Sec 02 Dmaic Steps

The DMAIC Improvement Process
Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04
Section 2 / Slide No : 1
Why- What - How

Understand the principles (i.e. Know-why) Concepts
Process
Techniques & Tools
Put them into practice (i.e. Know-how)

The DMAIC Phases

2. Measure 1. Define
Identify Project
Determine Capability
Investigate Causes 3. Analyze
5. Control
Sustain Improvements
4. Improve Find Solutions

The DMAIC Process Steps

Phase Step Task
DEFINE
1
2 3
Identify Focus Areas

Set Up Project and Deploy Team Define Key Process Output Variable Develop Data Collection Plan Determine Process Current Performance
MEASURE
4 5
Phase
Step 6
Task Brainstorm All Possible Causes Shortlist Major Suspected Causes Verify Root Causes Identify and Evaluate Possible Improvement Solutions Confirm Improvement Solutions Standardize Improvement Plan Close The Project
ANALYSE
7 8 9 10 11
IMPROVE
CONTROL 12
Define: Identify Project

1. Identify Focus Area 2. Set Up Project and Deploy Team
1. Identify Focus Areas

Focus limited resources on important areas.
The effort involves a working session with the participation of the management team (the sponsors) where they examine the various possible areas that impact the business results and, with the use of a structured collective decision making process, decide the critical areas to focus the improvement efforts. Examples of focus areas include line reject rate, on-time shipment, capacity utilization, inventory turns, response time and warranty costs/customer complaints.
A tool that is commonly used for this purpose is the Tree Diagram
Increase Sales
Sales Orders Production Output
Sales Lead Time On Time Delivery Order Fulfillment Customer Complaints Process Yield Down Time Process Efficiency Time to Market Market Success Rate Design Changes Material Price Material Usage Rate Lot Reject Rate
New Products
Material Cost
Profitability
Manage Cost
Failure Cost
Improve Working Capital

W I P Rejects Material Rejects Electricity Utility Cost Water Account Receivable Gas
Inventory Section 2 / Slide No : 8
Alternatively, the SIPOC diagram is used. SIPOC is more suitable for service organizations or supporting departments.
SIPOC Diagram
[Supplier Inputs Process Outputs Customers]
Inputs
Suppliers
Process
Outputs
Customers
SIPOC Diagram
Example: Suppliers
Requesting Department
Inputs
Requisition request
Process
Recruiting
Outputs
New Staff Employment Letter Orientation program
Customer
Requesting Department New staff New staff Finance Dept. HR Dept.
Job Applicants Application 1. Review Request letters 2. Advertise Position Finance Department Management Company budget Company policy 3. Screen Applicants 4. Interview Candidates
Payroll 5. Prepare Employment information Letter Personal 6. Orient new staff record file
2. Set Up Project & Deploy Team

Project Idea Sources
Performance Gap Voice of Customer Cost Reduction Initiative
Competitive Pressure
Ideas Generation
Issues of Concern
Ideas Prioritization
Selected Projects
Project Charters
Prioritize Project Ideas

Impact / Benefits
Project F Project A Project C Project B Project G Probability of Project H Project E Project D
Success / Ease of Effort
Develop the Project Charter

The project sponsor (usually with the help of his/her people) defines the problem statement, decides the improvement goal, and selects the project team members. Project charter helps to make sure that due thoughts are given to make sure that the project is properly set up. The project should be scoped at the process level where specific actions can be taken to realize the improvement in business results. The outcome of this step is an approved project charter.
Project Charter
A Project charter is a document created at the start of a project to assign the project to the team. It is an important tool for getting commitments from the team members. A Team Charter should specify the following:

Issue : 1.0/09-04
Project title and the project scope. The business case and problem/opportunity statement. The goal statement. Estimated financial benefits. Name of the sponsor. Team leader and members. Project timeline.
Copyright Pera Neville Clarke Pte Ltd, 2004
Example of Project Charter

Project Title
To reduce late payments

Business Case
Problem/Opportunity Statement
Estimated 30% of payments are received later than the credit term of 60 days
Goal Statement
Improve cash flow. Reduce bad debt risks

Project Scope
To reduce late payment percentage to less than 5%

Team Leader Members
Account receivable process

Time Line Phase 1 Phase 2 Phase 3 Phase 4 Sponsor Name Mar XX Apr XX May XX Jun XX Sign
Financial Benefit (estimate)
Date
Notes on forming a team : There should be an appointed member (sponsor) of top management Team members are to be selected based on the problem statement and the scope involved. Team members must have good working knowledge of the subject matter.
Rule of thumb for the number of team members is 5 to 7 persons.

The team leader should be trained in: Problem solving process steps Team facilitation skills Process improvement tools
The 4 Rights of Successful Projects

Right project.
Right team composition. Right team process.
Right Results
Measure: Determine Process Capability

3. Define key process output measure/s 4. Develop a data collection plan 5. Determine process capability
3. Define Key Process Output Measure

Input Process Output
Why is it necessary to measure the process output? To quantify the current performance level. To objectively evaluate the gap. To aid in the analysis of key input factors. To verify the effectiveness of the improvement solutions.
Examples of Process Output Measure: Proportion defective / Proportion of rework
Defect per unit / Error per unit / Callback per unit

Process capability ratio (Cpk, Ppk) Cycle time / Turn- around-time / Service response time / Queue time On time delivery / Span (Order to Delivery) Proportion of value adding activities
Availability of personnel / material / facility
4. Develop Data Collection Plan

To make sure the data collected are reliable and accurately describes the process output characteristics.
Components of Data Collection Plan: Definition of process output measures Data collection method Sampling timeframe Sample size Sampling method Recording sheet
Example: Process output measure

Cycle time (day) from the date of invoice issued to the date when the payment is received
Data Collection Method

Obtain the data from existing records
Sampling Time Frame

Jun xx to Dec xx
Sample Size
60 invoices
Sampling Method
Random Samples
5. Determine Process Capability

Gather process output data according to the data collection plan.
Translate the raw data into useful process information:
- Use histogram to show the variation in process output variable.

- Estimate the process average and process variation using descriptive statistics. - Compute the process capability figure.
Example: Process Output Variation

Descriptive statistics of process output variation:
Mean is 57 days.
Standard deviation is 7 days.
(Output From Minitab)

Example: Process Capability Study
Defect per million is 336,000

Analyze: Investigate Root Causes
6. Brainstorm all possible causes 7. Decide the vital few suspected causes 8. Verify the causes
6. Brainstorm All Possible Causes

List all possible factors causing the process performance gap.
Team leader to facilitate the brainstorming process. Leverage collective experiences of the team members. Search thoroughly, do not leave out any possible cause. Depending on the situation, choose the most suitable tool for this purpose. (Cause and Effect diagram, Process FMEA, Process Mapping)
Identify possible causes using brainstorming and organize the information using cause and effect diagram
Customer Related
Customer Payment Policy Customer Location Customer Financial Position Customer Acct Payable Process Need for Currency Exchange Payment Method Frequency of Invoicing
Invoice Related
Money Amount In Invoice Errors In Invoice
Dont Match P.O. Wrong Address Wrong Amount
Product Quality Problem No Follow Up On Past Dues Relationship With Customers Customer Type
Why Are Customers Late In Paying Invoices?
Invoicing Method
Others
7. Decide the Vital Few Suspected Causes

Use structured discussion and teams collective knowledge to narrow the possible causes down to a few most probable causes. Team leader to facilitate this narrowing process. It is important for the team to gain a common understanding on the possible causes before starting the narrowing process.
Choose the most suitable tool for this purpose. (Multivoting, nominal group technique, selection matrix)
Decide the key suspects using multi-voting method

Possible Causes 1 Customer Payment Policy 2 Customer Location 3 Customer Financial Position 4 Customer Acct Payable Process 5 Currency Exchange 6 Payment Method 7 Frequency of Invoicing 8 Money Amount In Invoice 9 Errors In Invoice 10 Product Quality Problem 11 No Follow-up On Past Dues 12 Relationship With Customers 13 Customer Types X X X X X X X X X X X X X X X X X X X X X X X Irene Mary X X John Peter Adeline X X X X X Score 3 4 1 2 0 4 2 5 5 1 2 1 0
8. Verify the Causes

Confirm the key suspects are actually root causes. Make sure the key suspect are actually root causes. Discuss and decide how to confirm the key suspects. The methods commonly used for this purpose include: - Historical data analysis. - Design of Experiments. - Process observation and tracking.
Historical data collected on the 4 key suspects
Using Dot Plot to verify whether error is a root cause

Using Box Plot to verify whether location is a root cause

Example: Hypothesis Testing
Ho: There is no difference in the means of payment days among the different locations. Ha: At least one of the means is different.
Cannot dismiss Ho

Using Box Plot to verify whether payment method is a root cause
Dismiss Ho, accept Ha.

Use ANOVA to confirm payment method is a root cause
Using Scatter Diagram, it appears that money amount does not effect days payment
Using Scatter Diagram with stratifications, it appears that money amount has some correlation with days payment
Using Multiple Regression to confirm the effect of money amount on days payment

Improve: Find Effective Solutions

9. Identify and Evaluate Possible Improvement Solutions 10. Confirm Improvement Solutions
9.
Identify and Evaluate Possible Improvement Solutions
Identify various possible solutions and evaluate their effectiveness in solving the problem.
With the root causes identified, brainstorm all possible improvement solutions. The first solution is usually not the best solution. Without any constraints, generate a list of possible solutions. Choose the most suitable creativity technique for this purpose. Evaluate and select the best improvement solution.
Challenging conventional thinking / assumptions:
Do not think
- It cant be done.
Think
- How to get it done.
- It will not work.

- Theyll never buy it. - Weve always done it this way. - Weve never tried this before.
- Try and make it work.

- We can convince them. - Lets find a better way. - If we dont try, we wont know.
Select Best Solution

Use Effectiveness Practicality Matrix to evaluate each idea.
Effective
G F C D A
Practical
Using Force Field Analysis to evaluate in detail the idea of giving rebate if customers pay on time for those invoices with high dollar values.
Driving Forces +
- Restraining Forces
Increased cash flow of about $ xx.

Contribute $xx to financial benefits.
An estimated $xx will be incurred as rebates.

An estimated xx hrs of administrative efforts.
An estimated total cost of $xx will be incurred by the company
Step 10: Confirm Improvement Solutions

Purpose: Make sure solutions are effective before standardization. Decide and develop an action plan to check solution effectiveness. Collect initial data to make sure the solutions are effective: - Check data distribution, compute the descriptive statistics, calculate new process capability. Perform potential risk assessment and stakeholder analysis to anticipate and address possible problems when implementing the solutions.
Descriptive statistics of process output variation: Mean is 42 days. Standard deviation is 6 days.
Process Capability: Defect per million is 1,260

Establish Action Plan

Improvement Action Error proof the invoicing process. Make arrangements with customer to use payment method other than check. Develop and implement a rebate scheme
Responsible Person Irene
Completion Date 18 May
Peter
30 May
Adeline
30 May
Control: Sustain the Improvements
11. Standardize Improvement Plan 12. Close the Project
Step 11: Standardize Improvement Plan

Purpose: Incorporate improvement solutions into process control system.
Transfer the solutions from the team to the process owners.
Revise process control system / documents (control plan, procedure, work instruction, etc.)
Train / brief staff on the revised process control system. Implement a continual monitoring system.
Step 12: Close the Project

Get Champions approval to close the project. Project can be closed when: - The project phases have been completed.
- Project documentation have been completed.

- Improvement plan documented. Share the lessons learned and knowledge gained with other related processes / areas.
Process Mapping, Analysis and Redesign Project Example

Define: Identify Project Problem Statement : The time taken from the moment production is completed to delivery is 2 days. Some urgent orders require products to be delivered in 1 day. Goal Statement : To reduce the turn-around-time ( TAT) to 1 day. Project scope: Order fulfillment process
Measure: Determine Process Capability Map the As-Is Process Make the process visible by creating the process maps. Common process mapping methods: Linear flowchart Cross functional map Relationship map Validate the maps created by walking through the process and collect the necessary data.
Orders Fulfillment Process Cross Functional Map (As-Is)

Day 1
8 QA Technician
10
11
12
Prepare Samples
Perform Lab Test
Key In Test Results Visual Inspection
Visual Inspector
Packers
Packing
Store Supervisor
Update F/G Stock
(continue)
Day 2
8 Sales Officer
Issue D.I.
10
11
12
Prepare D.O. and Gate Pass Approve D.O. and Gate Pass Pick Lots Updates F/G Stocks Prepare Shipments
Sales Manager
Store Supervisor
QA Clerk
Prepare Test Certificates
QA Manager
Approve Test Cert Deliver Shipment Section 2 / Slide No : 53
Delivery Driver
Orders Fulfillment Process Relationship Map (As-Is)

Test Certificates
QA Manager
D.O. & Gate Pass

Lot Numbers
Store Office
D. I. Lot Numbers Passed Lot Numbers Pallet Number
Sales Office
Quantity Accepted
QA Lab
D.O., Gate Pass & Test Certs
Packing
Visual Inspection
Driver
Quantity Accepted Test Certificates
Analyze: Investigate Root Causes

Examine the As-Is Process Look for flaws in the as-is process. Examples of process flaws: Waiting Duplication Non-value adding activities Unnecessary check / approval Errors Rework
Analysis Summary
A] Waiting - Visual inspection will not start unless laboratory tests have been completed.
- Store supervisor waits for the test certificates before he can prepare the shipment.
B] Duplications
- Packers record product names, lot numbers and quantities and send these information to store. Store supervisor keys in the same information into the finished goods inventory system.
C] Non-value Adding Activities - Unnecessary movements involved in sending information or documents around.
Improve: Find Effective Solutions

Identify Improvement Solutions: A] Reduce waiting.
Laboratory tests and visual inspections to be performed concurrently. Store supervisor prints test certificates from computerized workflow system.
B] Reduce non-value adding activities & duplications.

Packers key in product information into finished goods inventory system. Reduce document movements by installing a computerized workflow system. Empower QA technicians to decide lot acceptance based on the specification.
7 Principles of Process Redesign

A useful guide for redesigning work processes: Organize work around results, not tasks. Work parallel instead of sequentially. Capture data only one time when it is first created. Allow decision where the work is performed. Incorporate controls into information processing. Make people who use a process do the work. Treat geographical dispersed resources as one.
Technology Enablers
Leverage on technologies to improve work processes:
Computerized workflow system. Document imaging and management.
Groupware.
Electronic Commerce. Automated input.
Mobile and remote computing.

Wireless communication.
Control: Sustain the Improvement Implement the should-be process

8
QA Technician Visual Inspector
Visual Inspection
10
Test Samples
11
12
Prepare Samples
Key In Test Results
Packer Store Supervisor Sales Officer
Packing
Update F/G Stock Prepare Shipment Pick Lots, Prepare D.O. and Test Cert.
Issue D.I.
Sales Manager Driver

Approve D.O.
Deliver Shipment

Sec 02 Dmaic Steps

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The DMAIC Improvement Process

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Why- What - How

Put them into practice (i.e. Know-how)

The DMAIC Phases

Investigate Causes 3. Analyze

4. Improve Find Solutions

The DMAIC Process Steps

Identify Focus Areas

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Define: Identify Project

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

1. Identify Focus Areas

Sales Orders Production Output

Improve Working Capital

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

2. Set Up Project & Deploy Team

Prioritize Project Ideas

Project F Project A Project C Project B Project G Probability of Project H Project E Project D

Success / Ease of Effort

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Develop the Project Charter

Copyright Pera Neville Clarke Pte Ltd, 2004

Example of Project Charter

To reduce late payments

Improve cash flow. Reduce bad debt risks

To reduce late payment percentage to less than 5%

Account receivable process

Financial Benefit (estimate)

Rule of thumb for the number of team members is 5 to 7 persons.

The 4 Rights of Successful Projects

Measure: Determine Process Capability

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

3. Define Key Process Output Measure

Examples of Process Output Measure: Proportion defective / Proportion of rework

Defect per unit / Error per unit / Callback per unit

Availability of personnel / material / facility

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

4. Develop Data Collection Plan

Example: Process output measure

Data Collection Method

Sampling Time Frame

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

5. Determine Process Capability

- Use histogram to show the variation in process output variable.

Example: Process Output Variation

(Output From Minitab)

Example: Process Capability Study

Defect per million is 336,000

(Output From Minitab)

Analyze: Investigate Root Causes

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

6. Brainstorm All Possible Causes

Why Are Customers Late In Paying Invoices?

7. Decide the Vital Few Suspected Causes

Decide the key suspects using multi-voting method

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

8. Verify the Causes

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Historical data collected on the 4 key suspects

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Using Dot Plot to verify whether error is a root cause

(Output From Minitab)