The Anderson Packaging, Inc. Lean Six Sigma Journey by DzwRIh


									   Going Beyond Lean Six Sigma:
Focusing on Sales, Customer Service,
   Finance and Human Resources

   Charles Aubrey, VP Quality and Performance

Anderson Packaging, Customer Base

                    Lean Six Sigma
What is Lean Six Sigma?
Disciplined team based process to identify improvement opportunities to
significantly improve performance and eliminate waste resulting in increased
processes capability to meet and exceed customer, management and owner
requirements and expectations.

How is Lean Six Sigma Measured?
Sigma Level Yield       DPMO            Opportunity Cost    Sales (@ $200MM)
    1        30.9      691,462          33% of sales               $66MM
    2        69.1      308,538          25% of sales               $ 50MM
    3        93.3       66,807          18% of sales               $ 36MM
    4        99.39       6,210          13% of sales               $ 26MM
    5        99.997        233           7% of sales               $ 14MM
    6        99.9997       3.4           1% of sales               $ 2MM

   Lean Six Sigma                                                              3
            LSS Provides Organizational Direction
           Define                Measure               Analyze              Improve               Control
         Define the purpose    Understand the        Identify and confirm Pilot solutions,        Maintain the
         And scope. Collect    Current process       Root Causes w/Data evaluate resulting data   Gain, standardize
         Background info.      •Data Collection/     •Hypothesis tests     •Pugh Matrix           •Standardization
         •Charter              Sampling Plan         •C&E Diagrams         •FMEA                  •Training
         •SIPOC                •Run Time/Control     •Run/Control Charts •New Paretos             •Control Plans
         •VOC                  Charts                •Histograms           •New Process Sigma     •Run/Control Charts
6σ       •Affinity Diagram     •Frequency Plots      •Stratified Frequency •Ideal Flowcharts      •Process Audits
         •CTQ Defined          •Scatter Plots         Plots                •Pilot Studies         •Communication
         •Oper. Definitions    •Test for Normality   •Regression           •Commitment Scale       Plans
         •Pareto               •Transformations      •DOE                  •Tree Diagrams         •Ownership
         •Communication        •Process Sigma        •Validated Root       •Gantt Charts            transition
          Plan                 •Flowcharts            Cause List           •Planning Grids        •Multiply
         •Gantt Chart          •Histograms                                 •Affinity Diagram       Solutions

         •Value Stream Mapping      •Autonomation               •Operational Analysis     • Management
         •Takt Time                 •JIT                        •Six Big Losses             Deployment System
         •Eight Wastes              •Visual Stds./Controls      •OEE                      •Vendor Scorecards
Lean     •Visual Factory            •Kanban                     •SMED                     •Real-time Dashboards
         •Error-Proofing            •Standardization            •TPM                      •Simple Graphical
         •Workload Balancing        •5S                         •One-Piece Flow            Analysis
         •Change Control            •Future State               •Kaizen                   •Go to Gemba

       Lean Six Sigma                                                                                                   4
           Anderson Packaging’s Lean Six Sigma Journey
                                                                  2012      Baldrige Performance
                                                              2011       Business Intelligence
                                                                         Design for Six Sigma
                                                        Jan 2010
                                                                     Balanced Score Card
                                                                     Strategic Management System
                                                     Jan 2009      Value Streams
                                                                   Strategic Planning
                                                Jan 2008     Culture Survey/Customer Survey
                                             Jul 2007      Lean Supervisor Cert
                                          Feb 2007   Yellow Belt for all Employees
  Intensity,                         Dec 2006     Kaizen
  Resources and                               Black Belt Training
                                  Jun 2006
                              Apr 2006     Lean Mechanic Certification
                         Mar 2006      Benchmarking
                       Mar 2006      Process Management
                  Jan 2005        Green Belt Training
              Dec 2004        Initial Yellow Belt Training for Leadership
            Nov 2004    Steering Committee Formation and Training
   Continuous Improvement Culture

1967                   2004                                                                   2012
   Lean Six Sigma
Participation in the API LSS Program by Skill Level

Black Belts      Very complex
                 Improvement Projects
                                            (160 hrs training + project)

Green Belts      Complex Improvement                   177
                                            (40 hrs training + project)

Certified Lean   Set-up/mechanical                       34
                 trouble-shooting, waste
Mechanics        removal
                                           (24 hrs. training + skill demo)

Kaizen Team      Identify and eliminate                 159
                 waste in processes
Members                                      (3 days training + event)

Yellow Belts     Remove waste in daily
                                           (3 hrs. training + skill demo)

Lean Supv.       Shop Floor Lean
                 coaching/mentoring –
Certification    emphasis in real time     (32 hrs. training + skill demo)

  Lean Six Sigma                                                             6
        105                        Projects by Type
                                           2006   Closed
         65                                2007   Closed
                                           2008   Closed
# Projects

         55                                2009   Closed
                                           2010   Closed
                GB    BB       K      PM       BM      SMED   VS   Strategic   Other
                                        Participant Skill

              Lean Six Sigma
Anderson Packaging’s Lean Six Sigma Journey

                                         Project, Functional Focus
                                                                                                 Project Business
                                        44                                                            Focus
  Percent of Projects

                                                                  8         8    8
                                                                                     3       1


















 Lean Six Sigma                                                                                             8
     Anderson Packaging’s Lean Six Sigma Journey

                                                             API LSS Project Impact Areas
Project Benefits Profile
                                                 80           66

Note: In many cases

                           Percent of Projects
Projects have multiple
focus or impact.                                 40
Function/Impact totals                                                     24
will exceed 100%.                                                                         14
                                                 20                                                     10

                                                      Cost/Capacty   Custom er    Regulatory        Em p       Com m unity
                                                                      Service     Com pliance   Satisfaction

                                                                                 Impact Area

         Lean Six Sigma                                                                                                      9
              Project Summary—Sales

Issue: Sales Order Entry

Involvement: Project Management, Maintenance, Planning, Materials
Management, Accounting

Benefits: Created scorecard to track improvements, created standard form for
conversion and changeover, produced a report for project managers to
manage open sales orders. A total cost savings of $71,000.

     Lean Six Sigma                                                      10
 Project Summary—Customer Service
Issue: Documentation Accuracy (First Time Right)

Involvement: Production, HR, Quality Control Documentation, QC Supervision

Benefits: Enhanced regulatory compliance, 3-facility involvement
(standardization, innovation), training enhancements, improved
communication, hiring and orientation practices. Resulting in increased
customer satisfaction and a total cost savings of $73,000.

     Lean Six Sigma                                                       11
 Project Summary—Customer Service

Issue: Improve the New Product Launch Timeline Effectiveness and Timeliness

Involvement: Sales, Project Management, Planning,

Benefits: Eliminated low value items from the launch timeline and
streamlined the process as well as improved our relationships with vendors.

     Lean Six Sigma                                                       12
 Project Summary—Customer Service
Issue: Customer Project Management

Involvement: Project Management

Benefits: Mapped the process, identified best practices, eliminated waste
and simplified. Developed a training manual and course with details.
Standardized the common Planning processes with faster, more consistent
and better training.

     Lean Six Sigma                                                         13
       Project Summary—Purchasing
Issue: Process Map – Supply Ordering

Involvement: Purchasing, Materials Management, Planning

Benefits: Mapped the Supply Ordering process and eliminated non-value
added steps and waste. A total cost savings of $33,000.

    Lean Six Sigma                                                      14
          Project Summary—Accounting
Issue: Payroll Error Reduction

Involvement: Accounting, Payroll, Production, Quality, Validations

Benefits: Reduced input/output errors of the payroll process, added features to
the current scan units, conducted training, increased employee satisfaction, 338
hours per year saved in rework and a total cost savings of $11,000.

       Lean Six Sigma                                                       15
         Project Summary—Community

Issue: Increase Social Responsibility

Involvement: Human Resources, Training, Project Management, Warehouse

Benefits: Increased overall API social/community awareness, increased
volunteer participation, implemented company wide volunteer system,
established and coordinated 9 volunteer events supported by 283 volunteers
and 849 hours worked

       Lean Six Sigma                                                        16
             Project Summary—Green
Issue: Reduce Utilization and Waste of Utility Services and Implement Cost
Reducing Green Applications

Involvement: Production, Lean Six Sigma, Facilities, Maintenance, Product &
Process Systems Engineering

Benefits: Created shop floor shutdown program on Friday nights, upgraded
lighting, assessed energy usage at the facility and reduced utility costs by
25%. A total cost savings of $129,000.

     Lean Six Sigma                                                            17
             Project Summary—Green
Issue: Increase Recycling Opportunities

Involvement: Human Resources, Training, Project Management, Warehouse,
Lean Six Sigma

Benefits: Increased opportunities for material recycling, created office
recycling program and improved trash vendors. A total cost savings of $4,000.

     Lean Six Sigma                                                       18
            Project Summary—Green
Issue: Energy Conservation/Green Efforts

Involvement: Safety, Production, Product & Process Systems Engineering,
Validations, Lab, Maintenance

Benefits: Reduced energy consumption by idle process equipment,
reduced losses via chillers and compressors, install “green” warehouse and
office, lighting/occupancy sensors, explore recycling and available
investment funding tax rebates for green projects.

     Lean Six Sigma                                                          19
             Project Summary—Sales
Issue: Improve Quote Alignment

Involvement: Product & Process Systems Engineering, Sales, Planning, Project

Benefits: Improved the accuracy of quotes, captured additional business,
changed quote sheet and quote process.

     Lean Six Sigma                                                        20
              Project Summary—Sales
Issue: Quote Process/Specification Development

Involvement: Project Management, Sales, IT, Accounting, Purchasing

Benefits: Trained personnel on Uhlmanns, cross trained purchasing personnel,
reviewed the RFQ forms, brainstormed with vendors and created the MPR
tracking report. A total cost savings of $65,000.

     Lean Six Sigma                                                       21
 Project Summary—Customer Service
Issue: Quality Control Sampling Costs

Involvement: Quality (at every level of the function)

Benefits: Process analysis system developed, identify/eliminate
redundancies (IP/FG), accelerate defect identification/resolution at lowest
reasonable cost, reduced destructive testing, reduced labor reqs.,
sampling maps and document simplification, customer involvement. A total cost
savings of $582,000.

     Lean Six Sigma                                                     22
         Project Summary—Accounting
Issue: Additional Billing

Involvement: Accounting, Purchasing, Planning, Sales, Materials Management

Benefits: Created invoice tracking worksheet, PP&D management via JDE WP,
WP to create Additional Bills. A total cost savings of $70,000.

      Lean Six Sigma                                                    23
            Project Summary—Finance
Issue: Develop Business Continuity Plan

Involvement: Facilities, Safety & Security, Project Management, Production, IT,
Purchasing, Maintenance

Benefits: Conducted a comprehensive analysis of risks for business continuity at
API, developed Electrical Continuity Plan, implemented fire safety training,
created HELP line, work status magnet, traceable 911, SOP’s and departmental

      Lean Six Sigma                                                        24
                Project Summary—IT
Issue: Benchmarking – Computer Software Validation

Involvement: Quality, Lean Six Sigma, Validations, IT

Benefits: Identified best practices in computer software validation efforts,
added Validation Report to CSV documentation, improved compliance and
improved understanding of our processes.

    Lean Six Sigma                                                         25
Project Summary—Human Resources

Issue: Operator, Packer Turnover Reduction

Involvement: Human Resources, Lean Six Sigma, Training, Production,

Benefits: Reduced Operator and Packer turnover by 50%, with a total cost
savings of $418,000.

   Lean Six Sigma                                                          26
  Project Summary—Human Resources
Issue: Improve Quality and Lead Time Requisition Approval to New Hire Start

Involvement: Human Resources, Lean Six Sigma

Benefits: Reduced the duration of the hiring process for positions and
improved the quality of the hiring process, enhanced the process for tracking
and hiring applicants. A total cost savings of $28,000.

      Lean Six Sigma                                                       27
        Project Summary—Laboratory
Issue: Reduce Laboratory Costs and Cycle Time

Involvement: Quality, Laboratory, Validations, Accounting, Project

Benefits: Reduced the cost of laboratory services and the lead times required.
Created a checklist for Project Managers, revised laboratory submittal form
and improved communication between departments. A total cost savings of

     Lean Six Sigma                                                       28
Office Kaizen Events, Processes and Profiles
                                         # Ideas
                                       Generated /
       Event #           Kaizen Team    Approved                     Highlights
                                                     A major information system installation
                                                     effort went smoothly and on time for the
Information Technology       12            15        first time.
                                                     An increase in output by almost 50% and
                                                     reduction of cycle time by almost 50% =
 Administrative Office        9            25        increased capacity and delayed hiring.

                                                     Reduced headcount by reducing non-value
                                                     activities and increased the actually
  Customer Service            8            31        customer contact time available.
                                                     Improved same day customer response time
                                                     from 74% to 90%. Increase customer
         Sales                5            28        satisfaction by 30%.
                                                     Order accuracy from 95.3% to 99.8% and
   Order Processing           6            32        improved order processing time by 30%.
                                                     Process time to fulfill orders was reduced by
 Warehouse/ Shipping          8            20        15%

                                                     Drawing approvals in Engineering were
                                                     reduced from 8 to 2 and in production from 3
     Engineering              5            35        to 1 with an annual savings of $315,000/yr.

        Lean Six Sigma                                                                          29
                                        Customer Survey
                         CATEGORY                               Customer A Customer B Customer C Customer D Customer E
   Do we communicate in a professional, friendly, and courteous
1 manner?                                                                5          5          4          5          5
   How would you rate our availability or ease of reaching us
2 when needed?                                                           4          4          4          5          5
3 How well do we communicate status, delays, etc?                        5          5          3          5          4
4 How well do we answer your questions?                                  4          4          2          4          4
   How would you rate our customer service relative to our
5 competition?                                                           5          5          4          5          4
   How would you rate the timeliness of our documentation
1 submissions?                                                           5          5          3          5          5
2 How would you rate our process knowledge?                              4          5          3          4          4
   How would you rate the clarity (easy to understand) of the
3 documentation that we provide?                                         4          4          1          4          4
   How would you rate the Quality of our documentation relative
4 to our competition?                                                    4          5          2          4          4
1 Overall how would you rate Anderson Packaging?                         3          5          2          5          4
   How would you rate Anderson's performance relative to our
2 competition?                                                           3          5          2          5          4
   How would you rate Anderson's performance relative to your
3 best supplier?                                                         4          4          1          5          4

               Lean Six Sigma                                                                                   30
                      Corporate Culture Survey

                            Average Net Agreement Percentage by Core Values Category

 Manage with Information & Metrics                                                               81.0%

              Empower Employees                                                                 78.9%

                        Teamwork                                                        72.6%

        Respect & Ethical Behavior                                                              77.8%

                Improve & Innovate                                                                 83.0%

Coach, Mentor, & Make a Difference                                                65.4%

   Surpass Customer Expectations                                                                              92.2%

                                     0%   10%   20%   30%   40%     50%    60%    70%      80%          90%     100%

              Lean Six Sigma                                                                                   31
                Areas for Improvement

• “There is excellent communication up and down in this company”

• “Employees are rewarded for improving work processes”

• “Personal career growth of employees is important”

        Lean Six Sigma                                        32
         Anderson Packaging’s LSS Project Results
                    Actual 2006          Actual 2007         Actual 2008         Actual 2009          Actual 2010

Hard Savings       $1.28MM             $3.83MM              $3.62MM             $2.25MM              $1.6MM

Avoidance          $1.50MM              $468K               $3.48MM              $566k               $1.5MM
                                  14                   38                  51                  205                  175

           Total   $2.77MM             $3.86MM              $7.10MM             $2.82MM              $3.13MM
                              * Includes cost saving passed on to customers

          Lean Six Sigma                                                                                    33
Anderson Packaging


      Lean Six Sigma   34
       LSS Summary of Benefits

      •   Reduce Operating Costs
      •   Increase Capacity and Agility
      •   Increase Profitability
      •   Enhance Compliance
      •   Increase Employee Empowerment
      •   Increase Employee Satisfaction
      •   Greater Organizational Creativity
      •   Improve Customer Satisfaction
      •   Improve Customer Service

Lean Six Sigma                                35
              Best Practices of
           Continuous Improvement
• Senior management involvement
• Start “office” projects and Kaizen events at the same time as
• Profit Sharing for all employees
• 41 hours/year/employee of training (including office)
• Team training and facilitation (hard and soft skills)
• Performance Appraisal goals and rewards
• Employee Satisfaction/Culture Surveys
• Kaizen - train and facilitate ideas from the front line (including office)
• Team and Individual Reward and Recognition Programs
• Continuous Improvement Newsletters and posters
• Succession planning and employee development
• Employee Satisfaction: 78.7 % “very satisfied”
• Customer Satisfaction: 81.7% “very satisfied”
• Sales Compound Annual Growth Rate 13%
• EBIT Compound Annual Growth Rate 28%

   Lean Six Sigma                                                          36
   Going Beyond Lean Six Sigma:
Focusing on Sales, Customer Service,
   Finance and Human Resources

   Charles Aubrey, VP Quality and Performance


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