Improving Processes Through LeanSix Sigma

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Improving Processes Through Lean-Six Sigma

• Jim Weishaar
• Director
• Operational Risk Management
• November 28, 2007

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Agenda

• Lean6 Overview
• Integrated Process Transformation
• Results

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Lean6

• Lean6 is our fact-based approach for improving
  our business processes and delivering best value
  to our customers. Leadership Council - January
  16, 2004
• Combines both lean and Six Sigma principles

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Lean6
Improve it
Lean6 empowers our employees with the skills,
abilities and tools to make a real difference!
The Past
The Present
The Future

• Lean6 integrated with ERMP
• Centralized project ranking

• Lean6 projects fully aligned to highest priority
  initiatives
• Just in time training of teams

• 2004 Program started
• 2005 Centralized PMO
• 2006 Benchmarked training

FY08 (planned)
FY07
FY06
14 Projects 17M ROI 282 Trained People
143 Projects 22M ROI 1,310 Trained People
820 Projects 62M ROI 1,685 Trained People
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Key Components
SIX SIGMA Reduce Variation
LEAN Remove Waste
Purpose
Flow Focused
Problem Focused
Focus

1. Waste Removal with Improved Business
Performance 2. Many Small Improvements are Better
than Systems Analysis
1. A Problem Exists 2. Figures and Numbers are
Valued 3. System Output Improves if Variation in
all Processes is Reduced
Assumptions
Primary Effect
Reduced Flow Time
Uniform Process Output
Secondary Effects
1. Less Waste 2. Fast Throughput 3. Less
Inventory 4. Flow--Performance Measures for
Managers 5. Improved Quality
1. Less Variation 2. Consistent Output 3. Less
Inventory 4. Fluctuation--Performance Measures
for Managers 5. Improved Quality
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Lean6 Principles

• Specify value in the eyes of the customer
• Identify value stream eliminate waste and reduce
  variation
• Make value flow at pull of customer
• Involve, align empower employees
• Continuously improve processes in pursuit of
  perfection

Not an event, but a way of life
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Value Definitions

• Value added activity
• Customer is willing to pay
• Changes or improves the product
• Non-value added, but necessary activity
• Required by law
• Supports Agency requirements
• Reduces risks, defects, and costs
• Required by a Value Added activity
• Non-value added activity
• Not supported by the above
• These activities are muda

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Tools of the Trade

• Gemba
• Flowcharting
• Value Stream Mapping
• Pareto Charts
• Brainstorming
• Affinity Diagram
• Fishbone Diagram
• Five Whys
• 6S safety, sort, set, shine, standardize,
  success

Like any tool using the right one makes all the
difference
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Lean6 Tools - 6S and Visual Management
Before
After
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Lean6 Tools Enterprise Level Diagnostic
Enterprise Management Services

• Serves as a framework for diagnosing and
  improving overall enterprise performance
• Focuses on enterprise-wide processes, rather than
  individual functions, programs, or tasks
• Provides a structure for creating a shared vision
  for the enterprise
• Identifies improvement opportunities that will
  benefit the entire enterprise

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Lean6 Tools Enterprise Level Diagnostic
Kansas City Enterprise Focus on improving
processes before workload moves to enduring
site(s)

• Alignment Exercise
• Helps to ensure that processes, goals, metrics,
  and stakeholder values are aligned
• Facilitates identification of gaps and
  misalignments

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Plan for Continuous Improvement

• The improvement process is a continuous event
• One project will have an effect on other
  processes
• Opportunities identified in previous phases need
  to be explored and considered for improvement
• This is the next steps of any process
  improvement
• Improvement plan
• Start with prioritized list of projects from
  initial phase
• Present recommendations for continued projects
  for other target areas identified
• Solutions implemented may change list

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Integrated Process Transformation
ERMP Check it
Risk Management
Process Excellence
Internal Controls
Internal Controls Check it Fix it! (the
solution)
Lean6 Improve it! (the process)
Lean6
Business Activity Monitoring Check it! (the
transaction)
Project Management Center of Excellence Manage
it! (the initiative)
BAM
PMCoE
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ERM and Lean6 Integration
Objectives
Integrated Outputs
ERM
L6
Core Area Analysis
Enterprise Level Diagnostic

• Map End-To-End Process
• Validate Sub-core Areas
• Identify/Prioritize Risks
• Identify Assess Internal Controls

• End-to-End Process Map
• Value Stream Map
• Validated Sub-Core Areas
• Prioritized list of Risks/Opportunities
• Identified Control Deficiencies

• Identify High Level Value Stream
• Identify Prioritize Improvement
• Opportunities
• Align Goals/Metrics/Stakeholders/
• Processes

Sub-Core Area Analysis
Business Diagnostic

• Map End-To-End Process
• Validate Sub-core Areas
• Identify/Prioritize Risks
• Identify Assess Internal Controls

• Identify High Level Value Stream
• Identify Prioritize Improvement
• Opportunities

• Identify High Level Value Stream
• Identify Prioritize Improvement
• Opportunities

• End-to-End Process Map at Sub-Core Area
• Value Stream Map for each Sub-Core Area
• Validated Major Functions
• Prioritized list of Risks/Opportunities
• Identified Control Deficiencies

Major Function Analysis
Lean6 Project

• Map the process (A-123)
• Identify, Classify, Prioritize Risks
• Identify/Evaluate Internal Controls
• Compliance Integration
• Testing and Remediation

• Process Maps for Each Major Function
• (A-123 Compliant)
• Develop/Implement corrective action plans
• Internal Control Test Plans
• Implemented Remediation Activities

• Map the process
• Identify Undesirable Effects (UDE)
• Determine root cause
• Develop/Implement corrective action

Benefits of an ERM/Lean6 Integrated Approach

• Single process/multiple uses
• Cohesive approach of risk mitigation and process
  improvement
• Efficient use of time and resources
• Consistent message and awareness throughout the
  agency
• Standard terminology for Risk, Process, and
  Compliance Management

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ERM/Lean6 Integrated Process
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Improved Mission Delivery
Our processes are how we accomplish our Mission
Mission Direct, approve, and perform finance and
accounting activities for DoD
The Approach - Process Excellence Program
Planned Results

• Risks identified
• Mitigation plans in place
• Robust internal controls
• Processes documented
• Continuous process improvement

Measuring Success
Process Maturity Level
Level 1 Ad Hoc
Level 2 Managed
Level 3 Standardized
Level 4 Integrated
Level 5 Optimized
By Dec 2008
Today
Future
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Results - CPI-Aligned Top 25 Project Examples

• Modernize and integrate critical financial
  management and internal control systems (USD (C))
• 84 projects completed
• 64 projects in-process

• OUSD(C)
• Reprogramming Actions in OSD
• Reduced cycle time by 20
• ADA Project
• Reduced cycle time by 30
• DFAS and Customers
• WIZARD (IPAC processing)
• Reduced cycle time by 50
• Reduced rework by 565K
• VISTA Logic (Interfund processing)
• Eliminated rework of 3,300 transactions / month
• Reduced rework by 2.5M
• DFAS Doc Control
• Reduced wait time 37
• Reduced FTEs 66

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Results - CPI-Aligned Top 25 Project Examples

• Implement DBSMC and BTA agendas to include
  fielding DIMHRS
• 3 projects completed
• 4 projects in-process

• Basic Allowance for Housing
• First DFAS and inter-Service project
• Specific recommendations for each Service
• Case Management System
• Pay problems resolved within 20 days increased
  from 42 to 99
• Cost savings 2.276M
• Wounded In Action
• Eliminated 17K backlog and approximately 100
  accounts/month that do not require review
• Cost savings 209K

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Backup
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Lean6 Tools - Gemba

• Gemba (real place) see what is happening with
  your own eyes
• Hints on what to consider
• What workers are doing
• What support staff is doing
• What is happening to the product
• Where are the backlogs
• How to do this well
• Believe you know nothing
• Think in terms of discovering
• Leave bias at the door
• Observe from different perspectives
• Search for attitudes, habits, opinions
• Observe at different times

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Lean6 Tools - 6S

• 6S Improvements
• Safer working conditions
• A cleaner, more organized work area
• Reduction in non-value added time
• Effective work practices
• Efficient work processes

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Lean6 Tools - Visual Management

• Visual Systems
• Visually provide the right amount of information
• Real time or close to it
• Allows to quickly determine health of the process
• Empowers the work force
• Examples of Visual Controls
• Traffic signals
• Colored text box on computer to indicate error
• Gas gauge
• Temperature indicator