Which Continuous Process Improvement Method Should I Choose? · iTLS TM a n TOC Global Optimization...
Transcript of Which Continuous Process Improvement Method Should I Choose? · iTLS TM a n TOC Global Optimization...
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Which Continuous Process Improvement Method Should I
Choose?
Dr. Reza (Russ) Pirasteh, PMP, MBB, CLM Vice President – Operations Excellence
Stephen Gould Corporation
June 27, 2012
www.iTLS-ISO.com
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Objectives
– Demonstrate the synergetic power of Lean, Six Sigma and TOC when used in logical steps, for continuous process improvement (CPI)
– Introduce integrated Toc, Lean, Six Sigma (iTLS) methodology
– Overview of Lean, Six sigma and Theory Of Constraints (TOC) as applied in integrated Toc, Lean, Six Sigma (iTLS) methodology
– Overview of comparative analysis of Lean, Six Sigma and iTLS contributions
– Overview of the need for iTLS application, study and history
– Brief example of typical iTLS results
– Overview of iTLS implementation steps
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Questions…
• Manufacturing companies can produce at least 25% more, why don't they?
• 25% more projects can be completed in an organization, why aren't they?
• Despite having 25% more finished goods inventory than needed , why do
companies continually lose sales because products are not available to
consumers?
“Bob Fox”
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Why?
• 80% of improvement initiatives fail
• 70% of company employees do not know the company strategies
• 73% of strategies are not owned by employees
• 81% of employees do not feel committed to the organization
• 92% of employees feel that they are working harder than the year before
• Over 50% of the work is waste, (Non-Value- Added or Fake Work)
Source: Fake Work – Gaylan Nielson, 2012 CPI symposium
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Why?
• Lack of focus on what is the value to end users and consequences • Too much Waste and non-value-added activities • Too many Errors & lack of consistency in processes, procedures,
policies … • Competing on the edge of chaos
Typical rage of waste (COPQ as % of Sales):
• Manufacturing: 20-30%
• Services: 30-40%
• Software: 40-65%
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Alternatives?
• In past 30 years great management philosophies have been introduced to continuously improve processes and achieve operations excellence by shifting paradigms and challenging the existing assumptions.
• Over 95% of CPI initiatives are:
– Lean
– Six Sigma
– Theory Of Constraints
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Lean - 7 Muda
Toyota Production System (TPS)
Focusing on reduction of the seven wastes
1. Overproduction
2. Waiting - People, Parts
3. Too Much Inventory
4. Unnecessary Motion
5. Unnecessary Transporting
6. Over Processing
7. Producing Defects or Rework
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Overproduction
Transportation
WaitingMotion
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Intellect
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Lean
Key lean operation principles include:
1. Value / Hidden Factories / Non-Value – Added
2. value-stream (eliminate waste)
3. Flow
4. Pull
5. Perfection
Source: “Lean Thinking”
Womack and Jones
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TPS - Lean
Enormous amount of effective tools:
– Employee involvement & Respect for people
– Work life culture change
– 5-S and Visual Communication Management
– Value Stream Mapping
– Process Fail Safe and Error Reduction
– Pull Systems, Kanban, Buffer Management
– Kaizen
– SMED
– WCE (measurement system for NVA)
– Takt setting
– ….More…
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Six Sigma…
• Pioneered by Bill Smith at Motorola in 1986
• Originally defined as a metric for measuring defects and improving quality
• Defect levels below 3.4 (DPMO)
3 4
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66,810
6,210
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3.4
.02
Sigma
DPMO (Defects
Per Million
Opportunities)
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Six Sigma…
• Aimed to manage process variations that cause defects – Unacceptable deviation from the mean or target
– To systematically work towards managing variation to eliminate those defects
Distribution
Spec Limit Spec Limit
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TOC – Theory Of Constraints
– Originated and authored by Dr. Eliyahu M. Goldratt
– Also referred to as "Constraint Management“
– Focus on Throughput
– Throughput is what is being “sold”
– Rate of revenue generation (Throughput) is limited by at least one constraint
– Only by increasing capability at the Constraint overall throughput will be increased
– Focus when dealing with change:
• Why Change?
• What to Change?
• What to Change To?
• How to cause the change?
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CPI Contributions…
• These continuous improvement approaches have shown considerable tangible impact.
– Toyota
– Boeing
– GE
– GM
– Banking & Financials
– Etc…
• How good?
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iTLS Story… A Research to Explore…
• How to optimize profits using CPI?
• There had been little consensus among CPI methodologies
• Many opinions and guesses
• Effectiveness:
– Compare and contrast methodologies
– Evaluate and statistically quantify the impact
• Deployment
– Deploy CPI methodology that yields higher profits
– Systematic deployment globally
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iTLS™® Brief History • 1985 – Learn and apply TQM
• 1996 - Begin to experiment with various combinations of CPI tools
• 1998 - Developed TLS CPI model (no consensus)
• 2003 - Documented for the first time in the world: • Quantified effects of Lean, Six Sigma and TLS
• 2005 – Summarized & documented the designed experiments
• 2006 – Publicized experiment findings – APICS
• 2006 –The First CPI Symposium – Weber University – Introduced iTLS • Scott Jensen
• 2006 – iTLS-Trio model at the Weber University’s CPI symposium • Decided on writing a book to ensure integrity of iTLS and possibly bringing the CPI disciplines
together for universal betterment…
• 2007- Introduced iTLS-Trio model at TOC-ICO (Goldratt - Los Vegas) • Others published books based on my research
• Created the origin of change in TOC models
• 2010 – August “Profitability with No Boundaries” available… • Took us 3- years to publish the book – we needed to be sure …
• Results of implementations fully supported the model
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iTLS Story… Research Case
• Lean and Six Sigma had been practiced in for several years
• Both approaches had shown that they were able to prompt operations personnel to work on a series of projects that resulted in cost savings and process improvements
• iTLS: an alternative – using synergetic approach
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Experiment Objectives
• Hypothesized approach to measure and validate effectiveness of: – Lean – Six Sigma – Integrated TOC, Lean, Six Sigma (iTLS)
• Analyze results for statistical significance
• Criteria: – Aggregate contribution to verifiable financial savings – Validate savings – US operations were studied
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Experiment & Approach
• Methodology was assigned due to the local preference, experience with a particular methodology and expertise – Data gathered (Time-years): 2.5 – Participating plants: 21
• 11 Six Sigma • 4 Lean • 6 TLS
– Team leaders trained: 211 – Projects completed by all methods: 105
• Each site chose their projects and coached with local experts • Plant size, population, financial standing were mixed
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Comparing Six Sigma With Lean Individual 95% confidence intervals for Mean Based on Pooled Standard Deviations
Level N Mean StDev ---+---------+---------+---------+------
Lean (Log) 8 4.8380 0.6575 (----------------*---------------)
Six Sigma (Log) 19 4.8673 0.5030 (----------*---------)
---+---------+---------+---------+------
4.50 4.75 5.00 5.25
P-Value: 0.622 No Significant difference
µ1 µ2
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Comparing Six Sigma With Lean & iTLSTM Individual 95% confidence intervals for Mean Based on Pooled Standard Deviations
Individual 95% CIs For Mean Based on
Pooled StDev
Level N Mean StDev +---------+---------+---------+---------
Lean (Log) 8 4.8380 0.6575 (-------------*------------)
Six Sigma (Log) 19 4.8673 0.5030 (--------*-------)
TLS (Log) 74 5.3469 0.4445 (---*---)
+---------+---------+---------+---------
4.50 4.75 5.00 5.25
P-Value: 0.000: Highly Significant difference
2 31:oH
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µ3
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• Plants using iTLS were able to return 12-24X financial benefits compared with the plants that used only one method
• Teams using iTLS were
able to complete more projects
• Return per trained employee was 10-12X higher
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Experiment Results
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Experiment Results • iTLS showed 4 X greater
financial benefit (project-to-
project comparison)
• Plants that used iTLS produced 89% of the savings
– 28% of the plants produced – 89% of the benefits
© 2011 iTLSTM-ISO All rights reserved
Per Project Financial Return
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Examples of Results Achieved…
– 5% bottom-line profitability improvement – Gold mining - BR
– Improve throughput by 4X (L3)
– $3.8 mil in cost savings in 18 months - Alcon Labs – process ind
– $18 mil reduction in inventories - Telecom
– 24 inventory turns from 7 per year
– Improved supply chain OTD performance from 45% to 99.8% - SGC
– Reduced DPM to < 393 from 37,000 in 4 months
– Achieved supply chain performance with Cpk of 1.67 in 6 months from ~0.8
– $185 mil in cost reductions in 24 months – Telecom
– Fulfillment cycle time reduction from 11 days to <5 globally
– 40% increase in revenue – transactional & sales
– 90% reduction in plating process rework - Appliances
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Some iTLS users…
• Stephen Gould Corporation
• New Beginning
• Sanmina-SCI
• Alcon – Brazil
• in Colombia, that I have advised during the past 3 years:
– Senco Colombiana: bathroom appliances Eurocerámica: Tiles Salamanca: Catering services Arroz Caribe: Rice mill
• L3 Communications
• Sanmina-SCI
• Northrop-Grumman
• Huntsman Cancer Institute
• Dyplast Products
• NavAir
• PECO
• Knight Industries
• Eli Lilly
• AzulK, Columbia
• Votorantim
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iTLS 7 Step Application
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A B C D
A: 120/D Takt: 85/D
B: 100/D
C: 85/D
D: 110/D
A: 200/D
40% improvement
Step 1 Identify the constraint
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Step 1 What is your operation River
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“T” River
• A Multitude of Product Options
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“V” River
• Distribution and Semi-Process Industries
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“A” River
• Typically Fabrication-Assembly Operations
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“I” River
• Assembly & Flow Processes
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iTLS 7 Step Application
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Step 2 Identify Which Factor To Control
Undesirable Undesirable ResponseResponse
Which activities (factors) Which activities (factors) have the most impact on have the most impact on
your response?your response?Undesirable Undesirable ResponseResponse
Which activities (factors) Which activities (factors) have the most impact on have the most impact on
your response?your response?
YY = = (1x(1x1 1 ,, 10x10x22 , 2x, 2x3 ... 3 ... ))ƒƒ
Suppliers Process Inputs Business Process Process Outputs
X’s are activities or
factors within the
process
=
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Step 2 Exploit The Constraint
B C D A
A: 120/D Takt: 85/D
B: 100/D
C: 85/D
D: 110/D
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iTLS 7 Step Application
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Step 3 Eliminate The Sources Of Waste
?Trigger Board
Point of use.
Card information:
Raw Material Code
Card Quantity
Batch Size
Number of Cards
Receiver closes
release
Operator E-Mails Order
Trigger
Purchasing Dept
Supplier
Supplier E-Mails Acknow- ledgement of release to blanket PO .
Inventory
Information
Material Material is shipped
1. Purchasing issues blanket P.O. (Purchase Order) for material
2. Warehouse Associate will E-Mail appropriate supplier and Purchsing dept. a release for set quantity of material
3. Supplier E-Mails acknowledgement of release back to Purchasing and Warehouse. (Compliance)
4. Supplier ships material within timeframe specified on P.O.
5. Receiving Transaction closes this release upon receipt of material.
KanBan / Pull
System for Raw
Materials
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iTLS 7 Step Application
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Step 4 Identify Sources Of Variation and Minimize
Distribution
Spec Limit Spec Limit
• Listen to the VOC
• Understand the VOP
• Shrink error
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iTLS 7 Step Application
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Step 5 Control Supporting Activities
B C D A
A: 120/D Takt: 85/D
B: 100/D
C: 100/D
D: 110/D
S1
Sn
• Identify direct feeders to the constraint • Control feeder performance and variability • SPC: Control Charts
– Fail safe
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iTLS 7 Step Application
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iTLS 7 Step Application
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Step 6 Remove The Constraint and Stabilize
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Safeguard gains and embed control
– Re-mapped the process and analyzed for constraint shifts detection
– Go to step 1 of the TLS process and follow the cycle
Step 7 Reevaluate system go after the next constraint
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Good Luck
&
Thank You!
The Change Is Up To You…
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About: Reza (Russ) M. Pirasteh Co-Author of Profitability With No Boundaries: Optimizing Lean, TOC, and Six Sigma, Dr. Pirasteh is currently the Vice President of Operations Excellence at Stephen Gould Corp and CEO of the iTLS-ISO Group. He conducted scientific studies on the efficacy of CPI approaches, which was later published in a groundbreaking article, The Continuous Improvement Trio. He has held executive, staff and line positions with 25 years of solid experience in implementation of continuous improvement systems in manufacturing, services and transactional environments. He has earned Ph.D. in Engineering, MBA in Industrial Management, BS in Industrial Engineering, Project Management Professional (PMP), Certified Lean Six Sigma Master Black Belt, and Certified Lean Master. He has formulated iTLS ™® CPI methodology to fill the gaps among CPI methodologies he has experienced. Dr. Pirasteh has published numerous publications and provided lectures for Weber University, OSU, UTA, APICS, Industry Week and IIE organizations. He is a member of APICS, ASQ, IIE and PMI. Dr. Pirasteh is the recipient of the “Fox Award” for outstanding innovation and creation of iTLS system.
To contact Dr. Pirasteh:
WWW.iTLS-ISO.com
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