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Six Sigma Systems
Case Studies - Six Sigma, Lean Manufacturing, Six Sigma Training

Overview of Six Sigma Systems Projects

Six Sigma Systems, Inc. experience:

The individuals who make up the Six Sigma Systems team have successfully implemented six sigma and lean manufacturing programs worldwide across many different industries and corporate cultures. Companies such as Xerox, American Standard, Whirlpool, Special Devices, Unisource/Georgia Pacific and Wyeth have achieved performance improvements with the help of Six Sigma Systems. The experience and insight we have gained enable us to rapidly and effectively introduce this methodology into your organization so you can achieve maximum results.

Six Sigma Systems has established kanban systems and reorganized product flow at various manufacturers. Six Sigma has developed new cell layouts, work instructions, and data collection plan. Six Sigma Systems used experimentation and measurement system assessment to understand defects at a manufacturer of automotive components.

  • Implemented a six sigma and lean manufacturing program for Fortune 50 company
  • Generated a ROI of greater than 700% for our clients
  • Helped clients improve hundreds of business processes, for example:
    • Increased yield on avionics component. Savings: $4,000,000
    • Reduced cycle time on high tech abrasive process. Savings: $2,800,000
    • Reduced inventory by 50% in entire product delivery chain while improving service level by 20%
    • Reduced defects in paperwork process for government required paperwork. Results: $1,500,000 increase cash flow
    • Improved cash conversation cycle time
  • Provided project leadership, technical and implementation assistance on several mission critical projects with savings in excess of $20M+
  • Completed project assignments for smaller organizations

A typical process improvement expert will generate $500,000 of savings in 6-9 months. A group of 24 employees can generate $12,000,000 of savings in your organization in that time period.

Six Sigma System, Inc. results:

The experts of Six Sigma Systems have a proven track record of success. Across many industries and many types of projects, Six Sigma Systems team members have delivered results such as these:

  • A $2 M reduction in inventory for one product line
  • A $3.5 M savings through improved quality of critical component
  • A $11 M gain from inventory reduction, cycle time reduction and increased sales
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Inventory Management Case Study

Preface

Just like any investment in business, inventory needs to serve the purpose of maximizing profit. However, in many cases inventory has turned into a major cash flow constraint thus making it necessary to optimize inventory using analytical and statistical methods in an integrated approach.

One of the biggest challenges in optimizing inventory is the fact that it is merely an output of many inter-organizational processes. All too often organizations attempt to lower inventory using non-analytical approaches which lower service levels.

Although counterintuitive, it in fact is possible to reduce inventory while improving service levels simultaneously using our proven inventory management methodology.

Our inventory management methodology attacks inventory from two directions:

  • Optimizing inventory levels while viewing the existing order fulfillment process as a given constraint
  • Changing the fundamental order fulfillment process across the entire system

Most clients find this two-step approach of significant value. During the first step cash can be made available quickly and success is immediately generated. Step two is used to generate breakthrough business results and provide a robust order fulfillment process that will be able to perform at lower inventory levels while providing extraordinary service levels.

Case

A major US corporation identifies a cash flow problem. Further analysis reveals that inventory levels are high and turns are below most major competitors. In addition a technology change and a proliferation of models amplify the issue.

The corporate goal is a reduction of inventory across the order fulfillment process in excess of 50% with no negative impact on service levels. Customer feedback reveals that a key to customer satisfaction is on time delivery and any deviation from promised dates has a negative impact on customer satisfaction.

Course of action

A baseline of the existing order fulfillment process is conducted. It quickly highlights some key leverage points in the order fulfillment process. Furthermore it becomes apparent that much of the current inventory is present due to internally generated variation versus customer driven order variation.

Following the baseline activity various process changes are modeled to verify their impact on inventory levels and service levels. Real world constraints are taken into account prior to deciding on the appropriate changes. Simulations are conducted to verify the appropriateness of the analytical models using actual process data.

As a result the following changes are made to accomplish the goals.

  • Implementation of a Pull System for the order fulfillment process. This pull system spans from supplier through manufacturing, logistics to the customer. The previous order fulfillment process was managed via an MRPII system
  • Determination of inventory levels using economic and statistical methods in an integrated approach
  • Implementation of appropriate inventory management models to minimize cost given various real world conditions in the supply chain (flow production, batch production, re-manufactured parts inflow etc.)
  • Revision of the planning process to support the order fulfillment process
  • Training of analysts to determine the appropriateness of forecast models
  • Reduction of internally generated variation through:
    • Organizational changes to reduce tampering
    • Application of statistical methods

Management of the new process is significantly less resource intensive than the original process. Changes in volume are easily accomplished due to the simplicity of the new order fulfillment process. Inventory is reduced and service levels to customers are improved.

Results
Inventory reduction post full implementation: > $20,000,000

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Production Case Study

Preface

Often we view old equipment as not worth understanding and improving for our operations, however replacement costs can be staggering. Certainly purchasing new equipment is necessary at times. However, frequently it is possible to produce good product with existing equipment. Properly characterizing existing equipment using statistical methods can yield significant improvements. We have been able to help our clients utilize existing, considered 'out-dated', equipment to produce high quality product efficiently. Our improvement process follows the basic flow of:

  • Define
  • Measure
  • Analyze
  • Improve
  • Control

Case

A supplier to a major US manufacturer made the decision to stop providing critical components. As a result several programs are at jeopardy as they require the use of this supplied component. The supplier made the decision because the equipment was 30-40 years old, yields had traditionally run at 60% and the margins were low. There were no other suppliers found that would produce these critical components. The manufacturer was forced to buy the exiting equipment and produce the components. The goal was to produce the parts, for which there was no existing knowledge, and to improve the yield if possible. It was also a foregone conclusion that new equipment would have to be purchased.

Course of action

A baseline of the extrusion process was performed and a vast list of potential factors was identified during Process Mapping. It was also determined, through Measurement System Studies that the measurement systems were not capable of measuring the parts. The measurement systems were improved and several screening designed experiments (DOEs) were conducted. Results showed a few key factors to be important. Follow-up optimization experiments were run. In addition, some of the input devices that were not working on the equipment were repaired. The process was producing 100% yield within 3 months on existing part numbers. The next step was to produce parts that had not been previously produced. The first parts off of the new die met the desired specification, although slightly off target. Based on the process knowledge gained from the previous experiments one of the critical factors was adjusted. Within one shift the new parts were being produced to specification and on target.

Finally the purchase order for new equipment was cancelled.

Results
Total cost savings: $3,000,000. Time to completion: 3 - 4 months

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Administrative case study

Preface

Administrative or transactional processes are at time not designed to function with efficiency since they are often viewed as secondary to the manufacturing operations of a company. These processes however, have direct implications to the customer and business performance and can be viewed as opportunities for significant savings.

Case

A major US company was having difficulty with its cash conversion cycle time.

Course of action

A baseline of the process was performed from order input through collection. The baseline included:

  • Process maps
  • Spaghetti charts
  • Failure modes & effects analysis (FMEA)
  • Pareto charts
  • Statistical process control (SPC) on management performance metrics
  • Associate surveys
  • Evaluation of goal & metric alignment
  • Evaluation of organizational structure

The baseline showed that due to the complexity of the process there were many process and organizational locations where problems could and did occur. There was no short list of solutions that would eliminate the errors negatively impacting cash conversion. Furthermore, the feedback loops, which could have reduced the number of repeated errors were cumbersome, which prevented learning and improving from occurring. There was a relatively high turnover rate and the complexity of the process made training a lengthy and expensive process.

The following changes were made to improve the cash conversion cycle time:

  • Redesign the organization into customer support teams, with each required function being represented on each team
  • Mistake proof critical processes
  • Co-locate the team members into autonomous groups
  • Develop goals and metrics to evaluate the customer team performance and focus the team on the overall process
  • Provide a progressive training platform for associates

The new process allows for teams to become familiar with their unique customers' requirements and to improve the existing process with a continuous and short feedback loop. Metrics allow them to focus on the critical few versus the trivial many aspects of their process.

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Medical Records.

A hospital has a backlog in the medical records area.

A team of medical records associates are assigned the task of eliminating the backlog and preventing future occurrences.

The team completes:
  • Process Maps of several areasexecutive training
  • Failure Modes & Effects Analysis
  • Data Acquisition & Analysis
  • Metrics Design
Conclusions: • The bottleneck of the process is the scanning system. • Extra time and errors are coming from specific departments and procedures • The work does not flow smoothly Team Actions:
  • Redesign the processing of medical records
  • Re-layout the processing area
  • Work with key departments to eliminate errors that increase handling time & errors
  • Establish daily metrics tracking• Establish shift briefings
  • Establish downtime log
  • Implement a cross functional team for completing records
  • Provide a HIPPA compliant place for patients to pick up their records.
  • Increase capacity on a temporary basis to eliminate the backlog.
total quality managementA new process and physical layout were designed to accommodate these changes.

The team decreased cycle time to 24 hours initially and within 2 weeks were completing the records within 8 hours of receipt. The required floor space to stay current was reduced by 50%. Extra capacity was added on a temporary basis to clear the backlog. The team meets every shift to discuss issues and problems in achieving their target production levels.

“Soft” Dollars: Being In Compliance = Priceless

This work was completed in 5 days.

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Medical Supply Management:

A hospital suspects that they are not adequately charging for patient supplies.

A team of clinicians and administration representatives are assigned the task of determining whether or not charges are being adequately captured for proper billing.

The team completes:tqm
  • Process Maps of several areas
  • Failure Modes & Effects Analysis
  • Failure Mapping
  • Data Acquisition & Analysis
Conclusions:
  • Up to 25% of the supplies being used on patients are not being captured for correct billing
  • Procedures are not being captured from some areas for correct billing
  • Supplies are aging and have to be thrown away periodically ($XX annually)
  • 80% of the supplies (in dollars) are managed by individual departments
  • The process to set up supplies and procedures for correct billing is not well understood
Team Actions:
  • Develop the process to set up supplies and procedures for correct billing
  • Centralize all supply management & establish restocking system for departments
  • Establish cut off limits for single patient use supplies that are to be recorded
  • Provide tools for recording all supplies used that are not shop supplies
  • Eliminate clinicians having to provide detailed information for ordering
A new process was designed to accommodate these key changes. The team is working to train the departments in the new process as it is rolled out. Current savings to date are $200,000 from making a number of tactical changes. Ongoing increases in net revenue are expected to be at least $2,000,000 annually.

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The winners of The Six Sigma Excellence award for world class revenue cycle.




The winners of The 2009 Global Six Sigma & Business Improvement Awards were announced at The Gala Awards ceremony & Dinner on Wednesday October 14th 2009, held at The Walt Disney World Swan & Dolphin Resort, Orlando, Florida.
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Phoenix, AZ 85024
623.889.7124