they arrive on time for
production
1980s: American manufacturers, Omark Industries, General Electric, and Kawasaki.
Six Sigma, Motorola, Total customer satisfaction
1990: BPR, M Hammer, HBR
1991: Lean manufacturing, the machine that changed the world, Womack et al.
5 key principles of lean (Womack)
→ in order to achieve the Lean thinking strategy some steps are recommended
1. Define value add and nonvalue add
2. Map the value stream
3. Establish process flow
4. Shift from push to pull systems
→ Not always necessary for example when demand is fixed
5. Strive for perfection / zero defects
,What is Six Sigma? Why?
→ An organizational philosophy/BPI approach
→ A methodology
→ A standard deviation of a population: 6σ
→ A process capability metric: Z-score, Cpk, Cp
You perform at Lean Six Sigma quality if 3.4 in 1 million products are not functioning well
For some companies, it is not worth the investment to reach this level
→ You are one of the only companies that offer a certain product on the market
→ There is not enough budget
→ When the market does not care about quality
→ When a product is really cheap (only when it is not a critical product)
Six Sigma Goals
→ Higher Quality of a product
→ Reduce variation related to the variation within process output (Y) caused by the input or
process variable (X)
→ High customer satisfaction
→ Reduce variation by eliminating waste
→ High customer retention
→ Increase in shareholder value
Company B is performing better than company A because there is less variation even
though they are both within the spec limits
USL → Upper spec limit
LSL → Lower spec limit
Variation is only bad when it is outside of the customer specification limit. e.g. Zalando says
they will deliver in 2 days but they deliver within 1.5 days, this is a variation but it is not bad
because it is within the customer specification limit.
Customer Satisfaction
→ Quality starts with understanding customer needs and ends when those needs are
satisfied
Customer satisfaction can be achieved by:
1. Conformance to Specifications (Crosby)
2. Value
3. Fitness for Use (Juran)
4. Support
5. Psychological Impressions
We use methods to make sure no one rushes to
conclusions based on bias. You follow methods and
instructions to limit bias.
How is Progress Monitored?
1. Define→ the opportunity from both business and
customer perspectives
2. Measure → Understand the process and its
performance, know how big the problem is.
3. Analyze → Search for the key factors (critical X’s) that have the biggest impact on
process performance and determine the root causes
4. Improve → Develop improvement solutions for the critical X’s
5. Control → Implement the solution and control plan
, CTQ = Critical to Quality Tree
→ a Six Sigma tool used to identify the needs of the customer and translate that information
into measurable product and process requirements. It allows organizations to understand the
characteristics of a product or service that most drives quality for customers.
DMAIC is used to improve existing processes
Critical Enablers
- Project Selection
- Project Sponsorship
- Tollgate reviews
Project Selection
→ Feasible projects (don’t try to solve world hunger)
→ Business results with limited investments
→ Data Available
→ High profitability of success
https://theleansixsigmaoffice.com/2017/03/18/low-hanging-fruit-matrix/
Certified Lean Six Sigma Levels
Yellow - Green - Black - MBB (Master Black Belt)
Lean Six Sigma is tested to international standards by IASSC or ASQ
Lean Six Sigma Roles
Yellow Belts
→ Awareness Levels
→ Participation in project part-time in the function
Green Belts
→ Certified level of competency
→ Lead projects part-time in their function
→ Responsible for majority of projects and Six Sigma benefits
→ Understands internal and external Supply chains imporvement needs
Black Belts
→ Certified position / demonstrated performers
→ Lead projects full time in their function
→ Dedicated to lead projects and train and coach green belts
→ Can define and improve Supply Chains using Lean Six Sigma techniques
Project Sponsor
→ Identify opportunities, initiate and define projects
→ Creates environment for GB/BB to complete project (remove barriers, provide resources)
→ Decision maker during toll gate review
Deployment Manager
→ Lead project prioritization
→ Manage black belts
→ Track financial returns
→ Track certification of black belts and green belts
→ Create environment of knowledge sharing
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