Page 173 - Lean six sigma demystified

152 Lean Six Sigma DemystifieD

In 1995, I was struggling with the complexities and inherent problems in a huge
telecommunications company. Sitting at my desk, I was staring at a vast spread-
sheet of facts and figures about postage costs for the company’s bills. With a
cranky VP sitting upstairs, I decided to do a simple analysis. There had to be a
pattern to the steady increases in postage costs. It wasn’t the postal service or
ride-along coupons, so it had to be something else.
More and more of the company’s bills were being mailed at the 2-ounce (oz)
rate instead of the 1-oz rate. So either the postage meters were wrong, or the
bills were getting heavier.
On top of this, every month thousands of bills were returned due to bad
addresses. I went through the bins of returned bills looking for any bill over the
1-oz rate. One by one I opened them up looking for the secret to unlock the
root cause of increased postage costs.
It only took a few dozen bills to discover the culprit. The company had
begun billing for smaller telecommunications companies. Each company got
their own page in an already thick envelope. Page by page and company by
company, the bill was steadily creeping over the 1-oz limit. Of course, the prod-
uct manager who sold the billing service hadn’t priced it to cover the increases
in postage costs.
On the basis of my research, a team redesigned the bill to be smaller, lighter,
and more readable. In the year after its implementation, postage costs fell by
$20 million a year.
What charts did I use to display the problem and garner support for the
redesign?

Control Charts, Pareto Charts, and Fishbone Diagrams

I used them again to save $16 million a year in billing adjustments.
And again to save $3 million a year in service order errors. And $5 million a
year in denied claims for a hospital system. Isn’t it time you discovered the
power of control charts, Pareto charts, and fishbone diagrams to laser focus your
improvement efforts?

Fire Alarm Case Study

In 1990, I worked at U.S. West’s Advanced Technologies Facility. I’d been strug-
gling with the improvement process because my teams weren’t really focused
on the right thing. They had been tasked with world hunger, boil-the-ocean