Lean Organization from the Tools of the Toyota Production System.pdf

Perspectives in Business Culture

For further volumes: http://www.springer.com/series/10441

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Andrea Chiarini

Lean Organization: from the Tools of the Toyota Production System to Lean Office

Andrea Chiarini Chiarini & Associates Bologna Italy

ISSN 2280-1464 ISSN 2280-2088 (electronic) ISBN 978-88-470-2509-7 ISBN 978-88-470-2510-3 (eBook) DOI 10.1007/978-88-470-2510-3 Springer Milan Heidelberg New York Dordrecht London Library of Congress Control Number: 2012935549 # Springer-Verlag Italia 2013 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Exempted from this legal reservation are brief excerpts in connection with reviews or scholarly analysis or material supplied specifically for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work. Duplication of this publication or parts thereof is permitted only under the provisions of the Copyright Law of the Publisher’s location, in its current version, and permission for use must always be obtained from Springer. Permissions for use may be obtained through RightsLink at the Copyright Clearance Center. Violations are liable to prosecution under the respective Copyright Law. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. While the advice and information in this book are believed to be true and accurate at the date of publication, neither the authors nor the editors nor the publisher can accept any legal responsibility for any errors or omissions that may be made. The publisher makes no warranty, express or implied, with respect to the material contained herein. Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)

For my wife and my children, Rosita, Anna Laura, Pier Francesco and Gian Mattia

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Preface

This is a book about the so-called Lean Thinking derived from the Toyota Production System. Nowadays many books and papers deal with the subject, especially books concerning the operative tools of the Toyota Production System. So how will this book try to bring more knowledge to its readers? The book presents a complete journey, top-down and bottom-up, for implementing Lean inside an organization with the scope of achieving economic and financial results. The title of this book, From the Tools of the Toyota Production System to Lean Office, indicates that the book intends to propose a complete pattern, starting from the strategic objectives to the production. The pattern includes service processes such as marketing, accounting, design and can be applied in service industry as well. In this way, the book presents a model developed using an inductive approach based on multiple case studies. The author has taken into account more than 200 companies based in the European Union and Asia, many of which are clients of Chiarini & Associates. This latter is a consulting firm that provides Lean Six Sigma consultancy. Chiarini & Associates has managed projects for companies such as ABB, Barilla, Bulgari, Bridgestone, Continental, Donaldson, Ducati, Ferrari, Fiat Power Train, Praxair, Sitel, Technip, Tetrapak, Tyco, Usag Stanley, Vaillant and many others. Projects have also been managed for public administrations. The proposed model in this book has been compared with many practitioners’ point of view. Besides it has been compared with papers from international peer-reviewed journals and conferences. The first chapter is dedicated to the historical evolution of the Toyota Production System. The second chapter discusses the so-called seven wastes and the valueadded concept. The strategic system Hoshin Kanri is explained in the fourth chapter as the real starting point of the Lean Organization. Hoshin Kanri is the expression of the thoughts of senior management and sets the precise direction for the Lean ship. The strategic objectives deployed by the means of Hoshin Kanri are matched in the fourth chapter with the wastes found through the value stream map. After having mapped the processes and defined the strategic objectives, an organization can launch quick and intensive improvement projects called Kaizen workshops. The fifth chapter discusses how to manage these quick projects and their teams. Kaizen vii

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teams in this chapter are compared to other kinds of teams such as Six Sigma teams, and the reader will understand why the roles and rules are very peculiar. Kaizen teams can use several tools inherited from the Toyota Production System. The sixth chapter takes into account the most important tools from the basic 5S, through onepiece-flow, Kanban and SMED to TPM. After dealing with the tools of the Toyota Production System, a case study applying some of the tools is presented. The famous Italian motorbike manufacturer Ducati, owned by Volkswagen – Audi, discloses how Lean tools are applied in its shop-floor through some examples. The results achieved through Kaizen workshops can be measured day by day and managed by the introduced visual control and management system. The seventh chapter describes lean metrics as well as the accounting systems to measure economic and financial improvements. Traditional accounting, activity-based costing and value stream accounting are compared in order to understand which is better for the Lean Organization. Last but not least the eighth chapter deals with lean office and a new tool for mapping transactional processes, the Makigami. Lean Office is the way to reduce wastes and consequently the lead time for processes such as marketing, engineering, accounting, quality management and supply chains as well as processes inside public administrations.1

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You can contact Andrea Chiarini by e-mail at: [email protected]

Contents

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From Mass Production to the Lean Six Sigma . . . . . . . . . . . . . . . . 1.1 Once Upon a Time There was Mass Production (and Sometimes Still There Is) . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 The Organizational and Productive Model of Mass Production . . 1.3 The Birth of the Toyota Production System . . . . . . . . . . . . . . . . 1.4 The Relentless Decline of Mass Production . . . . . . . . . . . . . . . . 1.5 The Recovery of the USA in the 1980s–1990s and the Proclamation of the Toyota Production System . . . . . . . . . . . . . 1.6 The American Model of Six Sigma . . . . . . . . . . . . . . . . . . . . . . 1.7 Lean Six Sigma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8 The Necessity of Applying Business Excellence Models . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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The Seven Wastes of Lean Organization . . . . . . . . . . . . . . . . . . . . 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Value Added and Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Classifying the Types of Waste . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.1 The 3 MU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 The 4 M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.3 The Seven Relevant Wastes According to Toyota Production System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.4 Defectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Removing Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Using Value Stream Mapping to Visualize Value Added . . . . . . . . 3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Managing Value Stream for Lean Organization . . . . . . . . . . . . . 3.3 Compilation of VSM as-is . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Mapping the Future State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Mapping at Process Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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31 31 32 34 44 46 48

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Strategic Planning: Hoshin Kanri . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Lean: A First Warning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1 Examples of Mission in Lean . . . . . . . . . . . . . . . . . . . . . 4.2.2 Examples of Value Guides in Lean . . . . . . . . . . . . . . . . . 4.2.3 Examples of Vision in Lean . . . . . . . . . . . . . . . . . . . . . .

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51 51 51 54 54 55

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Kaizen Workshops and How to Run Them . . . . . . . . . . . . . . . . . . . 5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Introducing Lean Kaizen Workshops . . . . . . . . . . . . . . . . . . . . . 5.2.1 Programming and Preparing the Event . . . . . . . . . . . . . . 5.2.2 Choosing Team Leaders and Team Members . . . . . . . . . 5.2.3 Carrying Out a Workshop . . . . . . . . . . . . . . . . . . . . . . . 5.3 Gathering Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 Analyzing the Data Gathered and Implementing Solutions . . . . . 5.5 Final Check, Results Presentation and Team Celebration . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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63 63 63 66 67 69 71 73 78 80

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The Main Methods of Lean Organization: Kanban, Cellular Manufacturing, SMED and TPM . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Pull Versus Push . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 5S Order and Cleanliness, the First Step Towards Introducing Visual Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.1 Seiri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 Seiton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.3 Seiso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.4 Seiketsu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.5 Shitsuke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 The Kanban System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.1 Different Types of Kanban and Application Methods . . 6.4.2 Calculating the Number of Kanbans . . . . . . . . . . . . . . . 6.4.3 The Kanban Operating Principle . . . . . . . . . . . . . . . . . . 6.4.4 Using the “Milk-Run” . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 Balancing the Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Cellular Manufacturing and One-Piece-Flow . . . . . . . . . . . . . . 6.6.1 Designing Cellular Management . . . . . . . . . . . . . . . . . . 6.6.2 P-Q Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 Heijunka Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 Quick Changeover and Single Minute Exchange of Die . . . . . . 6.8.1 The Four Stages of SMED . . . . . . . . . . . . . . . . . . . . . . 6.8.2 Identifying Internal and Outer Set-Ups and Preparation . 6.8.3 Converting Internal Set-Ups to Outer Ones . . . . . . . . . . 6.8.4 Improving Internal and Outer Set-Up Activities . . . . . . .

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TPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9.1 The TPM Campaign: First Step, 5S . . . . . . . . . . . . . . . . 6.9.2 Self-Maintenance: Maintenance Carried Out by Workers . 6.9.3 Preventive Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Lean Metric, Lean Accounting and Value Stream Accounting . . . . 7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Defining Lean KPIs: Lean Metric . . . . . . . . . . . . . . . . . . . . . . 7.3 Measuring Cell/Process Performance Bottom-Up . . . . . . . . . . . 7.4 OEE and the Six Big Equipment Losses . . . . . . . . . . . . . . . . . 7.5 Other Cell/Process Key Indicators . . . . . . . . . . . . . . . . . . . . . . 7.6 Strategic and Lean Organization Value Stream Indicators . . . . . 7.7 Activity Based Costing versus Traditional Accounting . . . . . . . 7.8 Lean Accounting and Value Stream Accounting . . . . . . . . . . . . 7.9 Value Stream Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Lean Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 What is Lean Office? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Waste in Transactional Processes . . . . . . . . . . . . . . . . . . . . . . . 8.4 Mapping Service Flow and Identifying Waste . . . . . . . . . . . . . . 8.5 Indicators and Metrics for Lean Office . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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141 141 141 143 143 150 153

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Management of a Kaizen Workshop Carried Out in Ducati Motor Holding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 Workshop Preparation and Targets . . . . . . . . . . . . . . . . . . . . . . 9.2 Code and Sales Figures Analysis . . . . . . . . . . . . . . . . . . . . . . . . 9.3 Current State Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4 Definition of Inventories Between Processes . . . . . . . . . . . . . . . 9.5 Introducing Kanban in the Driveshaft Process . . . . . . . . . . . . . . 9.6 Managing Camshaft Production . . . . . . . . . . . . . . . . . . . . . . . . 9.7 Calculating the Amount of Kanbans . . . . . . . . . . . . . . . . . . . . . 9.8 WIP Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9 Inspection and Workshop Results Presentation . . . . . . . . . . . . . .

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Chapter 1

From Mass Production to the Lean Six Sigma

A warrior of light who trusts too much in his intelligence will end up underestimating the power of his opponent By Paulo Coelho

1.1

Once Upon a Time There was Mass Production (and Sometimes Still There Is)

In the first years of the twentieth century the famous entrepreneur Henry Ford used to say, half serious, half joking, that “Any customer can have a car painted any color that he wants so long as it is black” and “What doesn’t exist cannot break” (referring to a car’s optional features). Considering the interruption of the markets development due to the two world wars, in 1960s and 1970s companies all over the world found themselves doing business in a sort of calm sea where the route wasn’t difficult to choose. The consumers requested products they did not have which could significantly improve their daily lives and for marketing managers it was relatively simple to satisfy their needs. The post-war generation, for example, used the moped as means of transport, but for obvious reasons desired a car. As soon as they managed to buy one, it became a Sunday morning ritual to tinker away in ones garage, trying to repair and maintain the product, as it was replacing the broken vacuum valve of the black and white television. The washing machine, the television, the fridge, the dishwasher and other objects that we now take for granted, often remained dreams for years for families in the post-war era. As soon as the financial status allowed it the purchase was automatic, without many demands regarding the quality of the product, from those few companies whose main goal was satisfying a rather large local request. In fact, only very few companies tried expanding to foreign markets due to trade protection and communication barriers. Today every company uses the Internet to complete transactions, but to those times even fax did not yet exist. So the consumer bought a product/service that he had never had before, having to choose between a few competing companies; and this product will have definitely changed his lifestyle. In this context it was quite A. Chiarini, Lean Organization: from the Tools of the Toyota Production System to Lean Office, Perspectives in Business Culture 3, DOI 10.1007/978-88-470-2510-3_1, # Springer-Verlag Italia 2013

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difficult to obtain personalized products, long-term guarantee, immediate delivery and other services that nowadays are ever-present. The production for this market was concentrated on products that scarcely varied, produced by few companies that relied on little competition and relatively low-priced raw materials. So was it really necessary to strive for excellence through quality and by reducing internal waste?

1.2

The Organizational and Productive Model of Mass Production

Between the nineteenth and the twentieth century F.W. Taylor introduced the socalled Scientific Management, reaching the conclusion that the best establishments had to rigidly and scientifically specialize their organizational roles. If the market demanded an increasing quantity of relatively simple products with a constant rhythm, an “organizational clock”, which was synchronized with this market, was needed. Rather than having a work forces organized in teams to improve products and processes, it was favored having work forces concentrating on producing at the right speed and with the correct equipment, leaving the task of finding and removing products not up to standard at the end of the chain to quality inspectors. Scientific Management is the organizational model used by Ford to produce the famous model “T”, introducing the assembly line. Compared to taylorism, Ford even believed that the worker had to be completely subdued by the mechanism of the chain: the assembly line set the rhythm of production, or, as we nowadays call it, takt time (cycle time) and the worker had to comply without questioning. A perfect model, with an uninterrupted lead-time would certainly not lead to warehouses with a low inventory turnover. And what about employee management? Concepts like Team Building, Job Enrichment & Rotation and self-accountability were not applied; in fact, workers often felt alienated in this system, an aspect discussed in Charlie Chaplin’s famous film “Modern Times”; even the quality of products was not exactly up to Six Sigma standards, since these were checked by production line inspectors. To be fair, this organization allowed a considerable reduction of the car’s unit price, and Ford started selling the cars to the workers, who in the meantime saw their purchasing power rise thanks to the parallel increase of the gross domestic product.

1.3

The Birth of the Toyota Production System

Some authors describe the dawn of the Japanese industrial system almost like a philosophical myth; a concoction of elements connected to the rigid social system, the comparison between Shinto and the western philosophy of Cartesian origin,

1.4 The Relentless Decline of Mass Production

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lead to the success we now know. Historical anecdotes aside, analyzing the situation with the eye of a macro-economist, it’s certain that Japan, in the mass production glory years, emerged defeated from the second-world war and had to fight obstacles that western, especially American, industries did not have. It’s common knowledge that post world war Japan had: • Higher raw material costs: since Japan has few natural resources, these have to be imported. • Rigid salary ranges due to a stifling union system imposed by the victorious Americans. • A smaller internal demand compared to western countries, considering the difficulties induced by economic crisis after the defeat in the Second World War. Attracted by mass production, which kept the western industries at high speed, the inventors of Lean Manufacturing attempted to compete with similar products obtaining poor results. Mass production followed the very simple equation of “quality equal to costs”, and since the Japanese had the initial disadvantage of elevated costs, there was high risk of producing products of poorer quality than the western competitors. Someone may still remembers the Japanese products of the 1960s, like cameras of very poor quality quite similar to the Chinese products of the late 1980s. There are many myths regarding the famous journey in 1950 of the Toyota heir, Eiji Toyoda, and his production manager, Taiichi Ohno, to Ford to understand how they could apply mass production methods to Toyota. Ohno understood immediately that it would not have been a success due to the aforementioned problems; instead, they would have to thoroughly modify the cost structure to obtain a necessary cost reduction. Meanwhile, the situation on the international markets was rapidly changing, moving away from the organizational structures of mass production.

1.4

The Relentless Decline of Mass Production

In the first years of the 1970s, the GDP of the industrialized western nations was still increasing steadily, and with them, the purchasing power of the consumers. It has been sociologically proven that an increase of purchasing power is accompanied by an inevitable tendency of the consumer to demand higher quality, seen as reliability, personalized products and other bonuses. Thus, the consumer starts to complicate the lives of marketing managers and their companies by demanding diverse products and thus causing an explosion of production codes. American and European reached mass product saturation at the end of the 1960s, which reached its peak in 1971 with the American economic crisis and Nixon stepping back on the 1944 Bretton Woods system that determined the convertibility of dollars to gold. Parallel to this important historical event, the Arab-Israeli Yom Kippur war in 1973 caused increase of petroleum and natural gas prices of 70%. These political

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and economical events clawed at the heart of Ford concept: the concept of unlimited development based on the limited and unstable resource that is petroleum. Thus the Japanese industry and especially Toyota in the 1970s and 1980s had a head start in competing in this new big economic scene, since they had already developed strategies and methods of eliminating internal waste (the famous Muda), improving the quality of products and, especially, reacting to new clients that demanded personalized products at competitive prices. By the end of the 1970s Japan was the nation to follow for its industrial and economic structure, and many economists were certain that the American decline was inevitable in the next decades. The western answer to this new situation, it must be said, was not particularly speedy. European countries, for example, tended towards protectionism, leading to a general delay in development, and some organizations were still trailing behind in the new millennium. Differently, the USA initially responded with a reorganization policy based on cutting back directly on production costs, especially labor, and, at the same time, increasing automation. In the 1980s, aided by the explosion of computer science in companies, the concept of Computer Integrated Manufacturing (CIM) is introduced in the USA, making it clear that mainframe, server, robotized cells and AGV would have replaced workmen bit by bit and led to a workman-free factory controlled by few, specialized technicians. Thanks the best universities in the world such as MIT, Harvard, Stanford and others, the USA tried to respond to this new situations with the most advanced systems of planning and control. Software such as MRP I (Material Requirements Planning) and MRP II (Manufacturing Resources Planning), still much used today, are developed together with the first mainframes and servers for companies, making it possible, by using predictive models, to partially keep up with the increase of codes and the reduction of lots the market clamored for.

1.5

The Recovery of the USA in the 1980s–1990s and the Proclamation of the Toyota Production System

It is important to realize that the USA responded to the crisis with a revolution of their economical and industrial philosophy. Obviously a system that leads to excellence like Lean Manufacturing, Six Sigma or for instance TQM (Total Quality Management) has to start with significant commitment by the leadership. The USA started off with a liberal breeze brought by president Ronald Reagan from 1981 to 1989, who personally handed over the Malcom Baldridge prize to companies of excellence; this was the sign of a new era. Even Hollywood declared that the era of finance and of those that considered companies mere short-term profit centers had come to an end, and that now it was time for engineers concentrated on processes; Oliver Stone, the American film director, in the film Wall Street denounced greed

1.6 The American Model of Six Sigma

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(greed is good) and the absence of rules in a world of bankers that would have soon been surpassed by technicians and managers that believed in production. In many ways a similar scenario to the last economic crisis that was set off by large banks going bankrupt as well as the US and European public debts is underpinned on the not long-view of short term profits. Still in the 1980s, Deming wrote one of the best books on management of the last two decades, Out of the Crisis: a symbolic title that warned and advised the whole industrial world what really needed to be done to survive in the competitive struggle. A shame, really, that the last crisis didn’t produce similar masterpieces. The American economy took off and the global competition became more intense. In the 1980s the strategies necessary to compete increased in number: • • • • • • •

Understanding the customers demand (Voice of the customer); Understanding when to introduce new products/services (Time to market); The safety and reliability of a product; The mix of codes and subsequent reduction of lots in sale and supply; On-time delivery; Reduction of production costs; The total cost of a product or service.

As well as the stress on automation and on computerized systems, the USA also started importing Lean Manufacturing principles. Womack and Jones of MIT published a book in 1989 called The Machine That Changed the World, introducing the concept of Lean Thinking in contrast with Mass production. This book, together with the sequel Lean Thinking, finally proclaimed the success of Lean in the whole world. Lean Manufacturing or Toyota Production System, of pure Japanese origin, became a necessity to compete with another important system that was developed in the early 1990s branching from TQM as many authors suggested: Six Sigma.

1.6

The American Model of Six Sigma

From 1985 to the early 1990s Motorola experimented with the famous Six Sigma pattern first on productive processes, subsequently on all company processes, saving 1.5 billion dollars in 5 years and winning the Malcom Baldrige award. Six Sigma spread to most of the western world in the early years of the new millennium, thanks to Motorola and especially General Electrics (GE) and its famous CEO Jack Welch. GE gave Six Sigma that strategic dimension that made it to system of excellence; removing the image it had of being a set of tools to improve quality. In the year 2000 Harry and Schroeder published a famous book on Six Sigma, giving to this management system a precise route that starts with strategies, uses teams with certified specialization and improvement programs organized in five steps (Define-Measure-Analyze-Improve-Control or DMAIC) and, especially, delivers results in the form of saving.

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Table 1.1 Correlation among sigma level, DPMO and COPQ Sigma level Defects per million opportunities (DPMO) Estimated cost of poor quality (COPQ) 2 308,537 Not applicable 3 66,807 25–40% of the turnover 4 6,210 (standard industry) 15–25% of the turnover 5 233 5–15% of the turnover 6 3.4