Control Plans: Ensuring the Economic Return of the Application of Statistical Thinking in Improvement Projects. Robert Mitchell 3M Corporate Quality

Transcription

1 Control Plans: Ensuring the Economic Return of the Application of Statistical Thinking in Improvement Projects Robert Mitchell M Corporate Quality

2 Statistical Thinking is a philosophy of learning and action based on the following fundamental principles: All work occurs in a system of interconnected processes Variation exists in all processes Understanding and reducing variation are keys to success.

3 Improvement using Statistical Thinking Process Variation Data Improvement Statistical Thinking Statistical Methods Philosophy Analysis Action

4 Process Suppliers Inputs Process Outputs Customers S I P O C A series of activities that converts inputs into outputs

5 The Bottom Line: How do we capture the benefits from the application of Statistical Thinking? Y = f(x)

6 How Projects Impact The Business - Examples Revenue Growth - Increase top line through capacity expansion and new product introduction/extension Operating Margin - Bottom-line impact of capacity expansion (growth) or cost reduction (productivity) Working Capital - Cash impact of inventory or receivable reductions or reduced thruput time (cycle time reduction - improved turns)

7 How Projects Impact The Business - Examples Revenue Preservation - Maintain volume otherwise lost (due to stockouts or lost customers, etc.) Cost Avoidance - Reduce the planned spend (that would have otherwise been incurred) Reduce NVA - Redeployment of resources (personnel, equipment, etc.) without removing their cost from the overall system - consider customer satisfaction

8 Project Selection Elements Clarify the big picture using the strategic plan and annual business plan for the business Top-down project identification Establish productivity baseline Bottom-up project identification Prioritize projects based on business metrics Select key projects with leadership support Check for accountability

9 Clarifying the Big Picture The functional goals should support the business plans. The key metrics (Critical Y s) for the business are identified and goals set for each year. Projects should support the key business directives and should be measurable through the process key metrics.

10 Project Identification Methods Two fundamental methods: Top-Down Projects are identified through association with the metrics of the company s Strategic Plan Bottom-Up Projects are identified through association with current process issues.

11 Project Selection Approaches Strategic / Operating Plan Metrics Opportunities to reach the goals Issues needing attention Problems, Defects, Dissatisfied Customers, Downtime, Pain

12 Example: Goal Tree Alignment Goals Productivity / Cost Working Capital / Cash Growth How Employee Satisfaction Metrics Better Increase Top Box Yield, RTY Faster Rate Cycle Time Cheaper Reduce Waste COPQ Projects More Valued Features Increase On-time delivery Fewer Defects Increase Capability Reduce Cycle Time Redesign Process Flow Reduce Waste Lower Inventory Reduce Rework First Time Acceptance Eliminate non-value add Why Decrease RM Cost Works Best for Operational Projects

13 Example: SIPOC Model Defectefect Suppliers Inputs x x Outputs Customers x Effectiveness of Inputs RM Consistency Intellectual Property RM Availability Mgmt Strategic Goals Market Presence Availability of Information Efficiency of Process Rolled Throughput Yield, First Pass Yield Rework, Scrap, Waste Throughput % Things Gone Right Days of Stock Days Beyond Terms Effectiveness of Outputs CTQ Performance Product Features On-Time Delivery # Warranty Claims Customer Loyalty Response Time Works Best for Transactional Projects

14 COPQ Iceberg Tip of COPQ Iceberg Customer Returns, Waste, Scrap, Rejects, Inspection Costs, Recalls, Rework, Warranty Claims Excessive Overtime, Premium Freight Costs, Expediting Costs, Excess Inventory, Consumed Capacity, Customer Allowances, More Setups, Lost Sales, Late Delivery, Long Cycle Times, Engineering Change Orders, Lost Customer Loyalty Lost Opportunity Hidden Factory Traditional Quality Costs, 4-5% of Sales Tangible, easier to measure Full COPQ, 15-25% of Sales Intangible, more difficult to measure Average COPQ Approximately 20% of Sales

15 Entitlement Defines what s possible - a vision Provides a performance level for which to aim Tells you how your process performance relates to perfection Provides an internal benchmark

16 Entitlement Best Possible Performance Rolled Throughput Yield = 100% Cost of Poor Quality = $0 Speed: Best observed performance over a short period of time Predicted by business process design Predicted by should map Capacity: Performance specified by equipment manufacturer Predicted by engineering & scientific fundamentals Best observed performance over a short period of time Best performance predicted by empirical relationships developed from process data

17 Improvement Methodology PDCA Control Define DMAIC ACT PLAN Measure CHECK DO Improve Analyze

18 Control Plans / Methods Importance to the improvement process Documented control methods for all critical Process Output Variables and Process Input Variables in the process drives sustained gains Effective control methods maintain the level of performance over the long term Provides a complete critical to operation list of variables and their associated measurement systems / control methods Identifies the Reaction Plan for the Process Owners to resolve any out-of-control occurrences

19 Outputs Control Plans / Methods Updated Control Plans and methods for all critical Process Output Variables and Process Input Variables Completed Reaction Plan for each Process Input Variable / Process Output Variable Sampling methods and measurement system controls in place for each Critical Process Input Variable and Process Output Variable Procedures and appropriate documentation Identified and completed training for all pertinent personnel / functions affected by changes in the process

20 ISO 9001:2000 Management Responsibility Resource Management Measurement, analysis, improvement Input Product Realization Output

21 Three Diamonds of ISO Management Review (5.6.1) Corrective/Preventive Action (8.5) Internal Auditing (8.2.2)

22 Benefits That Can Be Maintained/ Gained With ISO 9001:2000 Improved consistency of products and services through documentation of standards and specifications Organizational retention and transfer of process knowledge through improved documentation. Current and accurate raw material specifications Improved calibration and accuracy of measuring devices

23 Benefits That Can Be Maintained/ Gained With ISO 9001:2000 Discipline to follow documented processes Established requirements for training and record keeping Improved system performance Provides a process to reliably deliver what you promise to customers

24 Benefits That Can Be Maintained/ Gained With ISO 9001:2000 Identifies improvement project opportunities with supporting information about: Current performance levels Measures and Processes used Provides a framework to sustain the gains of continuous improvement projects

25 Case Study Adhesive Corporate Critical Y: Growth Cost Cash Performance Business Unit Critical Y Project Y Financial Impact

26 Adhesion Performance Improvement Initial Capability KPOV out of Control Mean 5 oz/inch over target of 0 PSA - Adhesion Final Capability Process in control Mean on oz/inch 50% reduction in variation Individual Value UCL=7.28 Mean=29.90 LCL=22.51 Subgroup Process Moving Range UCL=9.070 R=2.776 LCL=0

27 Adhesion Performance Control Plan Transitioned 8 of 12 identified critical X s from uncontrolled to controlled variables Documented new SOPs, implemented mistake proofing, and instituted training Critical Y s Adhesion to Glass 5-Bond Critical X s Ct Wt Profile Coating Appearance Adhesive Formulation ISO 9001:2000 Management Review Quarterly internal audits of control plan

28 Key Learnings - Control Plans Start developing the control plan as soon as possible After completion of Measure or Analyze phase Select the appropriate process owner and keep him / her informed of and involved in the Control Plan Team membership of Process Owner is crucial. If project outcome is not important to the PO, you have chosen the wrong Process Owner.

29 Key Learnings - Control Plans Keep the Control Plan as simple as needed to sustain the desired results Don t replace a complex project with an equally complex control plan. Use existing culture and SOP Simplify or mistake proof process to prevent the need for Active Control