The Importance of Metrics in Lean Six Sigma

by: Jack Reardon, Vice President, Quality & Productivity Solutions, Inc.

The basic premise in Lean Six Sigma is that we don’t know what we don’t know! I had a boss who asked me, “Tell me something I don’t know.” This was a micro-management CEO, who knew everything about his company; the problem was that when you did tell him something he didn’t know, he didn’t believe it. This is what the Six Sigma process is all about. Tell me something I don’t know and back it up with data! Six Sigma is a data driven strategy that helps us make decisions - decisions that are based on real data and on a real statistical analysis of the data.

My mistake with the CEO was that I had no data to show, partly because we had no data collected for much of what we did, so bits and pieces of data was all we had available. Then I designed a good data collection system that pin pointed and backed up what I was trying to say. From that point on, we were able to move forward. Now I was able to tell the CEO things about the company that he didn’t know; things backed up with real data! With real data, it is pretty hard to just dismiss. The result was that now real improvements began to happen.

Lean Six Sigma is a very positive and capable strategy that anyone can implement. All you need is some training and some data to cause dramatic improvements.

Case Study

For example, take an application review process in an insurance company that originally averaged 12 days. With analysis and real data, we were able to implement changes that reduced the average application review process to only 1.1 days on a very consistent basis! The analysis revealed that there was a lot of waste in the process, and that the application itself was inefficient. But by reviewing the data, we were able to shrink the application to include only the information required, and to eliminate a huge back log. Now, the metrics of this process are updated every two hours, and the goal is to complete everything received each morning. So as the applications are finished, the whiteboard is updated every two hours, and now all the employees can see exactly what they need to do, and they adjust their schedules to complete 100% by the end of the day. In addition to this, there is a Kaizen meeting every morning to review what happened the previous day.

‘We don’t need a supervisor to tell us what to do; we can take care of this ourselves.” This is exactly what they are doing, on their own. Supervisors and managers have little involvement in the process, and they now have time to do the other things they should be doing. Metrics are driving the process, and that is what we want to happen. Using metrics, we eliminated the waste, walking, waiting and searching for information. We also made the application easier for their internal customer, therefore eliminating costly mistakes. Before, the error rate was at 60%, but now it is less than 1% and improving. Management has now implemented a 3 day turnaround guarantee to their internal customer. With an application review process that averages only 1.1 days, the process is very capable of achieving this goal. In the voice of the customer review, this was a key requirement: process the application as soon as possible, so they could get back to their customer.

Three days is well within what they considered as fast as possible. They are happy, the employees in the processes are happy, and nobody is working any harder, they are, in fact, working smarter.

Process Mapping

How can you make this happen? Map out the process and at every output step in the process, go to the customer and ask what they want you to produce. “I want the item on time, (when you committed to supplying it) and I don’t want any errors.” Start with the external customer, what do they want and when do they want it? Now take these CTQ’s (Critical to Quality items), and drive them back through the process. Establish metrics at every point in the process.

Example

 

example

I want to monitor each step. So if any part of this process is late, then my customer shipment will be late - unless I spend more money on overtime or premium freight. Spending more on overtime and premium freight is wasteful. To ensure quality and delivery, you need to track and monitor all of these metrics. It is amazing how many companies don’t look at all these metrics. For example, many places don’t track scrap and the causes of scrap; or maybe they track what gets thrown away, but not the causes. Metrics means that we also want to track and monitor inventory at every level. Inventory has a direct effect on my cash flow, because excessive inventory means wasted space and reduced cash flow. Lean only allows what is being produced at that time. Because every process is Lean, there is no waste.

My Core Process is defined as the reason I am in business. In this case if extrusion is my core business, then I expect that process to be perfect. If it is not, I need to fix it, now! This process initiates everything, so if it has a problem, then I am in trouble right from the start. To be competitive, I need this process to be the best in the business!

Process Ownership

Notice that every process step has a process owner. This is a critical step in the improvement process; someone needs to be responsible for making things happen and answer when things don’t happen. I need answer to a question such as: Why was this job late? With metrics in place, the process owner can address the cause. So, if the cause was that my supplier was late, now I can address the supplier and so on to determine the root cause of the problem. With metrics I can look at the entire process and identify roadblocks or areas that are not meeting their goals.

For example, the external customer on time delivery is 80%, so where is the 20% late delivery coming from and why?

 

  • Question: Why are 20% of the orders late?
  • Answer: They are late because my supplier was late.
  • Question: What is his data?
  • Answer: The supplier’s data is 70% on time.
  • Question: Why was your supplier late?
  • Answer: I don’t know. Let’s go ask the supplier.
  • Question: Why are 30% of your orders late?
  • Answer: Because my supplier was late.
  • What is his data?
  • Answer: My supplier is 95% on time.
  • Question: So your supplier was only 5% late, why are you 30% late?
  • Answer: My machine broke down.
  • Question: Why did your machine break down?
  • Answer: I don’t know.
  • Question: What broke?
  • Answer: I don’t know.
  • Question: Why did the machine break?
  • Answer: I don’t know.
  • Question: Are you doing Preventive Maintenance?
  • Answer: No, we don’t have time.
  • Question: Why don’t you have time?
  • Answer: I don’t have enough resources to do everything I need to do.
  • Question: Why don’t you have enough resources?
  • Answer: silence
  • Question: Why did you commit to deliver by these dates if you don’t have the resources to meet the dates?
  • Answer: Those were the dates we had to meet in order to be on time at the customer. But we weren’t on time.
And so on……..

Metrics

With the metrics we need in place, I am able to stop at the right place and ask the right people the right questions. Maybe I don’t have every answer - yet, but remember this is why it is called continuous improvement. Now I can focus resources in the right places to solve the problem. I need to find a way to get this process to be at least 95% on time. How do I achieve this? This now becomes my project. Using Lean and Six Sigma I can solve this issue and improve our customer on-time delivery.

The most important part of metrics is that they are visible for all to see and react to when needed. If I track daily on-time delivery, as soon as I go out of control or exceed a threshold, I stop and fix the problem. This is the key to the Toyota Production System: as soon as an error happens, stop and fix it! If I had a one piece flow, and one piece was late, I would see it immediately and fix it. In the application process, I update the metrics every couple of hours, so I know right away if there is a problem meeting the daily amount of applications. This enables me to take immediate steps to correct the problem, instead of waiting until the end of the day and determine that I missed my goal.

Whoops! We missed the delivery date. Oh well, we’ll try to do better next order.

Not good enough!

 

  • How long do you think customers are willing to put up with late deliveries?
  • How many more times will they accept orders with defects?
  • So not only are the orders late, but they have defects as well!
  • How long before the customer starts looking elsewhere?
  • Soon, the customer ends up saying: “I don’t care if I have to pay more, I can’t deal with the defects and late deliveries anymore.”

About Jack Reardon

Jack Reardon has over 30 years experience in the Quality and Business Improvement field, specializing in Quality Management Systems and Improvement. His professional experience includes working at Data General Corporation for 15 years, including holding positions as the Corporate Quality Manager, Technical Operations Manager, Production Manager, and Customer Support Manager. He has also worked at Proconics International, Robotics as Director of Quality implementing TQM and ISO 9001, as Quality Manager and Plant Manager for National Perforating, an Aerospace supplier to Boeing, and as QA Manager for Insco Corporation, an automotive supplier of transmission gears.

Jack has provided coaching & training for ISO, Six Sigma and Lean at many companies. He has been a member of American Society for Quality for the last 12 years. In addition, he was an active member of the Worcester Section Executive Committee, holding several positions including Chairman. He also has ASQ Certified Quality Auditor, Provisional RAB Provisional auditor, and ASQ Certified Six Sigma Black Belt, as well as a Master Black Belt, Project Management, DFSS, and Certifications.

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