Control Plans:
Ensuring the Economic Return of the
Application of Statistical Thinking in
Improvement Projects
Robert Mitchell
3M Corporate Quality
3
Statistical Thinking is a philosophy of
learning and action based on the following
fundamental principles:
z
All work occurs in a system of interconnected
processes
Variation exists in all processes
Understanding and reducing variation are keys
to success.
Improvement using
Statistical Thinking
Process
Variation
Data
Statistical Thinking
Philosophy
3
Analysis
Improvement
Statistical Methods
Action
Process
Process
Inputs
Outputs
Suppliers
Customers
A series of activities that converts inputs into outputs
3
The Bottom Line:
How do we capture the benefits from the
application of Statistical Thinking ?
Y = f(x)
3
How Projects Impact The Business Examples
Revenue Growth - Increase top line through
capacity expansion and new product
introduction/extension
Operating Margin - Bottom-line impact of
capacity expansion (growth) or cost reduction
(productivity)
Working Capital - Cash impact of inventory
or receivable reductions or reduced thruput
time (cycle time reduction - improved turns)
How Projects Impact The Business Examples
Revenue Preservation - Maintain volume
otherwise lost (due to stockouts or lost
customers, etc.)
Cost Avoidance - Reduce the planned spend
(that would have otherwise been incurred)
Reduce NVA - Redeployment of resources
(personnel, equipment, etc.) without removing
their cost from the overall system - consider
customer satisfaction
Project Selection Elements
Clarify the big picture using the strategic plan
and annual business plan for the business
Top-down project identification
Establish productivity baseline
Bottom-up project identification
Prioritize projects based on business metrics
Select key projects with leadership support
Check for accountability
3
Clarifying the Big Picture
The functional goals should support the business
plans.
The key metrics (Critical Ys) for the business
are identified and goals set for each year.
Projects should support the key business
directives and should be measurable through the
process key metrics.
3
Project Identification Methods
Two fundamental methods:
Top-Down
Projects are identified through association with the
metrics of the companys Strategic Plan
Bottom-Up
Projects are identified through association with
current process issues.
Project Selection Approaches
Strategic / Operating Plan Metrics
Opportunities
Opportunities
to
to reach
reach the
the
goals
goals
Issues
Issues
needing
needing
attention
attention
Problems, Defects, Dissatisfied
Customers, Downtime, Pain
3
Example: Goal Tree Alignment
Projects
More Valued Features
Metrics
Better
Increase On-time delivery
Increase Top Box
Fewer Defects
Yield, RTY
Increase Capability
Working Capital / Cash
Faster
Reduce Cycle Time
Growth
Rate
Redesign Process Flow
Employee Satisfaction
Cycle Time
How
Goals
Productivity / Cost
Reduce Waste
Lower Inventory
Cheaper
Reduce Rework
Reduce Waste
First Time Acceptance
COPQ
Eliminate non-value add
Why
Decrease RM Cost
Works Best for Operational Projects
Example: SIPOC Model
Defect
Suppliers
Inputs
Outputs
Customers
x
Effectiveness of
Inputs
Efficiency of
Process
Effectiveness of
Outputs
Rolled Throughput
Yield, First Pass Yield
Rework, Scrap, Waste
Throughput
% Things Gone Right
Days of Stock
Days Beyond Terms
CTQ Performance
Product Features
On-Time Delivery
# Warranty Claims
Customer Loyalty
Response Time
RM Consistency
Intellectual Property
RM Availability
Mgmt Strategic Goals
Market Presence
Availability of
Information
Works Best for Transactional Projects
COPQ Iceberg
Tip of COPQ Iceberg
Customer Returns,
Waste, Scrap,
Rejects, Inspection
Costs, Recalls,
Rework, Warranty
Claims
Excessive Overtime,
Premium Freight
Costs, Expediting
Costs, Excess
Inventory, Consumed
Capacity, Customer
Allowances, More
Setups, Lost Sales,
Late Delivery, Long
Cycle Times,
Engineering Change
Orders, Lost
Customer Loyalty
Traditional Quality Costs, 4-5% of Sales
Tangible,
easier to
measure
Full COPQ, 15-25% of Sales
Lost Opportunity
Hidden Factory
Intangible, more
difficult to
measure
Average COPQ Approximately 20% of Sales
Entitlement
z
Defines whats possible - a vision
Provides a performance level for which
to aim
Tells you how your process performance
relates to perfection
Provides an internal benchmark
Entitlement
z
Best Possible Performance
Rolled Throughput Yield = 100%
Cost of Poor Quality = $0
Speed:
Best observed performance over a short period of time
Predicted by business process design
Predicted by should map
Capacity:
Performance specified by equipment manufacturer
Predicted by engineering & scientific fundamentals
Best observed performance over a short period of time
Best performance predicted by empirical relationships developed
from process data
Improvement Methodology
PDCA
DMAIC
Define
Control
ACT
PLAN
CHECK
DO
Measure
Improve
Analyze
Control Plans / Methods
Importance to the improvement process
z
Documented control methods for all critical Process Output
Variables and Process Input Variables in the process drives
sustained gains
Effective control methods maintain the level of performance
over the long term
Provides a complete critical to operation list of variables
and their associated measurement systems / control methods
Identifies the Reaction Plan for the Process Owners to resolve
any out-of-control occurrences
Control Plans / Methods
Outputs
z
Updated Control Plans and methods for all critical Process
Output Variables and Process Input Variables
Completed Reaction Plan for each Process Input Variable /
Process Output Variable
Sampling methods and measurement system controls in place
for each Critical Process Input Variable and Process Output
Variable
Procedures and appropriate documentation
Identified and completed training for all pertinent personnel /
functions affected by changes in the process
3
z
ISO 9001:2000
Management
Responsibility
Resource
Management
Input
Measurement,
analysis,
improvement
Product
Realization
Output
Three Diamonds of ISO
Management Review
(5.6.1)
Corrective/Preventive Action
(8.5)
Internal Auditing
(8.2.2)
Benefits That Can Be Maintained/
Gained With ISO 9001:2000
Improved consistency of products and services
through documentation of standards and
specifications
Organizational retention and transfer of process
knowledge through improved documentation.
Current and accurate raw material specifications
Improved calibration and accuracy of measuring
devices
3
Benefits That Can Be Maintained/
Gained With ISO 9001:2000
Discipline to follow documented processes
Established requirements for training and record
keeping
Improved system performance
Provides a process to reliably deliver what you
promise to customers
Benefits That Can Be Maintained/
Gained With ISO 9001:2000
Identifies improvement project opportunities with
supporting information about:
Current performance levels
Measures and
Processes used
Provides a framework to sustain the gains of
continuous improvement projects
Case Study Adhesive
Performance
Corporate
Critical Y:
Growth
Cost
Cash
Business Unit
Critical Y
Project Y
Financial
Impact
Adhesion Performance Improvement
Final Capability
Process in control
Mean on target @29.9
oz/inch
50% reduction in variation
Initial Capability
3 KPOV out of Control
Mean 35 oz/inch over
target of 30
Individual Value
P S A - A d h e s io n
1
90
80
70
60
50
40
30
20
S u b g ro u p
U C L = 3 7 .2 8
M e a n = 2 9 .9 0
L C L = 2 2 .5 1
0
50
P roc ess
Moving Range
30
100
20
10
0
U C L = 9 .0 7 0
R = 2 .7 7 6
LC L=0
Adhesion Performance Control Plan
Transitioned 8 of 12 identified critical Xs from
uncontrolled to controlled variables
Documented new SOPs, implemented mistake
proofing, and instituted training
Critical Ys
Adhesion to Glass
5-Bond
Critical Xs
Ct Wt Profile
Coating Appearance
Adhesive Formulation
ISO 9001:2000 Management Review
Quarterly internal audits of control plan
3
Key Learnings - Control Plans
Start developing the control plan as soon as possible
After completion of Measure or Analyze phase
Select the appropriate process owner and keep him /
her informed of and involved in the Control Plan
Team membership of Process Owner is crucial.
If project outcome is not important to the PO, you have
chosen the wrong Process Owner.
Key Learnings - Control Plans
Keep the Control Plan as simple as needed to sustain
the desired results
Dont replace a complex project with an equally complex
control plan.
Use existing culture and SOP
Simplify or mistake proof process to prevent the
need for Active Control
