Understand and apply operational excellence to improve your organization's processes, products, and

services for sustained competitive advantage. Dr. Richard Chua, consultant, professor and certified Lean
Six Sigma Master Black Belt trainer, explains the fundamentals of operational excellence-from key
concepts and tools to methodologies and implementation best practices. He explains lean principles and
shows how to eliminate variation, operationalize the voice of the customer (VOC), error proof, and build
in quality at the source. He covers methodologies such as Lean Six Sigma (DMAIC), Kaizen, Design for Six
Sigma (DMADV), and value stream management (VSM), and shows how to choose the right one for your
application. He concludes by sharing implementation best practices to drive the right mindset,
behaviors, and results for sustaining operational excellence.

Learning Objectives:

What is operational excellence?

Key concepts and tools

Choosing the right methodology

Implementation challenges

Auditing for sustained excellence

Welcome to Operational Excellence

- Do you have quality, time, and cost issues in your organization? Are customers complaining? Are
employees frustrated? Do you need things to be done better, faster, and cheaper? By addressing these
questions, you've taken a great first step towards operational excellence. To be operationally excellent
means everyone in your organization wants to, and is able to, be effective and efficient in delivering
value in their daily work. Hi, I'm Dr. Richard Chua. I'm an operational excellence trainer and consultant,
certified Lean Six Sigma Master Black Belt, author and professor. Over the past 25 years, I have worked
with CEOs and trained thousands of executives, managers, and project leaders in Fortune 500 and
multinational companies. In this course, I will introduce you to the concepts, tools, and techniques for
operational excellence. And I'll share implementation best practices and pitfalls to avoid. I'll highlight
importance of understanding the voice of the customer, roles of process stakeholders, evils of variation,
quality at the source, and Lean principles. This course will introduce metrics and organizational
alignment, process of value stream management, WorkOuts, Kaizen or Lean events, Six Sigma DMAIC,
and design for Six Sigma. I'll address how all of this translates to your management and control of daily
work. By understanding operational excellence, you can do your part to improve not only your daily
work but also your organization's processes, products, and services for competitive advantage.

Most of us have rented cars while on vacation or on a business trip. When you arrive at your destination
airport, you go to the rental car facility. The lines are long, but no worries, because you're a gold
preferred customer. So you head straight to the marquee board, expecting to find your name and car
listed there. Surprise, surprise, your name is nowhere to be found. So now, you have to go into the
rental car office, hoping to speak to someone at the gold preferred counter. But that counter is closed
for the night. So now, you have to stand in that long line with the regular customers. But wait, your
nightmare is not over yet. When you finally get to the counter after that long wait, you are told that they
ran out of cars and the only vehicles available are luxury SUVs for a higher rate. What's wrong with this
picture? You had a reservation. You're a VIP, a gold preferred customer. But all that went out the
window. You had a difficult and bad experience, not better. It took longer and it cost more.
Operationally, it was far from excellent. What does it mean to be operationally excellent? In general,
what is operation excellence? Simply put, it is better, faster, and cheaper. Better. Better quality of
products and services, better processes, and better user experience, and better value. Better in
whatever's relevant and important. For example, if safety and reliability are important, then better
safety and better reliability. Better means improved performance on metrics in the quality dimension.
Quality in its broadest sense. Faster. Faster service, faster response, faster processing, and on-time or
faster delivery, if customers prefer. Faster means improved performance on metrics in the time or
temporal dimension. Cheaper. Cheaper to operate, cheaper to process, and cheaper for customers.
Cheaper means being more efficient in the use of resources and improved performance on metrics in
the cost dimension. To achieve operational excellence, organizations needs to have processes that are
effective and efficient in delivering value. Processes need to be well-designed, capable, and consistent.
Where people perform the work are capable and have the means of knowing what's important, what to
do, when to take action, and what actions to take. They have the necessary process authority,
responsibility, and accountability. Organizations also need to have the tools and techniques for design,
improvement, and control. For example, for design, there's Design for Six Sigma. For improvement,
there's Six Sigma and Lean. For control, there's Value Stream or Process Management. In addition,
operational excellence means having the mindset and behaviors where everybody wants to and is able
to be operationally excellent. The right mindset is embraced and the right behaviors are encouraged by
the leadership, enabled by targets and metrics, and encouraged by performance goals, rewards, and
recognition. Finally, an organization cannot achieve operational excellence without four things.
Enterprise-wide alignment of strategies, priorities, policies, and decisions. This has to be across different
functions and up and down all levels of the organization to consistently drive the right behaviors and
results. These four elements are essential to achieve operational excellence. To be better, faster, and
cheaper. You want to get to the point when everyone in the organization is willing and is able to do well,
to be operationally excellent everyday. Everyone is engaged, enabled, and empowered to achieve
operational excellence and the desired results for competitive advantage. So the next time you rent a
car, hopefully you have a much better experience, receive faster service at a cheaper price, and drive off
in a car you reserved.
Process stakeholders and SIPOC
- Whether you know it or not, you participate in one or more processes every
day. Whether you work in a restaurant, a call center, a bank, a factory, or a bakery, you
are a process stakeholder. What is a process stakeholder, and what are the roles of a
process stakeholder? In other words, what are your roles in a process? Process
stakeholders are people involved in a process, people who have a stake in a
process who have an impact on how well the process performs. When people think of
process stakeholders they think of people who perform the process, the operators or
processors. Processors perform the work of transformation converting or transforming
inputs to outputs in one or more activities in a process. For example, when you conduct
an analysis for your boss, your work transforms data to useful information. You are a
processor. But there are other roles in a process. In addition to processors there are
suppliers and customers. Suppliers provide inputs to the process of process
activities. Inputs can be materials, parts, documents, data, or information needed for
work to be carried out. Most people think of suppliers as outside suppliers, external to
the process. But there are suppliers internal to the process. You and everyone else in the
process are suppliers. How is that possible? When you receive the work output of
someone upstream in the process, that person is your supplier. Similarly, when you
provide your work output to someone downstream in the process, such as when you
provide the results of your analysis to your boss, you are performing the role of
supplier. Your boss who receives your output is your customer, but you are also a
customer. Remember when you received and used data from IT to prepare that report
for your boss? You are a customer of IT. To summarize in this example, you performed
the roles of processor, supplier, and customer. Processor when you transform inputs to
outputs. In this case you transformed data to useful information. Supplier when you
provide the results of your analysis to your boss, and customer when you receive from
IT the data for your analysis. These three roles were first conceptualized decades ago by
the late quality guru, Dr. Joseph M. Juran as the triple role concept. These process
stakeholder roles come with responsibilities. Responsibilities are prerequisites for
operational excellence. As a supplier you are responsible for knowing what's important
and critical to your customers. Also you have to understand the needs and
expectations for your outputs. In this example you need to understand how your boss
intends to use the results of your analysis. This way the purpose and scope of the
analysis can be defined. As a processor you must know what's important and what must
be done well in the process. In other words, what performance criteria and process
metrics should be established and monitored, and what targets must be set and
achieved in order to satisfy customers. This information determines how you should
plan, perform, and monitor your work in the process. As a customer you are responsible
for communicating your needs and expectations to suppliers. Let them know what's
important to you, and provide them feedback at appropriate intervals to let 'em know
how well they're doing as your supplier. Every process stakeholder is a supplier, a
processor, and a customer. Executing these roles and responsibilities well is a
prerequisite for operational excellence.

Voice of the customer, CTQs, and metrics

- When you order online for a take out from a restaurant, what's important to you? Well
let's say you have a peanut allergy. You order a seemingly innocent food item, like a
grilled cheese sandwich, and you state in your order that you have a peanut allergy. In
short, you probably don't want any peanuts or traces of peanuts in your food. No
peanut allergens in your grilled cheese sandwich is what's important to you, the
customer. But these are expressed from the customer's viewpoint. These are what we
call the Voice of the Customer or VOC. VOC are needs and expectations expressed in
the customer's language. Now put yourself in the shoes of the restaurant owner. How
can you make these words meaningful to your employees as they make and deliver
orders such as this one? You will have to translate them from the customer's
language. You have to put it in terms that are meaningful to your employees' work. Put
another way, you have to translate the voice of the customer into critical-to-quality
requirements or CTQs. What are CTQs? CTQs are the performance characteristics of a
process, product, or service that are critically important to customers. CTQs are
measurable. They measure how good performance needs to be to satisfy the needs and
expectations of customers. Back to our grilled cheese sandwich. From the voice of the
customer, or VOC, we know that this customer wants no peanut allergens in their food
order. We can translate no peanut allergens in the grilled cheese sandwich to no peanut
allergens in the ingredients and careful handling to avoid any cross-contamination. So
the critical-to-quality requirements, or CTQs, are no peanut allergens in the
ingredients and no cross-contamination. These CTQs can be measured by A, amount of
peanut allergens in the sandwich, and B, how cross-contamination free are the cooking
utensils and preparation by the staff? We can specify how well the restaurant must
perform on these metrics to satisfy this customer. In other words, we can determine the
specifications and targets for these CTQ metrics. In this example, the CTQ targets or
specifications will be zero amount of peanut allergens in the ingredients and zero cross-
contamination from all preparation and utensils. To recap CTQs are the measurable
performance characteristics of a process, product, or service that are critically important
to customers. With CTQs you know what metrics to monitor and how well they must
perform to satisfy customers. In our example you want to monitor the ingredients,
preparation, and utensils. On an on-going basis beyond this order all food preparation
and utensils should be monitored to avoid any cross-contamination. CTQs provide
customer focus for your process on a day-in day-out basis, and if you embark on any
improvement or design projects, don't lose focus on the customer. Ensure that you
measure CTQs pre- and post-project. After all, we definitely don't want customers to
suffer a preventable adverse reaction.

Kano model and Its Implications

- When you shop online, board a flight, or stay at a hotel, what's important to you? Is
everything equally important? For example, is having a safe flight of equal importance
as having free champagne? Definitely not. These quality attributes describe different
aspects of the experience, service, or products, and they are indeed different, and
should be treated as such. But wait, there is a model to help you do just that. It's called
the Kano model. Named and developed by Dr. Noriaki Kano to model how customers
perceive quality, it is based on the level of achievement on three types of attributes that
impact customer satisfaction and dissatisfaction. The three types are dissatisfiers, or
basic quality attributes; satisfiers, or performance quality attributes; and delighters, or
excitement quality attributes. Here is a Kano model where the vertical scale is increasing
satisfaction as you go higher up above the horizontal axis, and increasing dissatisfaction
as you go further down the horizontal axis. The horizontal scale shows the degree of
execution from nonfulfillment on the left of the vertical axis to increasing fulfillment on
the right of the vertical axis. Let me describe each of these in turn. Dissatisfiers, or basic
quality attributes. They must be present, otherwise customers will be dissatisfied. These
attributes are essential must-haves or must-be's. Addressing them will reduce or
eliminate dissatisfaction, but will not increase satisfaction. For example, nobody jumps
for joy when they have a safe flight, or when there are clean towels in a hotel. It is a
basic requirement. However, not having a safe flight or not having clean, unused
towels brings about dissatisfaction. That is why basic quality attributes are called
dissatisfiers. Their presence does not increase satisfaction, but their absence results in
dissatisfaction. Addressing dissatisfiers, or basic quality attributes, will reduce
dissatisfaction. However, reducing dissatisfaction is not the same thing as increasing
satisfaction, and this brings us to satisfiers. Satisfiers, or performance quality
attributes. Satisfaction and dissatisfaction levels vary according to the level of execution
on these attributes. For example, with cars and trucks, better fuel economy or higher
miles per gallon increases satisfaction and lower miles per gallon lowers
satisfaction. Finally, delighters, or excitement quality attributes. The absence of these
attributes does not result in dissatisfaction, but their presence can lead to delight, or a
wow reaction, where satisfaction shoots up exponentially. For example, getting free
champagne during a flight in coach or economy class. Or a complimentary spa
treatment during your hotel stay. So what are the implications of the Kano model? Let's
discuss how they impact design projects, improvement projects, and day-to-day
management. In design projects, dissatisfiers, or basic quality attributes are
nonnegotiable and must all be addressed. Performance quality attributes, or
satisfiers, must be sufficient to achieve good customer satisfaction levels. And to
increase market share, delighters must be present. For improvement projects, if the
intent is a reduced customer dissatisfaction, focus on ensuring that all dissatisfiers, or
basic quality attributes, are addressed. If the intent is to improve customer
satisfaction, then improve on the satisfiers, or performance attributes, first before
addressing any delighters. For day-to-day operations, ensure that basic quality
requirements are always met, satisifers, or performance quality levels, are
maintained, and any delighters that are present remain present. So the next time you
shop online, board a flight, or stay at a hotel, I hope there is no dissatisfaction. Instead,
you can get some satisfaction and even be delighted.
Variation
- A customer places an order and is told it will take two to 10 days for delivery. You
make a request for a transaction in your company and you're told it will happen in five
to 10 days. Why is there so much variation? A more important question is what
happens when you try to promise, budget, staff, schedule, and plan on getting things
done correctly and on time when there is so much variation? The answer is with a lot of
difficulty, uncertainty, increased costs, and mixed results and performance such as not
meeting deadlines, not meeting surface level agreements, and other contractual
obligations. Not to mention, upsetting customers and potential loss of business. Let's
understand variation. Let's say there are five activities or processing steps needed to
complete a transaction. These steps could be mapped onto many different kinds of
processes. So, think about a process that's relevant to your work. It can be
manufacturing, services, or healthcare. But no matter what the process is, there is
variation in each step. In step one, it may take anywhere from one to four hours. Step
two, takes one to eight hours. Step three, one to three hours. Step four, one to six, and
step five, one to three hours. So the entire process can take anywhere from five to 24
hours. Mathematically speaking, averages or means add up, but standard deviations do
not. It is a square of the standard deviations. In other words, it is the variances that add
up. The variance of the total processing time is the sum of the variances of each of the
five steps. That is why you see a very wide processing time curve for the whole
process. Variation does not just impact time performance. Variation also impacts how
well specifications are met or not met. In other words, variation impacts quality. There
are specifications for services and products. These specifications are expressed as
specification limits. Here's the curve showing an example of the distribution compared
to the specification limits. The performance is off target and has wide variation. Because
large areas of the curve are outside the lower and upper specification limits, defects
occur frequently. While companies make changes to adjust the mean or average to be
on target, as shown here, the wide variation still results in performance outside the
specification limits. In other words, defects still occur. How often do companies report
only means or averages? And when the mean hits a target, they celebrate, or should
they? For example, we did very well last month. Our average or mean delivery time was
33 hours and that is less than our 34 hour guarantee. But then, why are there customer
complaints on late deliveries? This diagram shows why. It is the variation. Variation has
to be reduced to improve performance. Section marked projects are excellent for
reducing variation. Here's the result. With performance on target and the variation
reduced, there is a huge reduction in defects, quality improves. Let me conclude by
sharing an everyday example. How many of us have experienced shopping online and
buying products which states assembly required? What if there is variation in the size of
each of the parts or components beyond their specification limits? Well, as we learned
earlier, variances do add up. So the cabinet that you order online might not fit properly
together when you try to assemble it. Doors hang unevenly, screws don't fit in
holes. This is because of variation. That is why, where possible, I avoid buying any
product that requires assembly. So the next time anyone brags about average
performance being on target, ask them about variation.

Quality at the source

- How often do you have to redo or rework someone else's work output? Or how often
are defects and problems found at the end of a process? If a defect occurs in step
two, why is it not discovered until the 99th step when inspection takes place? Think of
all of the costs incurred in processing the defective item from step two to step 99. What
about the cost of scrap or, if it's salvageable, the cost of repair and rework and re-
inspection? Or worse yet, the effects remain undetected until they end up in customers'
hands. What about the cost of recalls, warranty claims, lawsuits, the loss of customers,
and bad reputation? Quality should be assured at the source. The principle of quality at
the source means that quality is assured at the source where work is performed so that
no defects are passed down to the next step or to subsequent processes. The source can
be a person, such as a waiter taking an order, a workstation in a factory or a call
center, a department processing a transaction, or, externally, a supplier who supplies
products and services. Quality at the source can be achieved in one or more of the
following ways: quality by design, quality by process monitoring and control, and quality
by self-checks and verification. Quality by design is used to ensure that it is always done
right the first time. To ensure quality by design, mistake proofing, error proofing, or
poka-yoke as it is called in lean are used. For example, when completing an online
form, it will not allow you to proceed to the next screen if all essential fields in the
current screen are not completed correctly first. By design, it is impossible to
proceed with missing information. Let me share another example: charging your
phone. By design, the charger plug can fit into the phone facing up or down. Both ways
will fit so you don't risk damaging the phone or charger. It is designed to avoid the
tendency to shove the plug into the phone the wrong way. Quality by processing
monitoring and control where tools such as statistical process control are used to
ensure that critical process parameters are monitored and controlled. For example, the
control of baking time and oven temperature when baking pizzas. Quality by self-check
and verification. To assure quality at the source this way, develop and implement
procedures and protocols that mandate it, and ensure compliance to those
procedures. For example, airline pilots are required to perform a preflight
checklist before pulling away from the gate. Another example, before a surgery, nurses
identify the patient's identify and surgical procedure, comparing verbal responses to
patient records. Internally, everyone should have the responsibility and authority to pull
the cord to stop defects from being produced and to bring it to the attention of
supervisors or management, all without any fear of repercussions. Management and
employees must embrace this mindset, the mindset of doing it right the first time, a
mindset where quality trumps production quotas, where metrics and rewards encourage
good quality output and do not reward quantity over quality. Externally, at
suppliers, quality at the source can be implemented the same way, by design, by process
monitoring and control, and by self-checks and verification. As a customer, you can
conduct audits to verify supplier performance. Not only audits on products, but also on
processes to ensure that supplier processes have sufficiently good process capability to
produce defect-free products. If these audits are successful, inspections at the receiving
dock can be reduced or even eliminated. Just-in-time deliveries can then be made
directly from the supplier to the points of use in your production line. In summary,
quality at the source facilitates just-in-time flow, being more responsive to customer
demand without any hiccups or delays. It is more cost-effective to do it right the first
time to prevent defects from occurring or from being passed down to subsequent steps
and processes. So, the next time you have to rework or redo someone else's work, think
about quality at the source.

Error-proofing or poka-yoke
- When you shop online, the credit card number you input has to be accurate, otherwise
you cannot complete your order. That's an example of error proofing, or mistake
proofing. In lean, it's often called poka-yoke from the Japanese terms (speaks in foreign
language) meaning mistake, and (speaks in foreign language) meaning to avoid. To
avoid inadvertent error or human error. Wouldn't it be useful to error proof or mistake
proof your processes, products, and services? Let's discuss the basic principles of error
proofing and how they can be applied. Error proofing is best when it prevents error
from occurring. If that's not possible, the next best thing is to facilitate the work so that
errors are minimized. Lastly, if errors do take place, then detection should be
made obvious and immediate, or be automated. There are basically three levels of error
proofing. Here they are in order of preference. One, prevention. Two, facilitation. Three,
detection. The first and most preferred is error proofing by prevention. An example is
the traction control system in cars. It works actively full-time to prevent wheels from
over spinning on slippery roads or low friction surfaces. Regardless of how good or bad
the weather is, or the driver is. Prevention-based error proofing is also possible in
processes. For example, in-store pickup of a prepaid online order. In addition to
showing a driver's license, the same credit card must be scanned for the system to
authorize and process the pick up. If prevention is not possible, then the next choice is
error proofing by facilitation. An example of this is anti-lock brakes, in which the car
helps facilitate your application of brakes in an emergency, so it is done efficiently,
effectively, and the brakes don't lock up. Similarly, in processing transactions, dedicated
pre-programmed buttons such as those on point of sales systems, for cheeseburger or
large fries are used. Also, you can connect your point of sales system to inventory
management. It can help you track inventory and prompt you when and how much to
order. Or as I've experienced recently, many easy to assemble furniture are not easy to
assemble. However, I've come across some well-designed truly easy to assemble
furniture where parts to be assembled to each other are labeled by the same matching
numbers and the parts fit perfectly. Facilitation-based error proofing makes it easier and
it minimizes errors, but it does not prevent non-compliance due to forgetfulness or
human error such as pressing the wrong button by mistake. If prevention or facilitation
is not possible, then employ the third choice, error proofing by detection, where
detection of errors is immediate, either by being made obvious or by automated
detection. An example is the annoying beeping sound and warning light in your car to
alert you when you forget to put on your seatbelts. Another example, is the fuel
gauge where the warning light comes on when the gas tank is low with a range of less
than 30 miles left. The only trouble is, for me, when I finally notice the light, I'm never
quite sure if it just came on or if it came on 25 miles ago. To summarize, if prevention is
not possible, use a combination of facilitation and detection. An example is a
combination of anti-lock brakes, seatbelts, and airbags. So prevent errors if possible. If
not, minimize errors or at the very least, detect and mitigate these effects immediately.

Lean principles
- Remember the last time you were delayed, or when you made multiple trips to a
customer work site? Or when you had to rework or redo a task? Or spend time, effort,
and money to hurry up only to wait at the next step? Bottom line, let's just say what
you've experienced is simply not lean. Lean can be viewed as a management
philosophy, a mindset, a methodology, a tool set, or an approach to daily work. At it's
core, it's all about minimizing wastes and maximizing value to customers. Value is what
customers need and expect and are willing to pay for. This includes receiving the right
products and services at a specified price, time, and place. For example, if you see an
extra charge in your invoice because warehouse personnel spent five hours to look at
your item, would you want to pay for that? Of course not! It is of no value to you. Waste
is anything that is of no value or adds no value for customers. Waste comes in many
forms. Eight types of waste have been identified. I know a guy named Tim Woods
who can help us remember it all. TIMWOODS is an acronym. T for transport, that's
movement of people, materials, products, or documents between activities or
locations. I for inventory. Just in case additional inventory whether it is raw materials,
work in process, or finished goods inventory. M for motion, movement within an
activity that does not add value for the customer. W for waiting, time wasted between
activities, waiting for required resources, materials, parts, people, or information. O for
overproduction, producing more than what's needed. For example, making 20 copies
when only two were needed. O for overprocessing, inappropriate, excessive
processing and unnecessary duplication of work that adds no value. For example,
polishing your presentation slides repeatedly after multiple rehearsals before presenting
to senior management. D for defects, defective work, defective items, or any undesired
outcome that adds no value. S for skills underutilized. This refers to underutilization of
employee skills and intellect such as when a highly qualified scientist or engineer is
assigned to administrative work. So that's TIMWOODS, the eight types of waste. Lean
targets the elimination of waste to improve efficiency, flow, and speed. Here are some
key concepts of lean. Value stream, a value stream is all those processes, activities, and
resources, including information, used to transform inputs into outputs that are sealable
to customers. The elimination of waste will improve efficiency, speed, and flow of the
value stream. Theory of constraints, the output of a value stream is only as fast as the
slowest processing step, bottleneck, or constraint. To improve the rate of output or
throughput, focus on improving the constraint until it is no longer a limiting factor. That
is the crux of the theory of constraints, developed by Eli Goldratt. Pull instead of push,
customer demand pulls the order, product, or transaction throughout the value stream
from suppliers to customers. Traditionally, products have been pushed to customers by
suppliers or producers, regardless of whether they want it or not or if they're ready to
receive it or not. That is why you see your end clearance sales. Pull, on the other hand, is
about customer demand pulling and authorizing work and delivery as and when it is
needed. Just-in-time flow, items or transactions should be produced, processed, or
delivered just-in-time, as it is needed, at the same rate as customer demand. If goods or
services are produced to the drum beat or rate of customer demand, where a demand
for an item signals a production and delivery of that item from the next upstream
workstation then there's no need for inventory. When you find yourself redoing
something, making unnecessary trips, waiting in line, or stuck with items you don't
need, fix the issue by applying lean concepts.

Process mapping
- They say that a picture is worth a thousand words. Yes, it is much easier if you are able
to visualize what you're trying to understand, manage or improve. A process map is a
diagram that provides a visual representation of the process flow, or a sequence of
activities or steps that take place in a process from start to finish. There are different
types of process maps. At the highest level is the high-level process map. This provides
a view of the process at 10,000 feet high. A high-level process map displays the main
activities of major steps in the process. Usually showing a whole process in 10 or fewer
major steps. If any of these major process steps needs more granularity to be better
understood, utilize process decomposition. This is when you drill down or decompose
those specific steps into more detail using detailed process maps. A detailed process
map provides sufficient granularity to enable the project team to understand what is
going on, not going on, and display where the decisions, re-work loops, delays,
bottlenecks, and walk arounds occur. If multiple groups are involved in a process, then a
swimlane process map will be useful to map across functional process. Think of a
swimlane process map as a detailed process map that has been allocated in the
respective lanes where the activities are performed. Visualize an Olympic swimming
pool where you have multiple lanes. One for each swimmer. A lane for each group
function or department involved in the cross functional process. A swimlane process
map is also called a deployment map because it shows where the work is deployed. You
may ask, so what, why bother with a swimlane process map? A swimlane map shows
which group or department is performing each process step. And where the handoffs
are. Handoffs are the weak links in a process. Where things can fall through the
cracks due to miscommunication between departments resulting in delays, mistakes and
defects. Being able to see these opportunities for failure is very useful. So if you have a
cross functional process, map it using a swimlane process map. Another type of process
map that has gained popularity with lean and operational excellence is the value stream
map. A value stream map is a diagram that shows the major steps involved in getting a
product or service from supplier to customer. It shows the material and information
flows from order to delivery. It is basically a high-level process map with additional
information, such as customer data, processing data, and information flows pertinent to
the value stream. At a glance, we can see the end-to-end process. From order to
delivery. Or from check-in to check-out. It shows the flow of information and
material including process steps, processing time, cycle time and the number of
servers. We can see the backlog or work in process, in front of each process step. The
timeline at the bottom of the map shows the lead time and actual processing times. The
value stream map provides a snapshot of entire value stream and its performance. To
summarize, the different types of process maps discussed are: high-level process
map, detailed process map, swimlane process map or deployment map, and value
stream map. Using these process maps, you can create a picture of the process that is
really worth a thousand words.

FMEA: Failure modes and effects analysis

- Take any process in your organization. On any given day, what can possibly go
wrong? As the saying goes, whatever can go wrong will go wrong. So what can be done
to anticipate and mitigate the risk of failure? Well there is a tool to help you do just
that. It's called FMEA or Failure Modes and Effects Analysis. It is a tool for mitigating the
risk of failure. First used in the 1960s for the Apollo Space Program, FMEA is widely used
in many industries and required in some, such as aerospace and automotive. There are
two types of FMEA. The Design FMEA and the Process FMEA. The Design FMEA is for
reducing the failure risks associated with a product or service design such as when you
are designing a new hospital or the next smart device. The Process FMEA is for reducing
the risk of potential failures in a process, any process, whether it is the procurement
process or on-boarding a new hire. FMEA works the same way for both Design and
Process FMEAs. Design FMEAs evaluate the risk of failure for each function, system, or
component, while the Process FMEA evaluates the risks for each process step. These
questions are evaluated. What can possibly go wrong? In what ways can it fail? These
are called potential failure modes. For each potential failure mode, what is its
effect? How severe is the potential effect using a one to 10 scale where 10 is the
worst. That is called the Severity Score. And what could have possibly caused each
potential failure mode in the first place? How likely is the occurrence of these causes on
a one to 10 scale, where 10 is the most likely? That is called the Occurrence Score. What
controls are currently in place to detect the cause or the failure mode? What is the
likelihood of detection on a one to 10 scale where 10 is least likely to detect? That is
called the Detection Score. The FMEA then multiplies the severity score with occurrence
score and the detection score to come up with a composite score called the Risk priority
number or RPN. The RPNs can then be used to prioritize the failure modes. The highest
scoring failure modes can be targeted for improvement first to reduce or eliminate the
risk of potential failures. Here's an example of a partial FMEA. With the FMEA, whatever
can go wrong will not go wrong but instead can be anticipated and the risk of failures
mitigated.
Process control and the control plan
- Do your operators, engineers, or customer service reps know what needs to be
monitored and controlled to achieve the desired outcome? For example, in a pizza
chain, do employees working in the kitchen know what's important and what to watch
for such as what the baking temperature should be and what the actual temperature is
at anytime? Are they authorized to take any action if the heat is too high or too low? Do
they know what actions to take to make it right? Well, there's a tool to address all these
questions, it's called the control plan or process control plan or matrix, they are all the
same thing. The control plan is a tool that provides process owners and operators with
the means to control a process so that it performs well on an ongoing basis. The control
plan specifies what needs to be controlled, these are control subjects. Control subjects
are factors or perimeters that impact the outcome. In our example, one control subject
is baking temperature. What it should be, desired target or specification. This enables
operators and process owners to know what to aim for, in this case, what should be the
correct range or target temperature. We can specify the target as 425 degrees
fahrenheit and the desired range as 423 to 427 degrees. What reality actually is, that is
the control plan specifies exactly how actual performance is made known including how
the measurement is to be made, how frequently, and where it is recorded. This provides
operators and process owners with information on actual performance thus knowing
whether target or specifications are met. When to take action and what actions to
take. This is basically a set of action triggers something happens and a specific behavior
is meant to follow such as leave the pizza oven temperature alone when it is between
423 degrees and 427 degrees, and when a temperature is above 427, turn the heat
down, when temperature is below 423, turn up the heat, and so on. Your control plan
lays out all of these important details. Who is responsible and authorized to take
action? In our example, we can state that the cook or the chef is responsible for
temperature. He's authorized to take action and record results and actions taken. The
control plan enables operators and process owners to know what's important and what
needs to be monitored by whom. It helps them know what target or specification is
desired and to know if actual performance is acceptable. Finally, following a control plan
helps you know when to take action and what actions to take. There can be multiple
control subjects specified in any control plan. In a pizza kitchen, this could be oven
temperature, baking time, weight of dough, amount of sauce and cheese, and so
on. Now, this doesn't mean you should place all elements of your operation in a control
plan. Only include the key ones, the key factors driving performance and outcome. As
the saying goes, knowledge is power. The control plan provides employees with the
knowledge, the means, and the authority to take action so as to achieve specified
performance levels.
Key roles in operational excellence
- So your company wants to pursue operational excellence. What are the key roles of
executives, managers, and process owners? Well, before we address those
questions, let's pause and consider what operational excellence is and isn't. For starters,
operational excellence is not and should not be thought of nor should it ever be
perceived as a one-time pursuit, a project, or one-off event with a start and end
date. The pursuit of operational excellence never ends. Operational excellence cannot be
assigned or delegated down. Operational excellence is predicated on how the
organization is lead, managed, enabled, and empowered, so that everyone executes
well. Executives, managers, and process owners should all focus on executing well to
gain competitive advantage. Their key role is the focus on running a successful
enterprise so that it executes better, faster, and cheaper in delivering value to
customers. Operational excellence is not something extra. It isn't a label or a specific
job, it is a way of operating that should be integrated into all work related to the
business. It should be part of the organization's DNA. The following are key roles of
executives, managers, and process owners. Embrace and encourage the right mindset
and behaviors so that everybody wants to and is able to be operationally
excellent. Ensure that metrics, targets, performance goals, reward and recognition
encourage these behaviors. Talk is cheap. You need to ensure and reward the right
performance. For ongoing day-to-day operations, ensure that employees are
capable, have the right skills and training. Enable employees to excel by providing
them with the means to know what's important, what to do, when to take action, and
what actions to take in order to deliver value to customers. Ensure they have sufficient
authority that's consistent with their responsibility and personal accountability. There
will be some processes that are poorly designed and/or performed inconsistently. For
these, improve or redesign them by selecting and launching appropriate projects. But
not every project should be pursued, only the ones that achieve strategic and annual
goals. So be selective. Executives and senior managers should view projects as a means
to achieve strategic and annual goals. Establish project selection criteria to ensure
alignment of projects with those goals, review proposed projects, evaluate, and select
projects. Assign executives or senior managers to be project champions. Review updates
from champions and provide resources as needed. What is a project champion and why
have project champions? The project champion is the management team's point
person who is tasked with ensuring project success. It is also management's way of
making it very clear that they want to see the project succeed. It would be great to
improve everything, but you have limited resources, so you need to prioritize and be
selective. With a project champion from the management ranks, you will lose sight of
the forest for the trees. Issues need to be addressed, but address in context. Project
champions provide that balanced perspective. The project champion should be an
executive or senior manager who has enough clout and respect to remove
roadblocks and to ensure that a project is given priority and has the right resources it
needs to succeed. For employees selected for projects, reallocate their duties to
others, so as to free them up with sufficient time to carry out project work. Recognize
individual contribution to project success in the performance appraisals. Provide
resources and training in the relevant operational excellence tools and techniques. For
example, for design projects, it's Design for Six Sigma. For improvement projects, Six
Sigma and Lean. And for control, it's process management or value stream
management. Finally, executives, managers, and process owners should ensure that all
decisions and policies are consistent with and supportive of the strategies and priorities
of the enterprise. Such alignment should be enterprise-wide, across different
functions, and up and down all levels of the organization. This consistency will drive the
right behaviors and results.

Alignment for operational excellence

- As management guru Peter Drucker once said, "What gets measured gets
managed." There are several types of measurements and metrics used across many
organizations. A common complain among employees is: "We have so many metrics
and so many so-called KPIs," or key performance indicators, "to the point where we
don't really know "which ones are truly the key KPIs." There's confusion among
employees as to what is being managed and on which ones they should perform
well. For example, if I am a customer service rep in a call center, am I evaluated on
average call handling time or first call resolution rate? Should I rush through a call, or
should I take the time and effort to resolve a customer problem? Unfortunately, this
confusion is all too common, regardless of whether you're working in the front office in
customer-facing jobs, in back office operations, in manufacturing, or support functions
such as IT and HR. To add to that, employees get mixed messages. For example, those
working on projects are often told by their supervisors that they need to spend less time
on the project and more time on the job in order to hit their numbers, but the project is
to improve a key process in that department. A phrase commonly heard is: "I love
working on this project, "but my boss tells me that I have this project "but I also have
my real job." Another big problem is the use of counterproductive performance
measures across departments or functions. For example, sales is rewarded on sales
volume and revenue. That's good, right? But it is not uncommon to see sales reps
promise customizations and multiple versions of the same basic product to customers in
order to make the sales numbers. We may ask, "What's wrong with that?" Well,
customizations and the proliferation of products or SKUs is a nightmare for other
functions, such as manufacturing and supply chain. Cost per unit goes up. While this has
no impact on the sales team, it adversely impacts the manufacturing and supply chain
teams. Metrics, performance measures, KPIs, and the accompanying reward,
recognition, performance appraisals, and promotions, these must all be made consistent
and aligned across departments and functions and across organizational levels. Every
employee must be rowing in the same direction for the ship, the enterprise to sail and
reach its destination successfully. To do that, reduce the number of KPIs to the truly key
ones that support higher level KPIs at higher levels of the organization. There should be
a vertical line of sight from individual employees to the highest level in the
organization. Every employee should be able to see how his or her performance
contributes to how the enterprise succeeds. In addition, there should be a horizontal line
of sight among individuals between different departments and functions who support
the same value stream or end-to-end process. For example, order fulfillment or hiring
and onboarding. Every employee should be able to see how the metrics and KPIs that an
individual is personally accountable for are supporting not just his or her
department and value stream, but the success of the entire enterprise. Alignment should
be enterprise-wide across different functions and up and down all levels of the
organization to consistently drive the right mindset, behaviors, and results.

Choose the right methodology

- When there is a need to identify efforts for operational excellence, which approach or
methodology is appropriate? Well first, we may need to ask, what are the various types
of projects and methodologies for operational excellence? Let's start with process
management of value stream management. If employees do not know how to perform
their work, or know when to intervene to take action, or what actions to take when
running a process, or if there is no effective monitoring and followup, or if there's a lack
of process metrics, discipline, or protocol, then that process requires process
management of value stream management. For design or improvement efforts, use
projects. Projects are very focused planned efforts with a start and end date to achieve
stated goals. These are launched as needed, and they do end when project goals are
achieved. They are not endless. Next, let's talk about lean projects. If the drivers of
performance are known or easily determined using the collective knowledge and
experience of the right people, then identify and select lean projects. Lean projects are
usually executed as kaizen events or workouts. The primary focus of lean projects is
efficiency, speed, and flow. Processes with redundant and wasteful activities are
streamlined. In other cases, the root causes of problems or drivers of performance are
unknown. For this, select six sigma D-M-A-I-C, or DMAIC, projects. DMAIC is an acronym
for the five phases of the project methodology. It stands for define, measure,
analyze, improve, and control. DMAIC is used for improvement projects where data
driven analysis is done to determine the key drivers of performance. If a new product,
service, or process is required, or if an existing product, service, or process is so
broken that it needs to be redesigned, then design projects using design for six
sigma, or D-M-A-D-V, should be identified and selected. D-M-A-D-V, or DMADV, is an
acronym for the five phases of define, measure, analyze, design, and verify. Selecting the
correct methodology for each type of project is important. When projects are
selected, project scope and process boundaries, should be defined. Project scope spells
out what's included and what's excluded. For example, in scope is product k and its
residential customers. But its commercial customers are out of scope. Process
boundaries spell out the start and end points of relevant processes. For example, if it's a
package delivery process, when does the process start? Does it start when a package is
dropped off? Or does it start when the customer calls for a pickup? When does the
process end? When the package is delivered to the receiving dock of a factory or office
building? Or does it end when the recipient gets the package at his or her desk? Usually
these processes are cross-functional processes. The project team has the challenge of
getting buy in and support from process owners and other stakeholders from across
multiple functions, departments, or groups. A tool that is useful for scoping process
boundaries and for identifying stakeholders is the S-I-P-O-C, or SIPOC, diagram. SIPOC
is short for supplier, input, process, output, customers. The use of the SIPOC diagram
helps a project team identify key process inputs and outputs, as well as suppliers to and
customers of the process. To summarize, depending on your goals, identify and select
the right processes and projects and choose the correct methodology. Define project
scope and process boundaries inputs and outputs. And finally, identify process owners
and other stakeholders who can drive project success.

Process or value stream management

- As a manager or fellow employee, don't you dread it when you hear these
words: "That's the way the system works." Or, "We'll make do." Or the dreaded phrase,
"it is what it is." These are all symptomatic of the value stream or process not being
managed and work not being done. Effective value stream or process management and
control require the following. Standard work and authority, control plans, process
metrics and KPIs, process owners, value stream managers. Standard work and authority
are essential. Process steps and tasks should be streamlined, defined, documented, and
made known to employees. This includes who does what, when, and how. Standard
work, standard operating procedures, or SOPs, and visual standards are used and
reinforced through training. Employees should know what they're supposed to do. They
need to know how to do it. And they need to know that they have the responsibility and
authority to make things right. Authority must be commensurate or consistent with
responsibility and accountability. Next, control plans should be implemented to
enable employees to be in control of the process. The control plan is an organizing
tool and comes in various forms. For example, a checklist or table. They are used by
employees to monitor and regulate the process. In the control plan, several things
should be defined. What should be monitored, with what metric, to what target, how
actual performance is to be measured, and how frequently. Measurements should be
frequent enough to adjust and regulate promptly. In addition, employees need to know
when to intervene and when to leave the process alone, and if action is to be taken,
what action to take and who does it needs to be clear. Otherwise it will be nearly
impossible to regulate and bring actual performance in line with targets. Imagine that
your pizza chefs making pizzas don't know the temperature of the ovens until they see
the weekly report. You could be left with hundreds of burnt pizzas. Also imagine if these
same employees don't know who is even allowed to regulate the temperature. It seems
extreme, but also often this breakdown in control occurs. Let's move on to process
metrics and key performance indicators, or KPIs. Process metrics and outcome
measures, including KPIs, should establish by management. This way actual performance
and desired targets are transparently visible to all employees in the process of value
stream. Keep the number of KPIs and metrics to a minimum. A common pitfall among
companies is to measure everything and label all metrics as key performance
indicators. Don't fall into this trap. The result is mass confusion, not to mention the
time and effort wasted in measuring and monitoring everything. Make sure that all
metrics are traceable to what's critical to quality, or CTQs. In other words, all metrics and
KPIs should be traceable to impacting what's important to customers. Take fast food
restaurants, for example. Customers want fast, inexpensive, tasty food. That's it. So
measuring and monitoring and reporting on customer satisfaction levels of fancy decor
and ambience is a waste of time. Process owners. Processes and value streams are cross-
functional in nature. They cut across departments and functions in the
company, sometimes even outside the company with suppliers and outside
partners. While there are managers for the respective departments of functions
involved, no one person is in charge of the end to end process or value stream. For
example, in the order fulfillment process, many departments, including sales, customer
service, manufacturing, supply chain and logistics are involved. But often there is no one
process owner for order fulfillment. A process owner should be assigned to ensure that
nothing falls through the cracks during the handoffs between the departments or
functions. The process owner should have accountability for that value stream meeting
its targets. Equally important, the process owner should have the necessary authority to
carry out those responsibilities. Value stream managers. In some operationally excellent
enterprises, the role of process owners goes one step further. The organization chart is
turned on its side, where there are no functional departments and department
managers. Instead, the company is organized by value streams and end to end business
processes. There are permanent positions called value stream managers who manage
value streams or business processes in the company. Employees working in the value
stream report to that value stream manager. The value stream manager has full
authority, responsibility, and accountability for the value stream. This includes the
resources, the authority to hire and fire, to reward and promote. Essentially, to run the
value stream. In conclusion, a couple of points should be reinforced. Timeliness and
frequency of reporting on actual performance. It should be as immediate as possible so
that appropriate actions can be taken to regulate and correct quickly to eliminate or
minimize any adverse impact. Imagine the driver of your delivery truck not having a
speedometer, but instead, receives a monthly speedometer report. Responsibility and
authority to regulate the process should be pushed down to as close as possible to
where the actual work is done. For example, imagine that same driver of your
truck having to get permission from corporate HQ before pressing the brakes. While
managing a process or value stream may sound mundane, it is critical that it is done
correctly day in and day out. Otherwise, results from the best planning, redesign, and
improvement projects will not be sustainable.

Lean event, Kaizen, or workout

- Have you ever wished if you could only gather the right people together, put them all
in a room, and pick their brains to address a problem or to improve on one area or
process. Well now you can. It's called a kaizen. Kaizen comes from a Japanese
term. Loosely translated, it's change for the better or simply put,
improvement. Sometimes it is called a lean event, a rapid improvement event, or a
WorkOut. A few different names all describing the same thing. The term WorkOut was
coined at GE. Essentially if you take unnecessary work out of the process to streamline
and make it more efficient. Kaizen is a well organized, structured, and facilitated event to
improve a work area, a department, a process, or an entire value stream. These rapid
improvement events can vary from one to five days, depending on the objective and
scope of the kaizen, such as to understand how the value stream flows or does not flow
due to mistakes, delays, and bottlenecks in order to improve it, prioritize what's
important to customers of a value stream in order to identify key process
metrics, brainstorm and identify likely causes of a problem, generate ideas and prioritize
solution alternatives, reduce equipment setup and changeover time, develop or
redesign procedures or standard work, or organize a work area to improve
workflow. The tools used do not require any intensive or rigorous data analysis, but they
do capitalize on the collective knowledge and hands on experience of participants at the
event. Examples of tools and techniques used include value stream mapping and
process maps to provide a common understanding of what's currently going on and not
going on, Gemba Walk to observe at locations where work is performed, process and
value add analysis to identify non value add steps, rework delays and
bottlenecks, spaghetti diagrams to map the physical flow of parts or transactions in a
facility, the acronyms DOWNTIME, or TIM WOODS, to identify the different types of
waste. Pareto analysis using available data to focus the analysis, brainstorming, cause-
effect diagrams, and five Whys to quickly identify potential causes, creativity techniques
to develop solution alternatives, and multi voting and prioritization matrices to select
alternatives, set up reduction and workload analysis to enable smaller batches and
reduce cycle times, 5S to sort and organize items so that there's a place for everything
and everything's in its place. So when is a kaizen or WorkOut applicable? When quick
analysis and improvements can be achieved using simple tools that do not require any
rigorous data analysis, but can benefit greatly from the collective firsthand knowledge
and experience of the right people. The right people are usually operators, stakeholders,
and customers of the process or value stream. During a kaizen event, participants
work under the guidance of a facilitator who is trained in operational excellence. More
specifically in lean tools. This is important so that the work is done right. The knowledge
and skillset of the facilitator has a big impact on the success of the kaizen. At the end of
the kaizen or lead event, the resulting output is a list. The deliverables include approved
recommendations and sometimes even implemented solutions. Done. The key to a
successful event is planning. Planning should be more than half of the total effort. It
should start at least three to four weeks before the event. Sufficient time and effort
should be allocated to gather existing data, obtain primary information from process
stakeholders, identify the objective and scope of the event, and develop the
agenda. Then you have to identify and invite the right participants for this event. The
lean tools used capitalize on participants' knowledge and hands on experience, so it is
critical that the right stakeholders are invited. Also, this will improve buy in and
acceptance during implementation. To summarize, if a issue does not require intensive
data analysis and you want rapid improvements, kaizen or WorkOuts are definitely
recommended.

Six Sigma DMAIC

- What if your process has poor yields? What if it can't produce defect free items or
services? Or it takes too long? Or is there so much variation that it is impossible to
plan, schedule, staff, or budget accurately? And what if you have no idea what's causing
the problem? That's when Six Sigma DMAIC projects are required. Six Sigma DMAIC
projects are what you need when you don't know the root causes, factors, or drivers of
performance. DMAIC are the five phases of Six Sigma projects and they are define,
measure, analyze, improve, and control. The underlying premise of Six Sigma is the
equation Y equals f of X or Y is a function of X. Y is the outcome and the Xs that belong
in that equation are the causes, or factors, that impact the outcome. DMAIC is data
driven. Data is used to understand, analyze, and determine the key Xs that have the
biggest impact on the performance of Y. In other words what are the key Xs in the
equation Y is a function of X? By knowing which Xs impact Y you can control the Xs to
obtain the Y you want. Armed with this knowledge you can move from reactive,
detection based interventions to proactive, prevention based routine excellence. In
other words from firefighting to fire prevention. Let's say you are the owner of a chain of
pizza restaurants in your state. Complaints have gone up. Refunds to customers
increased as a result of complaints and many repeat customers don't come
back. Hmm, what do you do? Well note that we actually do not know what the root
causes of these problems are. So we should launch a Six Sigma DMAIC project to
address the problem. Here's a summary of the five phases using a pizza problem as an
example. Define. In the define phase the project is defined, the team is selected, and
project is launched by management. What's important or critical to customers is
understood and the performance outcome to be improved or the Y in Y is a function of
X is defined. In our example Y is the number of complaints. You want to reduce the
number of complaints. The financial impact is a reduction in the amount of refunds and
the potential loss of repeat customers. Measure. In the measure phase the size and
scope of the problem is understood and performance of Y is measured. In our pizza
example we collect data to measure the number of complaints and the types of
complaints. A Pareto chart of the complaint data shows that the highest number of
complaints is on pizza crust and it is persistently the biggest complaint across the whole
state. So what do we do? Hire pizza crust inspectors? No, we will not fall into
this traditional detection based mindset. We want to set up our process to proactively
prevent poor pizza crust on a routine basis. Analyze. In the analyze phase we analyze
data to determine the causes or factors that impact performance. In other words we
diagnose and prove which X factors impact Y. The more specific the Y the quicker the
analysis as to which factors are the key Xs. Back to our pizza example what is Y in our Y
equals f of X? Is it the number of complaints? Or can we get a more specific Y? Yes, we
know that crust is the culprit for the majority of the complaints. Applying the Pareto of
80 20 rule we can get the biggest return on our efforts by focusing on crust
complaints. So our focus Y is crust complaints. Potentials Xs or potential causes or
theories of our pizza crust problem are proposed and we test them using data to
prove or disprove which ones are the key Xs or root causes. Say the root cause analysis
shows three key Xs are causing poor crust quality. Inconsistent tossing
technique, variation in oven temperatures, and inconsistent baking times. Improve. In
the improve phase solutions are developed to address the proven X factors so that Y
can be improved. Solutions are developed, tested, piloted, and implemented to optimize
the pizza crust quality. In our example let's say we determine the proven optimal
settings are 425 degrees Fahrenheit, 11.2 minutes in the oven, and as for tossing
technique it is three times clockwise and you get the perfect crust every time. Control. In
the control phase controls are established to ensure there are improvements or gains
are sustainable. Controls and procedures are put in place so that employees know
when and how to intervene to ensure superior performance. For our pizza chefs across
the pizza chain we make sure they are trained on the new procedures and control plans
are implemented. Then we would hope that the number of complaints would drop
drastically and, in turn, benefit financially from fewer refunds and higher retention of
customers. By determining the key X factors that impact Y we can be proactive in
ensuring superior Y performance simply by controlling the key X factors. For more on
DMAIC check out my other courses Six Sigma Foundations, Six Sigma Green Belt, and
Six Sigma Black Belt. With Six Sigma we shift from inspection and detection to
prevention and control.

Six Sigma DMAIC

- What if your process has poor yields? What if it can't produce defect free items or
services? Or it takes too long? Or is there so much variation that it is impossible to
plan, schedule, staff, or budget accurately? And what if you have no idea what's causing
the problem? That's when Six Sigma DMAIC projects are required. Six Sigma DMAIC
projects are what you need when you don't know the root causes, factors, or drivers of
performance. DMAIC are the five phases of Six Sigma projects and they are define,
measure, analyze, improve, and control. The underlying premise of Six Sigma is the
equation Y equals f of X or Y is a function of X. Y is the outcome and the Xs that belong
in that equation are the causes, or factors, that impact the outcome. DMAIC is data
driven. Data is used to understand, analyze, and determine the key Xs that have the
biggest impact on the performance of Y. In other words what are the key Xs in the
equation Y is a function of X? By knowing which Xs impact Y you can control the Xs to
obtain the Y you want. Armed with this knowledge you can move from reactive,
detection based interventions to proactive, prevention based routine excellence. In
other words from firefighting to fire prevention. Let's say you are the owner of a chain of
pizza restaurants in your state. Complaints have gone up. Refunds to customers
increased as a result of complaints and many repeat customers don't come
back. Hmm, what do you do? Well note that we actually do not know what the root
causes of these problems are. So we should launch a Six Sigma DMAIC project to
address the problem. Here's a summary of the five phases using a pizza problem as an
example. Define. In the define phase the project is defined, the team is selected, and
project is launched by management. What's important or critical to customers is
understood and the performance outcome to be improved or the Y in Y is a function of
X is defined. In our example Y is the number of complaints. You want to reduce the
number of complaints. The financial impact is a reduction in the amount of refunds and
the potential loss of repeat customers. Measure. In the measure phase the size and
scope of the problem is understood and performance of Y is measured. In our pizza
example we collect data to measure the number of complaints and the types of
complaints. A Pareto chart of the complaint data shows that the highest number of
complaints is on pizza crust and it is persistently the biggest complaint across the whole
state. So what do we do? Hire pizza crust inspectors? No, we will not fall into
this traditional detection based mindset. We want to set up our process to proactively
prevent poor pizza crust on a routine basis. Analyze. In the analyze phase we analyze
data to determine the causes or factors that impact performance. In other words we
diagnose and prove which X factors impact Y. The more specific the Y the quicker the
analysis as to which factors are the key Xs. Back to our pizza example what is Y in our Y
equals f of X? Is it the number of complaints? Or can we get a more specific Y? Yes, we
know that crust is the culprit for the majority of the complaints. Applying the Pareto of
80 20 rule we can get the biggest return on our efforts by focusing on crust
complaints. So our focus Y is crust complaints. Potentials Xs or potential causes or
theories of our pizza crust problem are proposed and we test them using data to
prove or disprove which ones are the key Xs or root causes. Say the root cause analysis
shows three key Xs are causing poor crust quality. Inconsistent tossing
technique, variation in oven temperatures, and inconsistent baking times. Improve. In
the improve phase solutions are developed to address the proven X factors so that Y
can be improved. Solutions are developed, tested, piloted, and implemented to optimize
the pizza crust quality. In our example let's say we determine the proven optimal
settings are 425 degrees Fahrenheit, 11.2 minutes in the oven, and as for tossing
technique it is three times clockwise and you get the perfect crust every time. Control. In
the control phase controls are established to ensure there are improvements or gains
are sustainable. Controls and procedures are put in place so that employees know
when and how to intervene to ensure superior performance. For our pizza chefs across
the pizza chain we make sure they are trained on the new procedures and control plans
are implemented. Then we would hope that the number of complaints would drop
drastically and, in turn, benefit financially from fewer refunds and higher retention of
customers. By determining the key X factors that impact Y we can be proactive in
ensuring superior Y performance simply by controlling the key X factors. For more on
DMAIC check out my other courses Six Sigma Foundations, Six Sigma Green Belt, and
Six Sigma Black Belt. With Six Sigma we shift from inspection and detection to
prevention and control.

DMADV: Design for Six Sigma

- Why do people prefer one product over another even though it has a higher price? Or
why do people buy services from one company instead of its competitor just around the
corner? Because the winning company provides the products, services, and experience
that customers want and are willing to pay for. Having a design that provides the right
features that work as required is what design for Six Sigma is all about. Design for Six
Sigma, or DFSS, is a systematic methodology for the design or redesign of products,
processes, and services. The goal is to ensure that design meets or exceeds customer
expectations and key requirements. Let's talk about some characteristics of DFSS. First,
quality is designed in instead of inspected in. That is, the process, product, or service
itself is crafted to ensure quality rather than relying on end of the line inspection
checks. Next, customer expectations and key requirements are prioritized and
incorporated into the design from the start. In DFSS, we call this requirements flow
down. It ensures there is a link between customer requirements and functional product
and process requirements. Lastly, quality is predictable. There are no surprises. The
capability of the design is predicted as the project progresses to ensure that design is
capable of meeting customer requirements and performance targets. DFSS projects
follow a five phase methodology. Define, measure, analyze, design, and verify, or
DMADV, pronounced as de-mad-vee. In the define phase, the business case for the
design project is established and the project charter, including objectives, scope, goals,
and design team, are approved. This phase establishes the reason for the design
effort and helps keep the team focused. Next, in the measure phase, VOC, or voice of
the customer analysis, is tear down. Customer needs are identified, prioritized, and
translated into measurable requirements called critical to quality requirements, or
CTQs. CTQs are the performance characteristics that are critical in satisfying customer
needs. For example, for a coffee maker, VOC efforts may identify the top three customer
needs as suits my taste, easy to use, and fresh coffee when I want it. We could translate
the need for fresh coffee when I want it into three CTQs, brews quickly, adjustable
amount of coffee, and fast total time from start to finish. A scorecard called a design
scorecard is established to score and track design capability against CTQs and
performance targets throughout each phase. In analyze phase, CTQs are examined to
determine the functions of functionality needed, that is we need to find out what does
the product or service need to be able to do to meet those CTQs? These functional
requirements drive the generation of conceptual designs and the best is
selected. During the design phase, product features are created and specifications are
finalized. Process requirements are developed and parameters are optimized. And last,
in the verify phase, the final design is agreed upon and tested to make sure it is
producible and still meets customer needs. Controls are designed and implementation
then takes place. Sometimes in a D-mac DMAIC project, after the A, or analyze phase, a
redesign effort may be required. In that case, a mini DMADV cycle can deliver the design
as part of the improve phase. There is much more to learn about Design for Six
Sigma than what we discussed here. There are several courses on this site that you can
watch for a deeper discussion, such as Six Sigma: Green Belt and Six Sigma: Black
Belt. So if you ever need to design or redesign a product, process or service, and you
want to address customer needs systematically, then Design for Six Sigma is what you
need to use.
Implementation challenges
- There are many challenges in implementing and sustaining operational
excellence. Here are some common implementation challenges. Fear of headcount
reduction and job losses. Many employees view operational excellence, especially lean,
as a means by management to lean out the organization, resulting in job cuts. Rightly or
wrongly, that's the view and fear. Senior management has to address this fear head
on. Not through pronouncements, but through actions. When processes of value
streams become more efficient, any displaced workers should be reassigned to fill useful
roles elsewhere within the company. And as the company grows, these folks can fill new
roles, first removing any need for new hires. Lack of buy-in and acceptance. Most people
don't like change. To improve buy-in, and acceptance of changes and improvements,
ensure that the right metrics and performance targets are implemented. Metrics and
rewards that motivate the right mindsets, behaviors, and results much support the
changes. For example, traditionally incentive pay is based on piece count or number of
transactions. Instead, reward based on the percentage of defect-free pieces produced or
the percentage of correct and accurate transactions processed. Reverting back to old
habits and the good old days. It's just human nature to take the easiest path or the path
of least resistance. Ensure that the new way of doing the work is easier than the old
way. If it is more cumbersome and more involved, it will not be sustainable. Employees
should love the new improved way of getting things done because it is now easier and
more user-friendly than ever. Keep it simple. Too many initiatives and projects. Most
organizations are already stretched thin with very lean staffing levels. It is not
uncommon to here that everyone's busy with their regular jobs and to top it off, there
are too many projects in progress, tying up whatever little time and resources there are
left. A common challenge is that there's no time and no resources available for
projects. To address this, take inventory of all existing projects and initiatives. Map them
to the company's annual goals and strategies to see if there is any connection. If there is
no connection, let alone alignment, then either kill those projects, put a hold, or
postpone them. For the remaining projects, prioritize them to gather the new
operational excellence projects. Such a mapping and alignment exercise will reduce the
number of ongoing projects. And to keep it streamlined, senior management can
proactively select and prioritize the list of projects. Too many metrics. This is another
common challenge when in the rush and temptation to measure and be data-driven, the
list of metrics to be monitored and controlled keeps growing. As the list grows, so
grows the frustration of employees. To address this, evaluate the reason for every
metric by checking to see how well the metric maps through CTQs and all the
company's business priorities. And any KPIs or key performance indicators should be
limited to just the key ones. Imagine the stress and nightmare if you drive a car with a
dashboard showing more than a dozen indicators on digital displays. You don't need to
measure everything, just what matters. These common challenges should be addressed
head on. Management must follow through, actively demonstrate their own buy-in and
walk the talk. It is management's responsibility to make the new operationally excellent
way of working a routine. Everyone in the organization will then be engaged, and able,
and empowered to achieve the desired results.

Audits to sustain operational excellence

- On New Year's Eve, many people are all excited about making and pronouncing their
New Year resolutions with a lot of fanfare, sharing them with friends and on social
media. Later on, when all that excitement dies down, how many of those resolutions are
kept? Well, there's always next year. But you do not want this to happen to operational
excellence. Operational excellence is not a slogan or rallying cry for excellent
performance, nor should it ever be. Slogans become old news and fade. To sustain
operational excellence, it must become part of the organization's DNA, become part of
the regular routine for creating and delivering value to customers. And the secret sauce
is process discipline. Process audits are excellent for verifying and reinforcing what has
already been implemented. The objectives and scope of these process audits should
include the following. To ensure that processes are well designed and capable, the audit
needs to evaluate process capability in meeting performance targets and
specifications. Audit for employee compliance to established procedures. Verify that
employee skills and training are current and employees are capable of performing their
work. Audit control plans and verify that employees have the means of knowing what's
important in their key job roles within the process of value stream. Know what to do in
the process. Know when to intervene and what actions to take. Verify that employees in
key roles have the necessary process authority, responsibility, and accountability. Audit
to ensure that managers and process owners have access, either directly or indirectly, to
resources, tools, and techniques for design, improvement, and control. Verify that every
project is indeed necessary. Audit linkage of projects to accomplishing the
organization's annual goals and strategic priorities. Verify that projects have the support
from management and have sufficient allocation of time and resources to these projects
regardless of whether they are Kaizen events, DMAIC, DMADV projects, or value stream
management. Audit for results and improvements from projects and validate that they
were sustained. Review statistical process control charts for evidence. Audit to verify that
value stream managers and process owners have the authority and the means to
manage, control, and improve the entire value stream or the end-to-end process. Verify
that process metrics and KPIs are supportive of CTQs, or critical-to-quality
requirements. Audit performance metrics and rewards to verify that they are aligned to
the organization's annual goals and strategic priorities. Verify that KPIs, or key
performance indicators, are indeed key and are limited to the vital few. Verify
enterprise-wide alignment of strategies, priorities, policies, and decisions. Verify
alignment across different functions that support value streams or end-to-end
processes. Verify alignment up and down different levels of the organization. For
example, alignment between the individual level, team, department, location to division
and company level. These audits can be done in a staggered way throughout the year,
at least once a year for each area, department, or process. The frequency for any one
location or process can be increased if there are noncompliance or performance
issues. You want to get to the point when everyone is willing and able to do well to be
operationally excellent everyday. In other words, the entire enterprise can deliver
value better, faster, cheaper.

Next steps
- Congratulations. You have made it to the end of this course. Operational excellence is
all about getting work done better, faster, cheaper, while delivering superior value to
customers. Just a review. To achieve operational excellence, you need to have processes
that are effective and efficient at delivering value, tools and techniques for design,
improvement, and control, the right mindset and behaviors where everybody wants to
and is able to be operationally excellent. And enterprise wide alignment of
strategies, priorities, and decisions. If you are interested in learning more, I recommend
watching my courses on Six Sigma Foundations, Six Sigma: Green Belt, and Six Sigma:
Black Belt. These courses provide a deeper dive into many of the concepts, tools, and
techniques we have discussed. For a closer look into graphs, charts, and data analysis for
operational excellence, I recommend my introductory course called Learning
Minitab. Remember, operational excellence is thought, and should not be thought
of, nor should it ever be perceived as a one time initiative or project. The pursuit of
operational excellence never ends.