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The Lean Six Sigma Guide to Doing More With Less: Cut Costs, Reduce Waste, and Lower Your Overhead

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praise for The Lean Six Sigma guide to Doing More with Less

"At Frito Lay, we have applied many of the concepts and tools in this book, and we are realizing a five to seven times return on our annual Lean Six Sigma investment."

—Tony Mattei, Lean Six Sigma Director, Frito Lay

"Ecolab has experienced a sustainable, competitive advantage through Lean Six Sigma. The principles in this book are helping us drive greater value for our share-holders, better service for our customers, and talent development opportunities for our associates."

—Jeffrey E. Burt, Vice President and Global Deployment Leader, Lean Six Sigma, Ecolab

"This book gives excellent insights into Lean Six Sigma and its strong impact within different industries. We used Lean Six Sigma in numerous process improvement projects, which, in turn, helped to create momentum and set up a process improvement culture. Amid a challenging economic environment, we are accelerating this initiative globally."

—Satheesh Mahadevan, Directeur des Processus, Société Générale

"Our Lean Six Sigma deployment of the concepts and tools described in this book is transforming our business—with tangible benefits for our employees, customers, suppliers, and shareholders."

—Jeffrey Herzfeld, Sr. Vice President and General Manager, Teva Pharmaceuticals USA

"We have deployed the holistic Lean Six Sigma strategy described by Mark George across our enterprise. It is providing remarkable returns for Unum."

—Bob Best, Chief Operating Officer, Unum

"The Lean Six Sigma Guide to Doing More with Less presents a comprehensive view of operations transformation, the approaches required for success, leadership's role, and the competitive advantage that results. Transformational changes are enabling us to do more with less, by investing and working smarter."

—Ted Doheny, President and COO, Joy Mining Machinery

Table of Contents

  1. Copyright
  2. Foreword
  3. Preface
    1. Creating a Holistic Approach to Lean Six Sigma
    2. Lean Six Sigma: Fad or Phenomenon?
  4. Acknowledgments
  5. 1. Why Use Lean Six Sigma to Reduce Cost?
    1. 1.1. Transactional Example: Lean Six Sigma Transforming Our Government
    2. 1.2. The Alloy of High Performance: Why Choose Lean Six Sigma to Reduce Cost
    3. 1.3. Lean Six Sigma versus Traditional Cost-Cutting Tactics
    4. 1.4. Emerging Stronger Than Ever
  6. Spotlight #1: How to Use This Book
    1. Overview of Part I : Process Cost Reduction—a Focus on the Tools of Waste Elimination
    2. Overview of Part II : Enterprise Cost Reduction—a Focus on Value, Speed, Agility, and Competitive Advantage
    3. Overview of Part III : Accelerating Deployment Returns—Getting More, Faster, from a Lean Six Sigma Deployment
  7. I. Process Cost Reduction: A Focus on Waste Elimination
    1. 2. Find Cost Reduction Opportunities in Waste
      1. 2.1. The Seven Common Faces of Waste: TIMWOOD
        1. 2.1.1. Waste #1: Transportation
        2. 2.1.2. Waste #2: Inventory
        3. 2.1.3. Waste #3: Motion Waste
        4. 2.1.4. Waste #4: Waiting
        5. 2.1.5. Waste #5: Overproduction
        6. 2.1.6. Waste #6: Overprocessing
        7. 2.1.7. Waste #7: Defects
      2. 2.2. Using the Full LSS Toolkit to Drive Cost Reduction
    2. Spotlight #2: Special Tips for Nonmanufacturing Processes
      1. Key Success Factors in Reducing Costs in Services and Retail
        1. Involve the People Who Do the Work
        2. Focus on Identifying and Eliminating Non-Value-Add Work People Do
        3. Look for and Formalize Best Practices and Turn Them into Repeatable Processes
        4. Look for Opportunities for Cost Reduction in the Infrastructure
        5. Recognize Interfaces with Technology
        6. Tips for Using Lean Six Sigma in Services
    3. Spotlight #3: Design a Successful Lean Six Sigma Project or Pilot
      1. Which Methodology Is Right for Your Project?
        1. When to Use Lean Six Sigma
        2. When Not to Use Lean Six Sigma
      2. Identifying the Players and Their Roles
        1. Defining Roles in a Cost Reduction Project
    4. 3. Use the Voice of the Customer to Identify Cost-Cutting Opportunities
      1. 3.1. Customer Types and Their Needs
      2. 3.2. Collecting Data on Customer Needs
        1. 3.2.1. What Are VOC Collection Tools?
        2. 3.2.2. Why Use VOC Collection Tools for a Cost Reduction Project?
        3. 3.2.3. Which VOC Collection Tools Are Best for a Cost Reduction Project?
      3. 3.3. Getting Specific about Customer Needs
        1. 3.3.1. What Is a Critical Customer Requirement?
        2. 3.3.2. Why Develop CCRs for a Cost Reduction Project?
        3. 3.3.3. How to Develop CCRs for a Cost Reduction Project
      4. 3.4. Avoiding Misinterpretations
      5. 3.5. Conclusion
    5. 4. Make Processes Transparent to Expose Waste
      1. 4.1. How to Define the Boundaries through SIPOC Diagrams
        1. 4.1.1. What Is a SIPOC Diagram
        2. 4.1.2. Why Use SIPOC in a Cost Reduction Project?
        3. 4.1.3. How to Use a SIPOC Map in a Cost Reduction Project
        4. 4.1.4. Example SIPOC
      2. 4.2. Using Value Stream Maps to Achieve Transparency
        1. 4.2.1. What Is a Value Stream Map?
        2. 4.2.2. Why Do a Value StreamMap for a Cost Reduction Project?
        3. 4.2.3. Analyzing Value on a VSM
        4. 4.2.4. Value Determinations Can Be Tricky
        5. 4.2.5. VSM Examples
      3. 4.3. Conclusion
    6. 5. Measure Process Efficiency
      1. 5.1. Process Cycle Efficiency: The Key Metric of Process Time and Process Cost
        1. 5.1.1. Why Calculate PCE for a Cost Reduction Project?
        2. 5.1.2. Interpreting PCE Numbers
      2. 5.2. Little's Law: Understanding the Levers for Improving Process Speed
        1. 5.2.1. How to Calculate Process Lead Time Using Little's Law
        2. 5.2.2. Why Calculate Little's Law for a Cost Reduction Project?
      3. 5.3. The WIP Cap Method: How Limiting WIP Can Increase Process Speed and Reduce Costs
        1. 5.3.1. What Is WIP Cap?
        2. 5.3.2. Why Use WIP Cap in a Cost Reduction Project?
        3. 5.3.3. Determining WIP Cap in a Cost Reduction Project
        4. 5.3.4. Linking Waste Time to Costs
        5. 5.3.5. Summary of Impact of WIP Cap
      4. 5.4. Using PCE and Little's Law to Drive Cost Reduction
    7. 6. Improve Your Analysis Skills
      1. 6.1. Analysis Skill #1: Learning to "Read" Variation
        1. 6.1.1. The Relationship between Variation, Lead Time, Capacity, and Cost
        2. 6.1.2. Using Data on Variation to Evaluate Process Capability
      2. 6.2. Analysis Skill #2: Digging Out Root Causes
      3. 6.3. Analysis Skill #3: Establishing Relationships between Factors
        1. 6.3.1. What Is Design of Experiments?
      4. 6.4. How DOE Works: A Sales Process Case Study
      5. 6.5. Conclusion
    8. 7. Make Rapid Improvements through Kaizens
      1. 7.1. Quick Overview: The Kaizen Approach
      2. 7.2. When Should You Use Kaizens in Cost Reduction Projects?
        1. 7.2.1. Comparing Kaizens to Traditional Projects
      3. 7.3. Seven Keys to Kaizen Success
        1. 7.3.1. Sponsor Involvement
        2. 7.3.2. A Good Facilitator
        3. 7.3.3. Workplace Preparation
        4. 7.3.4. Appropriate Scoping/Targets
        5. 7.3.5. Development of New Work Standards
        6. 7.3.6. Emphasis on Visual Tools/Visual Management
        7. 7.3.7. Celebrating and Publicizing Accomplishments
      4. 7.4. Conclusion
  8. II. Raising the Stakes: Reducing Costs at an Enterprise Level
    1. 8. Think Transformation, Not Just Improvement
      1. 8.1. Attain a Proper Understanding of the Extent of the Opportunity
      2. 8.2. ConsciouslyChoose a Path to Capture the Opportunity
        1. 8.2.1. Lever #1: Understanding Value Creation and Value Destruction in Your Company
        2. 8.2.2. Lever #2: Process Excellence
        3. 8.2.3. Lever #3: Asset Management and ROIC Focus
        4. 8.2.4. Lever #4: Leadership and Organizational Capability
        5. 8.2.5. Lever #5: Performance Management
      3. 8.3. Plan for a Transformation Journey
        1. 8.3.1. Transformation Case Study
      4. 8.4. Leadership Challenges in Leading a Transformation
        1. 8.4.1. Alignment at the C-level
        2. 8.4.2. Maintaining Focus
        3. 8.4.3. Managing Risk and Reward at the Leadership Levels
      5. 8.5. Conclusion
    2. Spotlight #4: Transformation at Owens-Illinois
    3. 9. Unlock the Secrets to Speed and Flexibility
      1. 9.1. Alignment and Analytics
      2. 9.2. A Model of Speed and Agility
        1. 9.2.1. Mix, Demand, and Flexibility
      3. 9.3. Economic Order Quantity (EOQ)—The First 100 Years
      4. 9.4. Augmenting EOQ with Lean Analytics
        1. 9.4.1. The Equation of Process Speed: Little's Law
        2. 9.4.2. The Equations of Flexibility: Cycle Time Interval and Workstation Turnover Time
      5. 9.5. The Equations in Action
      6. 9.6. Conclusion
    4. 10. Reduce the Cost of Complexity
      1. 10.1. The Hidden Cost of Added Offerings on Processes
        1. 10.1.1. Understanding True Costs
        2. 10.1.2. Upstream Costs of Complexity
        3. 10.1.3. Downstream Costs of Complexity
      2. 10.2. Assessing Complexity in Your Business: A Holistic View
      3. 10.3. Highlights of the Complexity Analysis Process
        1. 10.3.1. Prime Value Chain Analysis: Finding the Hidden Cost of Value Streams That Traverse the Business
        2. 10.3.2. Impact of PVC Maps
        3. 10.3.3. Complexity Value Stream Maps
        4. 10.3.4. Overview of CVSM Steps
      4. 10.4. Complexity Reduction as the Gateway to Transformation
      5. 10.5. Conclusion
    5. 11. Look Outside Your Four Walls to Lower Costs Inside
      1. 11.1.
        1. 11.1.1. Upstream Improvements
        2. 11.1.2. Downstream Improvements
      2. 11.2. What Is an Extended Enterprise?
      3. 11.3. Working on the Supplier End of the Extended Enterprise
        1. 11.3.1. Types of Supplier Relationships
        2. 11.3.2. Which Suppliers? How Many to Approach?
        3. 11.3.3. Helping Suppliers Develop Lean Six Sigma Capability
      4. 11.4. What to Do When You're the Supplier: Extending Your Enterprise Downstream
        1. 11.4.1. Options for Working with Your Customers
      5. 11.5. Conclusion
  9. III. Speeding Up Deployment Returns: Strategies for Getting More, Faster, from a Lean Six Sigma Deployment
    1. 12. Create a Pipeline of Cost Improvement Projects
      1. 12.1. Developing Rigor in Project Identification and Selection
        1. 12.1.1. Step 1: Conduct a Rapid Assessment and Validation
        2. 12.1.2. Step 2: Screen Initial List
        3. 12.1.3. Step 3: Scope and Define Projects
        4. 12.1.4. Step 4: Prioritize List and Select Projects
      2. 12.2. From First-Time to All the Time: Shifting from a One-Time Event to an Ongoing System of Pipeline Management
      3. 12.3. Conclusion: Maintaining a Dynamic Pipeline
    2. Spotlight #5: Link Projects to Value Drivers
      1. Option 1: Value Driver Trees
      2. Option 2: Financial Analysis Decision Tree
      3. Option 3: Economic Profit
      4. Option 4: EP Sensitivity Analyses
      5. Value Driver Example
    3. 13. Smooth the Path through Change
      1. 13.1. Change Readiness Assessments
      2. 13.2. Leading versus Managing the Change
        1. 13.2.1. Importance of Leadership Roles at Different Stages of Change
        2. 13.2.2. Drive Engagement at All Levels
      3. 13.3. Upgrading Your Communication Plan
        1. 13.3.1. Secret #1: Consider Feedback Feasibility When Determining Which Methods to Use
        2. 13.3.2. Secret #2: Address Both Logic and Emotion
      4. 13.4. Process Ownership and Cost Accountability
      5. 13.5. Conclusion: Restoring Faith, Hope, and Belief
    4. 14. Establishing a Center of Excellence
      1. 14.1. What Is a CoE and What Does It Do?
        1. 14.1.1. What a CoE Does
      2. 14.2. Focus #1: Performance Management
        1. 14.2.1. DevelopingMetric Dashboards and Control Plans
      3. 14.3. Focus #2: Replication: Copy and Paste Your Cost Savings
      4. 14.4. How Can a CoE Fit into an Organization?
        1. 14.4.1. Options for Structuring a CoE
      5. 14.5. Weaving the CoE into Strategic Planning
      6. 14.6. Conclusion
    5. 15. Gaining New Perspectives on Deployment Cost and Speed Opportunities
      1. 15.1. Looking for Focus and Flexibility in Deployment
      2. 15.2. Focusing Deployments on Business Issues
      3. 15.3. Flexibility in Building Skills
        1. 15.3.1. Rapid Development of Internal Expertise: The I Do–We Do–You Do Approach
        2. 15.3.2. Hiring a Master Consultant (Sensei)
        3. 15.3.3. Augmenting Internal Staff with Outside Resources
        4. 15.3.4. Applied Learning: Rapid Path to Results
        5. 15.3.5. Blended E-Learning
      4. 15.4. Conclusion
    6. 16. Reenergizing a Legacy Program
      1. 16.1. Why Deployments Lose Steam
      2. 16.2. Building a Steam Engine: Performance Management
      3. 16.3. Process Ownership: The Partner of Performance Management
      4. 16.4. How to Reenergize a Deployment
      5. 16.5. Conclusion