Operational Excellence – Articles + lectures
Master Business Administration 2020-2021
Shannon Karhof – Grade 8.5
Table of contents
Chapter 1: The business and economic background of Lean Six Sigma ..............................................2
Chapter 2: Organizational structure for LSS .......................................................................................3
Chapter 3: The Six Sigma method.......................................................................................................5
Chapter 4: Lean methodology ............................................................................................................6
Chapter 5: Deployment strategy ........................................................................................................6
Chapter 6: LSS in historical perspective ..............................................................................................7
Chapter 7: Project selection and the Define phase .............................................................................8
Chapter 8: Measure............................................................................................................................9
DMAIC 1: Define the CTQs...............................................................................................................9
DMAIC 2: Validate the measurement procedures ............................................................................9
Chapter 9: Analyze ........................................................................................................................... 10
DMAIC 3: Diagnose the current phase ........................................................................................... 10
DMAIC 4: Identifying potential influence factors .......................................................................... 11
DMAIC 5: Establish the effect of influence factors ......................................................................... 12
Chapter 10: Improve ........................................................................................................................ 13
DMAIC 5: Establish the effect of influence factors ......................................................................... 13
DMAIC 6: Design improvement actions ......................................................................................... 14
DMAIC 7: ...................................................................................................................................... 14
Chapter 11: Control .......................................................................................................................... 16
DMAIC 7: Improve process control ................................................................................................ 16
DMAIC 8: Close the project ........................................................................................................... 17
Chapter 12: Elementary statistics for lean six sigma ........................................................................ 18
,Chapter 1: The business and economic background of Lean Six Sigma
Lean Six Sigma * business strategy, it is a framework for organizing improvement activities
• Generic, ready-made approaches cannot be strategic by definition
• Focus on processes, all work that is done routinely
o Number of operations that turn input into output
o Cost of poor quality: Quality problems cost the organizations a lot of money
• Goal: Minimize the hidden factory
Hidden factory: The quality and efficiency issues, often invisible on flowcharts and process descriptions
Recurring problems make for good Lean Six Sigma projects. Lean Six Sigma brings understanding of the root
cause(s) of the problem, and provides a definitive and optimal solution
• Lean Six Sigma projects optimize processes, eliminate waste, and provide a quantitative basis for staffing
and line balancing
• Also tackles problems that are perceived as problematic by customers
• LSS provides a management structure and methodology that turn systematic improvements of routine
operations into a routine operation itself
Direct benefits: Customer satisfaction and cost advantages
• LSS projects improve efficiency and quality, thus increasing value for customers while simultaneously
reducing costs
• The gains of the unbelievable increases in quality and efficiency have gone almost entirely to consumers:
there have been only few businesses that managed to convert them into sustainable higher profits
o Improvements on quality and efficiency can be converted into CAs and sources of sustainable
profitability
• Price erosion: When most companies achieve the same improvement in their operations, principles of
competition and market ensure that prices decrease by the same amount as costs, leaving industry with the
same profit margins, and feeding spilling over gains to consumers
• Competitive convergence: When companies start copying each other's moves and best practices, so they
end up looking more alike
o This type of competition is destructive for companies participating in it
o Avoided by using 'competitive strategy': effective methodology for delivering the
improvements that the business strategy dictates as essential
Continuous improvement, flexibility, and the ability to adapt to new circumstances and opportunities have
become crucial competences in a highly dynamic and quickly evolving economy
• What is needed in addition are the organizational structures and facilities needed to carry out improvements
effectively
Values of LSS:
• Continuous innovation and improvement
• Focus on the customer
• Data-driven decisions
• Focus on the vital issues that determine performance
Strategy is all about making clear choices. Strategies are necessary to deal with trade-offs Competitive position
can be obtained through: 1. cost leadership 2. product differentiation, 3. focus (on niches)
LSS builds skills in data based management... projects automatically build a system of process and performance
metrics, thus providing a basis for a management information system
• Company-wide continuous improvement
• Change in culture: LSS companies nurture an innovative and experimental attitude in their workforce and
management
, Chapter 2: Organizational structure for LSS
Distinction:
• Quality planning consists of the determination of what customers want and the development of
the products and processes which are required to comply with these needs
• Quality control consists of the on-line and real time monitoring of production or service delivery,
the detection of irregularities, and the reaction to those irregularities
o Reactive in nature and deals particularly with... sporadic problems
• Quality improvement is the organized and systematic pursued improvement to increase quality and
efficiency to unprecedented levels (breakthroughs)
o Off-line affair that deals with chronic problems and has a project-by-project nature
o The reactive and opportunistic approach of control is completely different from improvement, which
searches for improvement opportunities systematically
Improvements are run by people with intimate and detailed understanding of the process and problem at hand
so projects are mostly executed by people from the line organization
Structure of the team:
• 1+ Black Belts and/or Green Belts from middle management, who are effective (and trained) project leaders
• Several Yellow Belts who work as advisors and may be called up to collect data
• Champion who is the product owner and responsible for reviewing and the process that the project aims to
improve
o The program director is ultimately accountable for the LSS initiative, and he should map out the strategic
direction
o Program managers do the day-to-day administration of LSS and do the planning and resource
management
■ They are also responsible for the adjustment of the program's course, reacting to problems and
complications
Decentralized approach to improvement as the BB and GB is dispersed over the organization
• Danger: There's no integration of activities, and efforts are wasted on issues that are not of strategic
importance
Master BB are experienced BB and act as LSS experts. They deliver training and support projects
Master Business Administration 2020-2021
Shannon Karhof – Grade 8.5
Table of contents
Chapter 1: The business and economic background of Lean Six Sigma ..............................................2
Chapter 2: Organizational structure for LSS .......................................................................................3
Chapter 3: The Six Sigma method.......................................................................................................5
Chapter 4: Lean methodology ............................................................................................................6
Chapter 5: Deployment strategy ........................................................................................................6
Chapter 6: LSS in historical perspective ..............................................................................................7
Chapter 7: Project selection and the Define phase .............................................................................8
Chapter 8: Measure............................................................................................................................9
DMAIC 1: Define the CTQs...............................................................................................................9
DMAIC 2: Validate the measurement procedures ............................................................................9
Chapter 9: Analyze ........................................................................................................................... 10
DMAIC 3: Diagnose the current phase ........................................................................................... 10
DMAIC 4: Identifying potential influence factors .......................................................................... 11
DMAIC 5: Establish the effect of influence factors ......................................................................... 12
Chapter 10: Improve ........................................................................................................................ 13
DMAIC 5: Establish the effect of influence factors ......................................................................... 13
DMAIC 6: Design improvement actions ......................................................................................... 14
DMAIC 7: ...................................................................................................................................... 14
Chapter 11: Control .......................................................................................................................... 16
DMAIC 7: Improve process control ................................................................................................ 16
DMAIC 8: Close the project ........................................................................................................... 17
Chapter 12: Elementary statistics for lean six sigma ........................................................................ 18
,Chapter 1: The business and economic background of Lean Six Sigma
Lean Six Sigma * business strategy, it is a framework for organizing improvement activities
• Generic, ready-made approaches cannot be strategic by definition
• Focus on processes, all work that is done routinely
o Number of operations that turn input into output
o Cost of poor quality: Quality problems cost the organizations a lot of money
• Goal: Minimize the hidden factory
Hidden factory: The quality and efficiency issues, often invisible on flowcharts and process descriptions
Recurring problems make for good Lean Six Sigma projects. Lean Six Sigma brings understanding of the root
cause(s) of the problem, and provides a definitive and optimal solution
• Lean Six Sigma projects optimize processes, eliminate waste, and provide a quantitative basis for staffing
and line balancing
• Also tackles problems that are perceived as problematic by customers
• LSS provides a management structure and methodology that turn systematic improvements of routine
operations into a routine operation itself
Direct benefits: Customer satisfaction and cost advantages
• LSS projects improve efficiency and quality, thus increasing value for customers while simultaneously
reducing costs
• The gains of the unbelievable increases in quality and efficiency have gone almost entirely to consumers:
there have been only few businesses that managed to convert them into sustainable higher profits
o Improvements on quality and efficiency can be converted into CAs and sources of sustainable
profitability
• Price erosion: When most companies achieve the same improvement in their operations, principles of
competition and market ensure that prices decrease by the same amount as costs, leaving industry with the
same profit margins, and feeding spilling over gains to consumers
• Competitive convergence: When companies start copying each other's moves and best practices, so they
end up looking more alike
o This type of competition is destructive for companies participating in it
o Avoided by using 'competitive strategy': effective methodology for delivering the
improvements that the business strategy dictates as essential
Continuous improvement, flexibility, and the ability to adapt to new circumstances and opportunities have
become crucial competences in a highly dynamic and quickly evolving economy
• What is needed in addition are the organizational structures and facilities needed to carry out improvements
effectively
Values of LSS:
• Continuous innovation and improvement
• Focus on the customer
• Data-driven decisions
• Focus on the vital issues that determine performance
Strategy is all about making clear choices. Strategies are necessary to deal with trade-offs Competitive position
can be obtained through: 1. cost leadership 2. product differentiation, 3. focus (on niches)
LSS builds skills in data based management... projects automatically build a system of process and performance
metrics, thus providing a basis for a management information system
• Company-wide continuous improvement
• Change in culture: LSS companies nurture an innovative and experimental attitude in their workforce and
management
, Chapter 2: Organizational structure for LSS
Distinction:
• Quality planning consists of the determination of what customers want and the development of
the products and processes which are required to comply with these needs
• Quality control consists of the on-line and real time monitoring of production or service delivery,
the detection of irregularities, and the reaction to those irregularities
o Reactive in nature and deals particularly with... sporadic problems
• Quality improvement is the organized and systematic pursued improvement to increase quality and
efficiency to unprecedented levels (breakthroughs)
o Off-line affair that deals with chronic problems and has a project-by-project nature
o The reactive and opportunistic approach of control is completely different from improvement, which
searches for improvement opportunities systematically
Improvements are run by people with intimate and detailed understanding of the process and problem at hand
so projects are mostly executed by people from the line organization
Structure of the team:
• 1+ Black Belts and/or Green Belts from middle management, who are effective (and trained) project leaders
• Several Yellow Belts who work as advisors and may be called up to collect data
• Champion who is the product owner and responsible for reviewing and the process that the project aims to
improve
o The program director is ultimately accountable for the LSS initiative, and he should map out the strategic
direction
o Program managers do the day-to-day administration of LSS and do the planning and resource
management
■ They are also responsible for the adjustment of the program's course, reacting to problems and
complications
Decentralized approach to improvement as the BB and GB is dispersed over the organization
• Danger: There's no integration of activities, and efforts are wasted on issues that are not of strategic
importance
Master BB are experienced BB and act as LSS experts. They deliver training and support projects
