Lean Six Sigma

The Service Systems and Innovations in Business and Society Collection Jim Spohrer and Haluk Demirkan, Editors

Lean Sigma Methods and Tools for Service Organizations The Story of a Cruise Line Transformation

Jaideep Motwani Rob Ptacek Richard Fleming

www.businessexpertpress.com

Lean Sigma Methods and Tools for Service Organizations

Lean Sigma Methods and Tools for Service Organizations The Story of a Cruise Line Transformation Jaideep Motwani, Rob Ptacek, and Richard Fleming

Lean Sigma Methods and Tools for Service Organizations: The Story of a Cruise Line Transformation Copyright © Business Expert Press, 2012. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopy, recording, or any other except for brief quotations, not to exceed 400 words, without the prior permission of the publisher. First published in 2012 by Business Expert Press, LLC 222 East 46th Street, New York, NY 10017 www.businessexpertpress.com ISBN-13: 978-1-60649-407-3 (paperback) ISBN-13: 978-1-60649-408-0 (e-book) DOI 10.4128/9781606494080 Business Expert Press Service Systems and Innovations in Business and Society collection Collection ISSN: forthcoming (print) Collection ISSN: forthcoming (electronic) Cover design by Jonathan Pennell Interior design by Exeter Premedia Services Private Ltd., Chennai, India First edition: 2012 10 9 8 7 6 5 4 3 2 1 Printed in the United States of America.

Abstract Every business aspires to be competitive and profitable in their markets. To do this, an organization needs to offer customers value propositions, whether it is manifest in the product they produce or in the service they provide. This in turn will create customer loyalty and growth. There are a number of organizational philosophies and strategies used by businesses to help accomplish this goal, among which are the concepts of Six-Sigma and Lean. Both are widely recognized and implemented, and both have been successful in improving value propositions of a variety of organizations, mostly in manufacturing concerns. Lean Sigma Methods and Tools for Service Organizations proposes to integrate the best practices from each of these philosophies and apply them to a customerfocused organization—a cruise ship—whose overriding mission is to deliver superior service to its customers. The authors demonstrate in this book how key components of both Six-Sigma and Lean, such as identifying and removing defects, elimination of waste, metrics, speed of delivery, and the seamless integration of these concepts and practices throughout the operation, serve to enhance the kind of value propositions that customers recognize and which allows the organization to be successful. This book illustrates Lean Sigma on a full range of service offerings: a cruise ship offers “whole service” to their guests including gaming, entertainment, food and medical services, retail sales, security, events and adventure planning, operations and maintenance, purchasing and logistics, human resources and training, and administration of payroll and accounting. By covering Lean Sigma applications in each of these areas in a story book format, service providers can begin to understand how Lean Sigma methods and tools can be applied in their service organizations. Through a unique and captivating story of two competitive brothers, one (Joe) who has had phenomenal success with Lean Sigma methods and tools in a manufacturing business, and the other (Larry), the manager of a cruise line desperately in need of improvement in all performance areas, this story illustrates the discovery, application, and transformation of a variety of service organizations supporting the cruise line operations.

Keywords lean, lean sigma, service, waste elimination, continuous improvement, service excellence

Contents Chapter 1

The Lean Sigma for Service Challenge ..............................1

Chapter 2

Identification and Understanding of Lean Sigma Implementation ................................................................5

Chapter 3

Lean Sigma Methods and Tools—Basic Concepts ............13

Chapter 4

Comparing Manufacturing and Service Environments ..................................................................37

Chapter 5

Key Enablers—Policy Deployment, Accountability Sessions, Employee Training and Involvement, and Lean Sigma Tool Selection and Application ......................................................................45

Chapter 6

Analysis of the Current State............................................53

Chapter 7

Application of Lean Sigma Tools and Results ...................73

Chapter 8

Making Cultural Transitions ..........................................107

Chapter 9

Achieving, Sustaining, and Celebrating Success .............115

References ..........................................................................................121 Index .................................................................................................123

CHAPTER 1

The Lean Sigma for Service Challenge “Shut up Joe! Everyone’s tired of your bragging,” Larry said as he slammed his chicken bone down on his plate and stood up from the picnic table. Joe shouted back, “It’s not bragging, it’s just the truth, and you’re the only one tired of it ‘cause you’re such a miserable loser and your so-called cruise line is about to sink!” Joe and Larry have been fighting in some way since the day Larry was born. Their fierce sibling rivalry had overshadowed other family outings in the past. There was the time Larry challenged Joe to a foot race around the house, which ended up in a wrestling match, and the time Joe beat Larry at darts, and Larry tore the dart board off the wall. Their competitive nature seemed to know no end. This time things seemed different though. Joe was right that Larry’s cruise line was in terrible trouble. While other cruise lines were enjoying banner years, Larry’s was barely breaking even, and the booking rate was declining. Larry had already cut many expenses but this only seemed to make things worse. Joe always said “You can’t cut your way to prosperity.” Joe, on the other hand, was enjoying great success in his manufacturing company. He was leading his organization’s continuous improvement (CI) program and had received several promotions over the past few years as a result of the improvements. The local newspaper had even written a nice article about Joe and his company’s improvement efforts. The article titled “DR Products (DRP) Wins Prestigious Continuous Improvement Award,” had several quotes from Joe regarding his role in the effort. Joe was telling his cousins about the article when Larry blew up at the picnic table.

2

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

Larry had always thought CI was easier for a manufacturer as compared to a service organization and that Joe had practically had the CI process given to him by his company’s leadership. Most of the CI books and methods were for manufacturers, not cruise lines. All Joe did was to follow the plan in the books to get the CI award. For the past 3 years DRP had been credited with establishing “best practices” in CI. Many of the best practices were credited to Joe and his production teams. Larry, on the other hand, was in trouble. Not only was his cruise line barely breaking even and losing customers, the employees weren’t happy either. Just last week two more key people had quit. Larry was spending so much time trying to replace these people that he didn’t have time for CI. It was time for Larry to swallow his pride and talk to Joe about business. As Joe came into the kitchen, Larry mustered up a meek apology. “Sorry I blew up out there Joe, I’ve been under a lot of stress lately.” “Nothing you didn’t bring on yourself.” Joe shot back. “Seriously Joe, how do you do it at DRP?” asked Larry. “Do what?” replied Joe. “You know, that CI thing. What do you call it—Lean Sigma?” said Larry. “Yeah that’s the name. I’m surprised you remembered.” “Yeah, I remembered. But it seems like a manufacturing thing. Would it work for a cruise line?” asked Larry. “I’m certain it would. It’s just a systematic approach to seeing and reducing the waste in a process. Your cruise line operation is just a bunch of processes. Sure the customers may want and expect different things, but the delivery of the services is simply a series of processes.” Joe replied. “But we are so different than a manufacturer.” said Larry. “That’s what they all say.” commented Joe. “They do? Who? And what else do they say?” Larry quickly replied. “They say ‘We’re different. Lean Sigma won’t work here.’ Even manufacturers say that, but they’re all wrong. Lean Sigma CI methods

THE LEAN SIGMA FOR SERVICE CHALLENGE

3

are just a scientific or data-driven way to systematically and continually improve a process. Everything an organization does, whether they’re a service organization or manufacturer, can be defined as a process. Lean Sigma methods and tools describe a standardized way to address waste reduction in a process. I’m certain it will work for you, but I’m not sure you’re bright enough to lead it!” “Yeah right!” responded Larry. “If you can do it, anybody can do it! Anything you can do, I can do better.” boasted Larry. “Care to make a wager on that?” asked Joe. “Sure, what are you thinking?” added Larry. “Well, if it works, you give my family and me a free 7-day cruise. If it doesn’t work, I’ll give you a job at DRP when you go bankrupt!” They both laughed, and then Larry groaned. “I’m even willing to help you,” added Joe. “One concept of Lean Sigma is to share the knowledge freely. Why don’t you come to the factory tomorrow and I’ll give you a tour and show you some of the Lean Sigma activities we’re doing. I could even have you attend a current Lean Sigma work session, and maybe a team huddle.” offered Joe. Without hesitation, Larry said “What time?”, and the plan was set. Tomorrow, Larry would arrive bright and early at DRP for a full day of Lean Sigma learning.

Larry’s perspective that his organization is different and Lean Sigma may not apply is very common. In fact, no two organizations are exactly alike; therefore, Lean Sigma methods and tools may work differently for different organizations. Yet, Lean Sigma philosophy, principles, and concepts of waste elimination (conservation of resources) and improving flow are universal. Lean Sigma is a never-ending, systematic/scientific approach to identify and eliminate or reduce waste for any organization that delivers any product or service. By viewing a business as a series of processes with Suppliers, Inputs, a Process, Outputs, and Customers (the Six-Sigma acronym is SIPOC), any organization can employ Lean Sigma methods and tools to improve their quality, productivity, customer satisfaction, and financial performance.

4

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

Chapter 1—Discussion Questions 1. Why did Larry seek help from Joe? Do you think the two bitter rival siblings could work together? 2. Do you think it is a good idea for Larry to benchmark Joe’s organization? What are some of the challenges that Larry may encounter? 3. Discuss Joe’s success with continuous improvement and Lean Sigma initiatives in his organization. What lessons can Larry learn from DRP’s approach? 4. Do you think Lean Sigma can be successfully implemented in Larry’s company? How would you address Larry’s skepticism that “But we are so different from a manufacturer.” 5. What is Lean Sigma? Do you think Lean Sigma can be applied to any business? Why or why not? 6. Why do you think Joe is willing to help Larry? 7. Larry has been spending a lot of time replacing people. Do you think he has the time to devote to continuous improvement and Lean Sigma initiatives?

CHAPTER 2

Identification and Understanding of Lean Sigma Implementation Larry arrived at DR Products (DRP) before dawn the next morning. Joe met Larry at the gate, had him sign in and get a visitor’s badge. Larry had to read a brief statement of DRP’s values, vision, mission, and safety rules in order to enter the plant. Joe said, “Come on, we have to get going. I don’t want to be late for my walk.” Before Larry even got a cup of coffee, Joe had them walking around on the factory floor. Joe walked at a brisk pace. The first stop was in shipping and receiving. Larry had a shipping and receiving area on the cruise ship as well. It didn’t look this organized. Joe went right to the 4′ × 8′ shipping scoreboard which showed the planned inbound and outbound materials, supplies, and products due for the day. The area was neat and tidy. Larry could almost see how the organization on the floor matched the details on the board. “Everything’s to plan here, let’s get to the next operation,” Joe said. DRP’s primary products are metal cabinets and work surfaces. Upstream from shipping was the assembly area. In the assembly area, they had three U-shaped cells. Joe explained to Larry that each cell produced several similar models of cabinets or work surfaces. Specials were produced in the cell where they had the most commonalities as determined by engineering. The cabinets were coming out of the cells like clock-work. Each worker in the cell seemed to work in unison with the others, moving parts to the next station in the cell at about the same time. Larry thought to himself that it looked like an orchestrated dance. As soon as one cabinet was completed and on the skid, a forklift would magically

6

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

appear to take it to the shipping area where final shipping paperwork was prepared. Everything seemed to be in sync, like the interlocking teeth of gears that always match up exactly to the timing or flow. At the assembly area, Joe studied each cell’s scoreboard. Larry noticed that the scoreboards had red and green coloring in certain areas. Larry assumed that green meant good and red meant bad, and he was right. Joe made some notes, and said “Let’s go,” and off to the paint line they went. Larry thought the cells were very similar to the laundry area on the ship, except they weren’t quite as structured. Any laundry basically just went into any available machine. Larry made the following sketches of the cells and scoreboards.

The paint line was manually operated. People hung cabinet parts and panels on hooks or racks and placed them on an overhead conveyor. The conveyor system carried the parts through several cleaning steps and then through a paint booth where two painters manually sprayed each part with the desired color. The parts would then be conveyed through an oven to dry or cure the paint. After drying, the parts would be inspected and set on roller carts to move to the assembly area. Just like in assembly, when a painted parts cart was full, someone would magically appear to

IDENTIFICATION AND UNDERSTANDING

7

take the cart away to the assembly area. Joe studied the paint line scoreboard for several minutes. The board was very colorful: red, green, and yellow highlights covered the board. Joe made some notes and moved on to the metal fabrication area. Larry made the following sketch of the paint line scoreboard showing the red and green coloring.

Joe went right to the metal fabrication scoreboard, made some notes, and stopped at the “quality hold” area to look at some parts. Larry watched as Joe picked up the parts tagged with red tags and examined them closely. Larry couldn’t help but think how this looked like his chef inspecting the shipments of fruit coming on the ship. Joe made some notes about the quality hold area and moved on. Larry sketched the red tag below.

8

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

Trying to keep up with Joe’s pace, Larry said “When do we get some coffee? You do have coffee don’t you?” Joe chuckled, “Yes, we have coffee. We’ll get some at our daily huddle,” he replied. “Huddle? Are we playing football now?” Larry said with a smile. Joe replied, “No. Our daily huddle is similar to a football huddle in that we review the current situation, and set the plan for the day. Like a quarterback calls a play, we cover the plan for the day and then get to working the plan. It’s part of our ‘Plan–Do–Check–Act’ (PDCA) Lean Sigma process for CI. The walk we just completed, we call a ‘Gemba Walk.’ ‘Gemba’ means ‘where the work is done’ and we do a Gemba Walk to check on the progress to plan and then huddle to adapt, adjust, and act with countermeasures as needed. The huddle aligns everyone on the action plan.” “Do you do the Gemba Walk every day?” asked Larry. “At least once in the morning as part of my standard leader work, but I sometimes take the walk several times a day to stay on top of things. The walk makes it easier for me to spot waste and abnormalities to the plan, and for me to offer help to the teams to make the proper adjustments quicker,” replied Joe. “I thought standard work was only for the workers,” Larry replied. “Absolutely not! Standard work is for everyone in the organization. Each person in the organization has standard work to complete. It’s part of our Lean Sigma CI initiatives,” Joe replied. Larry sketched the following standard work form. Joe explained, “The process is pretty simple. Everyone has standard work that’s kept track of on a scorecard. We measure our actual performance and post this on our scoreboards several times during the day so we can compare our actual performance to the standards. This method of ‘Scoreboarding’ allows us to quickly identify abnormalities and nonstandard performance throughout the day. Then we can make appropriate adjustments or counter measures. We’re ‘PDCAing’ continually throughout the day. This increases the likelihood that we’ll meet our schedule consistently every day.” “It sounds confusing,” said Larry.

IDENTIFICATION AND UNDERSTANDING

9

“It’s not. It’s really easy once you get used to it. As I said, I do the Gemba walk two or three times a day to stay connected with the work flow. With a 15-minute Gemba walk I can get critical information such as: • • • • • • • •

How many parts have been produced? How many parts should have been produced? Are we to schedule? What issues are preventing us from meeting schedule? What job is next? Do we have all the materials we need to continue? Are there any quality problems? The who, what, when, where, and why for the current situations.

Every leader in the organization can get this information just by going to Gemba,” Joe said with a grin. “I’m not sure this would work for me,” said Larry.

10

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

“Well, when you lose your cruise line you can do it for me,” quipped Joe. Joe had a series of activities lined up for Larry. Through the day, Larry would visit with several leaders and workers and near the end of the day, Joe had arranged for Larry to sit in on a Lean Sigma overview session for a small group of new employees. Every employee at DRP received basic Lean Sigma CI training within the first few weeks of employment. In each of the work sessions with the leaders, Larry reviewed department, team, or area scorecards and standard work for the leaders. Everyone seemed to tell the same story regarding how they worked, how they communicated, and how they made improvements. By the end of the day Larry was exhausted. He couldn’t wait to get home, have a beer, and relax. Joe arrived at the training room and asked, “Are you ready for another Gemba walk?” “Again?” questioned Larry. “Come on Larry, it’s only 15 minutes and it’s needed to set up second and third shift plans. We run three shifts here you know…” prodded Joe, and off they went to the Gemba walk. On the drive home, Larry couldn’t help but think of all the reasons Lean Sigma would not work for his cruise line. • A cruise line is completely different from a manufacturing company. • We work with people, not parts. • No two customers are the same—ours is not a consistent process. • Our products and deliverables are different. • Our customers expect different things. • We don’t measure things like a factory does. • We deliver service to customers, not products. Then Larry remembered what he’d said to Joe at the picnic, “Anything you can do, I can do better!” He’d taken some great notes throughout the day and at the Lean Sigma overview session. Intrigued, he made a commitment to himself to go through the notes, and to determine what

IDENTIFICATION AND UNDERSTANDING

11

might work versus what wouldn’t. It was a good thing he had some time the next day to review his notes and make a plan.

Chapter 2—Discussion Questions 1. Critically evaluate Larry’s visit to Joe’s organization. What lessons can organizations learn from this visit? 2. Discuss the manufacturing process at DRP. What lessons can Larry learn from this process? 3. According to Joe, why is it necessary for every organization to have a “daily huddle”? If you were in charge of the “daily huddle” in your organization, how would you go about doing it? 4. Why is “score boarding” so critical to Lean Sigma and CI success? Compare your organization’s approach to “score boarding” with DRP’s? 5. What do you mean by a “Gemba walk”? Why do you think Joe put so much emphasis on it? 6. Why is it necessary for all organizations to conduct a Lean Sigma overview session for their employees? If you were organizing one, what would you cover in this session? 7. On the drive home from DRP, Larry identified several reasons why Lean Sigma would not work in a cruise line? Do you think these concerns are valid? What made Larry motivated to pursue it?

CHAPTER 3

Lean Sigma Methods and Tools—Basic Concepts The next day Larry went over his notes and the training content provided at the Lean Sigma overview. He started to organize the files and notes in a logical format. The following are Larry’s notes from the first day at Joe’s factory: 1. Lean Sigma is the most successful continuous improvement (CI) method in the history of the world. 2. It combines the simple and versatile methods and tools of Lean with the powerful analytical approach of Six-Sigma methods to provide continuous incremental improvement with Lean and significant increases in productivity and quality with Six-Sigma techniques. 3. Lean Sigma is the combination of these powerful tools. 4. The origin of these methods goes back to the industrial revolution and the concept of time and motion studies with Fredrick Taylor and Henry Ford’s production lines. Lean Sigma represents the philosophy of total conservation of resources. 5. Edwards Deming brought this to Japan after World War II and is credited with Lean Sigma’s predecessor, Total Quality Management (TQM), which focuses on the customers’ needs, CI, and employee involvement. 6. Dr. Deming worked with the Toyota Motor Company, Motorola, and others to implement his TQM systems and develop the methods and tools we now know as Lean Sigma. Often, the Toyota Production System (TPS), waste elimination, and process or continuous improvement are used synonymously with Lean Sigma methods throughout the world.

14

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

Larry thought to himself how smoothly things worked at DR Products (DRP), and wondered how his observations fit with the training materials he’d received at the session. Larry continued to review his notes.

What is Lean, Six-Sigma, and Lean Sigma? Lean is a way of thinking and can be applied to every type of organization, whether it manufactures a product or delivers a service. Lean methods and tools are simple to learn and apply and have broad applications. Lean methods even work in people’s personal life! People can apply Lean tools to their hobbies, chores, and households to make things simpler, easier, more enjoyable, and cost-effective. The goal of lean is to strive for perfection by minimizing and ultimately eliminating waste which causes variation throughout the value stream. The entire focus of lean is customer-driven and it’s the customer who determines the value and the amount they’re willing to pay for the product or service. The customer enjoys the fruits of the information and material flow. Information and material flows are often documented in Value Stream Maps as shown below.

LEAN SIGMA METHODS AND TOOLS—BASIC CONCEPTS

15

or The 30-year fixed mortgage application current state value stream map

Client 5S

Pitch B B

Pre-application

Application

Approval/title

Closing prep

Q

Q

Q

Q

4 hrs

40 hrs

40 hrs

40 hrs

Gather financial data = 15 m Run credit report = 15 m Determine prgm = 120 m

Order appraisal & title = 20 m File paperwork pending = 5 m

Verify emply & assets = 60 m Underwriting = 120 m

S S

4 hrs 150 m

Butter/ safety

40 hrs 180 m

Notify parties & confirm = 120 m Schedule location = 5 m Print docs = 120 m 40 hrs

40 hrs 25 m

245 m

Source: Ptacek and Motwani (2011a).

Like Lean, Six-Sigma (or 6s) is another approach that an organization can implement to achieve excellence. Six-Sigma is a statistical term. Sigma (s) defines the variation or “spread” of a process. Six-Sigma defines how much of the total process falls within the normal process variation. The term “Six-Sigma” refers to the number of standard deviations away from the mean in a bell-shaped normal distribution curve (see below). Why?

Mean or average

–6s –5s –4s–3s–2s –1s 0 1s 2s 3s 4s 5s 6s Sigma (Deviation from the mean)

16

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

The goal of Six-Sigma is to eliminate defects and minimize variability. In statistical terms, if an organization achieves Six-Sigma level of performance, 99.99966% of its customers are satisfied as they are receiving services that are defect-free and meet their expectations. In other words, an organization that has achieved Six-Sigma status will have no more than 3.4 complaints, defects, or errors per million opportunities. The table below summarizes sigma or variation level and error rate per million opportunities. Defects (or errors) per million opportunities (DPMO)

Percentage acceptable (%)

6s

3.4

99.99966

5s

233

99.9767

4s

6,210

99.379

3s

66,807

93.32

2s

308,538

69.15

1s

691,462

30.9

Process capability or sigma level

Source: Ptacek and Motwani (2011a).

Six-Sigma forces organizations to pursue perfection by asking if 99% acceptability is good enough? If 99% acceptability is good enough, consider the following: 99% Good (3.8s)

99.99966% Good (6s)

20,000 lost articles of mail per hour (based on 2,000,000 per hour)

7 lost articles per hour

Unsafe drinking water for almost 15 minutes each day

One unsafe minute every 7 months

5,000 incorrect surgical operations per week

1.7 incorrect operations per week

Two short or long landings daily at an airport with 200 flights per day

One short or long landing every 5 years

2,000,000 wrong drug prescriptions each year

680 wrong prescriptions per year

No electricity for almost 7 hours each month

One hour without electricity every 34 years

Source: Ptacek and Motwani (2011a).

LEAN SIGMA METHODS AND TOOLS—BASIC CONCEPTS

17

Lean Sigma is the most powerful improvement technique as it systematically blends the best of the two approaches above to eliminate all waste or non-value-added activities from processes. This, in turn, lowers the cost and improves the quality of the process. The continued focus on the elimination of waste should be a daily, hourly, or minute-by-minute concern. Lean Sigma is designed to use people and materials wisely to satisfy customer needs. With that thought in mind, work elements or job duties may need to be modified to accommodate a waste-free Lean Sigma environment. This will allow companies to remain globally competitive, develop a cross-trained workforce, and establish a safe workplace. Lean Sigma tools are used to • improve customer satisfaction and total customer experience; • identify and eliminate waste quickly and efficiently; • increase communication and speed at all levels of the organization; • reduce costs, improve quality, and meet delivery obligations of a product or service in a safe environment; • initiate improvement activities and empower employees to make improvements themselves; • track and monitor improvements to ensure sustainability. Lean Sigma is truly a compilation of world-class CI practices. To understand Lean Sigma, one must understand that Lean Sigma is, in its broadest sense, a philosophy of conservation of resources and waste elimination. Building on the Lean Sigma philosophy are Lean Sigma principles, concepts, methods, and tools. These ideas are building blocks of a structured and supported approach to a total Lean Sigma transformation. Lean Sigma principles must be built on a basic understanding of Lean Sigma philosophy. Many organizations have forgone a basic understanding of Lean Sigma philosophy and tried to build a Lean Sigma organization on a weak foundation, only to be disappointed with their results. It truly pays to start with and build on a strong foundation of Lean Sigma understanding.

18

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

Conceptually, these building blocks are illustrated in the following diagram. Starting with a strong foundation of Lean Sigma philosophy, Lean Sigma principles can be used to support an organization in utilizing Lean Sigma concepts, methods, and tools to become a superior organization. Larry was starting to understand his role as a leader and continued to review the training materials from the class at DRP. He took a closer look at each of the Lean Sigma building block levels.

Delighted customers and profitable growth

Common goal of Six-Sigma Zero defects

Focus on variation Look for hidden wastes

Proven methodology Voice of the customer

DMAIC Quantitative analysis

Data collection and presentation Employee balance chart Just-in-time (JIT) Layout Leveling (heijunka) Mistake (or error) proofing Performance dashboards Plan-Do-Check-Act Problem solving Pull systems and kanbans Quick changeovers Standard work Statistical process control Takt time and demand analysis plots Teamwork Total productive maintenance (TPM) Valve stream mapping Visual controls Voice of the customer (VOC)

Scientific method Statistical methods

Speak with data and facts Waste elimination

Total employee involvement Customer focus Seek perfection Performance measures

Value and waste Quality first

Plan-Do-Check-Act Flow

Best quality, lowest costs, fastest delivery, and innovation Lean Sigma tools* Six-Sigma Lean 5S Concepts Concepts Continuous flow

Lean Sigma principles Continuous improvement in processes and results Focus on customers and value streams Total employee involvement

Lean Sigma philosophies Conservation of resources (sustainability or becoming green) Relentless pursuit of waste elimination

* Not all inclusive of Lean Sigma tools Source: Ptacek, R. & Motwani, J. (2011). Pursuing Perfect Service—Using a Practical Approach to Lean Six Sigma to Improve the Customer Experience and Reduce Costs in Service Industries. Chelsea, MI: MCS Media, Inc.

Larry’s notes on the building blocks are shown on the following pages.

LEAN SIGMA METHODS AND TOOLS—BASIC CONCEPTS

19

Lean Sigma Philosophies and Principles The overriding philosophy of Lean Sigma is defined by the continuous elimination of waste and non-value-added activities in everything we do, the conservation of all resources at every level of operation. Additionally, Lean Sigma philosophies include continuous learning and improvement in everything that’s done. Lean Sigma philosophy calls for the simplification of all tasks and efforts to eliminate waste and improve flow. Absolute perfection is seen as the goal. Very few organizations embrace Lean Sigma philosophies at this level. Toyota Motor Company has been practicing Lean Sigma for over 60 years, and they still believe they need to improve! Lean Sigma principles are the bedrock for Lean Sigma transformations. They provide the unchanging, solid foundation to build and improve upon. The three key Lean Sigma principles, supported by Lean Sigma philosophies, are as follows: • Continuous improvement in processes and results—Do not be “results or bottom-line only” focused. Instead, focus on processes that deliver consistent, waste-free results. • Focus on customers and value streams—Focus on the entire process, from the customer pull or demand to demand fulfillment and customer satisfaction. Focus on how materials and information flow through a process. • Employee participation in a non-blaming, fear free environment— Organization leaders must make it safe for people to suggest possible improvements in the way things are done.

Lean Sigma Concepts Lean Sigma concepts drive Lean Sigma transformations. It is essential that people at all levels be trained in and understand Lean Sigma concepts to facilitate a smooth and effective Lean Sigma transformation. Do not underestimate the power of these concepts. Larry knew he had a lot of training and communicating to do if he wanted his cruise line to apply Lean Sigma methods and tools, and continued to review his notes shown on the following page.

20

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

The Lean Sigma concepts are as follows: • Add value and remove waste Value Adding Organizations add value when they change the weight, shape, configuration, properties, or attributes of materials or information. These are the things the customer is willing to pay for. Waste (Non-Value-Adding) Waste is anything that does not add value. Non-value-adding activities fall into the 12 categories of waste. Things that consume time, resources, space, or both, but do not contribute to satisfying customer need. The 12 categories of waste are as follows: 1. Overproduction—Making more than is needed. 2. Expertise—Not using people’s knowledge. 3. Transportation. 4. Inventory and Work in process (WIP). 5. Motion. 6. Rework or Corrections. 7. Overprocessing—Processing more than is needed. 8. Waiting or delays. 9. Overload or straining a system—Overloading systems capabilities usually leads to other forms of waste. 10. Unevenness—Unevenness in work flow usually leads to other wastes. 11. Environmental waste—Pollution, excess consumption. 12. Social waste—Social networking while at work. Literacy, hunger, or cultural oppression. Larry wondered why Time was not a waste. He concluded that each of the 12 wastes wastes time as well! He continued to review his notes on the following Lean concepts:

LEAN SIGMA METHODS AND TOOLS—BASIC CONCEPTS

21

• PDCA process for implementing improvements. This is process mirrors the scientific method and drives improvement activities. • Next process or operation is the customer—Serve them. • Upstream quality—Build quality in; do not “pass along” poor quality. • Customer needs first—Always focus on the customer and their requirements • Decisions at the lowest appropriate level—Go to where the work is done or the value is added. Sometimes called “Gemba.” • Speak with data—Use objective information to evaluate process performance. Use other statistical tools to turn subjective information into objective data. • Variation reduction and control through statistical process control (SPC). • Define and seek PERFECTION. Adding value through waste identification and elimination is a fundamental concept of Lean Sigma. The customer is paying for value; waste is anything that your organization does to a product or service for which the customer may be paying, and probably should not be. Waste is anything that adds time, resources, or cost without adding value to the finished product or service. When waste is removed value increases. Waste can occur in customer processes as well.

Twelve Forms of Waste—The Dirty Dozen Lean Sigma tools and concepts assist employees (and customers in service processes) in identifying and eliminating all types of waste. It is critical that employees have a fundamental knowledge and understanding of “waste” in order to identify and eliminate it. The purpose of Lean Sigma practices is to identify, analyze, and eliminate all sources of process inefficiency. The following table was a handout Larry had from the training session. The table summarizes the 12 wastes with examples.

22

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

The Dirty Dozen: 12 Forms of Waste Form

Description

Examples

Ways to eliminate

Overproduction

More than required is made or served

• E-mailing, faxing the same document multiple times • Ineffective meetings

• Task time • Proof of need survey • Make to order

Expertise

Under-utilization due to placement of people into positions where their knowledge, skills, and abilities aren’t used to the fullest

• Workloads not being completed due to lack of cross-training • Assigning employees two jobs due to understaffing

• Standard work • Lean Sigma File System • Business case for Lean Sigma • Office quick-starts

Transport

Any transport of files, information, or materials

• Delivering unneeded documents • Updating customer records in different systems

• 5S • Value stream mapping • Standard work • Lean Sigma File System • Visual controls • Colocation of workers

Inventory

Excessive piles of paperwork, computer files, supplies, and time spent searching for documents

• Files awaiting signatures or approvals • Keeping multiple copies of reports

• 5S • Value stream mapping • Standard work • Lean Sigma File System • Kanbans for office supplies • Level loading-heijunka

Motion

Any movement of people, paper or electronic exchanges, or both, that does not add value

• Hand carrying paper to another process • Using an excessive number of transaction screens to support decision making

• Standard work • New office layout • Kanbans for office supplies • Pull systems and supermarkets

(Continued)

LEAN SIGMA METHODS AND TOOLS—BASIC CONCEPTS

Form

Description

23

Ways to eliminate

Examples

Corrections

All processing required in creating a defect and the additional work required to correct it

• Data entry errors • Not having integrated IT systems

• Standard work • Lean Sigma File System • Visual controls • Mistake proofing

Overprocessing

Putting more work or effort than required into the work requested by internal or external customers

• Duplicate reports or information • Constantly revising documents • Excessive approvals

• Standard work • Lean Sigma File System • Data collection techniques • Document tagging

Waiting

Waiting for anything (people, signatures, information, etc.)

• Excessive signatures or approvals • Delay in feedback from high-level management • Waiting for a meeting to make a decision

• Value stream mapping • 5S • Lean Sigma File System • Runners • Pitch • Standard work • Scoreboards

Overload

Overburdening or overloading a work system, machine, or process

• An 18-person bus carrying 25 people • A new contract requiring 80 additional hours of work and not enough staff to complete the work

• • • •

Unevenness

Lack of consistent flow of inputs/ information/ scheduled work from upstream processes causing many of the other types of waste previously mentioned

• Scheduling all work to be completed at the end of the month and not during the month at even intervals • Poor office processes for locating documents when a staff member is on leave

• 5S • Value stream mapping • Standard work • Workload balancing

Standard work One piece flow Statistical analysis Workload balancing

(Continued)

24

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

(Continued)

Form

Description

Examples

Environmental

Any waste that is generated by a service organization that impacts the environment, whether it is heat, solid, liquid, or gas

• Paper or plastic used in a cafeteria that isn’t recycled • Unnecessary use of power when machines and equipment aren’t in use

Social

Waste from the other • Time spent by areas of society, employees at work such as poverty, socializing discrimination, • Advertising malpractice, health products on social and injuries, networking sites nutrition, literacy that are not read and education, by target audience and also waste on account of social media networking

Ways to eliminate • Reduce, reuse, recycle • Sustainability or Green metrics

• Plan–Do–Check– Act • Sustainability metrics • Performance/gap analysis

Larry thought about where these wastes could be present at his cruise line and made the following notes.

1 of 12: The Waste of Overproduction Producing some type of work prior to it being required is waste of overproduction. Providing a service above and beyond what is needed is also considered overproduction. Overproduction is when too much of something is made or served. This is the greatest of all the wastes. Overproduction of work or services can cause other wastes. For example, by preparing extra copies of a report, you are using extra paper, extra time to handle the reports, and extra motion and transportation to dispose of the reports, and so on. Activities without direct immediate purpose should be eliminated or reconfigured unless they are already understood as essential to a perfect process.

LEAN SIGMA METHODS AND TOOLS—BASIC CONCEPTS

25

2 of 12: The Waste of Expertise The under-utilization of people’s expertise is a result of not placing people where they can (and will) use their knowledge, skills, and abilities to the fullest providing value-added work and services. An effective performance management system will reduce this waste significantly. Use company policies and procedures to effectively place people where they will most benefit the organization. 3 of 12: The Waste of Transport Excess transport affects the time of delivery of any work within an office. Even with the Internet and e-mail readily available, too often, or not often enough, documents (i.e., files) that provide little or no value are moved downstream regardless of need. Reducing or eliminating excess transport waste is important. Locating all work in sequential process operations and as physically close together as possible will help eliminate or reduce this waste. Transport between processes that cannot be eliminated should be automated as much as possible. Ask questions such as, “Is the office layout optimal?”, “Is the release and request for work automated?” and “Is IT aware of the problem and can they help?” 4 of 12: The Waste of Inventory Excessive piles of paperwork, computer files, supplies, and time spent searching for a document is waste. They all take up space or require someone’s time. If a document is waiting for additional information (i.e., signature, review, approval, etc.) and there is a change, then the time the document has been waiting is waste. There are basically two types of inventory waste related to administrative areas: (1) office supplies and (2) information. 5 of 12: The Waste of Motion Any movement of people that does not add value is waste. This waste is created by poor office layout or design, faulty or outdated office

26

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

equipment, supply inaccessibility, and movement of information or data that does not add value. The waste of motion is insidious and is hidden in service procedures that have not been reviewed for CI initiatives. Regardless of the industry, motion waste may appear as someone who is looking “busy” but not adding value to the work or service. Lean Sigma tools will assist to identify, reduce, and eliminate this waste. 6 of 12: The Waste of Corrections Correction waste refers to all processing required in creating a defect, or mistake, and the additional work required to correct a defect. And defects (either internal or external) result in additional administrative processing that will add no value to the product or service. It takes less time to do work correctly the first time than the time it would take to do it over. Rework and corrections are wastes and add more costs to any product or service for which the customer will not pay. This waste can reduce profits significantly. 7 of 12: The Waste of Overprocessing Putting more work or effort into the work required by internal or external customers is waste. Excessive processing does not add value for the customer and the customer will not pay for it. This is one of the most difficult administrative wastes to uncover. Some questions to ask to assist in the identification of this waste are, “What are the most basic processes required to meet the customer needs?” or “Is there a clear understanding of the customer’s needs?” 8 of 12: The Waste of Waiting Waiting for anything (people, signatures, information, etc.) is waste. This waste of waiting is “low hanging fruit” which is easy to reach and ripe for the taking. We often do not think of paper sitting in an “In” basket or an unread e-mail as waste. However, when looking for the item (document or e-mail), how many times do we mull through that “In” basket or the

LEAN SIGMA METHODS AND TOOLS—BASIC CONCEPTS

27

Inbox folder and try to find it? How many times do you actually touch something before it is completed? It is the finish it, file it, or throw it away system that can help eliminate this waste. This waste closely related to “wasting time.” 9 of 12: The Waste of Overload The overburdening or overloading of a work system or process typically causes other wastes to occur. Overload must be handled as a separate waste as it can be identified easily during the value mapping process, and is often expressed in terms of capacities of equipment or people. Usually this waste causes a great sense of frustration and aggravation, for customers and employees, and often leads to other wastes and loss sales. 10 of 12: The Waste of Unevenness Lack of a consistent flow of inputs/information/scheduled work from upstream processes causes many of the other types of waste previously mentioned. Unevenness such as traffic jams, loading and unloading tender boats, lunch hour rushes, and the like create special needs for service organizations wanting to provide the highest level of service. 11 of 12: Environmental Waste As service organizations become more sustainable or “Green,” they have to make extra efforts to protect the environmental resources as they are becoming very scarce. Any waste that is generated by a service organization that impacts the environment, whether it is heat, solid, liquid, or gas, is classified as environmental waste. These items can be observed in an organization’s trash containers and dumpsters. This is a huge opportunity for Larry’s cruise line—Larry double starred this item! 12 of 12: Social Waste Social waste is another category of waste that service organizations need to focus on if they wish to become more sustainable. The term social waste

28

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

is broad and includes areas such as poverty, discrimination, malpractices, health and injuries, nutrition, literacy and education, and also waste on account of social media networking. When people who are suppose to be working are using their social media when not allowed, or when an organization is not capitalizing on the use of social media applications where appropriate. Larry triple starred this waste! Larry knew that each of the 12 wastes existed for his cruise line and reviewed the leading waste questions identified in class. Leading Waste Questions 1. Where is waste causing us to spend excess time, resources, and money? 2. How can I communicate these wastes throughout the organization? 3. What are some of the obvious wastes (“low hanging fruit”)? 4. What can be done to immediately improve customer satisfaction? Larry thought he’d use these questions to stimulate people and promote more open communication regarding waste and continuous improvements. Larry reviewed the following Lean Sigma Service Excellence “Waste Walk” form. The form can be used by teams or individuals to identify waste in their work environments. Simply take the form into the work environment and look for a waste or two in each of the “Dirty Dozen” waste categories. This exercise develops a deeper understanding for waste and may provide a starting point for an initial project. At a minimum, the results will stimulate discussion, learning, and waste observation. Larry thought about how he could use this form to help teach his team about wastes and CI opportunities. Larry continued to review his notes from the training session at DRP.

Lean Sigma Methods The Lean Sigma methods used for Lean Sigma transformations include a systematic approach or steps to initiate improvement in an organization.

LEAN SIGMA METHODS AND TOOLS—BASIC CONCEPTS

Lean Sigma Service Excellence “Waste Walk” Check List Types of waste Overproduction Producing more material or information than is needed or used. Expertise Not using people’s minds and getting them involved. Transport Moving tools and materials to the point of use. Inventory Materials or information. This includes all work in process and finished goods. Motion Movement of people. This includes walking or riding, as well as smaller movements. Corrections This includes rework or fixing of products or information that is wrong the first time. Overprocessing This includes work above and beyond the minimum requirements or needs. Waiting This includes any time delayed or waiting for materials, information, or people. Overload This is when workload is too much and machines break and people burnout. Unevenness This is when workload varies from slow to fast uncontrollably. Environmental This includes pollution and other wastes of the environment. Social This is waste that impacts social issues.

Waste observations

29

30

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

The systematic approach is defined at three levels of engagement. Each level must use the PDCA improvement process. Larry recalled the various levels of engagement from his day at DRP. Leadership Level • Develop Lean Sigma understanding and commitment for organization leaders. • Develop and communicate Lean Sigma strategy to the organization. • Develop and deploy a tactical plan to transform the organization into a Lean Sigma enterprise. • Set, align, and communicate measureable goals and rewards to sustain and support the Lean Sigma enterprise and thinking. • Conduct regular organizational performance reviews. Project, Systems, or Team Level 1. Use the Define–Measure–Analyze–Improve–Control (DMAIC) improvement process. The DMAIC improvement process phases are defined as follows: • Define the project scope, resources, and objectives. • Measure the current state process key performance measures, drivers, capabilities, flows, and outcomes. • Analyze the current state process data to identify and prioritize improvement opportunities. • Improve the process by applying Lean Sigma improvement tools and techniques. • Control the process so that the improvements are sustainable. Worker Level 1. Implement a housekeeping and visual control effort at all worksites. 2. Conduct hourly or daily mini-experiments to improve processes.

LEAN SIGMA METHODS AND TOOLS—BASIC CONCEPTS

31

By engaging at these three levels, an organization can truly begin to transform their culture to a CI-driven environment. Further, discussion and cases are analyzed elsewhere to further illustrate how these levels work together to transform an organization.

Lean Sigma Tools Larry reviewed the following Lean Sigma Tool Application Chart and his notes on Lean Sigma tool applications. The Lean Sigma Tool Application Chart presented here is not all inclusive. It covers the Lean Sigma tools identified in the applications chart. These tools are found to be the most applicable for organizations. Not all Lean Sigma tools will work the same in every environment. Lean Sigma tools that apply directly in a mass production manufacturing environment apply to a service environment, but might not be a direct fit. Just as one would not use a screw driver to loosen a hex-head bolt, not every Lean Sigma tool will apply to every environment and culture. The savvy Lean Sigma practitioner will identify the key applicable Lean Sigma tools and apply them as needed. DMAIC Alphabetical Tool Application Chart Lean Sigma improvement phases Lean Sigma tools

Define Measure Analyze Improve Control

1

5Ss

2

5-Whys

X

4

Cause and effect diagrams

5

Check sheets

X

6

Constraint or Bottleneck analysis

X

7

Cross-training to develop worker flexibility

8

Flow, process, Swim lane, or value stream maps

X

X

X

X

X X X X

X

X

X

X

X

X

(Continued)

32

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

(Continued)

Lean Sigma improvement phases Lean Sigma tools

Define Measure Analyze Improve Control

10

Frequency charts

11

Future state flow maps

X

X

12

Histograms

X

X

15

Key metric data profiles

X

X

16

Leveling service flow, pull signals (kanbans), and paced work flow (Heijunka)

X

17

Mass customization

X

18

Mistake proofing (Poka yoke)

X

20

Pareto and pie charts

21

Performance management and improvement

22

Plan–Do–Check– Act process

X

23

Problem solving— Corrective and preventative actions

X

25

Project management

X

X

26

Quality function deployment (QFD)

X

X

27

Queue time

X

X

28

Radar chart

X

X

29

Rapid improvement events

30

Run and control charts

31

Scatter plots

X

X

X

X X

X

X

X X

X

X

X

X

X

X

X

X

X

X

X

X X

X X

X

X

X (Continued)

LEAN SIGMA METHODS AND TOOLS—BASIC CONCEPTS

33

Lean Sigma improvement phases Lean Sigma tools

Define Measure Analyze Improve Control

32

Spreadsheets and pivot tables

X

X

X

33

Standard work for leaders

X

X

X

34

Standardized work

X

X

X

35

Statistical process controls

37

Supplier/Input > Process > Output/ Customer (SIPOC)

38

X

X

X

X

Talk time, predictive selling or service rate analysis

X

X

X

39

Value-added versus non-value-added analysis

X

X

X

40

Visual controls

41

Visual management and performance scoreboards

42

Voice of the customer (VOC)

X

X

X

X

X

X

X

X

X

X

X

Source: Ptacek and Motwani (2011a).

Larry knew he had to do something different with his cruise line but he was beginning to feel a bit tired until he got to his notes on the Lean Sigma outcomes listed below. His notes on these potential results gave him a bit of inspiration.

Lean Sigma Outcomes Successful Lean Sigma transformations have been documented for hundreds of enterprises in nearly all sectors of the economy. In planning your Lean Sigma transformation, be careful not to set your expectations too low. Organizations implementing Lean Sigma transformations can expect to realize some or all of the following:

34

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

• High organization morale, teamwork and effort through alignment of goals and measures, and improved leadership • Clear communication of priorities, expectations, and results through visual and statistical controls. The “Right” things get done “Right” • Clean, organized, and efficient worksite—minimal waste or errors • High quality outputs and results • Smooth flow of work or services • No unscheduled downtime or surprises • Perfection—Zero defects or errors • Less inventory, delays, transportation, motion, and rework • Less costs and more profit and returns on investment (ROIs) • Increased capacity and sales growth potential All of this information was a bit overwhelming for Larry. He still wasn’t convinced that Lean Sigma would work for his cruise line but he didn’t have many alternatives. He knew that doing the same thing and expecting different results would just not work! Larry wanted to ask Joe some more questions about the process so he gave Joe a call and invited him for a tour of the cruise ship. Larry thought he’d have some time to pick Joe’s brain about how to begin. Larry just needed to know what the next step was and how to get started. Joe agreed to the tour if his family could spend the day on-board with a full pass to the amenities. Larry agreed and the tour date was set.

Chapter 3—Discussion Questions 1. In his notes from his visit to Joe’s factory, Larry stated “Lean Sigma is the most successful continuous improvement (CI) method in the history of the world.” Do you agree with this statement? Why or why not? 2. Discuss the similarities and differences between Lean, Six-Sigma, and Lean Sigma? Which of these is the most powerful and why? (Continued )

LEAN SIGMA METHODS AND TOOLS—BASIC CONCEPTS

35

3. Why do the authors recommend understanding the building blocks in order to understand what Lean Sigma is? Discuss the building blocks and how can it help an organization prepare for its Lean Sigma journey? 4. What are the three key Lean Sigma principles? Does your organization address these principles effectively? If not, how would you go about doing it? 5. Discuss briefly the fundamental Lean Sigma concepts. Can they be easily applied by Larry in his organization? 6. By means of examples, briefly explain the 12 categories of waste? Why is it important for an organization to be aware of and to address these wastes using the waste walk checklist? 7. Why is it important that a Lean transformation be conducted at three levels? If you were Larry, what steps would you take to ensure a smooth transformation at all three levels? What outcomes would you expect to achieve?

CHAPTER 4

Comparing Manufacturing and Service Environments Joe and his family were up early on the morning of the ship tour. Joe’s wife had cooked a pancake breakfast and the sugar high was just kicking in for the kids as they arrived at the port. Joe spotted Larry talking with a crew member outside the ship boarding area. “Larry!” yelled Joe with a wave. Larry wrapped up his conversation and walked over to Joe. “Boy, we are sure ready for this. What’s the day-plan?” asked Joe. Larry explained that he thought he’d drop Joe’s wife and children off at the family pool and set everyone up with a day pass for the ship’s amenities. The ship was at port today preparing for the next voyage. Many of the restaurants were in a changeover mode, yet there were plenty of things to do and places for Joe and his family to eat. Once Joe’s family settled in, Joe and Larry would take a walk around the ship. The walk with Larry started in his office. Larry liked his office and thought it would impress Joe. As they walked into the office, Joe said, “Pretty fancy! At least it looks like you’re doing well!” “Yeah Joe, this is one of the ways service is different from manufacturing. If you had an office this nice your customers would assume you were making too much money. When they see my office they assume the entire ship has such nice features,” Larry replied with a smile. “Yeah this is nice, but you probably shouldn’t spend too much time in here,” said Joe. “Well I wanted to start here to show you how we are organized and how different we are when compared to a manufacturer.” Larry showed Joe the list (see next page) of the key areas he was responsible for in the cruise line.

38

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

Cruise Line Departments 1. Navigation—Captain and crew 2. Guest services—Bookings and onboard guest services 3. Entertainment 4. Gaming—Onboard casino 5. Housekeeping—Maid services and laundry 6. Medical—Onboard medical center 7. Food services—Multiple onboard restaurants 8. Retail sales—Multiple onboard stores 9. Security—Onboard police 10. Adventures and event planning 11. Operations and maintenance 12. Purchasing and logistics (supply chain) 13. Human resources and training 14. Administration—Payroll and accounting Joe was impressed. “There are a lot of areas on this ship, it’s like a small city!” Joe said. “It’s not all about speed and efficiency on a cruise ship,” said Larry. “Sometimes our customers want slow, relaxing services. They want to be pampered, they want opulence!” explained Larry. He continued, “For example, if we charge $150 for a foot massage, we don’t want to rush through in 10 minutes.” Joe smiled a knowing smile, “That may be true, but they might not want to wait 45 minutes in the lobby before getting their massage either. Are guests ever put on hold when trying to schedule an appointment? I get what you are saying, but there are a lot of other areas on the ship where you do need improved speed and efficiency. You might want to focus on those areas before it’s too late! Let’s take a walk—I can’t stand sitting still,” said Joe, and off they went. “How do you know what your customers want?” asked Joe. “What do you mean?” asked Larry, seeming a bit confused by the question. “Well, how do you know if the customer wants a $150, 2-hour ‘foot massage experience,’ or only a simple foot rub for a couple minutes?” clarified Joe.

COMPARING MANUFACTURING AND SERVICE ENVIRONMENTS

39

“Well, we set up standard services and let our customers select the service or option they want. It’s like our food services, in that we provide a full ‘all you can eat’ buffet where the customers can select what food items they want, or we offer other locations where customers can experience full service, ‘a la carte’ menu items. Their choice is how we know what they want,” said Larry. Joe elaborated, “That’s great! We call that ‘Mass Customization,’ which is a Lean Sigma tool that allows customers a unique selection of exactly what they want. You see it a lot in food services, but what about the other services you provide? I studied a little about cruise lines before coming today. Your brochure does a great job of explaining the different areas on the ship where you provide multiple types of services. Some of them can be easily customized and offered to the customers, some can’t. For example, security, maintenance, and housekeeping are all services. Some have direct ties to customers, some don’t. Some have tangible or measurable outcomes, some don’t. In fact, services can fall into three categories: Service Delivered to an External Customer which is characterized by a high level of customer interaction and total number of transactions completed by an organization. Organizations providing services to external customers may have to face extreme competitive pressures and may be engaged in marketing campaigns in an effort to gain additional clients. In this category, a service provider or person interacts with the customer directly and typically performs a task or physical deliverable. Delivered services usually have more tangible outcomes than service process completions. Organizations compete on quality of outcomes. Examples include fast food restaurants, bank tellers, lawn maintenance services, laundry services, and the like. Service Process Used by an External Customer is similar in that they typically face extreme competition, yet are different in that the service provider may also have to educate their potential clients on how to use the service process. Many of these organizations are using the power of the Internet to improve their process delivery and options, by having customers complete the ordering process, or data entry rather than direct interaction between a service worker and a customer. Service processes typically have less tangible outcomes than delivered services. Organizations compete

40

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

on speed and simplicity of the process. Examples include automated teller machines (ATMs), self check-in monitors for airlines, self check-outs at retail stores, vending machines, and all other service types where customers use a process directly without “direct” person-to-person interaction. Service Process Internal to an Organization typically faces less competitive pressures because they have been established by the organization to serve the organization. However, they too must educate their users regarding the features and use of their internal service processes. Examples include human resources, Information Technology (IT), counseling, internal supply rooms, or janitorial services within an organization. (Source: Ptacek, R. & Motwani, J. (2011). Pursuing Perfect Service—Using a Practical Approach to Lean Six Sigma to Improve the Customer Experience and Reduce Costs in Service Industries. Chelsea, MI: MCS Media, Inc.)

Each of these services has either objective and measurable, or subjective and more difficult to measure outcomes. For example, subjective outcomes might be the feeling of relaxation, enjoyment from a concert or show, and similar things. Objective outcomes are things like the drinks being served on time, rooms being cleaned to standard, the ship sailing to the next port on schedule, and the like.” “Wow! You sound like a service expert Joe!” said Larry. “Well, we learned about processes in our Lean Sigma training and each of these types of service is a process with a Supplier, Inputs, a Process, Outputs, and Customers. We learned this analysis as the ‘SIPOC’ process definition. Get it? Supplier–Input–Process–Output–Customer = SIPOC. This defines and measures a process so we can make improvements. ‘Defining’ and ‘Measuring’ are the first two steps in the DMAIC improvement process,” said Joe. Joe continued, “Let’s get on to the tour! I’ve talked enough and I’m tired of this office already!” Larry provided Joe with an extensive tour of each of the main areas. Joe made notes about his observations regarding the 12 wastes as they visited each area. When they returned to Larry’s office, Joe wrote his observations on the white board. Joe’s notes are summarized in the following table.

Lean Sigma ideas already in use

Some good visual controls exist in the helm for maneuvering the ship.

The boarding had many visual controls, from directional arrows to color-coded alphabetical registration signage.

Many of the backstage areas were well organized. Clearly the entertainers are used to quick costume and act changes.

Casinos and gaming areas use a high level of visual controls and visual stimulation to attract and direct the customers.

The maid services were using standard carts with everything they needed to service guest quarters. This prevented waste of motion and transportation as items were consumed or needed.

Area

Navigation— Captain and crew

Guest services— Bookings and onboard guest services

Entertainment

Gaming— Onboard casino

Housekeeping— Maid services and laundry

A 5S would ensure the excess and or old items are removed thereby reducing inventory and delays.

Perform a 5S in the onboard guest services areas.

5S the helm. Perhaps add some visual controls to identify key files and information.

Improvement ideas

Driers were running well after the clothes were dry. This is a waste of overprocessing. There was also an unevenness and overload of laundry processing. Some days were extremely busy, and some days were very slow.

(Continued)

To further improve the maid services, a scheduled runner could deliver new linens and supplies on a specific pitch. This is a paced flow of Heijunka system, with the use of a runner or water spider. In the laundry area and Kanban system make sure washers and driers process the exact time, and no less or more.

Develop a low-cost standard work method to The casino area was a bit outdated, and many manual improve monitoring and create a mobile cashier methods of monitoring the area were observed. This is a waste of overload and motion as the monitoring group did to reduce wait times and motion for customers. not have the tools to do the rework without undue wastes. The casino area only had one cashier; this sometimes causes customers excessive motion and waiting.

Some of the storage areas were overflowing with props and costumes. This represented waste in inventory as some of the props were no longer being used. Working around useless props and items causes a bit of waste of waiting.

This onboard areas all looked disorganized. This caused customers to wait while workers tried to find critical information. Making the customer wait is worse than making a coworker wait, but both are wasteful.

The helm looked a bit disorganized. This caused a waste in motion and delay while crew members look for key items and information.

Wastes observed

COMPARING MANUFACTURING AND SERVICE ENVIRONMENTS 41

Lean Sigma ideas already in use

Healthcare areas typically use visual controls and signage to help people interact with their systems.

Several signaling or kanban systems were being used to inform chefs of the needed items.

Onboard stores were already using visual controls to attract and direct customers and workers.

The security group is using a mistakeproofing method to ensure they are achieving proper coverage and support to all key areas of the ship.

Similar to onboard stores, the adventures and event planning group was using visual controls to attract and guide customers.

Area

Medical— Onboard medical center

Food services— Multiple onboard restaurants

Retail sales— Multiple onboard stores

Security— Onboard police

Adventures and event planning

(Continued)

Wastes observed

Improvement ideas

Consider a visual management system to plan and schedule customers onto adventures.

Consider flow maps and pitch times for the standard security routes. Also, consider providing additional training to reduce errors and corrections.

At times several security personnel were overlapping in their standard routes. This is a waste of overprocessing. Additionally, the security group was continually having to modify their reports as they were often incorrect. This is a waste of corrections. Many corrections are needed as adventure sign-ups are often overbooked. These wastes or corrections overburdened and caused customers to wait.

Consider using statistical tools to determine more precise product needs and volumes. This will reduce the waste of inventories.

Consider using statistical analysis to minimize food waste.

Establish standard work to address social networking. Consider kanbans for supplies in the exam rooms.

Even with the statistical tools in place, excessive and obsolete inventories were observed.

Cruise ships are well known for their lavish food offerings, but where does all the excess food go? And how do they know how much food to prepare? Excess food waste is a waste of social responsibility and the environment.

Several people were surfing the web, when they should have been working. This is a social waste. The exam rooms seemed to be missing many items. This can cause the waste of waiting or delay as well as motion.

42 LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

Consider mistake proofing methods for the payroll and hours tracking system.

Quite often they had to make corrections in payroll and checks due to the hours accounting system. This is a waste on corrections, which causes waste of waiting by the staff.

Payroll was using standard work to process check on a weekly basis for all employees, as well as the regular financial reports. They also used doubleentry accounting techniques which is a form of mistake-proofing.

Administration— Payroll and accounting

Consider a revised method of handling e-mails. Use an office/software 5S. Develop standard work for processing e-mails that will reduce printing.

The HR department printed every e-mail they received, and had multiple people read them. This is a waste of environment, social responsibility, and overproduction or overprocessing.

The HR department used standard work regarding the orientation training program for all new members of the staff.

Human resources and training

Consider an improved standard work practice to serve customers. Also, establish a standard maintenance tool cart to take on all calls. This is mass customization and standardized work. Develop this plan through statistical and historical data analysis. Consider using kanban methods to prevent stock outs. Also, develop a plan to engage people’s thoughts and improvement ideas.

The purchasing and logistics group was already using statistical analysis to determine order quantities to reduce costs.

Purchasing and logistics (supply chain)

Customer maintenance calls sometimes took several hours to resolve. This is a waste of waiting. Often the maintenance member would make the initial visit to the area requiring maintenance support, and then go to get the proper tooling. This too is waste of waiting, as well as waste of transportation and motion. Several stock-out notices were found in the area. This causes customers and workers to wait. The group was also not using the ideas from the various areas of the ship. This is a waste of people as resources.

The maintenance crew was using a standard preventative maintenance program to maintain the ship and engine room mechanicals.

Operations and maintenance

COMPARING MANUFACTURING AND SERVICE ENVIRONMENTS 43

44

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

“There are a lot of opportunities for Lean-Sigma methods and tools here. I think you should start a couple of improvement projects,” commented Joe. “Great! How do I do that? We sail tomorrow!” asked Larry. “First, you need to build a foundation to support Lean Sigma improvements, so you have plenty of time. The first step starts with you,” Joe said. “Me? Why me? Tell me more Joe, tell me more!” replied Larry a bit sarcastically, but with real surprise. “Not today. I’ve done enough work for you today! I need to find my wife and kids and enjoy your sinking ship!” Joe said. “Quiet, Joe,” Larry said while looking around to see who was near. “I don’t want anything like that getting around. I’ll set something up for us next week.” “Great, where’s the pool?” Joe said with a sigh and a stretch. Larry took Joe to the pool and went back to his office to stew.

Chapter 4—Discussion Questions 1. Why was Joe critical of Larry’s office? Do you think the criticism was justifiable? 2. What are some of the thoughts that come to your mind when you see the list of the different departments in the cruise line? Do you think that Lean Sigma can be applied to all these departments? Why or why not? 3. Discuss the concept of mass customization. Why was Joe eager that Larry apply this concept in his cruise line? 4. Briefly discuss the three different categories of service. Under which category does the cruise line fall under and why? 5. Why is it critical to have both subjective and objective outcomes and measurements in a service business? If you were Larry, provide examples of subjective and objective outcomes and measurements that you would use. 6. Critically evaluate the table that summarizes the notes Joe made when he toured the cruise line with Larry. What lessons can your organization learn from this table and the process Joe used? 7. If you were Larry, what would you do with the list that was provided to you? What lessons can we all learn from this?

CHAPTER 5

Key Enablers—Policy Deployment, Accountability Sessions, Employee Training and Involvement, and Lean Sigma Tool Selection and Application Larry left Joe’s waste walk notes on his white board during the cruise and through the next week. He studied the notes and at first was a little upset about Joe’s comments. However, as time went by, he began to realize Joe had some good points. Larry became excited about Lean Sigma and invited Joe back to his office for the next session. Joe got to Larry’s office right on time. “You’re going to have to put me on your payroll pretty soon Larry,” boasted Joe as he arrived at Larry’s office. Joe handed Larry a single piece of paper. On the paper was the following. Key Enablers for Lean Sigma Success 1. Leadership establishing, communicating, and living up to the vision, mission, and values—Direction setting or setting the course 2. Resource commitment 3. Training and education 4. Process- and results-focused 5. Policy deployment and goal alignment 6. Total system or value stream focus 7. Employee involvement 8. Perseverance and commitment

46

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

(Source: Womack, J.P. & Jones, D.T. (1996). Lean Thinking: Banish Waste and Create Wealth in Your Organization. New York: Simon and Schuster; Ptacek, R. & Motwani, J. (2011). Pursuing Perfect Service—Using a Practical Approach to Lean Six Sigma to Improve the Customer Experience and Reduce Costs in Service Industries. Chelsea, MI: MCS Media, Inc.)

Joe explained where the document came from and each key to Larry. “Recently we visited several highly successful Lean Sigma organizations in a variety of industries to learn what had made each of them so successful. What we found was amazing; each company we visited generally concluded the same eight keys to success. We found that this was an enhancement to the current literature on Lean Sigma transformations,” explained Joe. Joe further explained each key enabler. 1. “Leadership establishing, communicating, and living up to the vision, mission, and values—Setting the course. Lean Sigma transformations do not happen by accident. It takes leadership to identify and communicate the need to change, define what to change to, and to define a process to use to continually improve. Too often leaders will have good intentions in mind for their organizations, but do not provide the key elements for continuous improvement. The vision, mission, and values are too often either absent entirely, or placed in plaques on the lobby wall, and never really used to drive improvement and excellence. One of leadership’s chief responsibilities is to create an environment where the need for continual improvement and excellence can be understood by all and people can motivate themselves to excellence. Leaders need to communicate the current business realities and priorities to the workforce, and challenge them with delivering continuous improvement. This can be done very effectively through the vision, mission, and value documents, and proper strategic planning. This starts with you Larry. 2. Resource commitment—Transforming an organization to Lean Sigma takes energy. Resources such as time for team work sessions, training materials and instructors, and materials for improvement projects and PDCA experiments all will be required during a Lean Sigma transformation. If the proper resources are not provided,

KEY ENABLERS

47

progress will slow or stop. People will perceive a lack of commitment from leadership and go back to less effective ways of doing business. The continued commitment of key resources at key times is one way leaders show their resolve to transform the organization. Remember, Larry, a leader’s actions speak louder than their words. It helps if leaders actually participate in early events and hold themselves accountable to use the tools for their own work too. 3. Training and education—This is an enabler for Lean Sigma transformations. If people don’t have the proper instruction and a systematic approach to improvement, random and sometimes detrimental results may occur. Some level of expertise needs to be developed by the leaders and key workers within an organization to fully transform an organization to a Lean Sigma environment. Not only the right materials, but the right counseling and mentors providing guidance at the right times will also support a Lean Sigma transformation. It should be expected that key leaders show their leadership by aggressively learning about Lean Sigma methods and tools. They lead the organization in Lean Sigma learning. I’m your master grasshopper,” injected Joe with a smile. Joe continued. 4. “Process- and results-focused—Process and results mean not only focusing on the results or the bottom line, but also to be concerned for ‘how’ the gains are being achieved. During the initial stages of a Lean Sigma transformation it’s normal for several early successes to be realized. These are commonly referred to as ‘low hanging fruit’ or ‘quick hit’ items. While these successes should be celebrated, it’s equally important for leaders to recognize and speak of the process, methods, and tools being applied. This dual focus will reinforce the workforce’s commitment to follow the process to achieve results. It is also important to note that there is not always low-hanging fruit. Teams diligently following the Lean Sigma improvement process methods should be celebrated regardless of the outcome. By rewarding or celebrating the process, leaders will encourage more

48

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

people to follow the process, and as they do, more improvements and results will be realized eventually. Remember, process first, then results. 5. Policy deployment and goal alignment. Policy deployment is the process of establishing, aligning, and communicating the measures, goals, and objectives throughout the organization. This provides a total ‘connectedness’ or alignment of the entire organization. It is the report card, or ‘score,’ for how things are going. If properly done, policy deployment encourages and excites people into high levels of personal and team performance. Remember our scoreboards on the Gemba walks?” Joe continued. 6. “Total system or value stream focus. Total system focus forces organizations to consider flow of products, services, and people in the delivery process. Too often businesses are organized into islands or silos through the organizational chart, and communicating across islands or silos is difficult, if not impossible, for the well-meaning worker. If nothing is done to break down departmental barriers, people will become discouraged and only do enough to get by. They will conclude that leadership really doesn’t care, and ask, ‘If leadership doesn’t care, why should I?’ The concept of total systems focus recognizes that work and value flows horizontally through organizations to service their clients. 7. Employee involvement—Employee involvement and participation is how any Lean Sigma transformation actually gets done. Management cannot simply ‘install’ a Lean Sigma culture. People of an organization are key stakeholders in transforming the organization. When they understand why the change is needed, what to change to, and what processes to use to change, they can fully deploy their energy and efforts. It is through their efforts and actions that a Lean Sigma transformation occurs. In general, people want to be on a winning team and when an environment exists where people can strive for improvement, where the question of ‘What’s in it for me?’ is clear and inspirational, employees will motivate themselves and strive for excellence. 8. Perseverance and commitment—Lean Sigma transformations do not happen overnight. Nor are they easy. Organizational leaders must

KEY ENABLERS

49

display long term perseverance and commitment for a full transformation to occur. Patience is needed to allow teams to progress through the DMAIC process and learn though PDCA improvement cycles. Remember, not everything a continuous improvement (CI) team tries will yield positive results. Consider celebrating the failures as learning opportunities. Leaders will also need to navigate issues and concerns along the way. It’s not enough to pursue Lean Sigma methods when times are good. Rather, it must be a deep rooted philosophy of applying the tools and techniques in good times and bad. Lean Sigma techniques are a way of working and behaving all the time. Once leaders shift their behaviors to Lean Sigma philosophy, the organization will begin to shift as well. Leading by example is my best advice,” added Joe, as he went right on to the next steps for Larry. “Your next step, Larry, should be to develop a strategy for improvement and then share this with your leadership team. From there, the team can develop high level goals to help achieve the strategy and then begin the process of cascading these goals to all areas of the organization. This process is called ‘Policy Deployment’ and is a ‘Key Enabler’ and is sorely missing here,” Joe explained. Larry organized his thoughts and developed the improvement strategy and began the policy deployment process with the leadership team, as Joe described it. The basic strategy is to participatively establish key measures and goals for each area, and then measure and post, in a scoreboard fashion, the actual performance to goals for each area. Once this is done, the teams will need a method to regularly review and respond to achieve continuous improvement. Things went well at first, but then Larry met with some resistance in the ranks of his leadership team. “A mutiny if you will,” Captain Bob burst out at a leadership work session, “We don’t need this for the crew, we are doing just fine, thank you! Go blow your stack somewhere else, Larry.” The captain had been known for his arrogance and blunt approach. After all, on the ship he was the captain and he was used to people following his orders, not taking improvement lessons from a land-lover like Larry!

50

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

Perceived competence

Larry pushed back. “Captain Bob, I think your behavior is inappropriate and as long as you are an employee of this cruise line you’ll follow our rules and policies and we are going to involve everyone in this improvement initiative. The life of the cruise line depends on it!” Captain Bob clearly was not happy and he kept to himself the rest of the session. Larry caught up to him later that day and explained that his crew and operations may be top notch, but Larry still needed him to participate as he was a respected leader in the organization. There was still some tension between Larry and Captain Bob, but Larry remembered the discussion on resistance to change he had learned about during the Lean Sigma session at Joe’s factory. The instructor at the session explained that resistance to change is a natural human reaction to change, and should be expected. Often people are afraid of the “unknowns” that change can bring. People may not express their fear, but it will manifest itself in resistance. Deep down, even subconsciously, they may fear not being the expert, not being able to learn the new skill or method, having to learn something new, or the sense of loss of security due to not knowing the system. Resistance was actually a sign that real progress is being made! Larry reviewed the managing change graph (shown below) he received at the training session regarding managing change, and thought to himself, “I must be doing something right, hitting a nerve somewhere, if people are starting to resist.”

(7) Integration (2) Denial and refusal (5) Learning

(6) Realization

(3) Rational understanding (1) Shock and surprise Current state

Managing change time plot. Source: Ptacek, Coats, and Ptacek (2012).

(4) Emotional acceptance Time

Future state

KEY ENABLERS

51

The lack of resistance may mean that leaders are not pushing fast or hard enough. Larry then decided to stay the course. His strategy to deal with the resistance was to focus on the people who were showing interest and nurture and cultivate their interest, rather than those who were resisting. He was hopeful that this approach would convince people to try to engage in the improvement effort. Other strategies to deal with resistance are as follows: • Recognize that the root of resistance is based in a fear of something and is a natural human response. • Answer the leading change questions: why do we need to change, what to change to, and how to do it together. Communicate this message often and consistently. • Be honest and truthful. Do not guarantee anything except more need for change and improvement. • Look for subtle change resistant behaviors and address them quickly. • Help people understand why change is needed and to settle their fears. (Source: Ptacek, R. & Motwani, J. (2011). The Lean Six Sigma Pocket Guide XL—Combining the Best of Both Worlds Together to Eliminate Waste! Chelsea, MI: MCS Media, Inc.)

With the managing change plan set, Larry led a series of sessions with his leadership team. They established their mission, vision, and goals. They reviewed the company value statement, and recommitted to holding each other accountable to these standards. The leadership team discussed a plan for daily work team sessions or “huddles” in each area to discuss the day’s activities and key issues. The leadership team prepared to meet with their respective teams to roll out the strategic goals, and define Key Performance Indicators (KPIs) and develop a system to monitor and improve their results. The mandate was clear: we must improve or cease to exist as an organization. Staying the current course would not lead to success. Change for the better was needed and expected from everyone. Full speed ahead with Lean Sigma was needed! Larry felt good that his work with the leadership team had addressed the key enablers. He was disappointed that it had taken 6 weeks to get

52

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

this done, but Joe told him to “Steady the ship, plan the work, and work the plan.” The next step was for Larry to share with the area teams the results and notes from Joe’s waste walk that was still etched on his white board. This represented the current state, which was filled with waste. Larry thought he’d ask Joe to attend these sessions as he thought there could be some rough sailing and resistance!

Chapter 5—Discussion Questions 1. Discuss briefly the key enablers for Lean Sigma success. Why is it important for every organization to know these enablers prior to Lean Sigma implementation? 2. What role do top leaders play in the success of Lean Sigma implementation? If you were Larry, what steps would you take to ensure success? 3. Why is it important not only to focus on the bottom line results but also on “how” the gains are being achieved? Does your organization have the same focus? Why or why not? 4. Why is it critical to have a total system or value stream focus? What are the typical mistakes organizations make when they don’t have this focus? 5. What do you mean by the term “policy deployment?” Why did Joe tell Larry that this enabler was solely missing in his organization? How did Larry go about fixing it? 6. Discuss some of the strategies to overcome resistance to change. What strategies does your organization incorporate to combat resistance? 7. Critically evaluate the process used by Larry to get his leadership team on board.

CHAPTER 6

Analysis of the Current State Joe arrived early as usual to the current state work sessions scheduled by Larry. As he greeted Larry, Joe asked, “So Larry, if you start your Lean Sigma journey, how will you know you’re getting better?” Larry looked puzzled. “Well I thought it’d be obvious. Won’t our KPIs tell us?” Larry replied. “They should, but having the base-line or current state or base-line Key Performance Indicators documented is critical to show the long term success. So what are your high level KPIs and how will you show improvement?” Joe asked. Joe and Larry continued their dialog. Larry indicated that the primary key measures are sales revenue, and Earnings Before Income Taxes and Adjustments (EBITA). If sales and EBITA do not improve there may be no cruise line to worry about. Joe asked Larry, “Okay, so what leads to increasing sales revenue and profit?” Larry replied, “Well, for profit to go up our operating costs need to go down, for sales to increase we need more customers.” “What leads to more customers?” Joe asked. Larry wrote the following on the white board: To increase customer bookings we need the following: • Advertising and promotions that attract customers • Satisfied and repeat customers/passengers • Referrals from past customers/passengers “Okay, so how do you get any of these to happen?” asked Joe. Larry had that puzzled look again. Joe spoke up again, “Well take a look at what

54

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

we call a ‘Critical To Quality’ (CTQ) diagram.” He sketched the following diagram on the white board. Increase EBITA and ROI (Organization Survival)

Increase sales Sales promotions and advertising

Reduce costs

Enjoyable experience in all areas

Increase referrals by past customers Enjoyable experience in all areas

Superior value for experiences

Superior value for experiences

Continuous improvement in speed and efficiency

Consume less for the same service levels

Continuous improvement in speed and efficiency

Easy of booking

Easy of booking

Provide the same level of service with fewer people

Reduce materials costs through negotiations

Provide the same level of service with fewer operating expenses

No hassles or problems

No hassles or problems

Provide improved service and customer experience with the same people

Provide the same level of service with fewer materials

Provide improved service and customer experience with the same operating expenses

Problems resolved quickly and to the customers expectation and delight

Incentive to return

Pleasant people

Problems resolved quickly and to the customers expectation and delight

Ship amenities and options

Pleasant people

Increase repeat customers

Reduce labor costs

Reduce materials costs

Reduce operating costs

Eliminate and reduce the 12 wastes

Eliminate and reduce the 12 wastes

Eliminate and reduce the 12 wastes

Provide improved service and customer experience with the same materials

Ship amenities and options Incentive for referral

Joe further explained that certain lower level activities and work lead to improving the KPI’s results at higher levels, and that this connection defines a process of Policy Deployment that puts action to the plan. This is the linkage between action items and worker level measures, and higher level organizational results. “Okay, so how do you measure any of those, and how can my team leaders drive this improvement?” asked Larry.

ANALYSIS OF THE CURRENT STATE

55

“Let’s get to the current state work session and ask the team leaders,” said Joe. To start the current state sessions, Joe and Larry agreed to cover the CTQ diagram and concept, as well as the high-level objectives and KPIs. They also decided to ask the area leaders to solidify KPIs in their areas that will support the CTQ concepts as well as the high-level KPIs that Larry and Joe had developed. Joe encouraged Larry to be on the lookout for a team leader who was energetic about the new approach. The goal was to establish a pilot area for fast track improvement and to provide guidance to the rest of the group. Joe said, “Initially, we want to spend our time and positive energy on someone who wants to move forward.” Larry was skeptical about this. “Don’t we want to get them all on board and moving forward at the same time? We have to make sure the stubborn team leaders are bought in before taking the next steps. We want them all to make progress as a team!” Joe smiled and said, “Let’s not waste energy trying to convince those who are skeptical. When you spend time with the people who demonstrate the behavior you want, others will take notice. Everyone will see that the ‘nay-sayers’ and ‘complainers’ don’t get all the attention anymore. The ‘fence sitters’ will then jump on-board and the momentum will drive the improvement process forward. The ‘nay-sayers’ will realize they’re being left behind.” Larry slowly smiled an understanding smile. Larry quipped, “Ah! I need to change my people approach as well. Reinforce the behaviors I want. The squeaky wheel shouldn’t always get the grease!” At the current state work sessions Larry explained the current business environment to the team. Larry didn’t pull any punches. He told them the brutal truth; if they didn’t improve, they may have to close or sell the cruise line. Everyone understood the seriousness of the situation but they had no clue as to what to do about it. They all felt they were doing their best. Larry mentioned that he was not dissatisfied with any of the team’s performance, but that the organization as a whole just wasn’t “getting

56

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

the job done.” Basically, Larry felt that they were underachieving, and he wanted to do something about it. Larry provided a brief description of how the leadership team got to this point. He described the walk through with Joe, and provided a summary of Lean Sigma methods and tools, and the enablers. When Larry shared the wastes summary table, there was a great deal of resistance in the form of explanations and reasoning for doing things the way Joe had observed. The leadership team heard comments such as: • • • • • •

That’s not fair! How else are we to do it? We don’t have the time to do it differently. Do you know a better way? Joe doesn’t understand our business—He’s in manufacturing! Things have to be done this way. That’s the way we’ve always done it, what’s wrong with that?

Larry explained that the idea isn’t to blame or point fingers, but to be able to see the waste so improvements can be made. After the group calmed down, a good discussion started to take place. During one of the breaks, Sue, the food service team leader, pulled Larry aside. “Larry, I have an idea for an improvement that needs to happen in one of my restaurants, the ‘Good Time Diner.’ I’d like to move ahead with an improvement project with your help and Joe’s if that’s okay.” Larry considered her idea for a minute or two, remembering Joe’s pilot idea, and then said, “Sounds good. We’ll support you any way we  can. I’m sure Joe will help out when he can. What are you thinking?” Sue responded, “I want to do a customer survey and find out what the customers think we need to do to get better. Satisfied customers equal happy customers, don’t you think?” “Absolutely!” Larry said excitedly. “Conduct your survey and let me know how I can help. Let’s get back to our discussion on improvements.”

ANALYSIS OF THE CURRENT STATE

Area

Increase sales

57

Reduce costs

Navigation

Smooth seas, safe passage, on time to ports, connection with passengers

Reduced overtime, less fuel, less breakdowns

Guest services

Expectations met, room acceptable and as described or better, activities as described or better, reasonable on-board costs

Reduced overtime, less materials costs

Entertainment

Exciting and fun, reasonable costs, Reduced costs for acts and connection between performers materials and passengers, fresh acts

Gaming

Exciting and fun, easy/no hassles, Reduced overtime, increased increase passenger success stake, reduced passenger winnings

Housekeeping

Clean rooms, relationships with passengers, all needs meet, quick response to inquiries and needs

Reduced overtime, reduced materials and supplies

Medical

Help everyone fast, no sea sickness—smooth seas!

Reduced overtime, reduced materials and supplies

Food services

Offerings, friendliness, entertainment during service

Reduced overtime, reduced materials and supplies, reduced wastes

Retail sales

No stock outs, reasonable prices

Reduced overtime, reduced materials and supplies, reduced wastes

Security

No problems, safe voyage

Reduced overtime, reduced materials and supplies, reduced wastes

Adventures and event planning

Exciting options, fair prices, no delays on popular items

Reduced over time, reduced materials and supplies, reduced wastes

Operations and maintenance

No problems or breakdowns, fast responses to passenger needs and requests

Reduced overtime, reduced materials and supplies, reduced wastes

Purchasing and logistics (supply chain)

No stock outs, reasonable prices

Reduced overtime, reduced materials and supplies, reduced wastes

Human resources and training

Support all employees, knowledgeable of staff, passenger questions answered quickly and accurately, customer service orientation classes

Reduced overtime, reduced materials and supplies, reduced wastes

Administration— No billing problems, smooth, Accounting accurate, and hassle-free currency exchanges, no credit defaults, pay checks on time and accurately, profitable

Reduced overtime, reduced materials and supplies, reduced wastes

58

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

When the session reconvened, Larry asked the area leaders how they could affect the CTQ factors illustrated in the CTQ diagram. The following table summarizes the discussion on how each area could affect the overall high-level objectives. The next activity for the team leaders was to define their KPIs and processes. Each area needed a base-line data set for the KPIs so they could determine if experiments and trials were actually improving things. Joe helped Larry explain that the KPIs should align with the strategic goals and high-level KPIs identified for the organization. This would ensure that their policy deployment efforts would be consistent and aligned to the strategic plan and goals. The process to establish and align KPIs and goals took several work sessions. Larry led these work sessions without Joe, but kept in contact with Joe as his team progressed. The results of the work sessions are  defined in the following table that Larry published after the sessions. In the meantime, during the weeks that area KPI discussions took place, Sue began working on her idea. She developed and distributed a survey to customers over several weeks. The responses she received were eye-opening and proved to be quite useful. A B C D E F G H

The room is cold and drafty A lot of tables not cleared—Looks bad No sweetener at the table Waited too long to be seated Buffet table is poorly organized Place settings are missing items Not enough window seats Drink refills took a long time Total:

28 48 15 78 68 15 11 18 281

Sue took this data and put together a Pareto chart, as Larry had shown in one of their work sessions. This visually showed the results of the survey and highlighted which responses represented 80% of the problems.

Metric category

Financial focus

Organization high-level KPI

Performance to budget (reduce costs)

EBITA

Return on investment

Profit

Sales revenue (increase sales)

Navigation

Fuel costs per nautical mile

Guest services

Supply costs to budget

Gaming

Entertainment

Supply costs to budget

Supply costs to budget

Sales from Revenue shows from gaming

Supply costs to budget

Housekeeping

Ocean Treasure Cruise Line High-Level Key Measures

Medical Supply costs to budget

Retail sales

Security

Food services Food costs Wholesale Supply to budget costs to costs to budget budget

Revenue from retail sales

Adventures and event planning Supply costs to budget

Revenue from adventures and events

Operations and maintenance Supply costs to budget

Purchasing and logistics (supply chain) Total spending to budget

Supply costs to budget

(Continued)

Human resources and training Supply, training, and recruiting costs to budget

Administration— Accounting

New offerings per quarter

Customer satisfaction survey scores

Customer satisfaction survey response rate

Organization high-level KPI

(Continued)

Metric category

Customer focus

Navigation

Passenger contact hours

Guest services

Survey scores

New offerings developed and participation rates

New offerings developed and participation rates

New offerings developed and participation rates

Entertainment

Passenger contact hours

Gaming

Survey scores

Response rate

Housekeeping Survey scores

Medical Survey scores

New offerings developed and participation rates Security visibility New offerings developed and participation rates New offerings developed and participation rates

Food services

Survey scores

Retail sales Survey scores

Security

Survey scores

Adventures and event planning

Survey scores

Operations and maintenance Survey scores

Purchasing and logistics (supply chain) Survey scores

Human resources and training Survey scores

Survey scores

Administration— Accounting

Productivity focus

Quality focus

Delivery focus

Commitments met per schedule or plan

Percent fill rate

Repeat visits

On time to ports

On time to schedule

Hours of operation

Hours of operation

Hours of operation

Stock outs

Hours of operation

Hours of operation

Reportable crimes

On time to schedule

On time to schedule

Stock outs from all areas

Total spend

Number of team members

Employee training hours

Number of team members

(Continued)

On-time payments

Number of team members

Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable complaints complaints complaints complaints complaints complaints complaints complaints complaints complaints complaints complaints complaints complaints to area to area to area to area to area to area to area to area to area to area to area to area to area to area

Wait times for service

Unplanned breakdowns

Number of team members

Customer complaints

Wait times for service

Number of team members

Service Bookings calls made made

Number of team members

Rooms complete by noon

Meals served

Number of team members

Wait times for service

Patients served

Number of team members

Rooms served

Number of team members

Passengers Shows served delivered

Number of team members

Nautical miles sailed

Number of team members

Sales revenue per operating costs

Number of team members

Number of team members

Number of crew

Sales revenue per employee

Metric category

x

Internal promotions

x

Training hours

x

Injuries

Absenteeism/ illnesses per day

(Continued)

People focus

Organization high-level KPI Navigation

x

x

x

Guest services

x

x

x

Entertainment

x

x

x

Gaming

x

x

x

Housekeeping

x

x

x

Medical

x

x

x

Food services

x

x

x

Retail sales

x

x

x

Security

x

x

x

Adventures and event planning

x

x

x

Operations and maintenance

x

x

x

Purchasing and logistics (supply chain)

x

x

x

Human resources and training

x

x

x

Administration— Accounting

ANALYSIS OF THE CURRENT STATE

92%

95%

99%

63

100%

88% 80 60%

70

78%

60 50

32%

40 30 20 10 0 Series1

D

E

B

A

H

F

C

G

78

68

48

28

18

15

15

11

The Pareto chart indicated the biggest issue was that customers waited too long to be seated. Sue was excited at the prospect of kicking off a team in the restaurant to begin attacking this issue. She felt this was right in line with her KPIs and the work that had taken place during the sessions with Larry so far. Sue decided to share this information with Larry and get some ideas for the next steps during the next work session. Larry smiled broadly as Sue explained what she had done so far and what the survey responses revealed. “Great job Sue! The Pareto chart is perfect. Now we need to plan out some next steps to take following the Define–Measure–Analyze–Improve–Control (DMAIC) approach. We just so happen to be covering that information today. After the meeting let’s talk some more to make sure you’re comfortable with all the steps.” With the KPIs in place, the next step was for Larry to ask that each area leader initiate an improvement project in their area that would have a significant positive impact for the area’s KPIs and the strategic goals. Larry would lead sessions twice a month with the leadership team to review project progress and monitor area KPIs and action

64

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

plans or countermeasures. Larry summarized his approach with the following chart:

High-level Lean Sigma service journey steps

Conduct current state and key performance indicator (KPI) analysis

Project selection based on current state and KPI analysis

Lean Sigma service project launch(es)

Project team(s) learn and use the DMAIC improvement process to implement improvements.

Establish and monitor key organizational performance measures. Take corrective, preventative, and improvement actions as needed by assigning DMAIC project teams.

One or multiple teams and projects depending on resources 1. Project teams define the project parameters 2. Project teams measure process variables 3. Project teams analyze process variable data 4. Project teams implement improvements using the Plan-Do-Check-Act (PDCA) improvement tool. 1. PDCA 1 2. PDCA 2 3. … 4. … 5. … 6. PDCA (n) 5. Project teams establish control processes to ensure the improvements are maintained.

Source: Modified from Ptacek, R. & Motwani, J. (2011). The Lean Six Sigma Pocket Guide XL— Combining the Best of Both Worlds Together to Eliminate Waste! Chelsea, MI: MCS Media, Inc.

The Lean Sigma flow diagram indicated that an initial Lean Sigma KPI analysis would be required to document their current state situation. The team felt this was a good idea and agreed to get moving on this effort. Three weeks later while at port, Larry met with Joe. Larry shared what was going on with Sue and how he had provided some coaching. Joe was surprised at how well Larry had done. “You’re a natural Larry, or did you just get lucky?” Joe teased. “This old dog can learn new tricks just as well as you, only quicker. How long did you say you spent trying to understand this Lean Sigma stuff?” Larry countered. “You have a great teacher that’s all,” laughed Joe. Over the next few hours Joe and Larry discussed next steps and went to visit Sue to answer any questions she might have.

ANALYSIS OF THE CURRENT STATE

65

Sue told Larry and Joe her story so far….. She had already formed a team and they had worked on problem and target statements. The problem they identified was customers waited too long to be seated. The current situation is 78 of 281 customer survey responses, that is 32%, indicate waiting to be seated is an issue. The team thought the expectation might be customers should not have to wait at all. They developed their target statement to read: Reduce customer “waited too long to be seated” survey results from 78 to 39 by March 1, this year and then to zero by April 30. This seemed unreasonable to a few on the team. “What about busy times? There’s no way we can make sure customers don’t wait at all! We can never reduce survey results to zero.” The team finally realized, with Sue’s help, they needed to put some parameters on a measure for “waited too long to be seated.” After some lively discussion, the team decided progress would be measured by reducing the percentage of customers each day who have to wait in excess of 30 seconds to be seated. Someone on the team wondered how they could possibly time this and do it consistently. A team member asked, “When does the wait time start? When they get to the hostess stand? When they walk through the door? When?” Another person chimed in “When does it end? Do we stop the watch when they are actually seated? Or should it be when the hostess asks the customer to follow her to the table?” Another member of the team asked “How will we actually time this? With a stopwatch? Give the customer one of those lighted things like you get at fancy restaurants?” The team worked on answering these questions and finally came up with an operational definition for “waiting too long to be seated,” and a simple way to collect data. The data collection began the next day. After 3 weeks of data collection, the team put the results into a table and generated a run graph, again with some direction from Sue. Of course Sue learned this from Larry after one of their work sessions. The run graph for percentage of customers waiting in excess of 30 seconds by day looked like this:

66

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS 12%

Week 1 Week 2 Week 3 Monday 8 9 9 Tuesday 9 8 10 7 7 8 Wed. Thurs. 7 8 8 Friday 6 6 7 Sat. 4 5 5 Sun. 3 4 4

10% 8% 6% 4% 2% 0%

M T WTH F S S M T WTH F S S M T WTH F S S

The team also collected data on other variables they thought might provide insight as to why and when waiting was occurring. They looked at the times during lunch when waiting occurred, the number of customers waiting and the reason customers were waiting. Time of afternoon and no. of customers waiting for a table: 10:30 = 14 11:00 = 52 11:30 = 139 12:00 = 185 12:30 = 118 1:00 = 83 1:30 = 27 2:00 = 17 Of course the team had learned to put the information in graphical format to allow them to “see” what it was telling them. Not surprisingly, most of the waiting took place during the busiest hour of the day. The top reasons for waiting seem to be either most people had a seating preference near a window, or a table was not available, or both. No. of customers waiting by time of day 200 180 160 140 120 100 80 60 40 20 0 10:30

11:00

11:30

12:00

12:30

1:00

1:30

2:00

ANALYSIS OF THE CURRENT STATE

67

The team had a discussion about tables not being available. One team member blurted out during the discussion “I know why! Customers are lingering around after eating and not leaving to free up tables for others. They’re just rude.” Sue quickly asked “Do you have data to support that?” “No. I just know. It’s obvious,” retorted the team member. Sue reminded the team to collect data to verify their hypothesis. The team investigated further and determined that 83% of the time a table was not available because the tables had not been cleaned and prepped quickly enough for new seatings and not due to customers just lingering around. The team asked the obvious question. So, “why are tables not being cleaned fast enough?” Everyone was quiet for a moment and then a bus boy complained “I’m working as fast as I can during the lunch rush. I think all the bus boys are working really hard! It’s not our fault.” Sue said “This is not about blame. We need to look at the process. What’s taking so much time to clean and prep dirty tables? Perhaps we should draw up a layout of the restaurant and see what the work flow is all about. An analysis using a ‘Cause-and-Effect’ diagram would be useful as well. What do you think?” The team all agreed these were good next steps. The team constructed the cause-and-effect diagram to determine if any root causes popped out.

People

Policy

Don’t clear dishes until people leave table Hostess can’t clear tables when Wait staff don’t help free Dirty tables take too High turnover clear tables long to be cleaned and prepped Not enough bus Takes too long to carts take dishes to kitchen Best way not documented Lack of training Tables are too Staff not trained in close together best approach Physical Procedures environment

We don’t work Not enough bus boys as a team at busy times

After looking at the flow of work on the floor layout and brainstorming using the fishbone diagram, the team concluded that the most likely cause

68

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

of tables not being cleaned and prepped quickly enough is the time spent taking dirty dishes to the kitchen, particularly from the west side of the restaurant. The group also felt they were not working as well as they could as a team. The team then brainstormed some improvement ideas. The list of possible countermeasures included the following: • Schedule more people during busy times to clear tables • Buy more bus carts that are bigger • Build a dirty dish holding station near the center of the seating area • Have hostess clear tables when possible • Have waitress help to clear tables • Have bus person move quickly between kitchen and tables • Fill the section closest to the kitchen as much as possible Out of this list, the team decided to conduct PDCA experiments with two ideas first. The goal was to try out an idea quickly and cheaply to get some data to verify if they were on the right track. The team decided to experiment with having a temporary holding station located at the center of the seating area, which could not be seen by customers, for placing dirty dishes. They quickly put together and set up a temporary station. The group also decided they would work as a team more and waitresses would help clear tables whenever possible, even if it was only a few dishes per table. This would be easier to accomplish with the temporary station close by. Within a day the team constructed a holding station and placed it in position. They continued to collect data to see what the results would be. After 3 weeks the team analyzed the new data and the results were dramatic. Sue decided it was time to conduct another survey to see if they had met their first goal. The results excited everyone on the team. Sue asked the team “What did you learn following this process?” She wrote their responses on the team flip chart:

ANALYSIS OF THE CURRENT STATE % of customers waiting more than 30 seconds 12% 10% 8% 6% 4% 2% 0%

No. of customer votes on survey

M T WTH F S S M T WTH F S S M T WTH F S S

90 80 70 60 50 40 30 20 10 0

Series1 Series2

D 78 11

E 68 42

B 48 5

A 28 24

H 18 9

F 15 5

C 15 8

G 11 6

• Did not expect such a simple solution to have such a dramatic impact • Exploring all ideas and agreeing on what to do helped us work more as a team • The storyboard helped to guide us through the process and identify true root cause • It is fun to measure and see success • Our tips seem to have gone up due to better service and turning tables more often • Maybe we should track this in the future to link improvements to earnings

69

70

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

“So what’s next?” asked Sue. The team quickly responded: • “We need to replace the temporary holding station with a permanent one. We will use labeling and other visual techniques to organize the station. Make it look nice so customers don’t view it as an eye sore.” • “We need to have daily huddles to review progress and look for additional improvement opportunities. This way we can accomplish our ultimate goal of zero complaints.” “Wow! That is a great success story Sue!” exclaimed Joe. “Well done,” Larry also recognized her success. “Sue, you did a fantastic job. You have got to share this with the other team leaders so they can see what’s possible.” Sue was a little unsure about standing in front of her peers to tell the story. She said “How about I have the team share what they did using the storyboard we created?” “Even better yet,” said Larry. Joe whole-heartedly agreed.

Chapter 6—Discussion Questions 1. Larry seemed very puzzled when Joe asked him about the KPIs. Do you think the cruise line had the right measurement system in place? If you were Larry, what else would you have measured? 2. What is a “Critical to Quality” (CTQ) diagram? How can Larry benefit from this diagram? Why did Joe insist that Larry find a team leader who was energetic about the new approach? 3. Critically evaluate the stance/approach that Larry took at the current state work sessions. 4. Do you think Larry and his team have identified the right approach and process on how each area in the cruise line could achieve the overall high level objectives? Explain. 5. Do you think Larry and the team have done a good job in identifying and aligning KPIs and the goals? What would you (Continued )

ANALYSIS OF THE CURRENT STATE

71

have done differently, if you were Larry? Do you think it is feasible for Larry and the team to implement these measures? 6. Critically evaluate Sue and her team’s efforts in implementing Lean Sigma in her area. What can other area leaders learn from her? 7. Why is it important to identify and focus on the right KPIs? What lessons can your organization learn from the approach used in this chapter?

CHAPTER 7

Application of Lean Sigma Tools and Results Standardized objectives and agendas were set by Larry and Joe to facilitate the first Lean Sigma work sessions in each area. Sue’s progress continually showed the way for the other teams. The objective of the first area team work session is to provide a brief update on the business conditions and competitive realities, to provide a brief overview of Lean Sigma for service industries, and to review the project objectives initiated by Larry. Initial Area Team Work Session Objective Standard Agenda 1. Provide a brief review of the business conditions and competitive realities 2. Provide a brief overview of Lean Sigma for service organizations 3. Review the project objectives initiated by the area leader and Larry 4. Begin developing the team objectives to support Larry’s initiatives 5. Establish the path forward, expectations, and the next steps for the area teams The Lean Sigma overview is to be provided by the area leaders. By doing this, the area leaders will have to study the Lean Sigma material a bit more and be prepared to teach their teams about Lean Sigma methods and tools. A brief written statement from Larry regarding the business update and competitive realities will be provided to the area leaders to be used as a training aid. This training effort supported the employee training and engagement enabler as well. The work sessions went well and, for the most part, the teams understood the common objectives of the Lean Sigma projects and journey. Some of the area leaders struggled a bit with the training portion of the session, so Larry helped where he needed to. Most employees could see

74

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

what was happening to the cruise line in the market place and wanted to make improvements. Some people were skeptical that this new approach would be any better than the last new approach. Regardless, the leaders pressed forward. Since Larry had standardized the approach, the teams had many things in common when developing their Team Charters and KPIs. The Team Charter elements listed below were thought to be common for all teams. They used Sue’s team’s initial success as a guide. Area Team Charter Commonalities 1. Mission or Purpose of the Project: Since this is the initial or launch project for each area, the primary purpose is to establish key measures and implement some key improvements using the Lean Sigma tools. A secondary purpose is to learn and use Lean Sigma methods and tools. 2. Deliverables or Expected Outcomes: Expected outcomes are (a) measurable improvements in every area and (b) practice and learn using Lean Sigma methods and tools. 3. Benefits of Expected Outcomes: Benefits are as follows: (a) We will begin the Lean Sigma Transformation Journey, which can revitalize our business. (b) Our work should become easier to perform. (c) Our guests and customers will have an improved and pleasurable experience which can lead to repeat business. 4. Expected Approach and Activities: Each area team will use the Lean Sigma DMAIC process to initiate and manage their projects, as Sue’s pilot team had. 5. Time Frame—(Start date, end date, and major milestone target dates): Project will be ongoing for the next 6 months, with monthly report-out sessions with Larry. The area teams spent additional time discussing specific wastes identified in their area, the area KPIs, how they would collect and display the KPIs, and how they could use Lean Sigma tools to make measurable improvements. Each team was asked to select the “vital few” KPIs to improve. The idea being that if each group focused on improving one or two vital KPIs rather than trying to impact every KPI, the teams would make better progress and be able to make key improvements to high impact areas. Larry asked that every area include customer complaints as one of their vital few KPIs to measure and improve.

Metric category

Financial focus

Organization high level KPI

Performance to budget (reduce costs)

EBITA

Return on investment

Profit

Sales revenue (increase sales)

Navigation

Fuel costs per nautical mile

Guest services

Supply costs to budget

Gaming

Entertainment

Supply costs to budget

Supply costs to budget

Sales from Revenue shows from gaming

Supply costs to budget

Housekeeping

Ocean Treasure Cruise Line High-Level Key Measures

Medical Supply costs to budget

Retail sales

Security

Food services Food costs Wholesale Supply to budget costs to costs to budget budget

Revenue from retail sales

Adventures and event planning Supply costs to budget

Revenue from adventures and events

Operations and maintenance Supply costs to budget

Purchasing and logistics (supply chain) Total spending to budget

Supply costs to budget

(Continued)

Human resources and training Supply, training, and recruiting costs to budget

Administration— Accounting

New offerings per quarter

Customer satisfaction survey scores

Customer satisfaction survey response rate

Organization high level KPI

(Continued)

Metric category

Customer focus

Navigation

Passenger contact hours

Guest services

Survey scores

New offerings developed and participation rates

New offerings developed and participation rates

New offerings developed and participation rates

Entertainment

Passenger contact hours

Gaming

Survey scores

Response rate

Housekeeping Survey scores

Medical Survey scores

New offerings developed and participation rates Security visibility New offerings developed and participation rates New offerings developed and participation rates

Food services

Survey scores

Retail sales Survey scores

Security

Survey scores

Adventures and event planning

Survey scores

Operations and maintenance Survey scores

Purchasing and logistics (supply chain) Survey scores

Human resources and training Survey scores

Survey scores

Administration— Accounting

Productivity focus

Quality focus

Delivery focus

Commitments met per schedule or plan

Percent fill rate

Repeat visits

On time to ports

On time to schedule

Hours of operation

Hours of operation

Hours of operation

Stock outs

Hours of operation

Hours of operation

Reportable crimes

On time to schedule

On time to schedule

Stock outs from all areas

Total spend

Number of team members

Employee training hours

Number of team members

(Continued)

On-time payments

Number of team members

Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable Assignable complaints complaints complaints complaints complaints complaints complaints complaints complaints complaints complaints complaints complaints complaints to area to area to area to area to area to area to area to area to area to area to area to area to area to area

Wait times for service

Unplanned breakdowns

Number of team members

Customer complaints

Wait times for service

Number of team members

Service Bookings calls made made

Number of team members

Rooms complete by noon

Meals served

Number of team members

Wait times for service

Patients served

Number of team members

Rooms served

Number of team members

Passengers Shows served delivered

Number of team members

Nautical miles sailed

Number of team members

Sales revenue per operating costs

Number of team members

Number of team members

Number of crew

Sales revenue per employee

Metric category

x

Internal promotions

x

Training hours

x

Injuries

Absenteeism/ illnesses per day

(Continued)

People focus

Organization high level KPI Navigation

Targeted Improvement

x

x

x

x

x

x

Untargeted Improvement

x

x

x

Guest services

Entertainment

Gaming

x

x

x

Housekeeping

x

x

x

Medical

x

x

x

Food services

x

x

x

Retail sales

x

x

x

Security

x

x

x

Adventures and event planning

x

x

x

Operations and maintenance

x

x

x

Purchasing and logistics (supply chain)

x

x

x

Human resources and training

x

x

x

Administration— Accounting

APPLICATION OF LEAN SIGMA TOOLS AND RESULTS

79

Larry then asked Sue’s team to present what they had accomplished using a storyboard laid out in the DMAIC format. After a brief presentation by the whole team, all the area leaders went on a tour of the Good Time Diner and discussed their success. Everyone was excited and energized. The following table outlines the critical few KPIs selected

Monthly Highlights Report Section 1 What are 3–5 key accomplishments or problems solved in the last 4 weeks?

Section 2 What improvement PDCA experiments were completed in the past 4 weeks, and what were the results and outcomes?

Section 3 Was there any individual outstanding performances or successes that should be recognized? List the person, what they did, and how it helped the team or organization. Be specific.

Section 4 What are 3–5 key issues, improvement targets, and or problems to resolve in the upcoming 4 weeks?

Section 5 What resources or training might be required to achieve performance objectives in the next 4 weeks? Source: Ptacek, Coats, and Ptacek (2012).

80

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

(highlighted light gray), and some secondary KPIs (highlighted dark gray) as identified by the area leaders. The next steps were for each of the area leaders to establish a meeting or work session schedule and meet regularly with their teams to begin the improvement initiatives. Larry also asked that each of the area leaders provide a monthly progress report. Each month Larry asked the area leaders to complete the following Monthly Highlights Report. Since leading meetings or work sessions was a new requirement for many of the area leaders, Larry provided the teams with some basic training on how best to lead a meeting and how to effectively document what was discussed during the meeting. Meeting or Work Session Leading is the process of presiding over, running, or facilitating a meeting to maintain focus and effectiveness. It involves establishing an agenda, identifying the necessary people to attend, scheduling a time and location, facilitating the meeting, and communicating the meeting action items and minutes. It is wise to use a standard meeting agenda format to help you plan and stay on track during a meeting. The Work Session Record should be initiated prior to the meeting and include updates and status of actions items, if appropriate. The teams used the Work Session Record below as a standardized guide to follow as a work session is scheduled and conducted. The following checklists will assist the work session leaders to prepare and lead effective meetings. Work Session (Meeting) Prep Checklist 1. Make sure the meeting is needed. 2. Specify and limit who should attend. 3. Distribute an agenda before the meeting, unless it’s not appropriate. 4. Tell participants what preparation is expected. 5. Set an appropriate time. 6. Get started on time and keep to the schedule. (Continued)

APPLICATION OF LEAN SIGMA TOOLS AND RESULTS

81

Work Session Record Instructions: Use this page and the back to record work session occurrence. Make copies of this form and have the scribe take notes on each topic discussed. Copy the completed page(s) and distribute the completed form at the end of the work session. Session Number: Project Name:

Date:

Location: Session Time:

Attendance

Agenda 1. 2. 3. 4. 5. 6. 7.

Action and Agreement Register* *Provide a brief summary of topics, discussions, agreements, or conclusions on back side if more space is needed. Description

Who

When

1.

2. 3. 4. 5. 6.

Future File/Parking Lot

Meeting Review

1.

−

+

2. 3. 4. 5. Next Work Session: Date:

Time:

Location:

Recorder/Scribe:

(Continued)

82

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

(Continued) 7. Try not to allow interruptions. 8. Avoid hidden agendas. Work Session (Meeting) Leading and Facilitation Checklist 1. Be prepared with information, copies, and so forth. 2. Welcome participants and call the session to order. 3. Restate the objective of the work session. 4. Ask for questions. 5. Explain how the session outcomes will be recorded and tracked. 6. Keep to the schedule. Ask permission to go over your scheduled ending time. 7. Invite those who haven’t spoken to contribute. 8. Gain closure on each issue as you sense a consensus. 9. Document decisions, deadlines, action items, and responsibilities. 10. Summarize the outcomes. 11. Communicate next steps. 12. Distribute the minutes within one business day after the meeting. Key Points for Work Session (Meeting) Leading • Make sure a work session is needed to accomplish the task or objective. • Establish clear and objective outcomes for the work session. • Set the agenda, start and stop times, and attendee list. • Start and stop the work session on time. Facilitate the agenda to stay on track and allow everyone to participate. If the session is going to run long, ask for permission from the attendees to continue after the proposed end time. • When the objectives have been met, or the session time is up, summarize the agreements, action items, the next steps, and then adjourn the session on time. If appropriate, document and distribute work session minutes. Source: Fleming and Ptacek.

APPLICATION OF LEAN SIGMA TOOLS AND RESULTS

83

Sue was full of energy and excitement. She was eager to start moving forward quickly. She took the initiative several weeks prior to other area leaders jumping into action. She shared her story with Larry and he asked her to present to the others what had been done. Sue’s story was inspiring and each team kicked into high gear and started their work. They used Sue and her team as a resource when they got stuck. Over the next several months each of the area teams conducted numerous CI work sessions and improvement “Plan–Do–Check–Act” (PDCA) experiments. Each experiment was documented and verified with data to determine if it was an actual improvement or not. As improvements were made, the teams documented their new methods with standard work documents. Some were more formal than others, but progress was seen everywhere and a new excitement had taken over the ship. The following reports summarize the activities, actions, and accomplishments from each area over a several-month period. Larry would review the reports monthly with the group of area leaders, along with Joe, when Joe had time.

Navigation—Captain and Crew The vital few KPIs for the Captain and Crew were customer complaints, and on time to ports. In their analysis, the team found that many of the customer complaints were due to rough seas, something the crew had little influence over. They also found that their on time to port performance was related to weather conditions as well. The team discussed what they could do to improve these situations in spite of their lack of control over the weather. Improvement ideas that were identified centered around improving communications and reaction to the weather conditions. The team also agreed with waste walk observations that the helm looked a bit disorganized, which caused a waste of motion and delay while crew members searched for key items and information. This was made even worse when bad weather quickly approached. The team brainstormed for ideas to reduce these wastes and improve the speed and accuracy of communicating information. Although the captain was not sure his team needed this approach, he remembered his

84

LEAN SIGMA METHODS AND TOOLS FOR SERVICE ORGANIZATIONS

time in the Navy when things were required to be better organized. The team agreed to implement the 5Ss in their areas. They sorted (S1) items out and only kept what was needed. They found many old, worn, and tattered maps that were no longer in use. The captain had his crew sign these and gave these to the sales team who would frame them and offer them for sale as cruise mementos in the ship’s gift shops. The maps almost looked like old treasure maps—a great new offering for the retail sales team! The captain’s team then established an exact location to set things in order (S2), they scrubbed (S3) things clean, and developed and standardized (S4) the new rules to keep things clean and in the right place. The final step for the team’s 5S was to determine a way to sustain (S5) the gains. The captain offered to perform an audit of sorts on his daily walk through. Twice a day the captain walked the ship to observe all areas of operation. During his walks he would interact with the crew and passengers. The purpose of this walk through was to connect with the passengers and crew to communicate critical information about the voyage. The crew later developed visual control boards in each area to streamline the communication of information. This move alone allowed the captain to complete his walk through in less time, usually in about an hour. Before the visual control and communications boards were started, the captain’s walk through took an hour-and-a-half to two to complete, depending on how long he would chat with the crew. The visual control and communication boards helped him to gain more time to connect with the passengers or to address adverse weather conditions with the crew. The 5S effort by the captain and crew spread over into other areas as well. As the captain observed untidy areas during his walk, he would radio housekeeping or maintenance to quickly get the area cleaned up. It didn’t take long for others to follow the captain’s lead. The captain felt better about being in control of the ship, and keeping it in “ship shape!” At the next group report out, the Captain was proud to share the following results. Before Improvements >4 complaints per voyage 90% on time to port

After Improvements 9 complaints per voyage 43% VOC response rate 4 minutes average wait time

After Improvements