Introduction to Lean Six Sigma A Human Resources Perspective Agenda Short Biography History of Lean Six Sigma (LSS) LSS Methodology Success Factors Application to HR Examples of project ideas New York ISO case study About the Presenter David Duda Over twelve years of LSS experience Delta Airlines, Inc. 1998-2008 Production based application of LSS New York Independent System Operator 2008--Present Service/transactional based application of LSS Certified Six Sigma Black Belt Contact Info: [email protected] The History of Lean Six Sigma A New Approach to Quality History of Lean Six Sigma What is in a name? Lean -- Focuses on removing waste (muda) from processes Six Sigma – Focuses on understanding and reducing variation in processes Lean Six Sigma (LSS) – Combines both approaches What is the Concept behind LSS? As wasteful activities are removed overall process variation is reduced Lean Six Sigma is one of many methodologies developed through the Quality Revolution History—Evolution of Quality Craft Production Each item is unique Individual parts made to fit Quality through craftsmanship Mass Production High volume Interchangeable parts Quality through inspection Better Production Understanding of process variation Quality through process Evolution of Quality--Timeline 1798 Interchangeable Parts Eli Whitney 1920s Statistical Process Control Walter Shewhart 1950 Reconstruction of Japan Deming & Juran 1960 1980 Toyoda Production System Six Sigma Eiji Toyoda Motorola Expanding Application of LSS Initially applied in production environments Manufacturing Supply Chain Maintenance Repair and Overhaul (MRO) Rapidly grew into transactional applications Financial Institutions Insurers Continued to expand to services Hospitals and Health Care A Couple of Questions What does “Six Sigma” mean? 1. a. A process that has a six sigma level of quality experiences only three defects per one million opportunities. Is it Important to have a six sigma level of quality? 2. a) It depends on the customers perception of quality. If you are landing airplanes, it is critical to obtain at least a six sigma level of quality. If you are manufacturing coffee stirrers, lower levels of quality may be completely acceptable. Sigma Level DPMO 6 Sigma 5 Sigma 4 Sigma 3 Sigma 2 Sigma 1 Sigma 3.4 233 6210 66,810 308,770 697,672 How Good is Good Enough? Sigma Level Improvements 3 Sigma 93.3193% Accurate 4 Sigma 99.379% Accurate • 133,600 lost letters per hour • 12,420 lost letters per hour week • 13 short or long landings at most major airports each day • 1,336,000 wrong prescriptions each year week • 1 short or long landing at most major airports each day • 124,200 wrong prescriptions each year • 33,400 incorrect surgical operations per 5 Sigma 99.9767% Accurate • 3,100 incorrect surgical operations per 6 Sigma 99.99966% Accurate • 466 lost letters per hour • 6.8 lost letters per hour most major airports • 4,660 wrong prescriptions each year most major airports • 68 wrong prescriptions each year • 117 incorrect surgical operations per week • 17 short or long landings every year at • 1.7 incorrect surgical operations per week • 1 short or long landing every 5 years at 11 Lean Six Sigma Methodology What is Lean Six Sigma? LSS Methodology DMAIC Process Key Concepts Understanding Variation Voice of the Customer Voice of the Process LSS Organizational Roles Champion Master Black Belt Black Belt Green Belt Yellow Belt DMAIC Process Define • What is the problem? • What is the goal? Measure • What is the current performance? • What is the defect rate? Analyze • What are the sources of process variation? • What are the root causes of defects? Improve • How do we change the process? • How do we verify our changes will improve the process? Control • Are the improvements to the process consistent over time? • How do we maintain the improvement into the future? Key Concepts of LSS Understanding of Variation Two types of variation Controlled variation (Common Causes) Uncontrolled variation (Assignable/Special Causes) Improvement strategy based on type of variation Controlled variation = Change the process Uncontrolled variation = Deal with the special events Voice of the Customer (VOC) How does the customer describe quality What is the customers tolerance for defects VOC is often expressed as specification limits Goals should align with the voice of the customer Key Concepts of LSS Voice of the Process (VOP) What is the current process capability How much variation is in the process How many defects does it produce What is the process average What process inputs are important to final quality Conceptual Summary of Lean Six Sigma Y=ƒ(x) The Output (Y) is a function (ƒ) of the inputs (x) LSS Organizational Roles Champions Master Black Belts Black Belts Green Belts Yellow Belts Lean Six Sigma Success Factors What are the building blocks for successful LSS programs? Considerations for LSS Success Organizational Factors Commitment of Senior Management Clear organizational vision and goals Effective LSS training strategy LSS Team Factors Flexibility Practicality Focus on Customers (Internal and external) Strengths of LSS Methodology Data Based Scalable Structured Considerations for LSS Success LSS Challenges It is not a quick win approach to continuous improvement It requires an investment It requires a degree of organizational humility Applying LSS in Human Resources Can I apply LSS to my processes? Questions for Consideration You have mentioned that LSS is an organizational approach. Can I learn LSS concepts and apply them to my area of expertise? 2. What are the challenges faced when trying to apply LSS to HR processes when the larger organization hasn’t embraced the methodology? 3. What are the unique challenges for HR in the application of LSS? 4. What types of process are idea for LSS application? 1. Effective LSS Application In HR A Case Study: The New York Independent Operator (NYISO) NYISO Success Factors Well-defined corporate mission and goals Executive commitment to LSS Established infrastructure to support LSS Systematic approach to LSS training Focus on core processes (affecting multiple value streams) Supportive corporate goal structure Background -- The Roles of the NYISO Reliable operation of the bulk electricity grid Managing the flow of power nearly 11,000 circuit-miles of transmission lines from more than 300 generating units Administration of open and competitive wholesale electricity markets Bringing together buyers and sellers of energy and related products and services Planning for New York’s energy future Assessing needs over a 10-year horizon and evaluating the feasibility of projects proposed to meet those needs Advancing the technological infrastructure of the electric system Developing and deploying information technology and tools to make the grid smarter Case Study Project Title: Reduce Cycle Time to Hire for Open Positions Problem Project baseline data reviewed from November of ‘05 to November of ‘06 Average cycle time to hire was 70 days (Median = 43 days) Standard deviation was 70 days 57 percent of positions filled within 60 days Goal Fill open positions in 60 days or less 90 percent of the time Result 87 percent of positions were being filled in 60 days or less (2007) Overview of Improvements Defined and communicated HR Hiring Process / Roles to NYISO Management Implemented Kick-Off Meetings for all Openings: Review/Define Job Specs and Posting information Discuss salary range and position level Discuss Pre-Screening questions and timing Discuss Recruiting strategy Review Hiring Process and HR/Hiring Manager Roles Standardized Pre-Screening process and questions Developed standard interview format, questions, evaluation Created dashboards for HR management and Senior Team reporting Controls Overview Process Step Control Activity Strategy Session Requisition signed by HR and Hiring Manager before recruiting begins Job Description Changes Legal Review for Fair Labor Standards Act ramifications Job Posting Preparation Hiring Manager review / signoff before posting Offer Preparation Generalists secure approval signoff from Management and HR Appendix Supplemental Material Improvement Process Road Map Define Measure Analyze Improve Control Define Measure Analyze Improve Control Activity • Identify Problem • Complete Charter • Develop SIPOC Map • Finalize Project Focus Activity • Develop Operational Definitions • Develop Data Collection Plan • Collect Baseline Data • Determine Process Performance/Capability • Validate Business Opportunity • Review EBPM&C process maps to create ‘As-Is’ Process Map Activity • Propose Critical X’s • Prioritize Critical X’s • Conduct Root Cause Analysis on Critical X’s • Validate Critical X’s • Prioritize Root Causes Activity • Develop Potential Solutions • Develop Evaluation Criteria & Select Best Solutions • Work with EBPM&C to create Develop ‘To-Be’ Process Map(s) • Develop High-Level Implementation Plan • Develop Pilot Plan & Pilot Solution Activity • Develop SOP’s, Training Plan & Process Control System • Implement Process Changes and Controls • Monitor & Stabilize Process • Transition Project to Process Owner Tools • Charter Form • Multi-Generational Plan • Stakeholder Analysis • Communication Plan • SIPOC Map • Voice of Customer (VOC) •Defect definition •Goal definition Tools • Operational Definitions • Data Collection Plan • Graphical Analysis •Pareto Chart •Histogram •Box Plot •Run Chart • Detailed ‘As-Is’ Process Maps Tools • Pareto Charts • Fishbone Diagrams • Brainstorming •5 Why’s • Non Value-Added Analysis From: NYISO Green Belt Training Module—Intro to LSS Tools • Brainstorming • Solution Selection Matrix • ‘To-Be’ Process Maps • Piloting and Simulation Tools • Control Charts • Standard Operating Procedures (SOP’s) • Communication Plan • Implementation Plan •Training Plan • Process Control Plans Lower Spec Limit Upper Spec Limit 68.26 % -3 -2 -1 Voice Of The Process 2 95.44 % -3 Why 6 Sigma? 1 -2 -1 1 2 3 99.73 % -3 -2 -1 1 2 3 99.99999975 6s Units from the mean to nearest spec. limit Voice Of The Customer 3 Sources of Information The New Economics: W. Edwards Deming Lean Thinking: James P. Womack and Daniel T. Jones Understanding Statistical Process Control: Donald J. Wheeler and David S. Chambers Lean Production Simplified: Pascal Dennis Knowledge gained producing training material and supporting LSS training for the following organizations: Delta Air Lines, Inc. New York Independent System Operator Helpful Links General Info: Six Sigma Website: http://www.isixsigma.com Organizations that provide Six Sigma Training: ASQ: http://asq.org/certification/index.html BMGI: http://www.bmgi.com/ Disclaimer This presentation was not prepared by, with, or for the New York Independent System Operator, Inc., and any opinions expressed or conclusions reached herein are not the opinions or conclusions of the New York Independent System Operator, Inc.