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The Road to Business Excellence:

The Integrated Quality System Way

Steve Hodlin
Vice President, Business Excellence
DST Output
sfhodlin@dstoutput.com

Copyright 2008 DST Output, LLC

Todays Roadmap
1. Inside Output: Making Quality Statements
2. The Management System
3. Begin With the End In Mind
4. The Standardization Tool
5. The Improvement Engine
6. Putting It All Together
7. The Dual Function of Work

Who is DST Output?

DST Output
A top outsourcer of print and electronic customer communications
Size and stability

Innovation and recognition

Comprehensive services

High volume experience and capabilities

TORONTO & OTTAWA


CANADA

BRISTOL
UNITED KINGDOM

EL DORADO HILLS, CA

KANSAS CITY, MO

HARTFORD, CT

DST Output: High volume


experience and capabilities
2.6 billion customer communications annually
Largest third-party First-Class mailer in U.S.
Worlds largest inkjet systems printer
Large scale facilities in key regions:
East, West, Central, Canada and UK
Nearly 3,000 North American associates
5

The Company We Keep

DST Output Business

Electronic

Postal

Print

Market expertise in Communications, Financial Services, Insurance,


Healthcare, Utilities and more
Output Options
Fold, Collate, Insert
Envelopes

A Common Platform

Address Express

File & Data Management

Move Update

Design and Development

Mail Tracking, Processing

Campaign Management
Online Reporting

Presentment

Monitoring

Payment

Disaster Recovery

Distribution

Distributed Printing

Requirements Gathering
Client Data Files

Customer Platform
Optimizing
client output
requirements

Manufacturing
Systems
Optimizing print
and electronic
costs

Output Delivery

Data Receipt &


Management

Data Prep

Campaign
Manager

Content
Composition

Document
Formatting

Output Media Router

Quality Validation
Job Release
Tracking
Reporting

DST
Customer
Portal

Marketing,
Ops, CSR

InFact, Mfg Preparation,


Execution & Control
eSolutions, Web Presentment,
Payment & Distribution

Mail Delivery, Website,


Secure e-mail, Portals

Consumers

eSolutions
CD/DVD
Presentment

CD / DVD

CSR,
Intermediaries
8

Operations Process
Manufacturing System Control

Customer
Data

File
Receipt
& Mgmt

Fan Fold
Stack Cart

Data Prep
Ancillary Products
Formatting

Statement Assembly
sheet
feeder

cutter

AFP
Metacode

merge

collate

fold

Pkg
feeder

Inse
Inserter
rt

Flats and
Special Handling
USPS

Inse
Inserter
rt

Outstacker to
Mail Conveyor

Automated Container Line

Tracking and Reporting


9

Overview of the Framework


Linked into a System

A helpful analogy...
10

Leadership
Triad

Bicycle System

STRATEGY

Results
Triad

WORKFORCE
FOCUS

LEADERSHIP

RESULTS

CUSTOMER &
MARKET FOCUS

PROCESS
MANAGEMENT

MEASUREMENT, ANALYSIS & KNOWLEDGE MGT.


11

The Baldrige Framework


The Baldrige Award enjoys very broad, positive recognition among
leaders in each of the Baldrige Award-eligible sectors. ... More than 70
percent of leaders surveyed among Fortune 1000 companies said they
are likely to use the Criteria for Performance Excellence.
Booz Allen Hamilton
Results:
Better employee relations
Higher productivity
Greater customer loyalty
Increased market share
Improved profitability

12

What is Business Excellence?


Business Excellence is a strategy that makes
quality an integral part of the way business is
designed
Goes beyond the quality of products and services,
and takes on a broader meaning of maximizing the
effectiveness of the business in meeting or
exceeding customer value expectations and using
continuous improvement to drive business results
It is the total quality of how the business operates
as a system.
13

Business Excellence Framework


A Systems Perspective
Organizational Profile:
Environment, Relationships, and Challenges

2
Strategic
Planning

5
Workforce
Focus
7
Results

1
Leadership

3
Customer
Focus

6
Process
Management

4
Measurement, Analysis, and Knowledge
Management
14

BEGIN WITH THE END IN MIND

15

Key Excellence Indicators


Leadership
Strategic Planning
Customer Focus
Measurement, Analysis, and Knowledge Management
Workforce Focus
Process Management
Results

16

Key Excellence Indicators:


Leadership
Communication of and role model for the
organizations values
Legal and ethical behavior
Focus on learning at all levels of the organization
Good citizenship

17

Traditional Thinking that


Drives Complexity
Blanket solutions
Managers believe
they know all

Focused on the
final result, not
on the means

Resultoriented

Knowers

Fragmented
Thinking

x Fragmented actions
x Lack of organization
wide strategy
x Failure is not
allowed
x Employees feel
the need to justify
their actions

Defensive

Command
& Control
Metrics and status reports
used as the primary
management tool

22
18

Lean Thinking Drives Continuous


Improvement
Lets identify the
problem and solve it together
Managers are learners
and partners

Process
Oriented

Learner

Create an environment
where it is OK to fail and

Focused on the
means to achieve
the results

Engaging

Systems
Thinking

Leader as
a teacher

Process and people


are aligned to
achieve organizational
goals

experimentation is
encouraged

x Go See
x Mentor people to
develop problem solvers
19
19

Begin with the End in Mind


Strategy is the path for attaining the vision
20

Key Excellence Indicators: Strategic


Planning
Balance of short- and long-term views
Aggressive goal setting
Strong work system alignment with strategy
Systematic approach to addressing all sources of
risk

Failing to Plan is Planning to Fail

21

The Plan framework


Vision: We are the premier
provider of statement and
billing output solutions
Mission: Make every customer
reference-able

22

Guiding Principles

Customer-centric
Integrity
Open and honest communication
A sense of urgency
Respect for the individual
Accountability
Commitment to improve and
innovate
Foster health, safety and respect
for the environment

23

Our Strategic Goals


Grow revenue and profitability
Improve customer and alliance
satisfaction
Achieve standardized infrastructure
and tools across centers
Continue operational excellence
Institutionalize continuous
improvement
Develop high-performance culture
Institutionalize continuous
improvement

24

Strategic Planning Category


x
x

Lower Costs and improve efficiencies


Improve
$X profit
commingling
$Y InFact
profitability
revenue
$Z legacy
revenue
Sunset legacy
applications and
Project Plan
continue to
Milestones
implement
&
standardized
Audit non processes across
conformance to
Operations
MPTQM
internal &
external audits

x Profit
y InFact
z Legacy

x
x
x
x
x

Met or Not

x
x

Optimize real estate


utilization
Annualized
savings $500K

124% YTD

x
x

Continue
institutionalizing
continuous
improvement
Restructure ELDP
(Executive
Leadership
Development
Program)

NGT 1 ppm
incidents

.72

x
x
x
x
x

Project Plan
Milestones

Q4 2009

x
x
x
x

()
Project Plan
Milestones

Q1 2009
(measures
through 09)

x
x

Profit. .
InFact Revenue.
Legacy Revenue.

MPTQM internal audits meet requirements East


USPS audit scheduled for July passed.
MPTQM internal audits meet requirements West
USPS audit scheduled for August
MPTQM audits meet requirements Central USPS
audit scheduled for Nov.
17 of the top 20 TA2000 clients have migrated,
remaining 3 planned; 50 additional client applications
identified and prioritized. MPTQM internal audits
meet requirements.
Hill top cafe building has been closed and lease was
terminated as of .
YTD savings through end of Sept are approximately
$620K.
Associates have moved out of Crown Colony building
in .
Jan 1.01
April 1.32
July - .32
Feb 1.05
May .57
Aug - .58
Mar .37
June .52
Sept - .54
Q2 finalize research for new content (6/09 on target)
research phase on target
Q3 researching more content options with budget
proposal to MC
Q4 build content structure; assessment on target/
2010 ELDP in proposed status in budget due to large
focus on training from Quality Culture both nationally
and KC pilot program.
Q1 - Complete curriculum build complete
Q2 Rollout/Announcement to CS Department
CS managers & above training , curriculum in complete
Q3/Q4 - Quarterly feedback; Q3 reminders and
manager documents shared with user. Planning
meeting schedule .
Hand off meeting for maintenance on target.

Salls / Tapke /
Mason /

Carnesecca /
Hodlin

Burns

Hodlin

Sutherland

Sutherland

25

Rolling Out Continuous


Improvement

Exceed customer expectations


and drive results

Dual Function of Work


Daily Work and
Improvement Work

Strategy based Baldrige


Criteria for Performance
Excellence

Six Sigma & Lean drive


process improvement

ISO 9000 (MPTQM) to enable


standardization of processes

CMMi and TMM used to


identify development
improvement levels and
opportunities
26

Strategy Deployment

Where is the organization


going?

How do we get there?

What do we need to
do well to achieve
the strategy?

Vision
Strategy
Key Result Areas
Financial Deliverables-First Time Quality-Organizational
Effectiveness-Customer Satisfaction-Market Share

Deliverables
How do we
measure
how well
we are
doing?

Performance Indicators

27

27

Key Excellence Indicators: Strategic Planning


Critical targets and goals based on customer requirements
and market directions
Strong involvement of key suppliers, partners, and customers
A focus on plan execution and agility
CCI SCORES

CONFIDENCE
LIMITS

PERFORMANCE INDICATOR

` Relationship Management

77

66

64

68

` Communication

68

62

60

64

` Understand Your Needs

68

60

57

62

` Innovation

66

52

49

54
28

Key Excellence Indicators: Customer Focus


In-depth market knowledge and forecasts
Consideration of needs of current and potential
customers
Proactive customer contact
Multiple mechanisms to identify customer requirements

29

30

Market Knowledge and Forecasts

31

Key Excellence Indicators: Customer


Focus
Focus on enhancing customer relationships and
loyalty
Effective and prompt resolution of complaints
High levels of customer satisfaction and repurchase
Overall Satisfaction

2005

2006

2007

2008

Likelihood to Recommend

2009

2005

2006

2007

2008

2009

32

Key Excellence Indicators:


Measurement, Analysis, and
Knowledge Management
Use of fact-based decision making
Collection of actionable data
Use of multiple aligned and interlinking measures
(internal and external)
Wide deployment and accessibility of data and
information

33

Key Excellence Indicators:


Measurement, Analysis, &
Knowledge Management
Strong analysis capability
Benchmarking of best-in-class processes and
results
Reliable, secure, and user-friendly systems
Organizational knowledge captured and shared
internally and with key partners and suppliers

34

Driving Performance - Balanced Scorecard


Realize
the Vision

The Vision
Financial Perspective
Objectives

To drive financial
success

Measures

Targets

Initiatives

Financial
Customer Perspective
Objectives

Measures

Targets

Initiatives

Needed to deliver unique


Customer
sets of benefits to customers
To build the
strategic capabilities
Equip our people with
Knowledge, Skills,
Systems and Tools

Internal Process Perspective


Objectives

Measures

Targets

Initiatives

Internal Process
Learning & Growth
Objectives

Measures

Targets

Initiatives

Learning
and Growth
35

35

Running an organization is like


driving a car. You need the
correct metrics to ensure you
are on track towards meeting the
goal.

Selecting Metrics The Formula

To

Understand
Evaluate
Control
Predict

The

Attribute Of
The Entity

In
Order
To

Goal(s)

Example

To

36

Evaluate

The

% Of Known
Defects Corrected
During Development

In
Order
To

Correct All
Defects
Before
Shipping
36

Metrics Car Analogy


Speedometer
Releases to Schedule
Requirements

Tachometer
Efficiency
Standard Op. Procedures
Bugs per release/developer
Tools

Coolant Temp
Customer Satisfaction
Customer Feedback
Customer Inquiries
Associate Satisfaction
Self-assessment
Fuel Gauge

Voltage Regulator

Performance to Budget
Resources
Training

Systems Uptime
Network metrics
System Response

Oil Pressure
Development Rework
Repeat Bugs
Errors
Faults
Failures

Which are In-Process Measures?


Which are Lagging Indicators?
Are there Leading Indicators?

37

Odometer
Performance to Strategic Goals
Measurements over time
CMM
SDLC
DST Audit
SAS 70
Self-assessment

37

Software SURVEY ANSWERS MAPPED TO CMM - TMM Model

38
38

Results

39
39

Results (contd)

40
40

Key Excellence Indicators: Workforce


Focus
Recognition of your workforce as internal
customers
Strong commitment to workforce satisfaction,
motivation, well-being, and morale
Reward system related to key organizational
challenges and organizational performance

41

OSHA Recordable Rates


Actual to Date = 2.4
Overall Goal = 4.0
Rate is per 100 associates / year
CENTRAL
12.0
10.0
8.0
6.0
4.0
2.0
0.0

EAST

12.0
10.0
8.0
6.0
4.0
2.0
0.0

1.4

4.6

WEST

12.0
10.0
8.0
6.0
4.0
2.0
0.0

1.6

42

Key Excellence Indicators: Workforce


Focus
Commitment to training, education, and
development
Links between individual and organizational
learning
Empowered workforce members

43

44

Multiple Levels of Learning


Information

Knowledge

Commentary

Understanding

Feedback

Use

Knowledge

Understanding

Skill

"Tell me and I will forget, show me and I may remember, involve


me and Ill understand." Chinese Proverb
45

Transforming Culture
Goal: Provide middle management with the
skills to begin the transformation to
institutionalizing continuous improvement
Why?
- Leaders must create the culture
Middle management leaders are closest
to the daily work
- 4 components to culture
Experiences: Foundation of the culture
Beliefs: Experiences form the beliefs; beliefs
people hold about what they should do and how
they should do it drive the actions they take
Actions: Those actions produce the results
they achieve
Results: Results achieved from experiences,
beliefs, and actions produce results, and form
the culture

Experiences

Results

Culture

Beliefs

Actions

46

Alignment
Experiences, Beliefs, and Actions must be aligned to achieve
new results
Avoid saying and doing things that put the culture out of
alignment
We can more significantly and permanently improve results
by working at the level of associates beliefs

47

Separation of routine work and


improvement work

I
I

I
I

Improvement
work

I
I

R R R R R R R R R R R R R R R R R R

Routine
work

48

The Vision: Dual Function of Work


(Institutionalize Continuous Improvement)
I
R
I
R
I
R

I
R
I
R

I
R

I
R
I
R

I
R

I
R

I I I I I I I I I I I I I I I I I I
R R R R R R R R R R R R R R R R R R

49

Managing Resistance
Forcing Change

Traditional Situation
Increasing
resistance

Neutral

Increasing
cooperation
c

Increasing
resistance

Neutral

Increasing
cooperation
c
Critical mass

Early adopters

Anchor
draggers

Strong pull
from early
adopters

"Uncommitted
Mass"

Management
Managemen
attention

Management
Managemen
attention
50

Key Excellence Indicators: Process


Management
Well-defined product/service, business, and
support processes
Focus on work systems and processes that create
value for all key stakeholders
Quality designed into products, services, and
processes
Focus on continuous improvement, cycle time
reduction, innovation, and productivity

51

Key Excellence Indicators: Process


Management
Strong integration of prevention, correction, and
improvement into daily operations
Partnering with suppliers and customers
Financial and other resources committed to key
processes
Prevention-focused but prepared for
emergencies

52

Waterfall = One Big Bite


How familiar is this?
Requirements ABCD

Cut D? Ok.
Change A,C?
Too late.

Design ABCD
Construct ABCD

Scope:
ABCD

Test ABC D

Business Value

Deploy ABC
Opportunity cost of
Staff during project

Months

ABC

53

53

Agile: One Bite at a Time


What can we learn from an elephant?
Cut D &
Change A,C?
OK!

Function A
Function B
Release AB

Scope:
ABCD?

Function A2C2
Release A2C2

Business Value

A2BC2
One bite at a time!

Months

ABC

54

54

When to use which?

Iterations
Waterfall

Stable requirements

Dynamic requirements

Established technology

Emerging technologies

Few deployment windows

Few or frequent deployment

Can tolerate longer ROI

Need for faster ROI

55

55

Effort to fix defects


Production

20

UAT

16

Enterprise Test
12
System Test
8

Unit Test
Development

Cost to fix increases

Tech Design
Requirements0

Lifecyc le
Source:
NIST
56

S Q D C Board
Visual Management
Safety Quality Delivery Cost

S
Dayshift

Measure

Q
1

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Month: April
Owner: Clyde Yarbro

27

28

Green = Safe Day

29

30

Orange = Near Miss

31

1 2

11

12

14

15

17

18

21

10

13

12

13

14

15

16

17

18

19

20

21

22

23

16
19

22

23
28

29

11

20
24 25
24

26 27

10

30

Red = First Aid or


....Recordable Injury

31

25
30

26

6S

27

28

6S

10

12

13

14

16

17

18

19

20

21

24

25

26

27

29

30

31

23

Daily
6S Audit

5
11
15

22
28

29

31

Analyze
Counter
measures

Counter
measures

Counter
measures

Counter
measures

Counter
measures

Improve

57

Visual Performance Tracking


Associates track and report their
own performance
SQDC board is a tool that enables
all to participate
Countermeasures (improvements)
are listed to show problem
solving activities

Slide 58

58

THE STANDARDIZATION
TOOL

59

Maturity Level Impact


Process Maturity vs. Rework Cost and Defect Rate2
CMM Level

Process Maturity (Characteristic)

Immature

Project Controlled

Defined Organizational Process

Managed by Fact

Continuous Learning and


Improvement

Rework
(% of Total Development)

Product Quality
(Defect Density)

50% or greater

Double digit

25% - 50%

Single digit

15% - 25%

0.X

5% - 15%

0.0X

5% or less

< 0.00X

60

- ISO 9001 (MPTQM*) Requirements


-

The standardization tool

Turns tacit knowledge into articulated knowledge

* MPTQM (Mail Preparation Total Quality Management Program) combines:


-

Malcolm Baldrige Performance Excellence Criteria

ISO 9001 Requirements

Total Quality Management (TQM) Concepts

61

ISO 9001 Standard-The Basics


Generic- means that the same standard can be applied to any
organization, large or small, whatever its product or service, in any
sector of activity, and whether it is a business enterprise, a public
administration, or a government department.
Management system standards- provide a model to follow in setting
up and operating a management system. This model incorporates the
features on which experts in the field have reached a consensus as being
the international state of the art.
The Plan Do Check Act (PDCA) cycle- is the operating principle
of ISO's management system standards.
The Standard-Do-Check-Act (SDCA) cycle- another operating
principle of ISO 9001, for standardization of processes until changed
through a PDCA cycle
62

PDCA & SDCA

Institutionalized Continuous Improvement

PLAN
DO

DO

Dual Function of Work


ACT

ACT
CHECK

Improvement

CHECK

Daily

63

THE IMPROVEMENT
ENGINES

64

The Business Excellence Maturity Model


Decision to
expand
deployment

LSS results linked


to strategies

2004

Burning
Platform
launches
Business
Excellence

Launch, Train
Mgt., Build
Infrastructure
Train BB,
Initial Projects

2005

Decision to Lead with


Lean and Follow with
Six Sigma

2006
Refresher
Training;
Improved
GB
training;
Harvest
projects

Expand
training: GB,
BB, Lean
Accelerate
projects,
Material
Lean
Initiative

Expand to Company Wide


Basis

Shift Responsibility
to Process Owners

2009

2007

2008

Lead with
Lean,
Follow
with Six
Sigma;
expand
into client
services

6S, VSM,
Lean Cert.,
Kaizens,
expand into
software
development

6S, VSM
driven
projects;
expand into
other non
production
processes,
expand lean
training

Generate Enthusiasm
Key
Goals

Demonstrate Success
Accelerate Benefit Delivery

Make Improvement Sustainable

Align Improvement With Strategy

Dual Function of Work-DNA


65

Lean Six Sigma is the Integration of Two


Powerful Business Improvement Approaches
Lean

Six Sigma

Speed+Low Cost

Variation+Quality

Goal- Reduce waste and


increase process speed

Goal- Improve performance on Critical


Customer Requirements

Focus- Identify non-value added


steps and cause of delay

Focus- Use DMAIC with Quality tools to


eliminate variation/ improve levels

Method- Kaizen events

Method- Management engagement,


dedicated Black Belt resources, Green
Belts

Lean Speed Enables Six Sigma


Quality (Faster Cycles of
Experimentation/Learning;
Simplified Processes)

Six Sigma Quality Enables Lean Speed


(Fewer Errors Means Less Time Spent
on Rework)
66

Lean is focused on the elimination of all nonvalue-adding


activities and waste from the organizations processes.

Waste includes
Scrap
Rework
Inspection
Inventory
Customer Queuing time
defined value
Transporting materials
or products
Redundant motion
Anything for which a final
customer would not want to
pay

Map and
understand
value stream

Goals:
Increase productivity
Eliminate waste
Maximize resource
utilization

Make value
stream
flow

Continuous
process
improvement

67

What Lean Is:


A methodology for improving cycle times and quality
through elimination of waste
Waste sometimes called muda

Differentiates between value-added and non-value


added activities
Value defined in customer terms

Lean techniques allow sustained operations with


reduced resource and cycle times

68

Focus: Visibility, Velocity, Value


Visibility (Transparency, Visual Control)
Broadens awareness of problems.
All hands on deck urgency to resolve.

Velocity (Flow)
Concentrate on speed of delivery
Improve responsiveness to customer demands

Value (Opposite of Waste)


Focus on value-added activities
Remove other (wasteful) activities

69

Value Added Activities


Something the customer is
willing to pay for!
Transform raw material or
information to meet customer
requirements. Transforms form,
fit, or function.
Done right the first time.

70

Non-Value Added Activities


(Waste)

Consume time, resources, space


No value added to customer
Doesnt contribute directly to customer deliverables
Not done right the first time

WANT

NEED

71

Kaizen Breakthrough Methodology


Day 1
Conceptual
training on:
Lean/Six
Sigma
Standard
Operations
6S
Kaizen
Methodology
Tools &
Techniques

Day 2
Project-Specific
Training

Measure &
Analyze Current
Work Process

Formulate
Process
Improvements

Day 3
Day 3

Simulate &
Refine
Improvements

Day 4
Day 4
Evaluate
Improvements

Establish New
Standard
Process

Operate Using
New Standard
Process

Finalize New
Standard
Process

Day 5

Present
Results and
Celebrate!

72

What is Six Sigma?

A metric
-

Represents 3.4 defects per million opportunities.

A methodology
-

Highly disciplined process that focuses on delivering near


perfect products and/or services. Can be applied to any
process or product to eliminate defects and their associated
cost, and reduce variation

A mindset
-

Designed to focus an entire organization on producing nearly


perfect products and services that delight customers and
realize higher profits.

73

Six Sigma
Six Sigma concentrates on variation
reduction by using statistical
methods to lower process defect
rates to less than 3.4 defects per million
opportunities.

Six Sigma Methodologies:


DMAIC - define, measure, analyze, improve, and control
DMADV - define, measure, analyze, design, and verify

74

Six Sigma Process


Formulating the Practical Problem
Phase

Question

Define

What do I want to improve? What is the


problem statement?

Measure

Whats the best way to measure? Does


performance meet expectations? How much
variation is there?
How good is my process today? What is at the
root of the problem? What causes the process
to behave the way it does and creates the
output?
Whats at the root of the problem? Develop
solutions to eliminate or minimize the root cause
influence on the process and outputs?
How can I sustain the improvement? What
controls can be put into place?

Analyze

Improve

Control

75
75

76

Selecting the Improvement Engine


Recognize a Project
Opportunity

Is the
Solution
known?

YES

Just
Do It
with
PDCA

NO

Are
Solutions
obvious?

YES

Workout
/Kaizen
Blitz

NO

Is it a new
product or
process?
YES

DFSS

NO

Is the
objective to
reduce time?

NO

Six
Sigma
DMAIC

YES

YES
Is the time
bottleneck due
to defects?
NO

Lean

77

Key Excellence Indicators: Results


Tied to
z

customer requirements

key processes

product/service performance

strategy and action plans

Workforce needs

financial and marketplace measures

governance and social responsibilities

78

Key Excellence Indicators: Results


Tracking of levels and trends
Linked to organization-level information
and analyses
Use of comparisons/benchmarks
Actionable

79

Tracking Progress:
Strengths and Opportunities for Improvement
Provides operational capability analysis
Used as input into the strategic planning process
80

4 Measurement, Analysis, and Knowledge Management


4.1 Measurement, Analysis, and Review of Organizational Performance Describe how your organization measures,
analyzes, aligns, reviews, and improves its performance data and information at all levels and in all parts of your organization.
Strengths

DSTO collects daily/monthly/quarterly/bi-annual data to monitor


progress towards company-level goals and to make departmental
decisions.
All functional areas compile and analyze key business indicator data that
links to the strategic plan. Clear and measurable goals are set, with
progress reported at corporate, management and departmental levels.
Alignment to goal are achieved through the performance development
and appraisal processes.
There are various measures and processes for determining organizational
performance and capabilities, including cost of quality reports, cockpit
reports, P&L reports, and monthly departmental quality performance
reports
Through the CIA&R and PQA processes, DSTO has a systematic process
for reporting on identified defects, providing monthly quality data and
information to guide improvement efforts.
Performance reports are reviewed monthly by senior management to
monitor performance.
A variety of systems are utilized to enhance operational performance,
including PeopleSoft, KRONOS, DiMES, InFact, DataLogger, Axi,
InDocs, Shop Floor Manager., Clarify.

OPPORTUNITIES FOR IMPROVEMENT

Score: 42%
Points: 18.9

Owner

RECOMMENDATION

Repetitive problems indicate a weakness in root cause analysis and ineffective


corrective actions. There is a lack of a systematic feedback loop regarding
corrective actions resulting from CIA&R resolutions and reported internal
defects. This can affect DSTOs ability to determine effectiveness of action
taken.
While some competitive information is now being collected, there is no
systematic process for analyzing and utilizing this information to determine
performance significance and opportunities. Using the information lacks
maturity. Overall, there is a lack of a systematic process for selecting and
ensuring the effective use of key comparative data and information
Copyrighttosupport
2008 DST Output, LLC
operational decision making.

DST Output Confidential For Internal Use Only

81

tjc:Baldridge.ppt 02/01/2007

Business Excellence Survey Results


Business Excellence Survey Scores
600

500

400

300
Business Excellence Survey Scores

200

100

0
2005

2007

2009

DST Output Confidential

82

Putting It All Together

83

The Baldrige Criteria, ISO 9000, Lean, and Six Sigma,


CMMi are complementary, not mutually exclusive

Many organizations use Baldrige and CMMi


to develop an overall performance map to
identify areas that need improvement, and
then they use Six Sigma, Lean, or both tools
to design operations or improve processes
within the organization, then use ISO 9001
(MPTQM) to standardize.
84

ISO 9000, CMMi, Six Sigma and Lean


How they relate to the seven Baldrige Criteria Categories

85

The Leadership Category


Baldrige, ISO 9000, Lean, and Six Sigma all
depend on leaders who

Align financial and human resources


Communicate cultural norms
Encourage and provide resources
Solidify a culture of organizational excellence
Baldrige addresses the overall leadership
system.

86

Strategic Planning Category


Lean and Six Sigma can be methodologies for coordinating resource use toward
organizational objectives identified using the Baldrige Criteria.
Six Sigma provides tools for measuring progress.
ISO 9000 has standards for measurement.
2009 April

May

June - July

Aug - Sept

Oct - Dec

External
Opportunities &
Threats
Vision,
Principles &
Mission

Environmental
Assessment

Goal
Formulation

Strategy
Formulation

Action Plan
Formulation

Timelines &
Implementation

Measurements

Company
Strengths &
Weaknesses

Conduct environmental assessment

Finalize company-wide
goals and strategies

Finalize department
strategies and action
plans.
Vail presentation.

Align financial
budgets to
strategic plan

Align associate
action plans to
strategic plan

87

Customer Focus Category


Quantification of
customer needs is the key.
(Voice of Customer)

Customerdefined value
2005

2006

2007

2008

Overall
Satisfaction

83%

82%

88%

83%

85%

89%

Would
Recommend

49%

40%

52%

46%

88%*

92%

Map and
understand
value stream

Make value
stream flow
Continuous
process
improvement

Lean environments aim


for all process steps to
be something for
which the customer is
willing to pay.

2009
2009
(target) Results

In Baldrige and Six Sigma, the voice of the


customer is used to identify areas of needed
improvement.

88

Measurement, Analysis, and Knowledge


Management Category

Six Sigma :
is data-driven:
specific metrics
data collection
data analysis
control data

ISO 9001: The standardization tool


-Turns tacit knowledge into articulated
knowledge
-Enables Knowledge Management
Lean :
measures, analyzes,
and reduces
waiting time
inventory
batches
process time
rework
89

Workforce Focus Category


Sample Size: 135

Sorted by question number asc

18. The person I report to treats


everyone fairly.

Six Sigma and Lean


methodologies require

2007: Operation Centers & Client


Services:
Client Services

Leadership development

1.
I consistently have the tools and
resources necessary to do my job.

Training

2007: Operation Centers & Client


Services:
Client Services
1.
The associates I work with view
change as an opportunity for growth and
improvement.
2007: Operation Centers & Client
Services:
Client Services
1.
Overall, I am satisfied with my
current employment and position.
2007: Operation Centers & Client
Services:
Client Services
1.
My work environment allows me to
do my best work.

Compensation alignment
Culture shift
ISO 9001 has standards
for resource management
CMMi has standards for
resource management

2007: Operation Centers & Client


Services:
Client Services
1.
I believe DSTO's mission, vision and
values drive the decisions that it makes.

90

Process Management Category


12,500

10,000

Defects Per Million - 13 Month Control Chart


Actual
Performance Threshold 2008
Average ppm
Upper Control Limit
Lower Control Limit

7,500

5,000

2,500

ISO 9000, Lean or Six Sigma


methodologies are used to
Generate standard operating procedures
Set specification and control limits
Identify explicit corrective actions
Optimize processes

0
O-08 N-08 D-08 J-09 F-09 M-09 A-09 M-09 J-09 J-09 A-09 S-09 O-09

Processes are interrelated and interdependent


steps along the path to customer satisfaction.
91

Results Category
Six Sigma and Lean are data-driven and results-oriented. Their use leads to
tracking systems (control charts, scorecards, rolled throughput yield charts, etc.) and
results monitoring in functional business areas where the methodologies are applied.
12,500

30,000

Defects Per Million - 13 Month Control Chart

Late Statements Per Million - 13 Month Control Chart

Actual
Performance Threshold 2008
Average ppm
Upper Control Limit
Lower Control Limit

10,000

Actual
Average ppm
Upper Control Limit
Lower Control Limit
Performance Threshold '08-09

25,000

20,000

7,500
15,000
5,000
10,000
2,500

5,000

0
O-08

400
300
200
100
0

360

N-08

D-08

J-09

F-09

M-09

A-09

M-09

J-09

J-09

A-09

S-09

O-09

100%
90%
81% 80%
79%
76%
73%
70%
69%
64%
60%
206
53%
50%
40%
34%
121
30%
20%
54
42
32
27
28
10%
0%
I

Bad or
Incorrect
incorrect
Multiple
statement
fold
inserted
orientation
or mixed
Partial
Remits
statements
statement
rejectedPoor
by lockbox
printWrong
quality
Unsealed
remit/insert
envelope(s) mailed

O-08 N-08

500,000

D-08

J-09

F-09

M-09 A-09 M-09

J-09

J-09

A-09

S-09

467
O-09

All Client Systems

400,000
300,000
200,000
100,000
0
Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct08
08
08
09
09
09
09
09
09
09
09
09
09

92

Summary

The Baldrige Criteria focus on organizational improvement and innovation


systems. Six Sigma and Lean methodologies drive waste and inefficiencies out of
processes that users of the Baldrige Criteria identify for improvement. CMMi, Six
Sigma and Lean focus on organizational improvement and innovation processes.
ISO 9000 aids in the setting of standardized processes in management
responsibility, resource management, product realization, and
measurement/analysis/improvement
93

Innovation and recognition


28 industry patents, including Mail-by-Tray
All U.S. operation centers MPTQM certified
IndustryWeek awards
DALBAR client awards
Exstream Visionary awards
Xplor International awards
3 time recipient of Industry Weeks Top Ten Best Plants in North America

94

Selected results over 3 year period

Revenue increased by 31%

Profits increased by 42%

Business Excellence Assessment using


Baldrige Performance Excellence Criteria
increased 52% since 2005

Defects per Million Opportunities decreased by


77%

Late Per Million Opportunities decreased by


70%

Quality and On-Time Delivery performance


exceed the Industry Weeks Top Ten Plants 4
year average

95

Process Management
Overview
PROCESS
DISCOVERY
UNDERSTAND THE
CUSTOMER AND THE
PROCESS

IMPROVEMENT
PROCESS
CONTROL

Six Sigma DMAIC/Lean

ASSESSING PROCESS
PERFORMANCE

7
1. STEPS
Define
2. Measure
3. Analyze
4. Improve

5. Control

*
Who are the customers ?
What are our products
and services ?
What are the requirements ?
What is the process map ?
How is our
process performing ?

Lean Thinking-Kaizen

Does the standardized process


continuously perform as expected?

What actions are needed to


improve my process?

What action is warranted by careful


checking of process data ?

Identify the largest source of


variation in standard process.

Continue with the next SDCA


Initiate PDCA to find
and remove root cause

Find and eliminate a root cause


of variation.
Define new standard process.

96

Relationship Between SDCA and PDCA

Continuously
Improve the Process

Process Control

Lean Six Sigma

DMAIC:

*
C
D

Need for improvement

P
A

New standard

D
C

1.

Define

2.

Measure

3.

Analyze

4.

Improve

5.

Control

Lean Thinking-Kaizen

97

Dual Function of Work


(SDCA and PDCA Cycles)
Improvement
activities

Do
improvement

Plan
improvement

Daily
work

Act-either use
present
standard, or
improve

Act-either
standardize or
replan

Accept standard and


proceed with daily
work

Initiate
improvement
activities

Job

Check
improvement
results

Check work
against
standard

Use
standard

Do work

NMJ
98

Integration: The Dual FunctionInstitutionalize Continuous Improvement


PDCA is used at all levels and in
all departments to improve local
daily work processes
pd
a c

c a
d s

This is when Continuous


Improvement is the DNA of the
organization

new
STD

pd
a c

c a
d s
new
STD

pd
a c

c a
d s
new
STD

new
STD

pd
a c

c a
d s
new
STD

pd
a c

c a
d s

pd
a c

c a
d s
new
STD

pd
a c

c a
d s
new
STD

99

Conclusions
Visionary Leadership
Systems Perspective
Linkage and Alignment
Valuing Workforce Members and Partners
Management by Fact
Focus on Results and Creating Value
The various quality system methodologies are synergistic
parts of the system
Any other takeaways?
100

100

Critical Components, Perfectly Synchronized


Creating Customer Value and Corporate Growth

101

The Challenge:
Tolerate nothing less than excellence

102