Theory of Constraints Handbook - James Cox Iii [691]
The question we must always strive to answer is, “Do we truly understand value from our Customer’s Perspective—both Internal and External?”
2. Identify the steps in the value stream.
Value Stream Mapping is a process to detail and analyze the flow of material and information to bring a product or service to the customer. After identifying the entire value stream for each product, we can separate actions into value added (VA) and non-value added (NVA) activities. Value Added activities can be defined as something that the customer would be willing to pay for; an activity that changes the form, fit, or function of the product or service and is done correctly the first time. Non-value Added is something that takes time, resources, or space and does not add value to the product, and thus adds no value to the customer. Identifying the value stream will expose many NVA activities.
3. Create smooth flow.
When the value-creating steps are understood, the next step is to create continuous flow. Things like producing in small lots versus batching, putting machines in the order of the processes, pacing production to Takt time,1 and the application of lean tools all create smooth flow. Creating smooth flow can dramatically reduce lead time and waste.
4. Customer pulls value.
Once the first three principles are in place, we can now put a system in place that only produces at the rate of customer requirements, a “pull” system. This is the opposite of “push,” releasing work into the system based on a forecast or a schedule. No one upstream will produce a good or a service until the customer downstream is ready for it.
5. Pursue perfection.
Lean says we must continually understand value through the eyes of our customer and refine our value streams to increase the flow based on customer demands. We want to move toward perfection. The process of improvement never ends.
Six Sigma
As shown in Fig. 36-2, Six Sigma has evolved from a metric, to a methodology, to a management system (Motorola University, 2008). Motorola is given credit for developing Six Sigma, but the statistical roots can be traced back to the 1800s when Carl Frederick Gauss used the normal curve for analysis and around 1924 when Walter Shewhart used control charts and made the distinction of special versus common cause variation and their link to process problems.
FIGURE 36-2 Six Sigma evolution.
The desired output of Six Sigma is to reduce defects, reduce cycle time, increase Throughput, and increase customer satisfaction by reducing variation in products and processes, thus giving an organization a competitive advantage.
Six Sigma as a metric equates to 3.4 defects per million opportunities (DPMO). Many companies use this metric to lead their defect reduction effort. Many improvement experts contend that most companies today work at a sigma level between 3 and 4. For example, if you are operating at a 3 sigma level, you are producing 66,800 DPMO; a 4 sigma level is 6210 DPMO. Reducing defects will obviously lead to higher customer satisfaction, lower cost of quality, increased capacity, and most important, increased profits.
Six Sigma has evolved into a business improvement methodology that focuses on how variation is affecting organizational desired results. Six Sigma project teams follow the DMAIC model to drive rapid improvement. DMAIC is an acronym for Define-Measure-Analyze-Improve-Control.
Define: Typically in this stage a team is assembled, a project charter is developed, customer Critical to Quality (CTQ) requirements are defined, and a process map is created. The charter will clearly define the business case for doing the project, state the problem, define the scope, set goals, and milestones, and spell out the roles and responsibilities of team members. In identifying the CTQ issues, we must define customer characteristics that have the most impact on quality. The process map, called SIPOC (Suppliers, Inputs, Process, Outputs, Customer), defines a high-level process map of the project focus.
Measure: In this