This presentation guides you through the DMAIC methodology that encompasses Lean, Six Sigma and ToC initiatives. The Measure phase guides you through the detailed process mapping of the SIPOC diagram to Swim Lanes, spaghetti diagrams that focus on time, cost and quality. The presentation guides you though the statistics element of data sampling and to understand the theory of constraints. The presentation also discusses the use of Pareto charts to identify the key issues within a process. – Optimise-GB (Creating Operational Efficiencies)

1. Lean, Six Sigma and ToC DMAIC Process Improvement - Measure Phase Optimise -GB

2. Knowledge base Lean: is centred around creating more value with less work by removing waste and increasing efficiencies in business processes. Six Sigma: seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) to achieve cost reduction or profit increase and customer satisfaction Optimise -GB

3. Knowledge base Theory of Constraints (TOC ) is an overall management philosophy introduced by Dr. Eliyahu M. Goldratt and is geared to help organisations achieve their objectives. Any manageable system is limited by a small number of constraints. Optimise -GB

4. Six Sigma Process Improvement methodology Optimise -GB

5. Six Sigma Measure Confirm Objectives Document current process Measure the performance of your process in terms of time, cost and quality (defects) and set new targets to be achieved Optimise -GB D M A I C

6. Six Sigma SIPOC (Process) map - Convert into a Swim Lane process map Optimise -GB D M A I C Supplier Input Process Output Customer Customer Need for goods Give order Order Operations Operations Order Take goods from shelf Obtained goods Finance Finance Obtained Goods Produce and print invoice Invoice Operations Operations Goods and Invoice Box goods / invoice Boxed Goods Customer

7. Six Sigma SIPOC (Process) map - Convert into a Swim Lane process map You may wish to add more process boxes for each department or add decision boxes for variable outcomes with diamonds. We will continue with the simple process map as an example Optimise -GB D M A I C Customer Operations Finance Give order to sales desk Take goods from shelf Produce / print invoice Box goods / Invoice

8. Six Sigma SIPOC (Process) map – Measures Optimise -GB D M A I C Types of measures Time of completing an activity Time waiting between activities Labour cost of activity Distribution costs % of errors / re-work Number of people in the process Cost of 3 rd party Storage costs

9. Six Sigma Process Time 10 Min 30 Min 10 Min 15 Min Waiting Time 0 Mins 5 Days 2 Days Distribution method N/A Post Post Cost of process £10.00 £0.00 £15.00 £0.00 £5.00 £0.00 £2.50 % Defects 5% 0% 5% 1% 0% 0% 4% Optimise -GB D M A I C Customer Operations Finance Give order to sales desk Take goods from shelf Produce / print invoice Box goods / Invoice

10. Six Sigma Using the data from the swim lane Process Time = 45 Minutes Waiting Time = 10,080 Minutes(8 hours in a day @7 days) Cost of process = £32.50 % Defects = 23% rework required You will need to verify the above data with sampling techniques of your choosing – Once more data has been identified then statistics can be used to verify consistency. Interviews should be used to obtain qualitative information Optimise -GB D M A I C

11. Six Sigma Spaghetti Diagram – Flow diagram (describes the motion of activity) Customer Operations Credit Control Phone in order Deliver goods and invoice Pay invoice Requests an invoice to be raised Optimise -GB D M A I C

12. Six Sigma Spaghetti Diagram – Also used to describe movement of people in a factory or office (Motion is waste) Post Room Credit Control Desks Central Printer Collect copy of order from operations Collect invoice from printer Take invoice to post room Stationery Room Get stamps and envelopes Optimise -GB D M A I C

13. Six Sigma Key things to measure here are : - Distance travelled - Cost of travel - Time of travel (return) - Number of trips made Optimise -GB D M A I C

14. Six Sigma Theory of Constraints (ToC) The Theory of Constraints aims to identify and eliminate constraints so that bottle necks do not appear by following 5 steps: 1 – Identify the constraint 2 – Exploit the constraint to maximise production benefit 3 – Subordinate everything else – eliminate non value added work 4 – Elevate the constraint by increasing resources to handle more work 5 – Start again from point 1 to review all other constraints Optimise -GB D M A I C

15. Six Sigma Process time: 10 Min 30 Min 10 Min 15 Min Batch Units B/F 10 25 10 50 Process along (6) (2) (6) (4) Prev Process - 6 2 6 Batch Units C/F 4 29 6 52 You can see which processes are becoming bottle necks and where action is required Optimise -GB D M A I C

16. Six Sigma Statistics to see if there is consistency Optimise -GB D M A I C Trial # Time to collect cash 1 12 Days 2 15 Days 3 28 Days 4 15 Days 5 22 Days 6 9 Days 7 10 Days 8 12 Days 9 15 Days 10 18 Days

17. Six Sigma Statistics to see if there is consistency Optimise -GB D M A I C

18. Six Sigma Statistics to see if there is consistency Mean (Average) = 15.6 Days Median (Middle number) = 15 Days Standard deviation = 5.8 If the standard deviation is > 2 then there is a large variation and little correlation in the data. Identifying abnormal data and removing it will ensure that a better sample may be taken. Optimise -GB D M A I C

19. Six Sigma Statistics to see if there is consistency A large standard deviation could be the result of different gauges – for example: - Different people being measured - Variations in complexity with invoice - Customers paying invoices differently - Different payment terms It is important to understand these variations and produce sample data based on categories rather than the entire sample Optimise -GB D M A I C

20. Six Sigma Remove abnormal data Optimise -GB D M A I C

21. Six Sigma Statistics to see if there is consistency Mean (Average) = 14.5 Days Median (Middle number) = 15 Days Standard deviation = 2.26 The standard deviation is still greater than 2 but this at least provides a better sample. Therefore the average (baseline) of 14.5 can be assumed for larger samples. Optimise -GB D M A I C

22. Six Sigma Staff availability: 6.5 working hours per day (8 hours less 1 hour lunch less 30 minutes for breaks) Meetings none customer focused Idle time due to no work Availability time Operating time 390 Mins (60 Mins) (30 Mins) 300 Mins 77% Availability Optimise -GB D M A I C

23. Six Sigma Staff Performance efficiency: Total Process time from order to cash As above one month later Efficiency Operating time 15 Days 18 Days 80% Optimise -GB D M A I C

24. Six Sigma Not Right First Time = Quality measurement of defects % Defects 5% 0% 5% 1% 0% 0% 4% In a sample of 100 sales invoices the number of defects would be 15. Therefore the NRFT is 16%. Quality = 85% Optimise -GB D M A I C Customer Operations Finance Order goods Take goods from shelf Produce and print invoice Box goods and invoice

25. Six Sigma Therefore the Overall Efficiency is: OEE % = Availability X Performance X Quality X 100 OEE % = 77% X 80% X 85% X 100 OEE % = 52.4% (World Class is 85%) This means that 47.6% of work is lost through inefficiency Optimise -GB D M A I C

26. Six Sigma Remove or minimise non-value added work Optimise -GB Value Added Non-value Added Value enabled D M A I C Process Take order Take goods from shelf Produce and print invoice Box goods / invoice

27. Six Sigma Prioritisation of focus: Process time If your focus is on process time, a Pareto chart will help to prioritise your improvement focus. In this case Taking goods from Shelves” and Boxing goods and invoice” seems to take the longest time. Optimise -GB D M A I C Process Time Take goods from shelf 30 Package goods and invoice 15 Take order 10 Produce Invoice 10

28. Six Sigma Prioritisation of focus: Quality If your focus is on quality a Pareto chart will help to prioritise your improvement focus. In this case “Taking goods from shelves” and “Taking orders” has the larges defects. Optimise -GB D M A I C Process Defects Take goods from shelf 5% Take order 5% Package goods and invoice 4% Produce Invoice 1%