Lean Six Sigma Metrics

Quick reference

• 00:05 Hi, this is Ray Sheen.
• 00:07 There's one other fundamental element of Lean Six Sigma that I would like to
• 00:10 discuss, and that is the measurements that are used.
• 00:13 These are used throughout all phases of a Lean Six Sigma project.
• 00:17 I'll start with the Six Sigma measures.
• 00:21 Now there are lots of things that are measured and lots of data that is thrown
• 00:25 around with statistics, but these are the key measures for
• 00:28 understanding the variation in the process.
• 00:30 The first is the sigma.
• 00:33 Sigma is the Greek letter that is used to represent the standard deviation
• 00:36 of a set of data.
• 00:38 I know, I haven't discussed how to calculate it yet.
• 00:41 But we'll have the basic statistic session soon, and I'll address it then.
• 00:45 The key for us is that the value of sigma represents how much
• 00:48 variation is in the data.
• 00:49 The higher the sigma, the more variation.
• 00:53 We often refer to a process sigma as a number of sigma levels that will
• 00:57 fit within the allowable spec limits for a process input or output.
• 01:01 So a Six Sigma process is one where the span
• 01:04 from minus Six Sigma to plus Six Sigma will fit within the specification limits.
• 01:10 Another measure that is frequently used is DPU, which stands for Defects per Unit.
• 01:15 This is the average number of defects that are observed in a typical unit or
• 01:20 item that goes through the process.
• 01:22 This measurement implies that a unit or
• 01:24 item could have no defects, one defect, or many defects.
• 01:29 It gives us a sense of the ability of the process to produce defect-free results.
• 01:34 The third Six Sigma measure is DPMO, which means Defects per Million Opportunities.
• 01:41 This is the number of things that went wrong in a production run,
• 01:44 divided by the total number of things that could have gone wrong in that run.
• 01:49 And then normalizing that to a million opportunities.
• 01:53 DPMO let's us know how often something goes wrong, whereas DPU gives us a sense
• 01:57 of how likely we are to make the unit correctly on the first try.
• 02:02 Well, those were some of the Six Sigma measures.
• 02:04 Now let's look at the lean measurements.
• 02:06 The first one I wanna discuss is Cycle Time.
• 02:08 This is the average amount of time that it takes an item to go
• 02:12 all the way from the first step through the last step of the process.
• 02:16 It includes nights, weekends,
• 02:18 and any time that is spent waiting at a process step to be worked on.
• 02:22 It is the time that the customer experiences waiting for
• 02:25 something to get done.
• 02:26 The second is value-added Time.
• 02:29 We'll discuss this in more detail in a later module.
• 02:31 But the quick version is that this is the time spent on a process
• 02:35 when process resources are actually working on an item
• 02:38 to add characteristics that the customer values.
• 02:41 It's not uncommon for this to be a tiny fraction of the total process cycle time.
• 02:48 FTY stands for First Time Yield, and it represents the percentage of time that
• 02:52 a process step completes its work on an item, in a defect-free manner,
• 02:57 when that item is first presented to the process step.
• 03:01 An additional quality measurement that is frequently used is RTY, which stands for
• 03:05 Rolled Throughput Yield.
• 03:08 This is the probability that a given unit will go all the way through the process,
• 03:12 error-free, from step one to step last.
• 03:16 It is the product of multiplying together all the FTY values for every step.
• 03:23 These were the measurements developed in Six Sigma and Lean manufacturing to
• 03:27 measure variation and waste.
• 03:29 But Lean Six Sigma projects will also use many of the more commonly
• 03:32 found metrics in business management of projects.
• 03:35 One project will not use all of these metrics.
• 03:38 Rather, the stakeholders will decide which subset of these,
• 03:41 in the uniquely Lean Six Sigma measures, to use on a project.
• 03:45 Whatever metrics are selected by the stakeholders,
• 03:47 they are used throughout the project.
• 03:49 The high-level targets for the metrics are set in the Define stage.
• 03:53 Data is collected, and the metrics are measured in the Measure phase.
• 03:56 The values are analyzed in the Analyze phase to determine the areas for
• 04:00 improvement.
• 04:01 Changes are made, and measures are remeasured in the Improve phase, and
• 04:06 the control plan for monitoring them is put into place in the Control phase.
• 04:10 So I've listed here a number of categories for typical project metrics.
• 04:14 Most projects will only have a few of these categories, but depending upon
• 04:18 the business case behind your project, it could be almost any combination.
• 04:22 Let's quickly highlight just one or two in each category.
• 04:25 Performance normally measures process performance tied to quality or yield.
• 04:30 Quality is the actual quality, statistically, for the product or
• 04:33 item that is produced in the process.
• 04:35 So, defects, reworks, returns,
• 04:38 or in-process capability, are typical measures.
• 04:41 Schedule is usually the process cycle time, although some organizations
• 04:45 are pretty strict about project schedules and completing those on time, also.
• 04:50 Especially if capital equipment must be procured.
• 04:53 Cost is normally product cost, or
• 04:55 one of the categories of cost, such as scrap or rework.
• 04:58 Sometimes the project is focusing on things happening
• 05:01 right at the point of customer interface.
• 05:04 So customer interaction, such as retention or complaints, are measured.
• 05:08 Material is normally measured in financial terms, although, occasionally,
• 05:11 inventory turns are also measured.
• 05:14 When I say labor, I'm not talking about labor costs, but rather,
• 05:18 labor issues such as overtime or grievances.
• 05:21 All the previous measurements are a form of operating measurements.
• 05:26 But when I say operations, here, I'm talking about the management
• 05:29 of the operation, not necessarily the management of the process.
• 05:33 So items like safety and audit findings are often used in this category.
• 05:37 And then, finally, if the process includes an element of inter-facility logistics,
• 05:42 the logistics cost or cycle time is also measured.
• 05:47 There's an old saying that you get what you measure, and that's why it's important
• 05:51 for us to understand our Lean Six Sigma measurements.
• 05:55 Then we can take actions to deliver on them.

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