Applying Lean Six Sigma to Risk and Reporting

ANDY CROWE ● BILL YATES ● NICK WALKER NICK WALKER:  Welcome to Manage This, the podcast by project managers for project managers.  We get together every two weeks to talk about what matters to you as a professional project manager, whether it’s certification issues or creating and implementing successful projects.  We draw on the expertise of experts in the field and share their challenges and successes. I’m your host, Nick Walker, and beside me are the two in-house experts who guide our discussion, Andy Crowe and Bill Yates.  And Andy, you know, folks go online, they look at your bio, and they see all these letters behind your name.  And probably most of our listeners are familiar with most of those letters, those acronyms.  But there’s one, a Black Belt Six Sigma.  Should I be dodging blows here?  What is the Black Belt Six Sigma? ANDY CROWE:  It’s funny, Nick.  It’s a Six Sigma Black Belt.  What it is, Six Sigma has different levels of credentialing.  And there’s Yellow Belt, Green Belt, Black Belt, Master Black Belt, and Master Black Belt Trainer.  So I’m somewhere in the middle there in terms of that. What it is, it’s funny, there’s a lot of project management certifications out there.  We’ve talked about the PMP before.  We’ve talked about the PMI-ACP.  And we’ve probably touched on the Program Management Professional and Portfolio, the PgMP and the PfMP, and certainly the Certified Associate in Project Management, the CAPM.  A lot of alphabet soup there. And it’s really funny because, even when I go do project management conferences, and people introduce me as a Six Sigma Black Belt, a lot of people in the room don’t know what that is.  They think it’s some martial art.  It’s not.  It’s related to quality.  And it’s a quality certification.  And it’s really the topic of today’s podcast is about Six Sigma, about Lean Six Sigma – which is something a little bit different – and how those work and how they can benefit. NICK WALKER:  Is this a certification that’s been around a long time?  Or is this something that’s fairly new? ANDY CROWE:  It’s been around a while.  Now, what happened with that, when it first came out, there wasn’t a lot of structure as to who owned the certification.  It was one of those things that a lot of different organizations were able to give that.  And then that’s changed.  We’ll talk about that later in the podcast a little bit, about how that’s evolved, who’s vying for kind of control of that certification, what that looks like, as well. BILL YATES:  There are a couple of key components here that I want Andy to explain to the audience, Nick, because if there’s a Lean component, then there’s a Six Sigma component.  And I like where we’re headed with some background here, where this thing, where this movement began because it is all related to quality.  And so Andy, what about Lean?  When did that really come into play? ANDY CROWE:  Lean is an amazing philosophy by itself.  So it’s a series of practices.  And what Lean is trying to do is get rid of waste.  Now, this is useful in a bunch of organizations.  But it’s really, really useful in manufacturing projects.  So if you have a project that has manufacturing, this is where it comes in.  Lean really came into vogue at Toyota.  And so it started after World War II.  It really picked up steam in the ‘70s and ‘80s.  And this is when Toyota started surpassing, and Honda and some of these organizations started really surpassing U.S. manufacturing. And I’ve lived through it.  I watched it firsthand, that it absolutely did.  You know, there were times when, if you got 80,000 miles out of some U.S. cars, that was good.  And then, you know, some of the Toyotas were getting 200,000 miles.  And it was just astonishing what they were able to do.  Well, they got there through a number of things.  Lean was part of it.  So Lean really talks about – the acronym we use in Lean is TIMWOOD, T-I-M-W-O-O-D.  And what it is, is it’s where you look for, where the Toyota production system started looking for waste.  So they started looking at waste in transportation. Now, one of the famous examples of that is Walmart.  Walmart started looking at their transportation.  They said we’re delivering these goods, okay, we’re sending trucks out all over the place, full of goods, and we’re bringing them back empty.  And so they started saying, how can we fix that?  That is a big problem right there is waste.  Waste in transportation.  So they looked at ways that they could contract, as a transportation provider, they could send a truck out full and then maybe load it with another company’s production goods and bring it back full.  It was kind of fascinating how they dealt with that.  So that’s the “T” is Transportation. Inventory.  You have too much inventory?  That’s a problem.  And so the Japanese philosophy everybody’s familiar with is just-in-time management, JIT.  JIT says we’re going to reduce inventory levels down to almost zero.  And the goal behind that is twofold.  Number one, you don’t have your money tied up in inventory.  But number two, and this is a really powerful secondary effect, and in fact it’s probably the most powerful secondary effect of low inventory, just in time, is that the scarcity increases people’s attention and value on these parts. So that now you don’t have a whole stack of this part lying around that you can be careless with.  Each one is kind of treated much more precious, in a way, and they’re more careful. BILL YATES:  There’s that awareness.  Yeah, it’s funny.  I think about, like when I’m traveling, if I’ve got plenty of time to make it to the gate before I catch a flight, then I’m not very worried about it.  I may stop and do a little browsing and shop or do whatever.  There’s plenty of waste.  But if, man, if my time is sharp, if I’m looking at my watch going, okay, I’ve got to get to the gate now, so I’ve got to beeline, and nothing distracts me.  I stay really focused.  So I see how this applies. ANDY CROWE:  Bill, you and I have traveled a lot.  Have you ever missed a flight? BILL YATES:  No, I haven’t. ANDY CROWE:  I’ve missed one in my career.  One flight.  And you know what the stunning thing about it is I had more than enough time in this particular one.  Yeah.  I could go on.  We’ll spare the listeners for that.  But some people are probably cringing right now, feeling the pain.  So that’s the “I” in TIMWOOD. The “M” is motion.  And this is trying to reduce the amount of unnecessary motion in an action.  So you saw this.  This is what happened with the assembly lines.  This goes all the way back to Frederick Taylor at Ford, back in the early 1900s, timing people, coming up with more efficient movements, trying to reduce waste in motion. Then waiting.  Ideally, and this is really the, oh, what is the book, the goal?  The “Theory of Constraints” looks at this and tries to say, okay, we want to reduce waiting.  We want to make everything go smoothly so that there’s no wasted time in waiting.  My doctor could certainly benefit from that one.  Goodness. Overprocessing.  And so this is an interesting one.  You know, you want to get it right.  You want to get it just enough.  In project management we talk about gold plating.  And gold plating is adding over and above the documented scope.  And so overprocessing is a form of waste, doing more than is needed to a particular item.  Overproduction is the second “O.”  And overproduction is just making too many of something.  And then the “D” is a big one everybody will be familiar with is defects.  That causes rework, and that causes a lot of pain rippling through the system. So they look at Transportation, Inventory, Motion, Waiting, Overprocessing, Overproduction, and Defects.  And they try and reduce these forms of waste.  These are the enemies of Lean.  So what happens when you get there is that ideally you have a really lean, mean system that’s very efficient. NICK WALKER:  So that’s the Lean portion.  What about Six Sigma?  What does that even mean? ANDY CROWE:  All right.  So this is where we get into the weeds a little bit.  We won’t go too far into it.  But basically, when you look at quality, you can plot quality out on a – and it’s oftentimes in the form of a bell curve; okay?  It’s always going to form some kind of a distribution.  So we’ll call it a bell curve, even though it might be a little more erratic than that in some cases. So now you’ve got a bell curve, you can look at what we call a standard deviation.  Now, standard deviation tells us, a high standard deviation means there’s a lot of diversity in data.  And you may value diversity in your workplace and in a lot of other areas, but you don’t value diversity in manufacturing outcomes.  You want them to be very similar.  There’s a wonderful movie called “Sergeant York,” back from – you’ve seen it? NICK WALKER:  You’re dating us. ANDY CROWE:  I know, I know.  And you need to watch it regardless.  It’s about the most decorated World War II hero, Alvin York.  And he was the most decorated World War II hero.  No, no, wait, it’s World War I.  I was getting that confused with Audie Murphy.  And he was an amazing sharpshooter.  And so when you look at that movie, and you see – they were testing him early on in boot camp, and they thought he had missed the target because his groupings were so tight; okay?  So that would be a really low standard deviation.  His shots didn’t deviate from each other.  Really high standard deviation would be like most of us would do, and they would be kind of scattered around all over the place. The idea behind standard deviations, each one of those is called a “sigma.”  So here’s what Six Sigma is.  Six Sigma says, okay, all of your results within six standard deviations of the mean fall into quality.  So that’s good when you get to that level.  What it really means is that there’s only 3.4 defects per million items produced.  That’s powerful.