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In the previous post, I outlined how lean projects can be manged through Plan-Do-Check-Act (PDCA) cycles. Here, I’ll be walking through an example.

Plan

This step includes drawing current value stream (VS) map in terms of processes (or activities), calculating processing times on the value stream, and analyzing for waste. After conducting some brainstorming, the PDCA team can list opportunities for removing such waste by reducing, re-organizing, realigning, training. Finally, we prioritize such opportunities start implementation with those with highest impact first.

In this example, a pizza shop takes orders for delivery over the phone and processes manually.  Customers complain about delivery time being long. Here is how the process works:

• The order taker writes down all order information (type of pizza, size, ingredients, ..etc.) as well as the address.
• Order gets verified by the manager before forwarded to the kitchen. In case of any missing information, the order taker calls the customer back for corrections
• Prepare pizza
• Pizza sits in queue before baking
• Bake, cut, package and label pizza
• Pizza waits in warmer for delivery
• Deliver pizza

The goal here is to eliminate all complaints due to “long delivery time”and increase customer satisfaction.

Times form the above value stream can be summarized as follows:

Lead Time: The time from the customer calling in until the pizza is delivered. In this example, the Lead time is 44 minutes.Value-Adding: All activities that add value to what the customer experiences / pays for. Those steps amount to 15 minutes which is about 34% of the lead time.

Delays / Waiting amounts to 8 minutes.

The PDCA team has conducted root-cause analysis to eliminate waste (and shorten delivery time). The team decided that the manual system for orders created delays and inefficiencies. So it was decided to implement a computerized system for entering orders and communicating them to the kitchen using computer monitors. Also, it was decided to hire an additional delivery driver. The future value-stream table is expected to look as follows:

Do

• Prepare and implement action plan for  computerized system
• After implementation, let the system run and stabilize
• Collect delivery times data again for measuring progress

Check

• Data analysis after implementation of plan show a reduction of  lead time by an average of 11 minutes. This is a reduction of approximately 25% of lead time.
• Complaints due to long delivery time were reduced by 60%.

Act

The updated  value stream after implementation will become the “current” for the next PDCA. As can be seen from the updated value stream table, delays due”waiting for oven space” and “waiting for driver” are still there and could be minimized or eliminated by coming up with efficient methods and creating additional capacity.

Mustafa Shraim

Answer: The Customer!

(1) What does the customer want? >> Use current requirements, marketing surveys, quality function deployment, and other tools

(2) What is the customer getting now? >>  Conduct a detailed assessment, collect complaint data, returns figures, consumer reports, etc.

(3) Identify gaps between (1) and (2) above

(4) Group and prioritize gaps. Use Pareto analysis, if needed.

(5) Start PDCA’s (cycles of plan-do-check-act) to identify root causes and implement solutions for each or a group of prioritized issues.

(5) Re-do Pareto Analysis and go to the next prioritized issue.

(6) make it a routine (kata)

When the customer experiences a product or a service, he/she evaluates such experience. Most of the time, this evaluation does not formally reach the product maker or service provider for many reasons. However, this evaluation is often felt by the provider through returns, repeat business or new business through word of mouth.

When the customer is dissatisfied,  it is usually due to a problem. For minor problems, most people don’t complain about the service or return products. In some instances, it is just not worth their time to do that. But in most cases, they do something else if they can.

For the provider, it is a lost opportunity that is not measured immediately. A customer suddenly cancels subscription or does not plan on renewal the next time around. Or may be one mentions such a problem to friends who are considering the product or service. Some put their lack of satisfaction on social media outlets making ripple effects. In all cases, it is a customer issue that was not accounted for but will likely have  impact on the bottom line.

In summary, cost of poor quality may be extended to the lost opportunity and customer good will using the Taguchi loss function. This can be estimated by taking a sample of most recent complaints then determining the projected overall cost.  In general, as the issue (problem) with the product or service is experienced by more customers, the loss (to society) becomes more severe. Ideally, our target loss is zero which can only be achieved with perfection.

 Number of complaints

Without an effective platform - lean (quality) management system- Lean initiatives might not be carried through to the finish line. A good Lean management system can effectively sustain gains and extends to other areas where they are needed.

A Leanmanagement system includes quality management system, financial management system, HR management system, environmental management system, ..and other, as applicable. Leadership, discipline, standards, and accountability are essential ingredients. Standards carry the documentation systems (manuals, standard works, procedures, visuals, dashboards). In the absence of good management system, particularly the standards, Lean initiatives are not sustainable. Here are some signs that the management system is weak and far from Lean:

• Employees develop tricks outside the system to get the job done
• Employees enter redundant information that no one cares about or analyze
• Problems are not readily visible and need “special investigation” to uncover
• Company spends a lot of time and effort before audits to clean up the system 
• Employees in production are not aware of customer complaints or involved in resolving them
• Line standards are not updated with improvements (e.g. visual workplace, poka-yoke)
• Dashboards are not updated regularly with useful information on performance
• Corrective actions are past due (months!!)

What’s important here is that these signs (and many others as well) create waste and result, directly and indirectly, in employee and customer dissatisfaction.

(For discussion on lean quality management systems, please join our group Lean QMS on LinkedIn.

I recently co-authored an article summarizing a Six Sigma project. The article was about a Six Sigma project in e-mail marketing in which design of experiments was used.

The project did not exactly follow the Define-Measure-Analyze-Improve-Control or DMAIC as we know it. Instead, The headings of the DMAIC process were as follows:

• Define / Measure
• Measure / Analyze
• Improve
• Control

The Define/Measurephase includes some Plan-Do-Check-Act cycles in determining and verifying factors to be included. For example, checking feasibility of that certain level combinations can be run. When we move to the Measure/Analyzephase, we are actually collecting and analyzing data based on the experimental design . Sometimes we need to do preliminary analysis before we add more samples and conduct more detailed analysis.

The point is that smaller PDCA cycles are often within each phase and between consecutive phases. The phases of the projects are dynamic in nature and not static. In the end, each project is unique and so should be treated.

When a company implements Six Sigma methodology, it usually hopes to achieve Six Sigma Quality. This means keeping a defect rate at about 3.4 defects per million opportunities (DPMO). For example, if an airline uses delayed or lost baggage as a measure of their performance, then it should keep that number below 4 lost/delayed luggage pieces per million on the average.

Can an organization declare they are at a Six-Sigma quality level when they’re only tracking one metric? In the case of an airline, what about on-time arrival? waiting time for check-in? double-booking? and complaints about their online reservation process? The answer is obviously “No”. All experiences by the customers must be accounted for. So once each of the experiences by the customer is less than 4 DPMO, we can say that the organization is at a Six Sigma level from customers’ perspective.

One more thing; What’s important to the customer is decided by the customer.

As I proposed in the first post, company X is asking you for help to improve, but where do you start?

Let’s ask this question… In terms of improvement, what does company X need?
Could it be improving customer satisfaction - for example, quality, on-time delivery ?
May be it has something to do with cost reduction?
May be the customer wants lower prices?

Typical solutions might include:
Customer dissatisfaction: give more coupons / deals
Profit margins not there: lay-off employees
Competition / Customer wants lower prices: Use cheaper materials / less qualified workforce

This rush into taking action for a “quick fix” may backfire. Giving discount and coupons to quiet customers about quality may temporarily satisfy the customer but would likely reduce the profit margin. Cutting staff without studying long term effects would also affect quality and customer satisfaction.

The first step for any improvement initiatives should always be evaluating the status quo using meaningful measures. When we do this we should keep in mind the costs of nonconformance and modes of waste. Costs of nonconformance are related to costs incurred as a result of customer’s negative reaction (bad experience) with the company’s product or service. They can also be internally generated for various reasons but related to inadequate processes.

Can you think of examples?