Integrating Lean and Six Sigma

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Integrating Lean and Six Sigma

• WCBF Summit, 4/29/2008

Pete Abilla Email pabilla_at_ebay.com Blog
www.shmula.com 801-400-3895 Alex
Bellabarba Email abellabarba_at_ebay.de
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Lessons Learned
Conclusion
eBay
Agenda
Lean
Six Sigma

• Opening Remarks
• On the Surface
• Beneath the Surface
• What does Lean really mean?
• Six Sigma
• Lean Six Sigma
• Lessons Learned
• Conclusion

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
beneath the surface
on the surface
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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
beneath the surface
on the surface
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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
Summary
Technical
Philosophy
What does Lean really mean?
Development Managerial

• The term lean does not find its origins in
  Toyota. The word was coined by Jon Krafcik, part
  of MITs International Motor Vehicle Program,
  which was led by Jim Womack. Krafcik came up
  with the term lean to describe Toyotas system
  that managed to get by with half of everything
  physical space, labor effort, capital investment,
  inventory, and with far fewer defects and safety
  incidents.
• Toyota describes its system as a triangle of
  Technical, Managerial, Philosophy with human
  development in the middle. All of this together
  combine to form a Lean Culture.

what we do
how we manage what we do
what we believe
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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
Summary
Technical
Philosophy
What does Lean really mean?
Development Managerial

• It is important to define Lean in the context of
  the organizations goals and objectives.
• For eBay, this means

We are pioneering new communities around the
world built on commerce, sustained by trust, and
inspired by opportunity.

• We believe people are basically good.
• We recognize and respect everyone as a unique
  individual.
• We believe everyone has something to contribute.
• We encourage people to treat others the way they
  want to be treated themselves.
• We believe that an honest, open environment can
  bring out the best in people.

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
Summary
Technical
Philosophy
What does Lean really mean?
Development Managerial

• The technical side of Lean can be described as
  the tools and methods that we implement and use.
  This aspect of Lean is what we see most often in
  popular culture the Cult of Lean, as it were
  but is only one aspect. For example,

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
Summary
Technical
Philosophy
What does Lean really mean?
Development Managerial

• Toyota leaders use the phrase building people
  before building cars, meaning that developing
  its employees is the key to improving its
  products and services.
• In true Lean fashion -- respect for people is
  at the center of most activities.
• In addition to Philosophy and Technical aspects
  of Lean, there is also an emphasis on how we
  manage and train leaders throughout the company.
  
• The infrastructure systems, processes, and
  people are required to sustain improvements.

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
Summary
Technical
Philosophy
What does Lean really mean?
Development Managerial

• In summary, we can reduce Lean into two parts
• Total Elimination of Waste
• Respect for People
• We claim that a successful implementation of Lean
  in any environment, transactional or
  manufacturing requires a balanced approach on
  

Total Elimination of Waste Respect for People
Waste, or Muda, refers to the 7 waste
transportation, motion, defects, inventory,
overproduction, waiting, over-processing.
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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
belt? what Belt?
what is it?

• Father of Six Sigma was Bill Smith, an engineer
  and scientist at Motorola.
• The characterization, measurement, analysis, and
  control of variation is the chief aim of Six
  Sigma.
• Customer experience is largely a function of
  consistent experience, of which the
  mathematical measurement is s or sigma.
• Consistent doesnt mean delightful. It can be
  consistently bad, but at least its consistent.
  Once variation is controlled, then it can be
  appropriately reduced.
• The methodology that is typically followed is
  Define, Measure, Analyze, Improve, and Control
  (DMAIC).

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
belt? what belt?
what is it?
In the beginning, there were no colored belts and
we focused only on the end customer, reducing
warranty costs and getting it right the first
time. It was named six sigma and it was
good. Over time, we added black belts and
increased the use of advanced statistical tools.
This was called the six sigma way and it was
better. Soon we saw the need for more definition
and including others to help the black belts in
their quality quest so we added green belts. This
made the black belts happy. Eventually, the black
belts grew numerous by order of the King. These
black belts expanded their search for variation
reduction to all corners of the kingdom including
even processes in the Human Resources Department
but still lacked direction. So we added Master
Black Belts to lead them. As we look across the
kingdom today, we can now see yellow belts, gold
belts, white belts, master black belts and even
Grand Master Black Belts added to the royal order
of belts. Everyone must have a colored belt to
save the kingdom money regardless if it actually
helps the end customer. And the only way to fix a
problem is through a black belt project, green
belt project or even a lime green project (in
between a green belt level project and a yellow
belt level project). I guess calling it a lime
green project is better then calling it a pea
green project. But is this good? Maybe we should
go back to the basics and focus on the customer,
reduce warranty cost and getting it right the
first time. Mike Wroblewski
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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories

• Our balanced strategy is simple
• Improve the Member Experience
• and
• Reduce the cost-to-serve
• Our Scope
• Within-CS We believe that participatory
  management leads to long-term organizational
  learning. Our aim is to empower each customer
  service agent with the principles and tools of
  Process Improvement to improve their work
  everyday. In sum, we believe that everyday,
  normal, down-to-earth CS Agents can do really big
  things.
• Outside-CS Our worldview is that Customer
  Service is a reflection of the customer pain and,
  that some or most, of the root causes are
  potentially and usually upstream in the value
  chain upstream from the Customer Service
  function. Most projects of this type, will
  usually follow DMAIC, but always with our Lean
  hats on, just for good measure.

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
unpaid items
Item not received
list-to-sell
paid-to-ship
seller
outside-CS focus Why do we receive CS contacts
at all?
significantly not as described
find-to-bid
bid-to-win
win-to-pay
buyer
ship-to-receive
etc
Customer Service
cs
abandonment rate
within-CS focus Why do we deviate from perfect
customer service?
handle time
policy issues
wait time
1st contact resolution
etc
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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
within-cs
beyond-cs
drive out fear
Expected Outcomes Key Deliverables

• Guiding Principles
• We want our CS Agents to
• Focus on the customer
• Be involved, participate, not be afraid feel
  heard
• Be empowered to enhance their work in a
  systematic way and know how to apply improvement
  tools appropriately.
• Deliver and sustain results
• Share best-practice across other areas of the
  business and with global partners.

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
within-cs
beyond-cs
drive out fear

• ICVS
• Investigate, Change, Verify, and Share is a
  modification of Demings PDCA Model.
• The beauty of ICVS is that this approach can be
  applied by anybody to almost any situation.
• The wheel below is another representation of ICVS.

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
beyond-cs
drive out fear
within-cs

• The Andon of Fear
• An Andon Cord is a cord that sits on both sides
  of a production line.
• It is designed to be pulled by the operator if a
  problem is observed.
• When pulled, the production line stops, the team
  gathers in the area, and quickly drive to root
  causes, brainstorm and implement countermeasures,
  and start the line again.
• But, in some places, workers are afraid to pull
  the Andon Cord.
• What are the consequences of fear in the
  workplace? What is the impact on the Customer?

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
beyond-cs
drive out fear
within-cs

• Most outside-CS work is done primarily following
  DMAIC.
• From a global perspective, we view contact volume
  as symptoms and we aim to follow the volume to
  its potential root causes upstream.
• The critical success metric for us is to reduce
  contact volume through fundamental improvements
  in product, policy, and process.

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
19
Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
results
participation

• Our Visual Management RotoCube contains cards for
  metrics recording, suggestion forms, and a
  celebrate section for completed suggestion forms.
• Goal Increase the Problem-Finding
  Problem-Solving capability of our CS Agents.

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
results
participation

• Unpaid Item Claims
• UPI Claims leads to less or no buying activity on
  eBay.
• Verified 3 Root Causes of Wrongful Unpaid Item
  Claims.
• Eliminating these 3 root causes will bring eBay
  an estimated 24MM lift in Gross Merchandise
  Bought (GMB).

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
results
participation
Chriss improvements to the contract
subscriptions process resulted in year-to-year
revenue gains of 114,000!
What were the Changes?

• Round Robin contract to DC
• Creation of eFax number
• Placing an 800 on the contract

Look at the Results!
Before
After
114,000Revenue Gains

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
results
participation

• Before
• Redundancy calls stored in 2 areas
  (spreadsheet and email box)
• Scheduling of calls not defined

• After
• Elimination of kana email box storage
• Phone calls now assigned
• Service level attached to calls

• 18 days

• 2 days

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
results
participation
What were the Changes?
Adam Lunds project addressed several problems in
the Error, Addition, and Muze Portal work
processes at Half.com that resulted in 72,000
growth of catalog GMV.

• Created Kana workflows
• Created process to evaluate catalog entries
• Tasked CSRs and trained

Look at the Results!
Before

• KANA
• 7,500 abandon cases
• Oldest case 10,802 hours

• MUZE
• 50 Roll Through
• Average Response Time 9 Days
• All Responses out of service level

Service Level Range
After

• MUZE
• 95.6 Roll Through
• Average Response Time 54 hours
• 70 of responses in Service Level

• KANA
• Cases worked within 72 hours

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
results
participation
What were the Changes?

• IP related proofs did not accurately identify ATO
  and were causing WATO to occur.
• Accurate proofs and education led to reduction of
  WATO by 839/month
• This equates to 2.1M in revenue gains annually

Look at the Results!
Before
After
2.1M Revenue Gains
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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
results
participation
The goal reduce the misroutes by 50 or approx.
1800 emails.
Implemented solution January 29th.
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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
results
participation
Problem Significant amount of redundancy User ID
2x Email address 2x Contact information Required
waiting for information
Solution Information Pushed Name Address Telepho
ne User ID
- 45 seconds
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General Support, Proof-of-Identity Eliminate
Steps Reduced Cycle Time Richard Wong and Scott
Taylor
Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories
results
participation
POI Before Process
POI After Process
Member Contacts CS
Rep Verifies Member
Verification/ POI Approval
Account Review
Fax sent in
Contact from member
Account Restored
The new cycle time for restoring an account is
now measured in minutes impossible under the
previous email and fax system.
Complex process 32 POI approvals sent out by
helpline over a 4-week period, only 2 members
faxed their details and regained access to their
accounts.
Rep changes the Password for the member
Account is Restored
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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
supply chain
infrastructure
summary
change management
gemba
strategy and scope
stories

• At eBay, our focus is on Improving the Member
  Experience and in Reducing the cost-to-serve.
• Our scope is within-CS and outside-CS.
• Within-CS, our approach is for broad
  participation and to teach CS Agents primarily
  Lean Thinking.
• Outside-CS, we always keep our Lean hats on, but
  do much more DMAIC work.

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma

• The Continuous Improvement team at eBay is only
  10 months old.
• Weve hit the ground running and are very
  focused.
• While true change happens from the ground-up, it
  sure helps to have key influential people
  throughout the company as allies.
• A focus on principles is key that resonates
  with people. The Tools and Methodology will make
  much more sense once people understand the
  principles.
• Next Steps
• Keep on building people keep on improving the
  member experience keep on fundamentally reducing
  the cost-to-serve.

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma

• We started with Lean, then a little about Six
  Sigma.
• We explained our strategy, focused on Improving
  the Member Experience Reducing the
  cost-to-serve.
• Our scope is within-CS and outside-CS. The
  former emphasizes participative management, lean
  thinking, and focused on within-CS metrics. The
  latter deals with why CS contacts are created and
  uses primarily the DMAIC methodology, but always
  with our Lean hats on for good measure.
• Next Steps continue to do good, delight the
  member, build our people, and reduce the
  cost-to-serve.

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Conclusion
Lessons Learned
eBay
Agenda
Lean
Six Sigma
Conclusion
Lessons Learned
Agenda
Lean
Six Sigma
Thank You