The Pareto principle, most commonly known as the 80-20 rule, is known by business owners as the simple fact that 80% of your problems are caused by 20% of the people. Really the theory was about wealth and power distribution, but the general premise applies. Most of your issues can be attributed to a fairly small distribution of root causes.
What does it look like?
What does it do?
A Pareto Charts work in levels to help you identify the root cause of the tallest bar (the biggest issue).
How do I use it?
The trick with Pareto is to start high and whittle away. What does that mean? It means that when you find out department A is supplying department b with all of the material that ends up in their rework, don’t go to department b and shut everything down. I know that it seems counterintuitive, but jumping the gun before you find out why that material ends up in the rework pile, leads to rework on department a’s part, causing more defects.
What doesn’t it do?
Pareto doesn’t provide an instant Ah-ha moment, it’s a method that requires patience and adherence to the process to be effective. If you need the answer now, it may not be the method for you. You may be better suited to process mapping or the 5 Why’s which will point you in a direction immediately. I have to say however, if you want the right answer validated by numbers then Pareto is right for you.
In 6Sigma the devil is in the details and a successful improvement initiative depends heavily on the selection of the right tool for the engagement. A successful selection depends heavily on the knowledge and skill of your belt, so use that library of knowledge and if that belt isn’t asking you a thousand questions about your end goal-move on!
With every improvement project you learn something valuable and a tool for improvements that need to happen quickly are Kaizen events. Kaizen events are rapid responses to very specific areas usually taking 3-5 days. Kaizen events are not difficult, but if you do not put the appropriate planning in place before you begin you will not realize any improvements. To begin with a basic structure of a Kaizen event should include the following:
- Training-what Kaizen is and how it works.
- Defining the problem/goals
- Documenting the current state
- Brainstorming and developing a future state
- Developing a follow-up plan
- Presenting results
- Celebrating successes
The most important thing to remember is that a Kaizen event is driven by two principles: What can we continuously improve and what waste can we eliminate? Those two principles bring us to my next point.
What Can’t Kaizen Events Do?
Kaizen cannot solve any 6Sigma problem. It is a tool that works best with situations that are not heavily focused on metrics. Situations such as yield improvements or variation reduction would not benefit from a Kaizen exercise.
There are many tools for a Kaizen checklist, but as with most 6Sigma tools the best advice often comes from your belt. If you are looking for a quick introduction to 6Sigma without the total commitment often necessary for a 6Sigma improvement project, Kaizen may be your answer.
In any lean project there are a ton of buzzwords, but the one thing that is a universal truth in all lean initiative is that for any tool used to be successful it must be understood. In today’s blog we are going to talk about a Gemba walk and why it works.
What is it?
A Gemba walk is literally seeing where the work happens and the value of work. The reason for the walk can be varied but its importance is to illustrate the process to the people who will be responsible for improving it. I like Gemba because it takes 6Sigma out of theory and metrics and illustrates it in a tangible way that makes sense to the people using it.
What do I do?
This is by no means a comprehensive checklist, but it is a place to start when you are planning your Gemba walk. I provided a simple but comprehensive checklist to create your Gemba walk below.
- Identify the processes (internal/external) that the customer pays for and has an expected output.
- Identify who understands the process- What you are looking for here is not the person/division/team responsible for the process, but the person who designed the process and understands why it operates the way it does. This person should understand the performance gap analysis and have a plan to correct the gap (or at least the beginning of an idea).This step is hard for a lot of people because the knowledge master generally isn’t the person with the official responsibility, but it is critical that you get this step right.
- Focus on the steps of the process that add value, show standardization or show how the work is distributed.
- Know the expected outputs-Are they gaps? Are you asking why? Are you assigning blame? (If are, you shouldn’t be.)
- Identify the areas of the process that are going well, what is making that success happen?
- Now that you know what is working and what is not, create your checklist based on this information.
- Remember to steer clear of the 3M’s and educated your process leaders on them. Muda-Waste, Mura-process variation not caused by the customer, and Muri-overburden on facility, people and equipment caused by Mura and Muda.
This is pretty comprehensive checklist, but as with all my posts this is just to introduce you to the Gemba Walk tool. Consulting with your belt will give you the most useful questions and sources of information in your walk. Done correctly a Gemba walk jumpstart rapid improvement events, done incorrectly they can derail an entire initiative. What will you value today?
First Time Yield (FTY) is a traditional metric that tells you how many defects your process produces for before any improvement is done. Generally this measurement is used in the manufacturing or production field, but it can make the switch to your office easily. The formula for FTY is:
FTY: Total Unit Passed/Total Units Tested
So if you work at a membership organization and you processed 120 retirement requests and found that 50 requests were entered incorrectly, our FTY is .58 %. 70 is the total number of request entered correct or passed and the total number of units tested is 120 retirement requests.
If your process has multiple measurement areas, you will need to perform a FTY for every measureable step in the process. The great about FTY is that it is one of the simplest metrics in 6Sigma and it creates a create illustration of the current state of your process
What does it look like?
A FTY can look like any typical graph you have seen, but most will resemble the chart below. My fancier ones include the curve illustration for clients that highlight the cost of these errors to the client and how the improvements will be quantified.
What doesn’t FTY do?
FTY is a great place to start, but it is important to understand its limitations. FTY will not measure rework or provide any accounting for the cost in time or resources for that rework. There is a more accurate method for measuring that, Rolled Throughput Yield, which we will cover next week.
FTY is a great foundational measurement piece and a great way to introduce your company to 6Sigma, in a way that makes a lot of sense to the people doing the work.
One of the best things about Six Sigma is that it presents a concrete way to translate the value of improvements to your staff and leadership. A great tool to highlight the value of Six Sigma is Cost of Poor Quality (COPQ).
What is the Cost of Poor Quality?
COPD identifies the amount of lost profit an error in a process causes. This is the method that you can use to build a business case for 6Sigma and how much value your company will save by implementing it.
What does the Cost of Poor Quality Look Like?
ASQ COPQ Template
How does it work?
COPQ has four essential elements: internal costs, external costs, prevention costs and appraisal costs.
Internal costs-these are the costs that occur due to an error in your organization’s processes.
External costs- these are costs that are associated with internal and external customer dissatisfaction.
The other two elements are self-explanatory but one could argue that they are significantly more important. If you can’t appraise the process you can’t prevent waste.
What it doesn’t do
What is important to remember about COPQ is that it identifies the symptom of the defect, not the defect itself. With that in mind, COPQ will not provide a solution to your improvement challenge. The solution will come from your belt.
COPQ may seem like a no-brainer, but cost come in two forms: tangible and intangible. What your belt will do is illustrate what the intangible are and how they affect the business. The typical company spends at least 25% of their revenue on COPQ or waste, so what will you clean up today?