2014

2014-08-20

INNOVATION CENTRIC GROUP 1

Performance Improvement with Six Sigma

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as an operational philosophy

Customer centered means that projects start with, and are measured by, meeting customer wants and needs.!

Systematic means that the Six Sigma tools are applied in concert, which makes them vastly more powerful than they are alone.!

Data driven means that facts and data are used for making decisions.!

Six Sigma is a customer centered, systematic, data driven method for doing things better and aiming to reduce the number of defects of any given process.

What is Six Sigma?

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as an operational philosophy

It is a toolset which follows a well-structured improvement methodology to reduce process variability and drive out waste within a business processes using effective application of statistical tools and techniques. This converges on a disciplined method that uses data and statistical analysis to pinpoint the root causes of issues and establish ways of minimizing and eliminating them. The main goal of Six Sigma is to sustain improvement over the long term.!

What is Six Sigma?

Accounting Design Distribution Finance

Information Services

Logistics Oil & Gas Operations

Marketing 4

Six Sigma Applies to all areas

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“Responsible, proactive and innovative decision making can keep the focus on sustaining achieved benefits. Continuous improvement must be diverse and

productive over time as conditions change.”

“Constant management commitment is the number one lever to enable delivery of top-quartile performance via continuous performance improvement projects from my experience. It is analogous to safety performance

improvement where lack of management commitment equates to substandard safety performance.”

in the upstream oil and gas industry

Andy Brooks, CEO, Flint Transfield Services

Charlie Malone, Kurdistan Development Manager, Talisman Energy Inc.

”Performance management is crucial to any organization and valuable to not only measure performance but establish governance, and ensure the right

outcomes are achieved through desired actions and behaviors"

Tristan Goodman, VP Strategy & Regulatory Development, Alberta Energy Regulator.

Examples of applied Six Sigma

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Are you consistently fulfilling customers’(internal/external) requirements ... or are there gaps in your performance?

Do your improvement efforts continue to repay your investment ... or have the financial benefits of these efforts already been realized, with innovation and competitive gains now stalled?

Are you satisfied with how quickly you see measurable bottom-line results from improvement efforts ... or are technological advances, competitors, and the market forcing you to demonstrate improvement results in months rather than years?

Is your organization truly prepared to commit to continuous improvement as well as revenue growth ... or are processes still out of alignment with dynamic market requirements –costing you business success?

Interested in driving cost reduction to led to lost opportunities?

Is your organization looking at cost reduction opportunities to mitigate headcount reduction?

Are you looking to become a low-cost leader in high-cost environment?

Are you looking to improve effectiveness and achieve efficiencies in your organization?

Performance Improvement with

Acc

ount

ing • Quick Closing

•Accurate Reports •Accurate Journal Entries •Accurate Account Reconciliation

• Cycle Time to Close Books •Number of Errors •Number of Inaccurate JE’s •Reduce Cycle Time to Close Books (DMAIC) •Reduce Errors on Monthly Reports(DMAIC) •Reduce Number of JE’s(DMAIC)

Bill

ing

(to &

from

) • Accurate Invoices •On-Time Invoices •Easy to Under-stand Invoices • Receivables Management •Cycle time to Invoice •Invoice Error Rate •Working Capital Growth •# Call Center Complaints •Reduce Number of Invoice Errors (DMAIC) •Reduce Invoice Cycle Time (DMAIC) •Reduce Invoice Complaints (DMAIC)

Aud

iting

• Accurate Audit Reports •Frequency of Audits •Short Audit Time

• Sigma of Audit Reports •Percent Locations Audited •Audit Cycle Time CCRs •Improve Audit Report Process (DMAIC) •Improve Audit Coverage(DMAIC) •Improve Audit Cycle Time (DMAIC)

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Example of Six Sigma Applications

Define “as is” and “to be”

opportunity for project.

Measure current process

performance.

Analyze the problem to find out root causes.

Improve… Identify potential

solutions and begin to

implement them.

Control the performance to

continue to achieve higher

results.

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Improvement Process: DMAIC

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What makes DMAIC unique is that it focuses on eliminating problems by looking at the processes that create them, not on assigning blame to people or functions. DMAIC helps us research and analyze our processes, which then leads us to more effective and permanent solutions.

How do we do it?

Define

Measure

Analyze

Improve

Control

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The DMAIC process

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• Deliverable: •  Identify Customer(s)and project *CTQ’s

(Critical to Quality)

A. Identify Project CTQs

•  Deliverables: •  Develop business case •  Develop the Problem and Goal statements •  Determine the project scope •  Select team and define Roles •  Set project milestones

B. Develop Team Charter

• Deliverable: • High level process map

C. Define process map

Define Phase

The DMAIC process

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• Deliverable: •  Identify Measurable CTQ that will be

improved

A. Select CTQ Characteristics

• Deliverables: • Determine and confirm Specification

limits for your Y

B. Define performance

standards

• Deliverable: • Measurement system adequate to

measure Y

C. Establish data collection plan, validate measurement System

and collect data

Tools:

QFD

Process Mapping

FMEA

Pareto

Cause and Effect Diagram

Tools:

Continuous Gage R&R

Test/Retest

Attribute Gage R&R

Measure Phase

The DMAIC process

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•  Deliverable: •  Baseline Current Project

A. Establish Process

Capability

•  Deliverables: •  Statistically Define the goal of the

Project

B. Define performance

objectives

•  Deliverable: •  List of statistically Significant Xs,

Chosen based on Analysis of Historical Data

C. Identify Variation Sources

Tools:

Basic Statistics

Graphical Analysis

Sampling

Continuous Zst, Zit

Normality

Discrete Zst, Zit

Tools:

Benchmarking

Tools:

Process Analysis

Graphical Analysis

Hypothesis Testing

Regression Analysis

GLM

Analyze Phase

The DMAIC process

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•  Deliverable: •  Determine the Vital few Xs that are

causing changes in Y

A. Screen potential causes

• Deliverables: • Develop business case • Develop the Problem and Goal statements • Determine the project scope • Select team and define Roles • Set project milestones

B. Develop Team Charter

•  Deliverable: •  High level process map

C. Define process map

Improve Phase

The DMAIC process

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•  Deliverable:"•  Identify Customer(s)and project CTQ’s"

A. Identify Project CTQs "

• Deliverables:"• Develop business case"• Develop the Problem and Goal statements"• Determine the project scope"• Select team and define Roles"• Set project milestones"

B. Develop Team Charter"

•  Deliverable:"•  High level process map"

C. Define process map"

Control Phase

The DMAIC process

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From our experience leading purchasing transformation initiatives with global clients, we have developed a framework for maximizing purchasing’s impact on the enterprise value creation.

Strategic Sourcing

Transaction Execution

Demand Management

Supplier Management

Inventory Management Engineering & Operations

Enterprise Process and organizational model

Enterprise Purchasing Strategy

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Some of the features available:!•  Aggregation of spend by supplier, manufacturer,

commodity, BU, buyer, location, etc.!•  Tracking of spend against Contract!•  Tracking of spend against Budget!•  Price vs. Actual in savings!•  Normalization of spend – mapping and cross-reference!•  Ad hoc reporting and queries – ability to find procurement

related information thought filters and selection parameters.!

•  Graphical representation for ease of understanding!•  Tools and methods to import purchase data from

transaction systems!

Spend Analysis

PO/ AP Component

2014

2014-08-20

INNOVATION CENTRIC GROUP 18