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Presentation of lean 6 sigma for retail

Dionne Dumitru

on 4 July 2009

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Transcript of lean

lean What is lean six sigma? Acronyms
The Packages What's in the package
What it is Six Sigma Defined Lean Defined Lean Six Sigma Lean 6Sigma
in Retail Organizational
Requirements Internal Experience Getting Started Lean SPC
Statistical Process Control Six Sigma TQM
Total Quality Management TOC
Theory of Constraints BPR
Business Process Reengineering A good idea... Repackaged... Yet, they are still... Process Improvement
Repackaged: Identifying value & waste
Measuring capabilities, capacities, inputs and outputs
Data analysis to remove waste and variability
Incorporating into training and operations
Enrolling the entire organization What it isn't Identifying 'dead weight' who don't work fast enough
Setting goals based solely on desired outcomes
Changing processes based on belief
Annointing a Quality Manager solely responsible
Management-initiated cost reduction Motorola initiated & trademarked
* 1986 - 2006, repoted savings of > $17Billion

Six sigma equivalent to 3.4 defects per million
* (4.5 deviations + 1.5 shift)
* Process control at 99.9997%

Methodology highly dependent on statistics
* Reliance on certified employees
* Designated by belt color
* "Master Black Belt", "Black Belt", "Green Belt" Toyota Production System
* Influenced by W.E.Deming's Statistical Process Control (SPC)
and Total Quality Management (TQM)

Removing Waste (Muda)
* "Only the last turn tightens the bolt -- the rest is just movement" (Shigeo Shingo, TPS) Original Seven Muda Innovations * Transportation
* Motion not involved in Processing
* Watiing
* Overproduction (ahead of demand)
* Over processing
* Defects / rework * One-piece flow (vs batch processing)
* U-shaped work cells (vs. linear assembly)
* Kanban (signal-triggered activity)
* Kaizen (continuous improvement)
* Pull demand (vs. push supply)
* Small production sizes / more frequent change-over
* Value stream
* Just in Time (JIT) Key Concepts:
* Lean is a way of thinking
* 6 Sigma is the methodology Process:
* Map Processes
* Capture time & space data
* Analyze data
* Re-engineer process
* Pilot new process
* Train and implement
* Feedback systems Lean Production (Mfg)
Transformed to Lean Consumption (Retail)
* Solve the customer's problem completely
... ensure all goods and services work, and work together
... solve root causes
* Don't waste the customer's time
... Streamline to match lean provision and lean customer experience
* Provide exactly what the customer wants
... pull system with rapid replenishment
* Provide what's wanted where it's wanted
... minimize total cost of consumption
* Provide what's wanted where it's wanted when it's wanted
... reduce uncertainty
* Continually aggregate solutions to reduce customer's time and decisions necessary to solve customer's problems Case Studies Bank One
* Improvements in one operation
.. Generated millions of $$ of revenue
... Saved thousands in expense Stanford Hospital & Clinic
* Higher quality of careat lower costs
* Increased market share
* Mortality from coronary bypass surgery dropped 48%
... costs in coronary unit dropped 40%
* Overall material costs for entire hospital reduced
... $25 Million below prior years Tesco
* 2006 results (52-week period)
... sales increase 13.2%
... EBITDA increase 16.7%
Dividend increase 14.2%
... employees earned 181 Million from gain-sharing
* Implemented changes beginning 2003:
... continuous replenishment
... in-store range management (category management)
... network management of logistics hot-spots
... flow-through (cross-docking)
... primary distribution (inbound freight)
... customer-centric empowerment of all staff Fashion Apparel
* 2006 results:
... sales increase 21%
... net profit increase 26%
... rapid international growth
* Lean purchasing & sales
... direct & immediate collection of customer information from stores to HQ
... reduced product range with rapid change-over, tailored to customer needs
... flat hierarchies, IT infrasturcutre, and control of supply chain
... purchasng quick response systems US Retail Successes
w/Six Sigma Albertson's
* Achieved cost-savings goal of $1B in 4 years Amazon
* Lowered fulfilment costs as a % of sales by 3 basis points Circuit City
* Reduced hiring cycle time from 18 days to 8 days
* Determined sales impact of markdowns
* Determined sales impact of bundling items
* Managed out-of-carton item pricing to retain margin
... Produced millions in savings 6Sigma@Target
* Supply chain: lowered lead time
... improving in-stock positions
* Improved checkout process speed * Top Management commitment
... critical to company's success
... willingness to discard current management practices that do not support the change Align entire organization with ownership of processes & goals
... education
... participation
... vigilance What you need... Who you need... Involve every employee
.. train continually
Support staff with specialized skills
... process mapping
... process measurement
... documentation
... statistical analysis
... project management
... facilitation
... CI methods / processes
Excellent IT infrastructure Dionne
* Total Quality Management
* Texas A&M Total Quality Process for Distribution
* Kaizen breakthrough event with Toyota Production System
* Univ Tx Quality Consortium
* ISO 9001 certification - software company From Experience: Doing = understanding & believing
Everyone must experience and learn
* Kaizen @ Trane Corp
... Double-digit improvements in WIP reduction & throughput
... in one week of process reengineering
* Kaizen at distribition company
... increased throughput over 33% in order fulfilment
... in one weekend
... innovations were implemented in ERP software and used by 100s of clients Where to now?
... {discussion} Lean TOC
Theory of Constraints Six Sigma BPR
Business Process Reengineering SPC
Statistical Process Control TQM
Total Quality Management
Full transcript