That was about approximately 10 years ago, and back then Lilly had some pretty big goals that they wanted to accomplish with Six Sigma.

Eli Lilly’s Goals

• Savings goal of 2-3 percent of annual revenue
• 1 percent of employee population to be Black Belts in Six Sigma
• 60 projects completed out of several hundred

Today, Eli Lilly is among the top Fortune 500 in the pharmaceutical industry, and they are now leaders in teaching others how to implement Six Sigma for their company.

Lilly has Black Belt staff to lead and oversee external projects on a volunteer basis. Eli Lilly believes that implementing Six Sigma has benefited the company, their shareholders, and of course their customers, so much so that now they are passing the good word.

Lilly feels that by spreading the good word of Six Sigma processes that it will improve the pharmaceutical industry as a whole, and that will improve the health of their customers.

The Black Belts within Lilly also help non-profit organizations by educating them on Six Sigma and how it can help their company by improving their processes and the way tasks are implemented.  As another way to spread the good word, they also offer to become partners to offer their customers improved healthcare.

Eli Lilly continues to improve continuously on their existing processes and operations. This proves the point that they are lifers in all that is Six Sigma.

Interested in learning more how your company or organization can benefit from Six Sigma methodologies? For more information on our Six Sigma courses and services please visit 6sigma.com.

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Cost of Poor Quality (COPQ): A 6 Sigma Tool

Also known as cost of waste, COPQ measures the costs incurred by an organization due to defects and poor quality in an existing process. It is not strictly a part of a Lean Six Sigma project itself, but rather is a Six Sigma tool commonly used to evaluate potential projects and prioritize the order in which they will be conducted. COPQ is a very effective way of identifying non-value adding activities associated with a process, making it easier to then eliminate those activities to generate cost savings.

COPQ analysis is not an exact science because accurate measurements are often not available prior to initiating a Lean 6 Sigma project. Skilled practitioners, however, can use COPQ analysis effectively and thoroughly enough to produce estimated measurements that are accurate enough for effective prioritization of Six Sigma projects.

The Purpose of COPQ Analysis

COPQ is an estimation tool, not an exact measurement tool. It is used to help identify Lean Six Sigma projects, determine their likely financial viability, and set priorities among potential projects. It can help an organization identify those projects where the Six Sigma effort will produce the greatest return on investment.

The primary purpose of COPQ is to determine the financial costs of waste/poor quality in an existing process. These costs are generally referred to as failure costs, and they fall into four primary categories:

• Internal Failure Costs
• External Failure Costs
• Appraisal Costs
• Prevention Costs

While not all failure costs can be captured with 100% accuracy, it is usually possible to capture enough of them with enough accuracy to have a good level of confidence in the results.

Let’s look at each of these categories in more detail.

Lean 6 Sigma Tool: Internal Failure Costs

This category contains costs incurred by an organization due to defects that are found before the product or service reaches the customer. Examples of internal failure costs are things such as:

• Scrap: Material generated from not maximizing the use of raw materials or from products/services that are sent to scrap because they are not fit to go out to the customer.

• Rework: Activities that are required to correct defects in products and services, or to produce new products and services to replace those that are sent to scrap.

• Failure Analysis: Time and effort needed to analyze defective products or services, especially when defect levels are high and a great deal of analysis is required.
• Re-Inspection and Re-Testing: Costs associated with repeat inspections or tests necessary to ensure defects have been properly corrected.

Lean Six Sigma Tool: External Failure Costs

This six sigma tool category contains costs incurred by an organization due to defects that are found after the product or service reaches the customer. Examples of external failure costs are things such as:

• Warranty Charges: Costs to the company for honoring the warranty on defective products and services; may include everything from shipping to repair to outright replacement of the product or service.

• Adjustments for Complaints: Reductions in retail charges or addition of added value items/service as a way to resolve customer complaints.

• Returns: Costs associated with refunding money on returned items, re-furbishing and/or re-stocking of returned items, and labor costs associated with the returns process.

• Allowances: Typically given to distributors or other parts of the distribution chain as credits against defective products or services

Lean 6 Sigma Tool: Appraisal Costs

This category contains costs incurred by an organization to inspect and measure a product’s or service’s adherence to quality specifications and requirements. Examples of appraisal costs are things such as:

• Inspection: All regular activities associated with inspecting products or services, whether during development, manufacturing, delivery, etc.

• Testing: All regular activities associated with putting products and services through testing procedures to ensure quality levels.

• Quality Audits: Periodic but generally random audits conducted to assess all or some quality aspects of a product or service.

Six Sigma Tool: Prevention Costs

This Lean Six sigma tool category contains costs incurred by an organization to conduct all forms of defect prevention for a product or service. Examples of prevention costs are things such as:

• Design Reviews: Assessment and evaluation of product and service designs to look for defects or problems prior to production.

• Policies and Procedures: Development, enforcement and review of the rules and standards that affect the incidence of defects; may include quality of materials, labor requirements, etc.
• Training and Education: Those activities related to training and education of employees with the goal of increasing skill levels and decreasing the likelihood of defects.

Lean 6 Sigma Tool: The Seven Deadly Wastes

Another approach to COPQ analysis is to include evaluation of the so-called Seven Deadly Wastes. These are areas where waste is most common and organizations have a great deal of potential for improvement.

• Overproduction: Making more than is necessary or called for in the schedule of production.

• Waiting: Down time due to lack of work balance, leaving operators and others standing or waiting to perform their tasks.

• Transportation: Moving materials and components during production, such as from one process to another, stacking, picking up, and putting down.

• Processing: Preparation, protection and packing of components for transport to another area or part of the production process.

• Inventory: Too much raw material on hand too far ahead of production needs

• Motion: Range of movement required during process, such as steps to reach parts, distance between work stations, etc.
• Defects: Points at which material and/or labor are wasted, creating bottlenecks in the overall process.

Lean 6 Sigma Tool: Putting it All Together

When you take the sum of costs from the four categories of failure along with the costs from the Seven Deadly Wastes, you can produce a generally accurate estimation of the costs an organization incurs due to poor quality and waste. This lean six sigma tool estimate can then be used to determine appropriate lean Six Sigma projects and prioritize which projects will provide the maximum return on investment. A solid COPQ is critical, then, to lean Six Sigma planning and should be an integral part of every organizational Lean 6 Sigma initiative.

Learn more information about 6Sigma.com’s Lean Six Sigma training coursework, available as classroom, onsite, or Six Sigma training online options.

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The answer lies in a newer 6 Sigma methodology known as Design For Six Sigma (DFSS). The specific steps of DFSS can vary quite a bit, depending on the company, consultant or training group using it. In this article, we will help you better understand how DFSS differs from other methodologies, and discuss three of the most popular sets of steps to perform DFSS.

How is 6 Sigma DFSS Different?

DFSS is expressly intended for designing or re-designing a process from scratch. It is highly data-driven in its approach, but allows a slightly lower Sigma level (minimum 4.5) than DMAIC methodology. This lower level is acceptable since the end result is a new product or service launch.

The following table gives you an “at a glance” view of how lean 6 sigma processes DFSS and DMAIC compare to each other.

DFSS

• Used to design or re-design a process from scratch
• Phases/steps can vary widely, depending on the company, consultant, or training group
• Data-driven, analytical, and highly structured
• Goal Sigma level 4.5 or higher
• Several methodologies to choose from, based on the needs of the business or industry

DMAIC

• Used to fix and improve an existing process
• Phases/steps are well-defined and widely recognized
• Data-driven, analytical, and highly structured
• Goal Sigma level 6.0 or higher
• Single methodology with little or no variation

What Lean 6 Sigma Methodologies are Used in DFSS?

There are a number of DFSS lean 6 sigma methodologies in common use, the most popular of which are:

• DMADV – Define, Measure, Analyze, Design, Verify
• IDOV – Identify, Design, Optimize, Validate
• DCCDI – Define, Customer, Concept, Design, Implementation

Each of these methodologies may be altered or revised, usually depending on the DFSS practitioner and/or the industry in question. For the purposes of this article, however, we will focus on the three main versions listed above.

Lean 6 Sigma: DMADV

This methodology is quite popular among DFSS practitioners. It is generally considered one of the closest in concept and application to DMAIC, which is probably why it is so often used by those who are already comfortable with that traditional lean 6 sigma method.

The specific steps of DMADV are as follows:

• Define: In this first phase, the project goals are defined. Strong consideration is given to the needs of internal as well as external customers, with the boundaries of the yet-to-be designed process clearly outlined. It should be noted that these boundaries should be firm and well defined, but they may be adjusted later if necessary as the new process unfolds and becomes clearer.

• Measure: This phase is at the core of every 6 Sigma project, and the DMADV methodology is no exception. In some cases, gathering the necessary data will be a bit easier because the affected customers (internal and external) are not already vested in an established process and they are more willing to be open and honest about their real needs. In other cases, however, the necessary data is more difficult to gather, especially if the new process is one that will supplant another well established process.

• Analyze: In this phase, the project team carefully considers the data and various options for the new process, with the focus on determining which option(s) best meet customer needs. It is extremely important to remember that there are two sets of customers to consider – internal and external.

• Design: With information from the first three phases sell understood, the project team moves on to actually designing the process. The process must be written and described in specific detail, again paying attention to the needs of both internal and external customers.

• Verify: In this final phase, the newly designed lean 6 sigma process is tested thoroughly to ensure the actual performance meets the project goals and meets the needs of internal and external customers. Tests are performed in small, controlled experiments before a full-scale launch.

DMADV

Define

• project goals
• project boundaries
• needs of internal and external customers

Measure

• data driven
• internal and external sources

Analyze

• statistical analysis
• process options
• best fit for internal and external customer needs

Design

• design the process
• detailed information and specifics
• appropriate to customer needs

Verify

• test for performance
• test for customer needs
• controlled experiments prior to full scale launch 

Lean 6 Sigma: IDOV

This lean 6 sigma methodology has a strong following in the manufacturing industry. Its four phases may seem at first glance to be less comprehensive than the five phases of other methodologies, but when used properly that is not the case.

The specific steps of IDOV are as follows:

• Identify: In this first step, the project team must clearly identify the intended customer(s) for the new process. Detailed specifications are collected and used to determine the characteristics of the process that are critical to quality (CTQ).

• Design: This step uses the CTQs as key information for listing functional requirements for the process under development. The requirements are then used to create several potential processes, which are evaluated and narrowed down based on one or more selection processes.

• Optimize: This step is highly data driven, as is expected in any Six Sigma project. Statistical tools, modeling, simulations and controlled testing are employed to ensure the process design will achieve optimal performance.

• Validate: In this final step, the project team thoroughly validates the designed process, going back to the CTQs identified in the first step to ensure they will all be met.

IDOV

Identify

• intended customers
• specifications
• CTQs

Design

• use CTQs to determine functional requirements
• create process options
• evaluate options
• select best option

Optimize

• data-driven
• statistical analysis
• modeling and simulations
• maximize performance

Validate

• test for CTQs
• ensure compliance

Lean 6 Sigma: DCCDI

This methodology is growing in popularity across multiple industries. Despite the different letters in the acronym, many practitioners find DCCDI to be similar in practice to DMADV. There are enough difference between the two, however, for DCCDI to stand on its own as a distinct lean 6 Sigma methodology.

The specific steps of DCCDI are as follows:

• Define: This first step is where the goals of the DFSS project are identified and delineated clearly. This is important, as it lays the foundation for subsequent steps in the methodology.

• Customer: This step involves detailed analysis of customers and their specifications for the end product of the process to be designed. The analysis should include both internal and external customers.

• Concept: In this step, the first concepts of the new process are developed. There are generally several concepts to start with that are then narrowed down through detailed reviews and various selection processes.

• Design: This step takes the process design that emerges from the previous step and subjects it to rigorous testing to ensure it meets the needs of all customers. It must conform to required business specifications as well.

• Implementation: This final step takes the newly developed process and brings it to full scale use. The specific method(s) used in implementation will vary depending on the process, the industry and the organization.

DCCDI

Define

• project goals

Customer

• analyze specifications
• internal and external

Concept

• initial process designs
• detailed reviews
• selection process

Design

• test for performance
• test for customer specifications
• test for business specifications

Implementation

• scale up from test levels
• launch and implement

Learn more information about 6Sigma.com’s Lean Six Sigma training coursework, available as classroom, onsite, or online options.

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All types of businesses can benefit from Lean Six Sigma principles. The concept was originally developed under the leadership of Bob Galvin at Motorola. Since this time, major companies, such as General Electric, have utilized the principles of Six Sigma to improve their organizations.

Lean 6 Sigma and healthcare has many implications. The healthcare system is one industry that has benefited from the principles. With more efficient business practices, organizations can become more profitable. A closer examination of a case study will illuminate how companies have used Lean Six Sigma principles to improve business practices.

Lean 6 Sigma Case Study of a Not-For-Profit Major Medical Center

This hospital wanted to reduce the setup between surgical cases and changeover in the inpatient surgery department. Staff noticed that patient care could be improved by increasing the overall efficiency. An efficient operating room (O.R.) would improve patient care, O.R. capacity and physician satisfaction.

The Lean 6 Sigma leader conducted an analysis of the current practices within the O.R. The analysis revealed areas of waste. Waste is known as MUDA. MUDA limited the hospital’s ability to be responsive to the patient’s and physician’s needs. Spaghetti diagrams, process maps and observation forms are included in the single minute exchange of dies (SMED) process and can help to improve efficiency through analysis.

To alleviate some of the problems in the O.R., visual indicators or Color Coding was used to clarify the process. The new business practices and the standardization of changeover processes helped to improve processes. Employees were trained and teams were developed to accomplish this goal according to the guidelines.

With training, the O.R. staff reduced the time spent managing the turnover process by 46 percent. The organization also became 60 percent more efficient within the team. Efficiency is the goal of any company attempting to implement lean Six Sigma best practices. Lean 6 Sigma best practices can be used in a variety of settings. From software to healthcare, organizations can benefit from Lean 6 Sigma methodologies. This case study demonstrates how Lean 6 Sigma can be beneficial even in a clinical setting.

Lean 6 Sigma is Beneficial in Healthcare

Lean 6 Sigma best practices can be used in a variety of settings. Lean 6 Sigma was not traditionally used in healthcare, but the principles translate effectively into clinical settings. Healthcare professionals have more job satisfaction because patients are served more proficiently and the payment cycles are shorter. Lean 6 Sigma can be used in an assortment of situations successfully.

Learn more information about 6Sigma.com’s Lean Six Sigma training coursework, available as classroom, onsite, or online options.

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Now, other companies are attempting to apply the concepts in an effort to produce a quality product. Many companies are recognizing the efficacy of these business practices. Many companies have saved money and improved efficiency by implementing Lean 6 Sigma.

To fully implement Lean Six Sigma, training and certification are required. Training will produce advocates or leaders that can guide the project to success. Employees can reach Lean 6 Sigma black belt level, Lean 6 Sigma green belt level and Lean 6 Sigma yellow belt level. Each level has a deeper understanding of the process and can help to implement the best practices. Most successful projects are led by Six Sigma black belt level individuals. This case study will provide more insight into how Lean Six Sigma can help businesses.

Catalent Pharma Solutions and the Lean Six Sigma Certification Process

Catalent Pharma Solutions is a leader in developing solutions for the pharmaceutical, veterinary, biological and consumer health industries. The company was faced with high numbers of defects after producing millions of units. The process flow was slow because of the time required to analyze the samples. Lean 6 Sigma processes were applied to address these issues.

The company specifically required a solution for their proprietary product known as Zydis. The company needed new systems that would help to predict the process variation. The improvements are also supposed to help operators understand statistical analyses.

The project team devised a database to collect information. Control charts were also completed and entered automatically. The programming language used for automation was flexible and easy to replicate. The efficiency was improved by making these changes. After two weeks of implementing Lean 6 Sigma processes, the company prevented the loss of two batches of product, which was worth 50,000 pounds.

This case study demonstrates how companies can improve processes to meet Lean Six Sigma Certification standards, prevent loses and save money. Companies that save money can reallocate the funds towards research and design or improvement of other processes. Every company should try six sigma processes.

Lean Six Sigma Certification Projects Can Be Improved Significantly

Consider enrolling your employees in Lean Six Sigma Certification programs to help your employees design processes that increase productivity and save the company money. Every business should develop a sound strategy for improving business processes according to Lean 6 Sigma principles. These companies will significantly improve and offer customers quality product on a consistent basis.

Learn more information about 6Sigma.com’s Lean Six Sigma training coursework, available as classroom, onsite, or online options.

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