In recent years, many financial organizations have turned to some form of Six Sigma or Lean Six Sigma in their search for tools to help them decrease defects and rework while increasing process velocity. But the basic toolkit associated with these methodologies does not incorporate the type of rigor needed when you want to invent a new service, product, or process (or overhaul something that is already in place). One methodology is powerful enough to handle the task. It is Design for Lean Six Sigma (DFLSS).
Design for Lean Six Sigma (DFLSS) is a complement to Lean Six Sigma’s DMAIC methodology. The basic difference between DFLSS and DMAIC is DMAIC focuses on bettering existing processes while DFLSS focuses on new processes or complete overhauls of existing processes. DFLSS concentrates a great deal of effort on designing a process to reach Six Sigma levels before it’s implemented, creating a completely new, Six Sigma-capable process from the start.
The key issue when you design a new service or process is that there are a lot more unknowns than when you tweak what you already have. You don’t really know what customers want. You don’t really know which models or approaches are workable. You may not have existing capabilities to provide the needed functionalities.
The preferred improvement model used for these situations goes by a number of names: some organizations call it DMEDI (for Define-Measure-Explore-Develop-Implement), some call it DMADV (for Define-Measure-Analyze-Design-Verify), and some just use the more general terms of Design for Six Sigma or Design for Lean Six Sigma (DFLSS). Though the labels differ, all are strategies for executing projects that require a significant amount of new design.
Define: The project team comes together with its sponsor to develop a well-defined charter that has clear ties to the business strategy and line-of-sight linkage to significant financial benefits
Measure: The team focuses on understanding the Voice of the Customer, information that will be used to design best-in-class products and services
Explore: The team innovates to develop multiple solution alternatives and selects the most promising concept, as well as confirms a high-level design
Develop: The team uses Lean and Six Sigma tools and simulation to create a robust design
Implement: The design is piloted, a control plan is developed, and the new product or service is launched
Define
The objective of the Define phase is to develop a well-defined charter for the project team that includes: a product/service description, business case, project goals, project scope, a high-level project plan, and team members. The charter should be sufficiently detailed so that the business objectives and the scope are clear to both the team and the management.
In addition, there are two major elements of risk to be considered in a DFLSS project. First, the risk that the project will not meet its objectives, which would primarily be a risk to the schedule and to benefits (technical, cost, schedule, and market risk). Second, there are the risks that the project poses to other elements of the business.
Measure
The purpose of Measure is to understand the Voice of the Customer (VOC), and to translate customer feedback into measurable design requirements.
The first step in capturing the Voice of the Customer is determining the appropriate customer segment. While in theory anyone in the world could buy your services, there is a particular subgroup, or segment, that is most likely to buy. If you’re interested in achieving maximum performance, you want to focus your products and services on the customer group where it is most likely to resonate in the marketplace.
Focus on the customer segment(s) that align with the company’s business strategy, are attractive from a size and profitability standpoint, and align with the business’s capability to satisfy them.
Start the VOC process by taking advantage of existing and available information within the business. Every company has customer contact sources that can provide a baseline for service/product design. Some sources to look at are complaints, compliments, returns or credits, contract cancellations, market share changes, customer referrals, closure rates of sales calls, market research reports, completed customer evaluations, industry reports, available literature, competitor assessments, web page hits, or technical support calls.
Once you understand the gap between the customer information you already have and what you need, use proactive methods to gather additional information. The most common techniques are interviews, focus groups and surveys.
Translating needs into requirements — If you survey customers and ask which features they would like to see in your services, they will undoubtedly say, “All of them!” However, customers don’t value all features equally. That’s why the DMEDI process exploits a tool known as Quality Function Deployment (QFD) that helps you understand customer priorities. The secret to QFD’s success is that it establishes design requirements that are:
◈ Measurable (quantifiable) so you can tell whether or not you’ve met them.
◈ Solution-independent, meaning the requirements aren’t linked to predefined solutions that the design team might have in mind (allowing for much greater creativity).
◈ Directly correlated to customer needs, so you know that you’re addressing issues that are important to customers.
◈ Easy to understand.
To achieve these goals, QFD walks through a series of steps:
1. Identifying customer needs from the VOC data you gathered
2. Prioritizing those needs
3. Establishing design requirements that address all customer needs
4. Prioritizing those design requirements (to help focus the design effort)
5. Establishing performance targets
These steps are linked together deliberately, so that at the end you can trace a path directly from customer needs to specific elements of the design.
The team also will assess the impact of failing to meet the targets and specifications, including an assessment of different risks (to the customer, to the business) and whether the organization’s current competencies are well matched to meet the performance targets.
Because there is such a learning curve in the Measure phase of a project, teams often discover quick wins: changes that look to be a sure thing, are easily reversible, and require little or no investment. The team should take advantage of quick wins as soon as possible, and begin accruing financial benefits.
Explore
After defining requirements, the team needs to answer the question: What is the best way to meet our customer needs at a conceptual design level?
This is where innovation occurs. Usually, teams will discover that there are conflicts between customer needs and the company’s ability to meet those needs, conflicts between different design parameters, or conflicts between cost and performance. Often, trade-offs or compromises are made — though finding solutions to resolve these conflicts rather than compromise leads to more innovative products and services.
The tool used here is a component of QFD called “functional analysis.” Every service or product has certain things that it must do in order to perform acceptably from a customer’s viewpoint. Functional analysis breaks the service down into its key tasks. For example, rather than brainstorm concepts for an imaging service at a system level, the team would identify the functions (prioritize paper items, scan paper to create images, validate scans, forward images) and then brainstorm solutions for each of the functions (e.g., prioritize paper images — on-us listing, transit listing, equipment, software).
The goal is to prioritize the functions that have the strongest link to the Voice of the Customer, because those will be the foundation of any new design. You also can use the House of Quality to flow down the high-level design targets into smaller design elements.
After generating many interesting concepts, the team will need to narrow the field to the one or two most promising alternatives. (Notice the key assumption that the team has multiple concepts to consider!) You want to be sure that all feasible alternatives have been explored before deciding on a single concept. World-class innovations don’t come from a one-horse race. If the investigation of concept ideas only brought about one or two options, it is strongly recommended you develop a plan to create additional options before moving forward.
Develop
The Develop phase is where the detailed design occurs. In addition to designing the core service, attention should be paid to developing information technology elements of the project, establishing a plan for human resources, developing sites/facilities, and purchasing materials that will be required for implementation.
As the solution is developed, the team should take advantage of lean tools to maximize speed and minimize waste in the new process. In particular, Value-Added Analysis is beneficial to many projects. The process map of the to-be service is reviewed and each step analyzed and assigned to one of three categories:
◈ Customer Value Add — Tasks that the customer would be willing to pay for (i.e., adds value to the service, provides competitive advantage).
◈ Business Non-Value Add — Tasks required by business necessity (i.e., financial reporting) but that do not provide value to customers.
◈ Non-Value Add — All other tasks (i.e., approvals, all rework loops, waiting).
Implement
The objective of the Implement phase is to successfully conduct a pilot, transfer ownership of the project to the new process owner, and implement the new service. One of the key benefits of the Six Sigma methodology is the rigor around implementation and process control. Everyone has worked on a project that started off well only to watch it fall apart when the solution was implemented. With solid up-front work in the Implement phase, these issues can be avoided.
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