1. Transforming your business operations with the Lean Six Sigma toolkitEntrepreneurial Roundtable  University of Chicago Booth School of Business John A. “Jack” Kahler December 21, 2009

2. How do I serve my customers? What value does my work create? All of us are in operations.

3. Kano diagrams plot customer expectations against satisfaction Weston Chicago found that guests were lonely away from home. Introduced successful evening social program. Starwood changed its complimentary massage because guests wanted massage to last longer. Paid massage revenues hit an all-time high, 30% over the previous year Page 3 High Satisfaction Delighted Customers Expectations Met Expectations Not Met Middle of the Road Basic Expectations Low Satisfaction

4. Do you hear the Voice of the Customer? Where to listen: Point-of-use observation User comment sites Interviews & surveys Customer complaints Sales reporting Lost sales or customers What to listen for: Likes & Dislikes Apologies & Forgiveness Wish List What to do with the info: Identify unmet needs Identify Critical-To-Quality requirements Convert VOC to measurable attributes Page 4

5. Value links to both Customer Service and Business Metrics Page 5 How do I serve my customers? What value does my work create?

6. Would you pay for these experiences? Waiting at the doctors office The drive-through kid forgetting your French fries The clerk searching for your file Making 3 copies of your mortgage application Repeating your account number to a customer service rep Calling your Primary Care Physician for a specialist referral Page 6 If you’re a customer of these industries, you already do!

7. The benefits of improvement Increase customer satisfaction Increase available resources Increase cash flow Decrease inventory Decreased lead times Improve the bottom line Page 7

8. How does business measure value? Page 8

9. Improvement in Layers Page 9

10. The first challenge is seeing waste Page 10 Performing more steps than needed Un-utilized capabilities Under-utilizing people & ideas Not doing It right the first time Walking, Bending, Turning Making more than you can sell People, Products, Information Information, parts, “your turn” Storing parts or material Inventory Over-Processing Capacity Skills Defects Motion Over-Production Transportation Waiting

12. Consultants

13. Contractors

14. Payroll Processing Company

15. Complete T&E rep’t

16. E-mail to Acct’ing

17. Sort by client

18. Sum and Balance

19. Match receipts to Expenses

20. Review expenses

21. Save to PDF

22. Enter data to A/P

23. Prepare and transmit Invoices

24. File T&E's

25. Report totals

26. Enter expenses into payroll run

27. Process payroll

28. Clients

29. Consultants

30. Management

31. IRS

32. Invoices

33. Expense Reimburse-ments

34. Summary reports

35. Payroll Adjustments

36. Quarterly tax reports

37. A/P Trial Balance

38. Airline receipts

39. Food receipts

40. Mileage

41. Other receipts

42. Hours

43. Billing Codes

44. Descriptive notes

45. T&E Spreadsheet

47. Spaghetti Diagrams diagram movement in a workcell As-Is Process Operator travels 3,215 feet Cycle time 98 minutes Improvements Improved workcell layout Point-of-Use toolboard Improved machine controls Improved inspection equipment and lighting Visual Production Board & instructions, signal for supplies and part removal KANBAN for perishable tools To-Be Process Operator travels 375 feet Cycle time 14.9 minutes Page 13 Stamping Press Steel Decoiler Eject Toolboard Grinder Tool and Die Bench Tool Kanban Grinder Scrap Inspection Table

48. Cellular Operations Arrange workstations and equipment to create a smooth flow with minimal transportation Benefits Flexibility Speed Teamwork Real-time coordination Small batches High-quality of work Page 14

50. Set In Order

51. Shine

52. Standardize

54. SMED/Rapid Changeover Eliminate total wasted time or useless operations Convert Internal into External operations Simplify fittings and time consuming fasteners Work in teams Reduce or eliminate adjustments and test runs. Page 17

55. One Piece Flow matches effort to demand and reveals problems Page 18 14 Days 1 Day

56. Use “Kanban” signals to match production with customer demand Pull system –the actual use of a resource or input dictates when to restock or replenished Kanban –a visual card or sign which is used as signaling system to trigger action Page 19

57. Just In Time JIT -produce only what is required, in the correct quantity and at the correct time Benefits Improve return on investment Reduce inventory (raw material, components, WIP, finished goods) Reduce carrying cost Increase efficiency Page 20

58. Visual Management Visual management allows you to quickly grasp the current situation in real time What to work on next Queue size Current pace Current quality Page 21

59. Why the best golfer changes his swing Be first to “raise the bar” Observe and learn about your business Solve the problems that emerge What’s left were deeper problems Page 22

60. So who is the better golfer? Page 23

61. The Six Sigma DMAIC Methodology Page 24

62. Is 99% good enough? Page 25 Lean Six Sigma Breakthrough Management Group with Neil DeCarlo Don’t forget, we all pay for poor quality!

63. But… where do I begin? © 2009 Avocus Group LLC. All Rights Reserved.

64. Begin by… Page 27 Seeing Doing Knowing Beginning

65. Raise the bar… Page 28 and begin again

66. Free and cheap resources Free Six Sigma Material offers good basic instruction and free templates www.six-sigma-material.com www.isixsigma.com has articles, case studies and products geared to the lean six sigma practitioner Several excellent blogs offer instruction, tips, case studies and tools for the Lean Six Sigma community. Here are a few of our favorites: www.gembapantarei.com Improve with Me (passthebuck.wordpress.com) www.productivitycafe.com www.leanblog.org www.evolvingexcellence.com www.worthsolutions.com/leanblog/ Cheap Open Source Six Sigma has a broad array of resources for training and implementation. www.opensourcesixsigma.com Getting Things DONE, The Art of Stress-Free Productivity, by David Allen. There’s also an Outlook Add-In at https://gtdsupport.netcentrics.com The Lean Six Sigma Pocket Toolbookby George, Rowlands et al 2005 McGraw-Hill The Goal, by EliyahuGoldratt & Jeff Cox 1984 North River Press Lean Thinking by James Womack & Daniel Jones 2003 Free Press The Six Sigma Handbook by Thomas Pyzdek 2003 McGraw-Hill Page 29

67. Thank you and good luck! © 2009 Avocus Group LLC. All Rights Reserved. Page 30 209W204 Roosevelt Road West Chicago, IL 60185 Jack Kahler(312) 404-5008 Direct jkahler@avocusgroup.com Visit our website at www.avocusgroup.com Avocus Group LLC