project management using lean six sigma ... project management using lean six sigma vision from a...

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PROJECT MANAGEMENT USING LEAN SIX SIGMA

VISION FROM A GREEN BELT

Abstract

This work shows the use of Lean Six Sigma methodology at the Green Belt level. According to that objective

it is shown the relevance of its application and also its origin and the main tools used. In complement it

includes the use of Lean Six Sigma in the management of an industrial project for physical defects

reduction. The project objective was 50% reduction in scrap cost due to pieces with physical defects. That

objective equals 5.500€ per month in cost reduction which was projected saving of 35.200€ for the year

2008 and 66.326€ for each of the next two years, considering the production level and spectrum unchanged,

and not taking into account economic factors such inflation.

Upon the project implementation the monthly scrap cost due to physical defects changed to 4.590€. So the

objective was accomplished by achieving a cost reduction of 58%. Concerning the related the savings the

goal was also met with a projected saving of 40.053€ (including the investment costs) for 2008 and 74.126€

for the next two years.

Keywords

Lean Six Sigma

Project Management

Cost Saving

Process

DMAIC

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1 – What is Lean Six Sigma

Most of the existing organizations are heavy and burocratic structures. This happened because, in order to

satisfy what was seen as the customer’s requests, companies tend to implement stages to their process. As

a consequence the process chain became extremely big with low added value along it when compared to its

extension. That resulted in price increase due to those costs.

With the birth of more demanding customers who are less willing to pay for the costs of these heavy

structures, the organizations are starting to change their view on the subject. So, they started seeing that

profit will have to be raised from a cost reduction policy instead of the traditional price increase.

Price – Cost = Profit

Born from the need of cost reduction appeared the Lean Manufacturing (usually designated as Lean) and

the Six Sigma methodologies. And from combining both we have Lean Six Sigma.

Lean is the set of tools, knowledge and methodologies used to remove waste and no value added activities.

Waste can be divided in 7 types, known as 7 muda (Japanese word for waste), that are: waiting,

overproduction, rework, motion, transportation, processing and inventory.

As for Six Sigma it is a methodology where the objective is to improve processes and the way the work gets

done in an organization. It mainly consists on reducing variation within the processes in order to improve

them. When we have an organization operating its processes at Six Sigma quality level then it commits no

mores than 3,4 defects per million opportunities for defects. This means that the it has the processes

operating correctly 99,9997% of the time. The core of Six Sigma is that it has a structured stage

methodology for performance problem solving and performance improvement called DMAIC.

It is important to refer that the sigma letter (σ) which, in

statistics, is used to represent standard deviation or

variation of a population must not be confused with the

sigma level in Six Sigma. The sigma level measures the

distance from average to the specification limit of a

characteristic, measured in standard deviations. So, the

essence of Six Sigma is to know how many standard

deviations you can fit between your average and the specification limit.

The Lean Six Sigma combines the speed increase and the performance

improvement related with the reduction of waste and no value added activities,

that come from Lean, with the quality improvement that comes from the

processes improvement and variation reduction using Six Sigma tools. Lean Six

Sigma is more than a toolbox. It’s a way of thinking, acting, organizing ideas and

managing projects directly related with organization and top management

objectives.

CHEAPER

LEAN

FASTER

SIX

SIGMA

BETTER

LEAN

SIX

SIGMA

Figure 1 - Example of a 3 sigma process

Figure 2 - Lean Six Sigma

pillars

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Lean Six Sigma consists on performance improvement projects and therefore is concerned on achieving

results. To achieve and maintain its results it defines and acts on the inputs that cause the undesired results.

It can be easily described by the mathematical expression f(X)=Y, where X are the inputs and Y are the

outputs.

2- DMAIC – Define, Measure, Analyse, Implement, Control

The Lean Six Sigma follows a structure called DMAIC, which is the abbreviation for Define-Measure-

Analyse-Implement-Control. As mentioned before, the DMAIC has its origins in the Six Sigma and the

projects follow those stages from the beginning until the end. Along these stages, the projects focus gets

narrower in order to really attack the variables that impact the problem. At the end of each stage there’s a

review, like a toll, usually called “Gate Review”. Here the project follow-up is made and the metrics, the

scorecards, and all the project findings are presented. At these points it is decided if the project shall go on

or stop It also can be set that it needs more work or data in order to go to the next stage.

We can briefly explain the DMAIC stages as follows:

Define: It’s the first step and it’s the project kick-off. Here it’s important to define the project scope, the goal,

the team, the metrics and above all the problem statement. It has to be linked with the organization strategy

and objectives.

Measure: In order to determine the actual situation it is necessary to collect data. At this stage it is the team

objective to gather precise and relevant measures related with the problem.

Analyse: After having collected the data it has to be analysed in order to determine the relations between the

variables. To solve the problem one has to understand the cause-effect relations

Implement: Consists on changing the process supported with the measures and analysis done previously. It

is time to improve the process assuring that defects are reduced and the processes are optimized.

Control: It is DMAIC’s last stage. To control is to assure that the process is working under control and within

the specification. It also consists in deploying solutions that guarantee that in case a defect it is detected and

alert is given.

3-The project

The project included in this work concerns an electronic component. That component consists of a metallic

nucleus obtained by pressing and sintering a metallic powder that afterwards is submitted to an

electrochemical process that confers him the desired electric proprieties. After that, the electric terminals are

assembled and the nucleus is covered by an epoxy resin that confers physical and humidity protection.

Follows a stage where all pieces are laser marked printing its electrical characteristics, the manufacturer

name and the date code.

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At the end of the line all pieces are verified concerning their electrical

and physical proprieties before shipping. The approved components go

to the customer and the other are rejected as scrap.

4-Define

The objective of this phase is to set the project scope, goal, financial outcome, metrics, team and duration

based on the problem definition.

The first step is to choose the project. The difficulty is not to find projects but to select the best one. In Lean

Six Sigma the best is the one that allows greater savings in a short period of time, with the available

resources and with effect in the future. As for the objective it is common to be cost reduction, scrap

reduction, process variation reduction, process speed increase, amongst many others.

It is now time to select the team. A usual Lean Six Sigma team is multidisciplinary and contains several

positions within the organization structure that includes a champion that reports directly to the top

management, a sponsor that supports the changes and the solutions implementation, several Lean Six

Sigma levels where the Black belt is the highest and is the team leader, and some experts and stakeholders

may also join the team.

Now the team is expected to define the problem by making an early evaluation and estimation of the

potential savings, main problems and focus. It is followed by the collection of the Voice of the Customer. It

implies knowing which the important requisites for the customer are. The customer can be either internal or

external. After knowing the customer requisites the team has to know what are the inputs and outputs of the

process and to check if they are correctly defined and controlled, since they are potential causes of

variation. That activity consists in the construction of a matrix called SIPOC1.

In the project the problem analysed consisted on the reduction of

scrapped pieces due to physical defects. That amount of scrap costs on

average 11.000€ per month and the objective is to reduce that cost in

50% which correspond to a projected saving of 66.000€ per year

considering a fixed production level and spectrum and not taking into

account any financial factors.

From the problem analysis the team concluded that product family 95x

represented most of the cost (21%). The costs were divided amongst all

1 SIPOC is the abbreviation of Suppliers-Inputs-Process-Outputs-Customers

Figure 3 - Electronic component scheme

Figure 4 - Physical loss by product

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products and the differences are mainly related to its production costs. Collecting the Voice of the Costumer

3 main requisites/defects arose: Visible nucleus, poor encapsulation and bad marking. During the SIPOC

construction it was found that there was no work instruction for the cameras inspection and adjustment.

One was created by the team.

The Define phase, as all the phases in Lean Six Sigma, ends with the Gate Review. Here is expected that

the team presents the project definition, scope, objective, and expected financial impact. Also to present all

findings that may help deciding if the project should go forward or not. In the studied project the main finding

was a process input that hasn’t controlled but didn’t impact the project in order to make it stop.

5-Measure

The objective of the Measure phase is to collect reliable data that allows to know and understand the

process performance.

In order to collect significant data for the project at this stage the team has to study the process and choose

the important characteristics that shall provide information for the project. To accomplish this task a map of

the product value chain is made to better understand the process and its variables. It is called Value Stream

Mapping. After it is done the team can easily elaborate a Data Collection Plan for the selected variables and

characteristics. Before starting to gather the data the team first has to be sure that the measure system is

adequate for desired information. So, at this point is the team performs studies on the measuring system

usually analysis of variance

Figure 5 - 2nd R&R study for "step angle" characteristic

During the project the team elaborated a measure plan that included all the requisites defined in Voice of the

Customer and all its critical variables. While analysing the measure system it was found that for the measure

of the “step angle” it wasn’t consistent since it lacked repeatability and reproducibility. The team concluded

that the procedure instructions weren’t clear. That caused different interpretations amongst the operators

that resulted in a poor measure system. The instructions were reviewed and a new R&R test was performed.

This time the results were consistent, having a variation lower than 10% that was the maximum acceptable.

This allowed the data to be collected.

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At the Measure Gate Review was presented the Value Stream Map, the Data Collection Plan, the Measure

System Analysis and also the data collected. Those were the expected items to be shown. The fact that the

detected problems were solved allowed it to be successfully approved for the next stage.

6 -Analyse

The objective of this phase is to identify the main cause-effect relations that explain the results for the inputs.

Based on the information gathered in the previous stage the team has now to establish the cause-effect

relations that explain the outputs according to the inputs. Usually it starts to use subjective evaluation based

on team experience and knowledge of the process. In this kind of tools we can find the brainstorming and

the Ishikawa’s Diagram (also known as the fishbone diagram). Both consist on gathering as many probable

causes as possible. In the Ishikawa’s diagram the causes are organized in 6 main groups: Mother Nature;

men; machine; method; measure; material. After it the probable causes refined and analysed using more

objective tools. These tools have a stronger statistical component that allows the team to be confident on the

presented conclusion. In such tools are included the Regression and the Hypothesis Test.

Using the FMEA (Failure Modes and Effects Analysis) it can also be possible to establish why an output

occurs and why it is not detected/avoid.

In the Physical Defects projects the team started by separating the problem according to the different failure

modes and building Ishikawa’s Diagrams for them. Those diagrams gave birth to an action list that consisted

in a group of actions and analysis to be performed in order to determine if those probable causes were valid.

Table 1 - Main actions and result for the defects in study

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It included simple actions, such as to verify if the established parameters were being respected and that they

weren’t changed by the operators and some more complex actions as material analysis in an external

laboratory. Most of the probable causes were considered not valid but some remained and resulted in

process changes.

The table 1 summarizes the results of Analyse phase, presenting the relevant probable causes from all that

were studied.

The Gate Review consisted on the presentation data analysis and also the cause-effect relations determined

by the team. The project was allowed continue with the advise that a deeper analysis could be needed.

7-Implement

Needless to say, at this phase the team is expected to implement solution according to the analysis made

earlier. Each project is different and there are no standard solutions.

The DOE (Design Of Experiments) is considered to be part of the implementation phase. It consists in

creating a matrix of tests (experiments) in order to obtain outputs of the manipulation of variables. This

statistical tool allows to see the effects of changing more than one variable at once, which goes further than

the usual tests.

When dealing with problems related to process speed and product flow it is common the need to implement

solutions such was Kanban cards that organizes the workstations in order to produce just what is needed

and the Pull flow that focus on the product leadtime reduction. Also solutions or actions as SMED or 5S

campaigns may be implemented during this stage.

Concerning the project under analysis, for the poor encapsulation problem the solution implemented was

maintenance to the equipment which detected several pieces with excess wear that had to be changed and

a DOE as made and resulted in a parameters optimization.

Table 2 - New parameters values

The root cause for this problem was the fact that the epoxy was now being delivered from a new location

due to the supplier factory change. Despite having the same chemical composition and having the

parameters within the control limits, the epoxy viscosity was lower. This caused the problems to occur

because the machines parameterization was not on its optimal point.

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Regarding the visible nucleus defect the

team implemented a new parameter

verification. This verification consisted on

checking the density of the bath of nitrate

and solvent during its operation time and not

only when it was prepared. When detected

out of specification it has to be corrected. In

this case the root cause consisted on the

evaporation of the solvent that caused a

higher density of the bath. This results in a

thicker nucleus cathodic layer that

overcomes the epoxy encapsulation making

it appear outside of the encapsulation.

For the last situation, bad marking, the decision was to change the consumption pressure limit for the CO2

bottles. The root cause in this case was the fact that the equipment did not preformed as expected with such

a low pressure.

It is important to notice that the number of defects in ppm went from 1467 to 937 ppm of defects/day and

then to 91 ppm of defects/day with the new parameters in the encapsulation problem. As for the Marking

issue using a CO2 pressure greater than 2,0 bar the number of effects came down to near zero against the

600 ppm that occurred when using lower pressures

This phase gate review consisted on showing the results obtained with it actions implemented.

8-Control

Here the selected solution is replicated whether applicable and error proof systems are designed, also

FMEA and Control Plan are reviewed or created.

The theory behind error-proof systems and detection systems is quite simple. It consists on avoiding the

error or detecting it as soon as possible because quality cost increases along a product value chain. So the

solution is whenever possible to design systems where it is impossible to commit mistakes, when it isn’t

possible the mistake must be detected as soon as possible. In order to help accomplish this objective the

work instructions have to be clear and updated, the control plan has to exist in such a way that guarantees

that the critical parameters are checked and that the defects are detected.

In the project the team reviewed all the mentioned documentation, that for the bad encapsulation problem

included a maintenance program review. For this case was also developed a software tool that warns when

the maintenance date is approaching and blocks the equipment when it reaches that date.

Figure 6 - Poor encapsulation defects evolution

02-06-2008

25-05-2008

17-05-2008

09-05-2008

01-05-2008

23-04-2008

15-04-2008

07-04-2008

30-03-2008

22-03-2008

2500

2000

1500

1000

500

0

data

Individual Value

_X=91UCL=232

LCL=-50

1 32

1

Chart of ppm defeitos

BEFORE MAINTENANCE AFTER MAINTENANCE NEW PARAMETERS

Average = 1467 defects/day

Average = 937 defects/day Average = 91 defects/day

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9 -Financial outcome

During the Lean Six Sigma projects then team can never lose track of the financial metrics and indicators in

order for the project to be successful. The results achieved were very successful has can be seen in the

tables. The project met its goal of 50% cost reduction due to

physical loss, achieving a global reduction of 58% ( from

11.061€ to 4.590€ monthly).

Taking into account that some investments were made the

project return was also calculated. In this calculation the term

“investment” refers to equipment acquisition and the

“implementation cost” contains the costs related directly with

the project implementation such as the cost of using less CO2,

the cost of nitrate+solvent bath analysis, and others. As

mentioned before the calculation does not consider financial

factors. But it should be noticed that the scrap cost considered

is the value of the product in the area where it is scrapped,

with both direct and inderect cost associated and that depends

on the product family.

The projected return is higher than the initial prediction so, the

project was also successful in this matter.

Jan Fev Mar Abr Mai Jun Jul Ago Set Out Nov Dez

Implem

entatio

n anual

costs TOTAL

Savings 0 0 0 542 2364 4214 6471 6471 6471 6471 6471 6471 --- 45946

Investements related

with the project (year

2008)

0 0 0 0 1789 2143 0 0 0 0 0 0 --- 3932

Savings 2008 0 0 0 542 575 2071 6471 6471 6471 6471 6471 6471 1961 40053

Savings 2009 6471 6471 6471 6471 6471 6471 6471 6471 6471 6471 6471 6471 3526 74126

Savings 2010 6471 6471 6471 6471 6471 6471 6471 6471 6471 6471 6471 6471 3526 74126

Values in €

Table 4 - Yearly project return

Product

FamilyDefect

Average

Monthly

Physical

Loss Cost

Before

Project

Average

Monthly

Physical

Loss Cost

After

Project

Poor encapsulation 1.232 € 314 €

Bad marking 369 € 152 €

Visible nucleus 688 € 271 €

Poor encapsulation 452 € 187 €
























Others global 1.577 € 881 €

TOTAL 11.061 € 4.590 €

91 X

95 U

95 D

10 X

91 B

95 X

91 D

91 C

20 V

Table 3 - Monthy savings by product family

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BIBLIOGRAPHY

1-The Black Belt Memory Jogger; Six Sigma Academy; 1st Edition; Goal\QPC

2-Gestão da Produção; Coutois,Alain; Pillet, Maurice; Martin-Bonnefous, Chantal; 5ª Edição; Lidel

3-The Machine That Changed The World; Womack, James P.; Jones, Daniel T.; Roos, Daniel; Free

Press

4-Gestão de Operações – na indústria e nos serviços; Pinto, Paulo João; 2ª Edição; Lidel

5-What is Lean Six Sigma?; George, Mike; Rowlands, Dave; Kastle, Bill; George Group

6-Lean Six Sigma Pocket Toolbook; Michael, George L.; Rowlands, David; Price, Mark; Maxey, John;

McGraw Hill

7-The LSS Academy Guide to: Lean Manufacturing; Pereira, Ron; LSS Academy

8 – Estatística Aplicada Vol.2; Reis, Elisabeth; Melo, Paulo; Andrade, Rosa; Calapez, Teresa; Edições

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