Chapter 1. Problem Definition

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INSTITUTO TECNOLÓGICO Y DE ESTUDIOS SUPERIORES DE MONTERREY

CAMPUS MONTERREY

ENGINEERING & ARCHITECTURE DIVISION ENGINEERING GRADUATED PROGRAM

“Operational Infrastructure for the execution of Uncoupled Lean Six Sigma Projects”

THESIS

MASTER IN SCIENCES

QUALITY AND PRODUCTIVITY SYSTEMS SPECIALITY BY:

SAMUEL MOISÉS NUCAMENDI GUILLÉN

MONTERREY, N.L. DECEMBER, 2009

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INSTITUTO TECNOLÓGICO Y DE ESTUDIOS SUPERIORES DE MONTERREY

CAMPUS MONTERREY

DIVISIÓN DE INGENIERÍA Y ARQUITECTURA PROGRAMA DE GRADUADOS EN INGENIERÍA

Los miembros del comité de tesis recomendamos que el presente proyecto de tesis presentado por (la) el Ing. Samuel M. Nucamendi Guillén sea aceptado como requisito parcial para obtener el grado académico de:

Maestro(a) en Ciencias en Calidad y Productividad Especialidad en Ingeniería Estadística

Comité de Tesis:

_________________________

Dr. Alberto A. Hernández Luna Asesor

______________________________ _____________________________

M.C. Diana Paola Moreno Grandas M.C. Eduardo A. González Valenzuela

Sinodal Sinodal

Aprobado:

_______________________

Dr. Neal Ricardo Smith Cornejo

Director del Programa de Graduados en Ingeniería Diciembre, 2009

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Summary

Six Sigma is a methodology focused on minimizing variability in a process, resulting in a reduction of defects and under-control operations. However, it is not related with the systemic flow process improvement and its response rates. On the other hand, Lean helps to reduce process complexity focusing in these two last aspects and not in variability and reliability of them.

By mixing those complementing approaches in a model called Lean Six Sigma, companies aim to improve both response rates and quality for their products/services. Therefore, with Six Sigma it is possible to get products under specifications, while Lean would be employed to simplify the process, reducing lead time and resources.

Tecnológico de Monterrey, using guidelines of Axiomatic and Structured Design, developed an operative Lean Six Sigma model with Value Stream Map as an integrator element. However, the necessary infrastructure to manage such model still needed to be defined.

A Lean Six Sigma organization, as every human organization, is a complex system. The viable System Model, developed by Dr. Stafford Beer, is a cybernetic model applied to deal with those administrative Systems. Using this model as reference, general guidelines for: organization structure design; innovation management; self-sufficiency; traceability of changes and management problems detection, were developed.

The purpose of this research is to design guidelines and policies for Project Execution using Viable System Model as a tool for diagnosing the management approaches proposed for Lean and Six Sigma methodologies; identifying critical success factors for supporting the Lean Six Sigma infrastructure Model selected and designing a system capable of its administration that serves as a guide in future “In company” deployments.

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Content

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Content

Chapter 1. Problem Definition ... 1

Introduction ... 1

Overview ... 1

Background ... 2

Systemic Approach ... 4

Problem Statement ... 5

Research Questions... 5

Hypothesis ... 5

Objectives ... 5

General: ... 5

Specifics: ... 5

Relevance of this Study ... 6

Delimitations... 12

Research Methodology ... 12

Chapter 2. Background ... 15

Introduction ... 15

Six Sigma Quick Review ... 15

Six Sigma Infrastructure ... 15

Lean Quick Overview ... 22

Lean Infrastructure ... 23

Comparing Lean and Six Sigma Infrastructures ... 26

Viable System Model... 31

Introduction ... 31

Viable System Model Organization ... 32

Uncoupled Lean Six Sigma Model Background ... 36

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Content

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Chapter 3. Analysis ... 38

Introduction ... 38

Superimposition of VSM Design on Program Management Structure ... 39

Implementation (Subsystem 1): ... 39

Coordination (Subsystem 2): ... 40

Control (Subsystem 3): ... 42

Planning (Subsystem 4) ... 43

Policy (Subsystem 5) ... 45

Six Sigma Infrastructure from VSM perspective ... 47

Lean Infrastructure from VSM perspective ... 54

Critical Success Factors (CSF) Identified for implementing a successful Lean Six Sigma deployment from VSM Perspective ... 62

Chapter Conclusions... 66

Chapter 4. Infrastructure Design ... 68

Introduction ... 68

Overview of LSS infrastructure for Project Execution ... 68

VSM Design for LSS Infrastructure ... 73

Conclusions of the Chapter ... 91

Chapter 5. Conclusions & Future Work ... 93

Research Outcomes and Conclusions ... 93

Future Work ... 95

Bibliography ... 96

Appendix ... 99

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Figure Index

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Figure Index

Figure 1-1 Uncoupled Lean Six Sigma Model (Hernández & Tercero, 2008) ... 3

Figure 1-2 Model to work for Thesis Development ... 6

Figure 1-3 Research Methodology Model ... 14

Figure 2-1 Interaction between key factors for a successful SS Deployment (Breyfogle, Cupello, & Becki, 2001) ... 19

Figure 2-2. Six Sigma practitioners participation across project phases (BMGI, 2008) ... 21

Figure 2-3. Impact of successful project execution into business level (BMGI, 2008)... 21

Figure 2-4 Typical Toyota organization - assembly operation ... 24

Figure 2-5 General VSM perspective for organizations (Trevor, 1995) ... 33

Figure 2-6 VSM System Outline (Trevor, 1995) ... 33

Figure 2-7 Complete VSM Diagram for Organizations ... 35

Figure 2-8 Conceptual model for LSS operational deployment (Moreno, 2007) ... 36

Figure 2-9 Uncoupled Lean Six Sigma model for Project Selection and Execution ... 37

Figure 3-1 Conceptual System 1 of Program Management (Rai & Subramanian, 2007) ... 40

Figure 3-2 Conceptual System 2 of Program Management (Rai & Subramanian, 2007) ... 41

Figure 3-3 Control System from the perspective of Metasystem (Rai & Subramanian, 2007) ... 42

Figure 3-4 Conceptual System 3 for Program Management (Rai & Subramanian, 2007) ... 43

Figure 3-5 Planning system from the perspective of Metasystem ... 44

Figure 3-6 Conceptual System 4 for Program Management (Rai & Subramanian, 2007) ... 45

Figure 3-7 Policy System from the Perspective of Metasystem ... 46

Figure 3-8 Conceptual View of Viable System's Architecture for Program Management (Rai & Subramanian, 2007) ... 47

Figure 3-9 Shingo Prize Model (UtahState University, 2008) ... 54

Figure 4-1 Execute & Sustain Roadmap (BMGI & De Carlo, 2007) ... 69

Figure 4-2 Uncoupled LSS Model from VSM approach ... 70

Figure 4-3 VSM design for Execution and Sustain Roadmap... 71

Figure 4-4 VSM design for LSS Project Execution ... 73

Figure 4-5 VSM Diagram of LSS infrastructure for Project Execution ... 86

Figure 4-6 VSM Diagram for Project Selection Stage ... 88

Figure 4-7 VSM diagram for Project Definition Stage ... 89

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Figure Index

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Figure 4-8 Zoom for subsystem 2 ... 89

Figure 4-9 VSM Diagram for Project Development Stage ... 90

Figure 4-10 Zoom diagrams for subsystems 2, 3 and 4 ... 90

Figure 4-11 VSM Diagram for Project Closure ans Sustainment Stage ... 91

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Table Index

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Table Index

Table 1: Main reasons for Non Completion of Six Sigma Projects (Acosta, 2005) ... 7

Table 2 Results of barriers for Six Sigma Deployments (Alvarado, 2007) ... 8

Table 3 Main factors for Six Sigma’s deployment failure (Temblador, 2009) ... 10

Table 4. Six Sigma Infrastructure Roles: Description and Responsibilities (Moreno, 2007)... 16

Table 5 Matching between Team Member activities & Six Sigma Members Activities ... 28

Table 6 Matching between Team Leader activities & Six Sigma Members Activities ... 28

Table 7 Matching between Group Leader & Six Sigma Members activities ... 30

Table 8 Requirements identified for a successful Six Sigma Deployment from VSM perspective (Tamez, 2001) ... 48

Table 9 Requirements identified for a successful Lean Deployment from VSM perspective ... 55

Table 10 Critical Success Factors identified for LSS deployments through project execution ... 62

Table 11 Minimum responsibilities Required for Project Execution ... 76

Table 12 Cross relationship table between Project Execution activities and their corresponding relationships ... 77

Table 13 Complete Design of activities and responsibilitis for LSS Project Execution ... 80

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Introduction Problem Definition

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Chapter 1. Problem Definition

“The nature of most business processes found in industrial and services organizations, clearly demonstrates how Lean thinking and Six Sigma work in a powerful combination” (Locher, 2007)

Introduction

Through this first chapter the object of study, arguments to support this research and author’s motivation for developing it are established. In addition, general research methodology structure and strategies which are used to achieve the objectives are recognized.

Overview

Every corporation on our planet is on a quest to outperform its rivals in two key areas optimizing both speed and quality/cost of their products. Although all organizations are different, they are the same in that they exist to fulfill some human or societal need. In fulfilling that need, all organizations take a certain set of inputs and transform them into certain outputs, called

“products”, “services”, “transactions”, etc. (BMGI & De Carlo, 2007).

During the latest recessionary years around the world, organizations have focused all their efforts on improving processes, reducing costs and gaining productivity (Jugulum & Samuel, 2008).

According to George (2005), a fusion between Lean and Six Sigma is required for two main reasons¹:

 Lean cannot bring a process under statistical control

 Six Sigma alone cannot dramatically improve process speed or reduce invested capital.

Based on a sampling of Internet job postings, the study shows that demand for lean talent grew from 2006 to 2007 to nearly equal that of Six Sigma at the same time. The study also concludes that 38% of companies seeking Six Sigma talent are looking for employees who also have lean expertise. On the other hand, 42% of companies advertising for lean practitioners require some Six Sigma exposure².

1 George, Michel, Rowlands, Davis, Maxey, John & Price, Mark. (2005). The Lean Six Sigma Pocket Tool book.

Nueva York USA. Mc Graw Hill.

2 Information obtained from “Six Sigma, Lean come together” Industry Week. Cleveland: Mar 2008. Vol. 257, Iss. 3; pg. 23, 1 pgs. Pencton Media Inc.

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Background Problem Definition

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This fact has motivated that several research and consulting institutions develop models to integrate both methodologies into one called Lean Six Sigma (LSS). Specifically, Tecnológico de Monterrey has developed a Value Stream Map approach (Hernández & Tercero, 2008)based on uncoupled Lean Six Sigma model for project execution (Moreno, 2007) and complemented by Flores (2008) and Peimbert (2009). However, even though they have set special interest on its operational functionality, there are operational aspects that do not meet the independence function, infringing its efficiency at implementation, making it less robust and reliable. Because of that, this research was developed to generate operational guidelines and policies to facilitate its deployment and monitoring.

Background

Tecnológico de Monterrey in association with Breakthrough Management Group International (BMGI) offers Lean Six Sigma Black Belt & Green Belt Certification Programs through ITESM-BMGI alliance in order to advise companies for their Lean Six Sigma Deployments.

Since its beginnings in 2000, ITESM-BMGI Program has advised in Six Sigma Methodology through 2 different program products: 1) In-Company deployment and 2) Open Enrollment training. In- Company deployments have been performed in more than 30 companies and participants from more than 100 companies have been enrolled in Open Enrollment programs³ . In the year of 2008, ITESM-BMGI training program started changing its focus to Lean Six Sigma methodology for “In company deployments”, and recently, in 2009 used this focus for Open Enrollment deployments;

in order to provide participants with the advantage of both methods to solve business issues.

The requirements to obtain a Green or Black Belt certification are: 1) Completion of GB and BB training program which consists of 3 and 5 weeks of training respectively; 2) GB or BB exams passed with a minimum score of 85% for BB and 75% for GB, and 3) Complete a project, using all required phases.

Companies interested in implementing an “In company” Deployment, come to Tecnológico de Monterrey to prepare its personnel, mainly as BB and GB. Most of the participants complete successfully the training and pass the exams, but there is a significant problem for project completion, due to the work overload.

3 According to participants database of ITESM-BMGI Program.

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Background Problem Definition

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It is very important to highlight that projects completion is a primordial factor for the success of the deployment. As we can see in Alvarado’s research (2007), completing projects provides the motivation for keeping on track the deployment of LSS methodology. Acosta (2005), also noticed that for “In Company” Six Sigma deployment programs advised by Tecnológico de Monterrey, there is a certification rate of 46% (Acosta, 2005) decreasing to 15% (Tercero, 2007).

The reason why this last 85 % did not obtain their certification was due mainly to the fact that they didn’t complete their projects.

For many corporations, Lean Six Sigma has become an effective operational strategy in order to be more responsive to customer needs, deliver flawlessly the promises made to customer, and operate with world class cost. The Uncoupled Lean Six Sigma model developed by Tecnológico de Monterrey, meets these operational objectives. But according to Hernández &

Tercero (2008), there are relevant operational requirements for implementation, infrastructure and management strategies that still need to be addressed (see Figure 1-1). Flores (2008) continued this line of research and validated the effectiveness of this concept in a real project, concluding that it also works for transactional processes improvement.

A main effort to standardize Uncoupled Lean Six Sigma model implementation was done by Peimbert (2009). He developed a roadmap for Lean/Six Sigma/Lean Six Sigma project execution, based upon the model shown above (Figure 1-1), to provide support for Green or Black Belts project completion, in order to facilitate the methodology’s deployment from an operational perspective.

Figure 1-1 Value Stream Map Approach for Uncoupled Lean Six Sigma Model (Hernández & Tercero, 2008) Design current process

value stream

Include both Lean and Six Sigma metrics

Design future process valuestream

Plan Lean Kaizen events and Six Sigma projects

Implement lean kaizen events

ImplementSix Sigma Projects

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Systemic Approach Problem Definition

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Systemic Approach

From organization´s perspective, Six Sigma has a structured methodology, based on management roles, project execution, and so on. In other words, it is addressed for “white collar”

employees. On the other hand, Lean drives an organizationally simpler methodology, using Kaizen events oriented to create self-disciplined groups or natural working groups. In consequence, to define an adequate operational infrastructure for Uncoupled Lean Six Sigma Model, it is necessary to use a tool that allows managing without affecting its operations and objectives.

Viable System Model (VSM), developed by Dr. Stafford Beer is a cybernetic approach for dealing with this kind of administrative issues. VSM provides guidelines for operational structure designs, innovation management, autonomy, change traceability, and detection of administrative conflicts, among others. Beer, on his book “Brain of the Firm” (1972), states that if there is a possibility to create a model capable to represent logical relationships between multiple interactions existing in a system, the generation of equilibrium condition with minimum damage for people and less cost would be possible.

Recently, Jugulum & Philip (2008) use VSM to try to find a better way to manage portfolios of projects. They said that understanding the operational design of Program Management (PM) required dealing with aspects of structure, governance processes and competencies⁴. Since LSS Methodology is considered as Management Program for projects (George, 2005), its results can be applied in a similar way.

Therefore, the purpose of this research is to develop an operational infrastructure model that allows the establishment of guidelines and policies for the execution of Uncoupled Lean Six Sigma projects, using VSM as a tool for diagnosing current Lean and Six Sigma’s management models, identifying the potential needs to robustness the Value Stream Map Approach (Hernández

& Tercero, 2008), and also designing a management system which can serve as a guide for the execution of Lean Six Sigma projects for “In-Company” Deployments.

4 Veendra & Subramanian (2008), Progam Management Design: A viable System Perspective. TATA Consultancy Services, pp.1

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Problem Statement Problem Definition

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Problem Statement

What operational characteristics (guidelines and policies) for project execution should be included for the execution of Uncoupled Lean Six Sigma (ULSS) Model?

Research Questions

 What is the current Operational Infrastructure Design (roles, responsibilities and rules) proposed by the literature for the execution of Lean and Six Sigma Projects?

 According to that design, are Lean and Six Sigma synergic or opposed to each other?

 Can Lean’s infrastructure be part of Six Sigma’s infrastructure, or vice versa, at the moment of designing an operational Lean Six Sigma infrastructure for executing projects?

 The current Operational Lean or Six Sigma infrastructures (for project execution) meet the requirements of VSM?

 What requirements are not met for the Operational Design proposed by the ULSS model?

 What does an Organization need to include so that it can be considered as viable at the moment of executing projects?

 What are the roles and their functions required by a Lean Six Sigma Organization in order to execute successful projects?

Hypothesis

An Operational Infrastructure (roles, responsibilities and rules) based on Viable System Model will facilitate the establishment of guidelines and policies needed for executing Uncoupled Lean Six Sigma Projects (see Figure 1-2).

Objectives

General Objective:

To establish guidelines and policies based on an Operational Infrastructure (roles, responsibilities and rules) Design to facilitate execution of ULSS Projects.

Specific Objectives:

 Develop an operational Infrastructure model for Uncoupled Lean Six Sigma project execution.

 To determine specific minimum required roles and responsibilities for an organization to facilitate the execution of uncoupled Lean Six Sigma projects

 To establish the required guidelines and policies for the Operational Infrastructure to execute Uncoupled Lean Six Sigma projects

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Relevance of this Study Problem Definition

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Figure 1-2 Model to work for Thesis Development Relevance of this Study

Throughout the development of research studies concerning team work methodologies (Ferrer, 2002; Guerrero, 2006; Rico, Alcover, Sanchez-Manzanares, & Gil, 2009), one factor, related to administrative aspects of implementation, has been identified as the main contributor of their failure. According to Ferrer (2002), if the company doesn’t consider Operational Management at the moment of the implementation of a new team work methodology, people won’t understand the importance and, as a consequence, they might execute their tasks in a wrong way. This makes difficult its deployment to the extent that it can be considered ineffective and therefore, unsuccessful. Consequently, at first companies decide to discontinue that methodology temporary, but if the troubles persist, definitely.

Regarding to Lean Six Sigma, which is considered a Team Working Methodology (George, 2005), companies have similar difficulties when trying to implement it. This is because while Lean focuses on a plain implementation infrastructure, based on Kaizen Events and self-addressed teams, Six Sigma sets a more complex infrastructure assigning specific roles for project management and creation of hierarchy team in order to execute them (Moreno, 2007). Although Moreno (2007) proposes a DLMAIC structure for deployment (who also proposed a team work

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infrastructure for project execution, based on Six Sigma infrastructure and Shingo Prize model) and subsequently, Hernandez and Tercero (2008) developed a Value Stream Map approach for this structure, a design for operational and operational infrastructure (roles, responsibilities and rules ) can help facilitate the LSS deployment and improve its efficiency in order to make it successful is still needed ( (Moreno, 2007; Hernández & Tercero, 2008).

Because LSS “In-Company” deployments have been recently incorporated to the ITESM- BMGI training Program; there is no data for evaluating its effectiveness. However, considering that according to several authors, Lean Six Sigma approach uses Six Sigma’s deployment infrastructure as a base (BMGI & De Carlo, 2007; Jugulum & Samuel, 2008; Martínez, 2008; Moreno, 2007), the potential barriers which complicate a Six Sigma deployment, can make matters worse for a LSS deployment process. Having this said, Six Sigma deployment results will be considered as a base for this research.

For the case of Six Sigma (SS) “In company” deployments, Acosta (2005) found that 46% of the projects are not completed. This is due to the reasons shown in the table below (see Table 1):

Table 1: Main reasons for Non Completion of Six Sigma Projects (Acosta, 2005)

Reason %

Overload(Too Busy) 25.0

Insufficient time for complete the project 11.7

Change of Project 10.0

Insufficient Management Support 8.3 Delay for Final Project review 6.7

Data missing 6.7

To be unaware of how to apply Six Sigma tools 6.7

Project Redefinition 6.7

Lack of stakeholders commitment 5.0

Undefined Project 5.0

Disorganized/Slow consultancy 3.3

Other 5.0

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Guerrero⁵ (2006) had similar findings where participants were asked about main reasons of failure for quality methodologies’ implementation, and everybody coincide about six critical factors, which if are not understood and assimilated, they become into barriers for success, creating severe damages for companies’ future:

- Change strategies and priorities clarity - High Management Leadership

- Team Work

- Appropriate Coordination - Staff Enablement

- Fluid communication in every level of organization

Alvarado (2007), developed an exploratory study in order to recognize common patterns which complicate Six Sigma Deployments, during their implementation (see Table 2)⁶:

Table 2 Results of barriers for Six Sigma Deployments (Alvarado, 2007)

Barrier %

Non establishment of roles, responsibilities, and organizational structure 50

Inappropriate selection of projects 48

Six Sigma Improvements are not recognized and awarded 45

Metrics are not defined clearly 40

Lack of Program for selection and retention of Six Sigma Trained Personnel 38

Lack of Communication 37

Incorrect measurement /computation for financial savings 33 Lack of Alignment between Six Sigma Results and Business Results 32 Lack of Integration between Suppliers and clients for Six Sigma deployment effort 32

5 For further information, an alternative thesis proposal can be consulted: “Estrategias para el modelo de planeación del despliegue Seis Sigma” by Ana Copelia Alvarado Zepeda, 2006.

6 Translation made by author. Barriers are shown in table 3.2 “Tabulación de resultados pregunta 8” pp. 65 and percentages are shown in illustration 3.7 “Resultados pregunta 8” pp.66

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Barrier %

Long waiting time for information 30

Insufficient number of projects 28

Difficult Completion Schedules 28

Poor incorporation of financial managers into Six Sigma Projects 28

Lack of Change Skill Management 27

Lack of Leadership 25

Lack of understanding and involving of high management 23

Lack of VOC vision 20

Competition for resources 20

Non Technology Investment 17

Six Sigma Deployment without a plan/goal 13

Lack of internal costumer concept application 7

Leave Deployment Plan responsibility to consultant 3

As it can be noticed, the top 7 of barriers results are related to Organizational Infrastructure, predominantly with top level management’s behavior. As is mentioned at the hypothesis section of this research, the establishment of policies and guidelines for the Operational LSS Infrastructure design and management based upon Systemic Diagnostic will provide theoretical solutions which can be used for facilitating its deployment at the moment to be applied.

Additionally, an internal study was developed by Maria del C. Temblador (2009) with the aid of top level managers from several corporations. This study consists of a survey used to evaluate the main barriers (Factors) for implementing a Six Sigma Deployment. The results are shown on next page.

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Table 3 Main factors for Six Sigma’s deployment failure (Temblador, 2009)⁷

Main factors for Six Sigma deployment failure

Factor Percentage of answers

Lack of strategic alignment for the projects 31 %

Change resistance 24 %

Lack of support from high managers of the

organization 21 %

Absence of tracking and control for the

implementation’s plan 16 %

Resources Limited 12 %

Poor strategic planning 12 %

As it can be seen, these results are very similar to Alvarado´s research results (2007).

Another fact worth noticing is that every factor listed in the table above, includes operational (human) aspects. Some of the suggestions made by top level managers for improving Six Sigma deployments are related with the creation of guidelines and policies that can facilitate decision making. In summary, this is the ultimate objective why this research is developed.

Since every operational infrastructure is based on human systems, an approach capable of dealing with it is necessary. Villareal (2003) points out that human system have a complex structure, which can be studied through organizational theories and cybernetic modeling. Complex systems are those which not only produce vast number of distinctive stages, but also have immense amount of parts and interconnections that can be studied by the construction of cybernetic models.

Several organizational theories were proposed for dealing with these kinds of issues. Due to their results they are only successful under certain environmental constraints and they can rarely be extrapolated in a different atmosphere. Authors like Lawrence and Lorsch (1967), Galbraith (1973), Mintzberg (1983), Thompson (1967), developed theories based upon aspects like the following: coordinating mechanisms, hierarchy, roles, collaboration, environment and tasks⁸. In

7 Notice that due to the managers chosen three main reasons, reason why the total percentage can exceed 100%

8 Extracted from Table 2.1 Primary Coordinating Mechanisms and contingencies from Organization Theory.

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summary, three themes from organization theory were identified. First of all, we have contingency theory, which suggests that organizations and deployment systems need to be uniquely designed to fit particular circurmstances. Secondly, a theme which deals with differentiation and integration was proposed. Differentiation results from the need to specialize and to decentralize decisions, while integration attempts to coordinate the decisions and activities of different departments.

Authors (Lawrence and Lorsch, 1967) seem to agree that these mechanisms create a variation in the organization´s effectiveness and cost. The third theme involves decision-making under conditions of uncertainty. For this, good problem solving includes appropriate search mechanisms that reduce uncertainty by finding out more about the alternatives under consideration, or finding additional alternatives.

On the other hand, cybernetic approach which also can deal with organizational issues was proposed by Stafford Beer. This provides a new way to organize effectively an organization, considering aspects of identity, planning, control, communication and implementation. Unlike the other organizational theories described above, this approach allows you to analyze complex systems specifying the minimum functional elements by any organization can be able to maintain a separate existence (Beer, 1985). Beer believes that human organizations are much more complex than they are usually prepared to admit, and the study of these organizations could have equally important consequences (Trevor, 1995).

For interpreting these types of models, Dr. Stafford Beer (1972) developed a model for adaptive complex systems based upon cybernetic eyes, called Viable System Model (VSM). VSM is capable for representing adequately the behavior of any organization in order to facilitate its analysis and proper solution⁹.

Tecnológico de Monterrey has designed and implemented successful organizational models using VSM as tool for diagnostic problems related to faculty issues at Industrial Engineering Department of Campus Estado de México. As a result, guidelines for restructuring and balancing workloads between instructors/professors were determined. This perspective allowed ITESM Estado de México to join into competitive international strategic environment for universities (Bourguet Díaz, 2003).

9 Beer, Sttaford (1972). “Brain to the Firm: The managerial cybernetics of organization”. Chichester Eng. ; New York : J. Wiley, c1981

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Delimitations Problem Definition

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Therefore, by using VSM as a tool for diagnosing current LSS Deployment Phases (BMGI &

De Carlo, 2007) guidelines and policies can be designed and include in the Uncoupled LSS Model in order to assure its successful implementation.

Delimitations Research’s Scope

This research has an explanatory nature (Sampieri, Fernández-Collado, & Lucio, 2008). It will evaluate the Operational Lean and Six Sigma Infrastructures proposed by literature according to VSM requirements. Then, the Value Stream Map Approach (Hernández & Tercero, 2008) derived from Uncoupled LSS model (Moreno, 2007) is analyzed in order to design an adequate Operational Infrastructure Model for executing LSS projects. Finally, guidelines and policies needed for achieving VSM requirements are developed.

Project Execution is defined as all the operational functions and activities developed by team members (from selection to sustainment) in order to achieve the established objective.

Limitations

 Theoretical verification is developed considering the fulfillment of Viable System Model requirements (see methodology section).

 A validation in an actual Uncoupled Lean Six Sigma deployment will be left as future work.

 The guidelines and policies will be limited for ULSS project execution. An extension of this work for execution of LSS projects will be left as future work.

Research Methodology

Taking into account the objectives established, DMADV methodology (which is a variant of DMAIC methodology) will be selected for developing this research (see Figure 1-3 ). Each phase will be documented as follows:

Define: For this phase, the problem statement and definition is established. In addition, the research´s purpose and objectives are determined based upon relevance of the study and hypothesis’ statement. Finally, research’s scope & limitations are established in problem delimitation section.

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Research Methodology Problem Definition

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Measure: In this phase, information gathered from Lean and Six Sigma infrastructures will be compared to define the most adequate infrastructure for LSS project execution. Also, Viable System Model approach and Uncoupled Lean Six Sigma overviews are explained in order to justify their inclusion in Analysis and Design phases (chapters 3 and 4 respectively).

Analysis: In this phase, and assuming that Lean and Six Sigma involve a common characteristic since they deal with program management functions, a VSM perspective for this approach is analyzed in order to determine the minimum required activities for project execution.

Also, the critical success factors provided from systemic Lean & Six Sigma approaches will be analyzed using Viable System Model as a tool to help determine the minimum required factors that should be included for each subsystem at the moment of designing a LSS infrastructure for Project execution.

Design: Once information provided from chapters 2 and 3 has been analyzed and critical success factors that support project execution have been determined, the next phase is to design the proposal of an infrastructure for executing LSS projects. For that, 6 steps have been considered for designing it: 1) Establish main activities needed for each subsystem, 2) Recognition of key responsibilities for supporting the activities to be developed for each subsystem, 3) Creation of cross-table matching activities and responsibilities for each subsystem, 4) Inclusion of CSF for project execution determined, 5) People responsible for executing these activities 6 responsibilities will be identified, 6) Minimum required stages for project execution will be established and 7) Corresponding VSM diagrams for each stage will be developed. As result, regulations for Project Execution will be developed based on this design.

Verification: During this phase, viability of the model proposed in chapter 4 will be determined by checking the fulfillment of VSM requirements and fulfillment of needs identified in define phase. Conclusions about this research will be established and future work will be described.

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Research Methodology Problem Definition

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Figure 1-3 Research Methodology Model Define

• Overview

• Problem Statement

• Objectives

• Hypothesis

• Relevance of the study

• Problem delimitation

Measure

• Background

• Lean

Infrastructure

• Six Sigma Infrastructure

• Comparision between both structures

• Viable System Model Approach (VSM)

• Uncoupled Lean Six Sigma Model Overview

• Conclusions

Analysis

• Program Management Diganostic from VSM perspective

• Analisys of Lean &

Six Sigma Critical Success factors (CSF) for project execution from VSM perspective.

• Advantages

• Disadvantages

• Identification of minimum CSF required for executing LSS projects.

Design Verification

• Design of LSS infrastructure for “In Company”

Deployments based on LSS Axiomatic Model.

• Establishment of minimun required activities.

• Establishment of minimun required responsibilities.

• Establisment of minimun required CSF.

• Identification of stages required for LSS project execution

• Integration of these elements into VSM diagrams for each stage .

•Verification for acomplishment of VSM

requirements for the

infrastructure model proposed

•General Research Conclusions

 Creation of Guidelines and policies

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Background

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Chapter 2. Background

Introduction

During this chapter, Lean and Six Sigma infrastructures will be explained separately, focusing specially in project execution topic, which has been defined as critical factor for successful deployments (see background section, pag.6). Subsequently, key indicators for comparing them will be recognized using Viable System Model as tool for diagnostic. Once these indicators are recognized, they will be established for identifying the differences and similarities between both methodologies. Finally, a conclusion about the most adequate infrastructure for deployment will be identified, which viability will be analyzed through next chapter.

Six Sigma Quick Review

In Six Sigma, the most mature system for ensuring quality at the organizational level, the operational level, the process level, and the individual product level is found. Originated in the late 1980’s by Motorola, Six Sigma has been defined as a structured methodology which requires data and measurement. The cycle of working is described by the DMAIC acronym, which is related with Define, Measure, Analyze, Improve, and Control Phases. The deployment of this methodology is focused on variance reduction, using statistical tools principally.

According to Brue (2002), the Six Sigma purpose is to link internal processes and systems management to end customer requirements. In a Six Sigma transformation, Brue establishes that people is considered as assets, rather than costs (liabilities). This approach employs statistics solely as tools for interpreting and clarifying data and driving decisions. The ultimate goal is to create companies whose systems and processes are as perfect as possible, functioning at their best performance level.

Six Sigma Infrastructure

It takes encourage to implement Six Sigma. That encourage can’t be found in the methodology. Encourage should be found and promoted in the people who use Six Sigma (Brue, 2002). From the Executive to the team member, everyone has to be involved through the project execution. Champions, Master Black Belts, Black Belts, and Green Belts are the key actors for a successful project completion. Process Owners and Team Members will be charged of the sustainment. Financial Rep will be assured of verifying financial savings. Responsibility from

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Background

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Chapter 2. Background

Introduction

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Background

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Chapter 2. Background

Introduction

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Six Sigma Infrastructure Background

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everybody is required; they need to exercise this in all that they do in order to achieve optimum outcomes.

When the Six Sigma business strategy is followed and combined with the wise use of metrics and statistical tools, the strategy can result in dramatic improvements to an organization’s bottom line (Breyfogle, Cupello, & Becki, 2001). Regarding to Brue (2002), the success of Six Sigma relies on the people who are responsible for implementing it. Six Sigma provides some powerful techniques and tools, but the success depends on the people who play the primary roles and assume the central responsibilities for putting those techniques and tools to work for the organization.

Based upon information existing in BMG Six Sigma Training handbooks (2004), Moreno (2007) developed a matrix which shown the roles and responsibilities required for a Six Sigma deployment. The matrix is shown below:

Table 4. Six Sigma Infrastructure Roles: Description and Responsibilities (Moreno, 2007)

Role Description Responsibilities

Executive

Develops the Six Sigma Vision and Deployment Planning Leads Culture’s Change

 To understand the potential benefits of Six Sigma

 To help for documenting and prioritizing business goals/objectives

 To guide Organizational Infrastructure Development

 To identify and work to remove barriers efficiency

 BB’s Supporting

Champion

Establishes goals Selects the Projects Facilitates Black Belts

 To understand Six Sigma foundations

 To identify/define projects aligned to business goals or objectives

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 To select BB

candidates and project assignment

 To take responsibility for financial outcomes’

delivery

 To understand/accept team’s agreement

 To monitory 12-month profits

 To attend Project Selection meetings

 To make sure BB’s receive the support required for the successful execution of their projects

 To make sure full-time participation of BB (training and project execution)

Process Owner

Identifies Opportunities for Projects

Implements Solutions Supports Culture Change Leadership

 To understand/accept team’s agreement

 To monitory 12-month profits

 To attend Project Selection meetings

Finance Rep

Identifies Opportunities for Projects

Implements Solutions Supports Culture Change Leadership

 To select BB candidates

 To assign defined projects

 Responsible for financial savings

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Black Belt

Expert in the use of Six Sigma tools

Provides support to the staff Indentifies opportunities for the application of Six Sigma Tools and methodologies, both internal and external

Looks for business opportunities through partnerships with other organizations

 To apply DMAIC phases into the

project selected by the Champion

 To respect Project schedules

 To accomplish the performance levels set (sigma level)

 To develop a successful project, which should achieve the financial savings required

 To coordinate the green belt team effort

Green Belt

Supports Black Belts

Develops Green Belt project Local “lawyer”

Speeds up deployments

 To apply DMAIC phases into the

project selected by the Champion

 To respect Project schedules

 To accomplish the performance levels set (sigma level)

 To develop a successful project, which should achieve the financial savings required

Master Black Belt

Defines Projects

Guides/trains Black Belts

 To select BB

candidates and project assignment

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 To take responsibility for financial outcomes’

delivery

Team Member

Supports Black Belts

Provides process’ knowledge Develops an specific task into the project

 To understand the potential benefits of Six Sigma

 To help for documenting the process

 To prioritize business goals/objectives

 To guide the organizational infrastructure development

 To remove barriers efficiently

 To Support BB’s

These responsibilities are interconnected as each one is a source/consequence for other. In the figure below, the interrelationship between the key infrastructure roles (see Figure 2-1) and the critical success factors for Six Sigma deployments is shown. The number denoted at left side is the amount of times that this factor can be considered as a source of success for other. The right side number is the amount of times of this factor is considered as a consequence of other’s action.

Figure 2-1 Interaction between key factors for a successful SS Deployment (Breyfogle, Cupello, & Becki, 2001)

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As is noticed for the diagram above, the Executive Leadership, strategy goals, and customer focus can be considered as critical factors for the success of Six Sigma deployments. In other words, high Management has to be committed for providing the basis of deployment (resources, training, planning) in order to achieve the expected results (Deliver results, culture change, and customer satisfaction). In a second level, there are factors which cannot be considered as critical, but that have relevance at the moment of implementing Six Sigma methodology, since they are means through which high management can develop a successful deployment. These factors are, Project Selection and, Training & (Project) Execution.

Both, Project Selection an Execution, require an appropriate team selection and the commitment roles distribution for each member (Moreno, 2007). The figure on next page (Figure 2-2) shows the distribution for each role across the time for the deployment. First of all, at the beginning of execution, the Champion is the principal responsible for the project tracking, principally for the recognizing phase, identifying the important problems into the process, selecting a project which defines its parameters, and determining the vital few factors to be assessed (Brue, 2002). While as, the process owner and Black belt work as advisers in a support level. During the define phase, the Black belt had increased her/his responsibility by the time the Champion reduced it. At this time, the potential factors to measure, analyze, improve and control are recognized, and the project is scoped. Once the project is defined and narrowed down, black belt is uncharged for the phases of Measure, Analyze, Improve and Control. Through these project phases, the Process Owner and the Champion verify the status by periodical review meetings, where also the Finance Rep and the Executive Leader should attend.

At the ending of the project (realize phase), the Black belt establishes a project plan for handing off it to Process owner. This verifies the final project status and signs the plan in agreement. Finally, Process Owner is uncharged to sustain the improvements established, through checklists or templates.

As is it mentioned at Relevance of the study section, a successful project execution impacts significantly in the work’s culture for the organization. In a systemic approach, the ITESM-BMG Six Sigma program proposes a view for the impact of project execution into long term business deployment viability (see Figure 2-3). An important aspect highlighted by Brue (2002) is that not every business issue needs to be treated as “project”. As good as the methodology is, you are not supposed to use it in every instance.

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Figure 2-2. Six Sigma practitioners participation across project phases (BMGI, 2008)

Brue (2002) proposes a strategy for minimizing the losses by clearly communicating and committing to a specifically structured, incentive based compensation plan for all those involved in Six Sigma at any level.

Figure 2-3. Impact of successful project execution into business level (BMGI, 2008)¹⁰

10 1 Rev= Time required for complete 1 Revolution (complete turn) 0.75

1.25 1.75 2.25 2.75

Champion BB/GB

Process Owner Finance Rep Executive/Leader

Business Level:

Improvement of Market share Improvement of

profitability Long term Viability

•1 Rev. 4-5 years

Operations Level:

Performance Improvement Work Force Reduction Raw Material

Reduction Hidden Factoory

elimination

•1 Rev. First 1-2 years

Balck Blet Level:

Focus on Projects Defects Reduction

Variation Reduction

•1 Rev. First 3-5 Months Leadership

Support

Review

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Lean Quick Overview Background

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Regarding to ITESM-BMGI In-Company deployment program, a successful project provides certain characteristics for a company in order to improve their competitiveness, these characteristics are¹¹:

 Alignment of the strategic priorities of the business, generally with a broad focus on the financial outcomes through project execution

 Radically reduction of costs by the implementation of Six Sigma tools and methods on the continuous improvement of their products and processes

 Improvement for the company’s profitability, based upon resource savings over investment ($80,000 of savings per year for Black Belt)

 Documenting solutions and knowledge acquired

When considering projects, it is best not to initiate a massive undertaking that is impractical and requires a lot of time, people an departments (Brue, 2002). Staying focused on the core issues and methodically attacking them through a series of projects keeps the goal in sight and a lot more attainable.

In summary, Six Sigma has an infrastructure in which each member is takes a specific-skilled role in order to assure a successful implementation. The monitoring of the project’s progress is evaluated in different ways according to the hierarchy level of the presentation (BB level, Champion level, Executive level). By making assure that the results are broadcasted, the BB team is solid, and that the executive staff promotes the methodology, the company will be positioned to sustain the gain.

Lean Quick Overview

Developed by James P.Womack in 1990 in his book “The machine that changes the world”, and based on Toyota Production System (TPS) implemented in the mid of 1980’s, Lean is a continuous improvement methodology focused on waste elimination. Womack says that Lean provides a way to make work more satisfying by providing immediate feedback on efforts to convert waste into value, creating new work rather than simply destroying jobs in the name of efficiency.

According to Alukal (2006), for many managers there are 3 essential ingredients for successful Lean implementation: 1) Sustained, hands-on, long term commitment for senior

11 Handbook of Definition Phase. ITESM-BMGI Six Sigma program. 2009. pp. 32

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Lean Quick Overview Background

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Regarding to ITESM-BMGI In-Company deployment program, a successful project provides certain characteristics for a company in order to improve their competitiveness, these characteristics are¹¹:

 Alignment of the strategic priorities of the business, generally with a broad focus on the financial outcomes through project execution

 Radically reduction of costs by the implementation of Six Sigma tools and methods on the continuous improvement of their products and processes

 Improvement for the company’s profitability, based upon resource savings over investment ($80,000 of savings per year for Black Belt)

 Documenting solutions and knowledge acquired

When considering projects, it is best not to initiate a massive undertaking that is impractical and requires a lot of time, people an departments (Brue, 2002). Staying focused on the core issues and methodically attacking them through a series of projects keeps the goal in sight and a lot more attainable.

In summary, Six Sigma has an infrastructure in which each member is takes a specific-skilled role in order to assure a successful implementation. The monitoring of the project’s progress is evaluated in different ways according to the hierarchy level of the presentation (BB level, Champion level, Executive level). By making assure that the results are broadcasted, the BB team is solid, and that the executive staff promotes the methodology, the company will be positioned to sustain the gain.

Lean Quick Overview

Developed by James P.Womack in 1990 in his book “The machine that changes the world”, and based on Toyota Production System (TPS) implemented in the mid of 1980’s, Lean is a continuous improvement methodology focused on waste elimination. Womack says that Lean provides a way to make work more satisfying by providing immediate feedback on efforts to convert waste into value, creating new work rather than simply destroying jobs in the name of efficiency.

According to Alukal (2006), for many managers there are 3 essential ingredients for successful Lean implementation: 1) Sustained, hands-on, long term commitment for senior

11 Handbook of Definition Phase. ITESM-BMGI Six Sigma program. 2009. pp. 32

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Lean Infrastructure Background

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management, 2) Lean building block training for all employees, 3) Good cultural change management in the transformation from the traditional push to lean mentality. These concepts are supported by 5 principles of Lean deployment (implementation), which are¹²: 1) Provide the value actually desired by customers, 2) Identify the value stream for each product, 3) Line up the remaining steps in a continuous flow, 4) Let the customer pull value from the firm, and 5) Search for perfection, the situation of ideal value provided with zero waste.

In order to accomplish these principles, Flinchbaugh (2006) provides a operating system basic upon systemic thinking, in pursuit of identifying a manage system capable to help people responsible for implementing Lean learn about the execution phases required and the pitfalls to avoid (the explanation of this operating system is beyond this investigation), however, the roles and responsibilities required for implementing it are not described. To that end, Moreno (2007) recognized the TPS infrastructure as an adequate organizational structure for implementing Lean, as it can be distinguished next.

Lean Infrastructure

George Aukal (2006) mentions that in order to implement and sustain Lean, teamwork is absolutely vital. People working together as a team, channeling their skills, experience, knowledge and innovation for the common good is an integral part of lean. Aukal says also Senior’s management long term support and commitment are absolutely essential for implementing Lean.

Unlike Six Sigma, Lean doesn’t have a hierarchy defined infrastructure (Moreno, 2007), due to that, the most likely role’s structure recognized is derived from Toyota Production System (TPS) (Liker, 2004). According to Liker, Toyota’s assumption is that if the foundation of the company is made teamwork, individual performers will give their hearts and souls to make the company successful. Combining the concepts of situational leadership with the highly evolved work process of TPS led to something new that could not be taught in a minute.

For Liker (2004), in a conventional company, white collar or skilled-trade staff is responsible for problem solving. By contrast, shop floor work groups are the focal point for problem solving in the TPS. Since Toyota exists to add value for its customers and it is team members who do the value-added work, the team members are the top of the hierarchy. The rest of the hierarchy is there to support them. The next line of defense is the team leader, an hourly employee who

12 For further details, consult the book: “Lean Solutions”; Womack and Jones (2005), Free Press, New York.

pp. 2.

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management, 2) Lean building block training for all employees, 3) Good cultural change management in the transformation from the traditional push to lean mentality. These concepts are supported by 5 principles of Lean deployment (implementation), which are¹²: 1) Provide the value actually desired by customers, 2) Identify the value stream for each product, 3) Line up the remaining steps in a continuous flow, 4) Let the customer pull value from the firm, and 5) Search for perfection, the situation of ideal value provided with zero waste.

In order to accomplish these principles, Flinchbaugh (2006) provides a operating system basic upon systemic thinking, in pursuit of identifying a manage system capable to help people responsible for implementing Lean learn about the execution phases required and the pitfalls to avoid (the explanation of this operating system is beyond this investigation), however, the roles and responsibilities required for implementing it are not described. To that end, Moreno (2007) recognized the TPS infrastructure as an adequate organizational structure for implementing Lean, as it can be distinguished next.

Lean Infrastructure

George Aukal (2006) mentions that in order to implement and sustain Lean, teamwork is absolutely vital. People working together as a team, channeling their skills, experience, knowledge and innovation for the common good is an integral part of lean. Aukal says also Senior’s management long term support and commitment are absolutely essential for implementing Lean.

Unlike Six Sigma, Lean doesn’t have a hierarchy defined infrastructure (Moreno, 2007), due to that, the most likely role’s structure recognized is derived from Toyota Production System (TPS) (Liker, 2004). According to Liker, Toyota’s assumption is that if the foundation of the company is made teamwork, individual performers will give their hearts and souls to make the company successful. Combining the concepts of situational leadership with the highly evolved work process of TPS led to something new that could not be taught in a minute.

For Liker (2004), in a conventional company, white collar or skilled-trade staff is responsible for problem solving. By contrast, shop floor work groups are the focal point for problem solving in the TPS. Since Toyota exists to add value for its customers and it is team members who do the value-added work, the team members are the top of the hierarchy. The rest of the hierarchy is there to support them. The next line of defense is the team leader, an hourly employee who

12 For further details, consult the book: “Lean Solutions”; Womack and Jones (2005), Free Press, New York.

pp. 2.

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worked on the line but has an opportunity for a small promotion. The team leader cannot take disciplinary action but is there to support the team members. The first-line supervisor is the group leader, who is responsible for leading and coordinating a member of groups.

Liker, also states that by the standards of many companies, Toyota has an operational infrastructure which looks very inefficient –lots of leaders for a small number of workers (Figure 2-4). Team leader typically have just four to eight workers that they support and most of the time the team leader are not doing production jobs. Group leaders typically have three or four groups.

Figure 2-4 Typical Toyota organization - assembly operation¹³

The roles and responsibilities for team members, team leaders, and group leaders are summarized below (Liker, 2004):

Team Member (TM)

 Perform work to current standard

 Maintain 5s in their work area

 Perform routine minor maintenance

 Look for continuous improvement opportunities

 Support problem-solving small group of activities

13 Source: Bill Constantino, former group leader, Toyota, Georgetown.

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 Process start-up and control

 Meet production goals

 Respond to andon calls by TM

 Confirm quality-routine checks

 Cover absenteeism

 Training and cross-training

 Work orders for quick maintenance

 Insure standardized work is followed

 Facilitate small group activities

 On-going continuous improvement projects

 Insure parts/materials are supplied to process Group Leader (GL)

 Manpower/vacation scheduling

 Monthly production planning

 Administrative: policy, attendance, corrective actions

 Hoshin planning

 Team morale

 Confirm routine quality and TL checks

 Shift to shift coordination

 Process trials (changes in process)

 TM development and cross-training

 Report/track daily production results

 Cost reduction activities

 Process improvement projects: productivity, quality, ergonomics, etc…

 Coordinate work with up-stream and down-stream processes

 Group safety performance

 Help cover TL absence

 Coordinate activities around major model changes

This infrastructure shows a progression of responsibilities form team members to group leaders. Team members perform manual jobs to standard and responsible for problem solving and continuous improvement. Team Leaders take on a number of the responsibilities traditionally done by “white collar” managers, though they are not formally managers and do not have the authority to discipline other team members. Their prime role is to keep the line running smoothly and producing quality parts. The equivalents of them are the first grade engineers who have mastered a specific technical area and take on the role of supporting and developing junior engineers in their specialty (Liker, 2004).