Liker's Toyota Way
The TPS House
The Five Principles of Lean Business
The First Improvement Concept (Value)
The Second Improvement Concept (Waste)
The Third Improvement Concept (Variation)
The Fourth Improvement Concept (Complexity)
The Fifth Improvement Concept (Continuous Improvement)
The Improvement Toolkit
Quality means doing it right when no one is looking.
During the last couple of decades small, mid-sized and Fortune 500 companies have embraced Six Sigma to generate more profit and greater savings. So what is Six Sigma?
Six Sigma is a data-driven approach for eliminating defects and waste in any business process. You can compare Six Sigma with turning your water faucet and experiencing the flow of clean, clear water. Reliable systems are in place to purify, treat, and pressure the water through the faucet. That is what Six Sigma does to business: it treats the processes in business so that they deliver their intended result.
What is "Sigma"? The word is a statistical term that measures how far a given process deviates from perfection. Sigma is a way to measure quality and performance. The central idea behind Six Sigma is that if you can measure how many "defects" you have in a process, you can systematically figure out how to eliminate them and get as close to "zero defects" as possible. This book will give you an overview of the Six Sigma methodology, and some of the tools required to deploy Six Sigma in their own organizations.
Six Sigma is the most important training we ever had. It's better than going to Harvard Business School.
Chapter One: Understanding Lean
Lean and Six Sigma are buzz-words we hear in business all of the time. Before we get started, let’s make sure we all understand just what we mean by “lean” and “Six Sigma”.
About Six Sigma
Six Sigma is a structured, data-driven process of solving critical issues from a business perspective that we haven’t been able to solve with current methodology.
Six Sigma is the single most effective problem-solving methodology for improving business and organizational performance.
The common measurement scale is called the Sigma capability or Z and is a universal scale. It is a scale like a yardstick measuring inches or a thermometer measuring temperature.
The scale allows us to compare business processes in terms of the capability to stay within the quality limits established for that process.
The Sigma scale measures Defects per Million Opportunities (DPMO). Six Sigma equates to 3.4 defects per million opportunities.
What Six Sigma is and is not:
“Lean” means continuously improving towards the ideal and achieving the shortest possible cycle time through the tireless reduction of waste.
Examples of Lean Projects:
History Behind Lean
The phrase “lean manufacturing” was coined in the 1980's and has its roots in the Toyota Production System. (See later in this module)
Most of the basic goals of lean manufacturing are common sense, and some fundamental thoughts have been traced back to the writings of Benjamin Franklin.
Henry Ford cited Franklin as a major influence on his lean business practices, which included Just-in-time manufacturing. The founders of Toyota designed a process with inspiration from Henry Ford and their visits to the United States to observe the assembly line and mass production that had made Ford rich. The process is called the Toyota Production System, and is the fundamental principle of lean manufacturing.
Two books have since shaped the ideologies of Lean: “The machine that changed the world” (1990) and “Lean Thinking” (1996).
Toyota Production Systems
The Toyota Production System (TPS) is a mindset and management system that embraces continuous improvement. TPS organizes manufacturing and logistics, including interaction with suppliers and customers. Originally called "Just in Time Production," it builds on the approach created by the founders of Toyota. TPS revolves around 5 simple steps:
The Toyota Precepts
The five methods defined by Toyota contain some basic principles:
Do you value practices, or do you practice values?
Chapter Two: Liker's Toyota Way
In this chapter we will look closer at Toyota’s philosophies that have become a spiritual pinnacle of modern manufacturing. “The Toyota Way” is a book about the 14 principles that drive Toyota’s culture.
The book was written by Dr. Jeffery Liker, a leading author on lean practices and an expert on U.S. and Japanese differences in manufacturing.
Have a Long-Term Philosophy
Principle 1: Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.
Principle 2: Most Business Processes are 90% Waste and 10% Value-Added Work.
Principle 3: Use a pull system to avoid overproduction.
Principle 4: Level out the workload (Heijunka).
Principle 5: Build a culture of stopping to fix problems, to get quality right the first time.
Principle 6: Standardized tasks and processes are the foundation for continuous improvement and employee empowerment.
Principle 7: Use visual control so no problems are hidden.
Principle 8: Use only reliable, thoroughly tested technology that serves your people and processes.
People and Partners
Principle 9: Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.
Principle 10: Develop exceptional people and teams who follow your company’s philosophy.
Principle 11: Respect your extended network of partners and suppliers by challenging them and helping them improve.
Principle 12: You need to go and see for yourself to thoroughly understand the situation (Genchi Genbutsu).
Principle 13: Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly (Nemawashi).
The following are decision parameters:
Do not pick a single direction and go down that one path until you have thoroughly considered alternatives. When you have picked, move quickly and continuously down the path.
Principle 14: Become a learning organization through relentless reflection (Hansei) and continuous improvement (Kaizen).
The general problem solving technique to determine the root cause of a problem includes:
Once you have established a stable process, use continuous improvement tools to determine the root cause of inefficiencies and apply effective countermeasures.
Toyota is as much a state of mind as it is a car company.
Chapter Three: The TPS House
If TPS is a mindset, then what’s holding it all together, is the TPS House.
In this chapter we look at the TPS house, the blueprint for a Lean Enterprise that has become one of the most recognizable symbols of modern manufacturing. The house represents a structural system of how to view our business and organization: The house is strong if the roof, the pillars, and the foundations are strong. A weak link weakens the whole system. It starts with the goals of best quality, lowest cost and shortest lead time – the roof.
There are two main pillars holding the roof up: Just-in-Time (JIT) and Jidoka. JIT and Jidoka mean never letting a defect pass into the next station and freeing people from machines – automation without a human touch. In the center of the system are people.
The Goals of TPS
The Main goals of the Toyota Production System are to eliminate three types of waste:
The elimination of waste (Muda) is the most common way to look at the effects of TPS. We will look at Waste in greater detail in Module Seven.
There are four rules to TPS:
The First Pillar: Just In Time (JIT)
JIT is the left pillar and means to make what the customer needs, when it is needed, in the right amount.
Ideally nothing is produced unless a customer is identified and the product is ordered. This helps in reducing inventories, warehousing and other holding costs.
JIT is not about automation. JIT involves controlling the flow of materials and manpower so that adequate resources are on hand when needed.
The Second Pillar: Jidoka (Error-Free Production)
Jidoka is the right pillar of the house.
It means that when an operator detects an error on an assembly line, they will try solving it themselves. If they cannot correct it themselves, they will call their supervisor. If the supervisor cannot complete the job within the given amount of time, the line will be stopped. The error will be fixed and the line will be started.
If you have no solution to the problem, you will not be able to continue with manufacturing. So solving problems becomes a must.
Traditionally, stopping the manufacturing line is treated as a crime, something you should not do at all.
The TPS view is that if you are not shutting down the line, you have no problems. All manufacturing plants have problems. So you must be hiding problems. TPS wants the problems to surface so that the process can be improved. Changing the mentality is the key to implementing Jidoka in an organization.
Kaizen (Continuous Improvement)
Kaizen is a Japanese term that means continuous improvement. With Kaizen, good enough is never enough. No process is ever perfect.
Kaizen aims to eliminate waste in all systems of an organization through improving standardized activities and processes.
The continuous cycle of Kaizen activity has seven phases:
The following are some basic tips for doing Kaizen:
The Foundation of the House
The foundation of the TPS house is called Heijunka and means “leveling”. Heijunka is a method for reducing waste .The principle is to produce adequate goods at a steady rate, to allow further processing to be carried out at a constant and predictable rate. This stabilization will prevent big spikes in production and hold inventory to a minimum.
Because customer demand fluctuates, two approaches have been developed in lean: demand leveling and production leveling through flexible production.
There are so many men who can figure out costs, and so few who can measure values.
Chapter Four: The Five Principles of Lean Business
In this chapter we’ll look closer at five great principles that are also known as Womack’s Principles. Benchmarking of automotive production facilities, Womack developed a set of five principles that form the basis lean enterprise implementation. The results were published in the book “Lean Thinking”, a milestone in Lean Management.
The value of a product or service can only be understood from the customer’s point of view. We call this “the voice of the customer.”
You need to consider the several voices of the customer:
“Flow” means that when your customer places an order, this triggers the process of obtaining raw materials needed just for that customer’s order. The raw material then flow immediately to supplier plants, where workers immediately fill the order with components, which flow immediately to a plant, where workers assemble the order, and then the completed order flows immediately to the customer.
Lean perfection is the result of:
The secret to success is to treat all customers as if your world revolves around them.
Chapter Five: The First Improvement Concept (Value)
The Kano model is a theory of product development and customer satisfaction. When introduced in the 80’s the model challenged traditional Customer Satisfaction Models that More is better, i.e. the more you perform on each service attribute the more satisfied the customers will be.
The Kano model assumes that every customer has a unique preference, and that a product has attributes that have different values to different customers.
Kano categorizes the attributes of a product into three classes:
To identify the “satisfiers” customers are looking for, there is a number of ways to gather data:
To seek business opportunities and areas of improvement there are a number of resources available including:
From the input gathered, brainstorm a list of features and functionality for the product you intend to improve.
Applying the Kano Model
The Kano classification process is straight forward and simple:
Analyze and rank the voice of the customer. Then rank into categories called Critical to Quality Characteristics (CTQs):
There is nothing so useless as doing efficiently that which should not be done at all.
Peter F. Drucker
Chapter Six: The Second Improvement Concept (Waste)
Muda is the waste and work that does not add any value to the product and that the customer would not pay for if given a choice. All waste has a cost that is direct loss to the company. In Lean and Six Sigma manufacturing, the focus is especially on eliminating three types of waste:
Muda is the waste or work that does not add any value to the product. There are seven kinds of Muda in the Toyota Production System:
Mura is the variation in the operation of a process not caused by the end customer. It is the Irregular, Inconsistent, Uneven, and Unbalanced work on machines.
A typical example of Mura is when employees are rushing production all morning only to stand around and do nothing later in the day.
Muri means putting excessive demand on equipment, facilities, and people caused by Mura and Muda. Muri is pushing a machine or person beyond natural limits. Overburdening people results in safety and quality problems. Overburdening equipment causes breakdowns and defects
Examples of Muri include pushing too hard, lifting heavy weight or repeating a tiring action.
The New Wastes
In addition to the three basic types of waste, lean principles have identified other sources of waste in businesses:
Statistics as a key technology is not merely an operational tool for profitable business. But as a powerful accelerator and catalyst for economic development.
Chapter Seven: The Third Improvement Concept (Variation)
If you toss a coin, what’s the chance it lands on heads? If you toss a coin ten times, you expect five heads and five tails. If you toss the coin ten times, and do it over and over again, the output varies. The extent to which your experience deviates from expectation is the extent to which variation has occurred.
If you measure something that occurs many times it’s going to vary around an average – or mean-value.
Variation is deviation from expectation. The size, trends, nature, causes, effects, and control of this variation is the center of Six Sigma methodology.
Describing variability over a period of time helps us understand how the system is working and to predict how it will continue to work in the future.
When variation is produced by the system itself it is known as common cause variation. You can act to reduce common cause variation but you cannot eliminate it.
This type of variation is directly caused by something special.
If the mailman comes to your house at 11:30 each day but he gets a flat tire and doesn’t come until noon, that’s a special cause of variation.
If the network system went down that is running your credit card application, that’s a special cause.
A common mistake is trying to improve a process by adjusting it when it does not need adjustment. The term for this mistake is called tampering. Tampering usually occurs when the measured outcome does not meet our external performance targets. Examples of external performance targets can be financial targets, and demands to meet monthly quotas.
These changes are a result of regular, systematic changes in output. They will be more pronounced over the long term and through seasonal patterns. These changes are normal and reflect an ebb and flow of normal production being influenced by the environment.
There is never any justification for things being complex when they could be simple.
Edward de Bono
Chapter Eight: The Fourth Improvement Concept (Complexity)
A product or service that is very complex adds more non-value, higher costs, and more work than processes that are slow or of poor quality. In other words, the complexity of something is more expensive than something that is lower quality or produced in a lower speed.
What is Complexity?
Complexity in Six Sigma means non-value added high cost manufacturing processes. The Law of Complexity and Cost adds more non-value-added cost and work than either poor quality (low Sigma) or slow speed (un-Lean).
What Causes Complexity?
There are two significant contributors to complexity:
Both scenarios are always at immense strategic risk when faced by a less-complex competitor.
How to Simplify?
Complexity reduction or elimination of non-value added processes is central to Six Sigma and Lean thinking.
There are two approaches to reducing complexity:
A practical example can be found in the automotive industry. Instead of 8 different vehicles built on 8 different platforms, the manufacturer condenses its engineering designs into one platform. Consider how GM now shares one platform across Chevrolet, Cadillac, Buick, and GMC.
The standardization process achieves low cost without the market penalization that an optimization strategy may suffer.
If you do what you always did, you get what you always got.
Gerhard Plenert & Bill Kirchmier
Chapter Nine: The Fifth Improvement Concept (Continuous Improvement)
By now you will know that in the world of lean, good enough is never good enough. In this chapter, we’re breaking down Continuous Improvement into three basic principles:
The PDSA Cycle (Plan, Do, Study, Act)
PDSA is a way to test out improvements on a small scale before implementing them across the board. It will give you the opportunity to see if the proposed change will work. Here’s how:
The DMAIC Method
Define: Identify and state the practical problem
Measure: Validate the practical problem by collecting data
Analyze: Convert the practical problem to a statistical one, define statistical goal and identify potential statistical solutions.
Improve: Confirm and test the Statistical solution
Control: Convert the statistical solution to a practical solution
Quality is never an accident;
it is always the result of intelligent effort.
Chapter Ten: The Improvement Toolkit
So what happens now? This chapter provides some basic methods and organizational advice for the journey ahead. Six Sigma can be a long journey but with a basic understanding of its methods and tools it will improve your work and personal life.
Gemba is Japanese for " actual place" and in business terms it is where you create value for your customers through daily work, often the factory floor itself.
The idea is that if a problem occurs, the engineers must go to Gemba, the source, or the root, to understand the full impact of the problem.
There are five rules of Gemba management:
Unlike focus groups and surveys, Gemba visits are not scripted or bound by what one wants to ask.
Genchi Genbutsu means "go and see for yourself".
It refers to the fact that any information about a process will be simplified and abstracted from its context when reported. This attitude of Genchi Genbutsu is to seek “the place where it actually happens”.
By observing the actual process or problem at the actual place where it is occurring, the problem solver is able to obtain actual data or facts, which will improve the chances for a better solution.
This is in contrast to the Western thinking in which many managers make decisions from behind a desk, armed only with second hand information from others.
The five-step thought processes for guiding the implementation of lean techniques are easy to remember, but not always easy to achieve:
The process of becoming a Kaizen learning organization involves criticizing every aspect of what one does. The general problem solving technique to determine the root cause of a problem includes:
A Roadmap for Implementation
A Six Sigma initiative begins with a deployment program from the top down. Individuals must go through the required training to become certified belts, and projects have to be identified.
A Six Sigma initiative occurs in five major stages:
When the organization is ready and trained, it’s time for a project!
A Six Sigma project should:
The focus of a project is to solve a business problem such as:
Tell me and I will forget, show me and I may remember, involve me and I'll understand.
We don't know what we don't know
We can't act on what we don't know
We won't know until we search
We won't search for what we don't question
We don't question what we don't measure
Hence, We just don't know
With Six Sigma, you can find the answers
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