Q 287. What is IPO-FAT tool and how can it be used for identifying or prioritizing projects for Lean Six Sigma execution? 

 

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Þ     Meaning of IPO Fat tool – This is a very Powerful tool which helps to assess business functions and to identify opportunities. This tool helps us in prioritizing the opportunities.

Unlike a quality function deployment tool this tool helps us in identifying a lot of opportunities which any organization Might not have thought about.

 

This is best suited for a process where there are multiple issues and it's difficult to prioritise which metric or opportunity should be worked upon first. This This tool can be used in any domain And it can Be used before one starts any project which can be a 6 Sigma lean project or any business process re-engineering project .This helps as a guideline as to what is the sequential pattern For any improvement journey .

 

Þ     When Can the IPO Fat tool be used – This tool can be used in any business where there are multiple problems and the root causes are not known. This not helps to prioritize which problem should be attacked first and this can also help in resolving some interrelated issues. This tool helps to understand what sequence should be used for the improvement projects.

 

Þ     Scope of IPO Fat Tool and the essential Components: - Any process will have an input process and output. IPO tool uses the same to understand what are the opportunities based on 3 critical factors

 

1.      Flow – How the input moves across the various process stages

2.      Accuracy – number of quality defect which are generated at each stage

3.      Timelines – Time taken for each policy stage

 

Below is the demonstration of an IPO Fat Tool:-

 

In the above table the green is for all Six sigma project

Yellow is for Lean project & blue is for Lean & Six sigma project

 

As per this methodology the priority is set and it should mean that the flow should happen from 1 to 6.

 

For example in the above example it will make sense if there is first a project to reduce misdirected calls and then work on a project for reducing abandon %( 2nd Priority) .As for those calls which are out of scope there will be not much of a business impact if we are able to pick the calls as these calls will anyway be transferred to the other department.

 

Post which the 3rd Priority can follow where we focus on improving the quality of the in scope calls. There can be some Lean or six sigma project around reduction of not ready time.

4th Priority can be identifying opportunity around Readiness .One project can be how to reduce the system downtime so that more agents are ready to take calls which will increase the agents available and improve the overall customer satisfaction.

 

The 5^th priority should be working on after call work so that more agents are ready to take calls.

 

Once the same is done the next priority (6th Priority) can be reducing the talk time which will help in providing faster resolution to the customer. This will result in customer satisfaction.

  

 

The team can use brainstorming or other discussion to find project around the above opportunities .A lot of problem can be related and once the root cause is found for one problem and solutions implemented it can also help in resolving other problems.

 

 

Lean Six Sigma is a process-focused strategy for achieving new levels of performance throughout any company. We need to focus on a process as a system of inputs, activities, and output(s) to provide a holistic way to all the factors and the method they interact together to create value or waste. Many products and services, when used productively, are also processes. An ATM takes account information, personal identification number, and money and processes a transaction that dispenses funds or an account refill. A computer can take inputs, energy, and software to process a Word document. A process diagram can represent this process model, often called an IPO diagram, for input–process–output.

 

Definition of IPO-FAT Tool

The IPO-FAT tool is a method of evaluating a business process to identify and prioritize potential possibilities. It explores the Inputs, Process, and Outputs (IPO Flow) of a business area from three perspectives: 1) Flow, 2) Accuracy, and 3) Timeliness. It is often used when a business area has several problems with potentially inter-related root causes. It is not immediately known what order to focus on the foundation causes and problems. It can even be accustomed to find opportunities during a business area by exploring the inputs and processes in this business area from different perspectives.

Finding and Prioritizing Six Sigma Projects with an IPO-FAT Tool

A different approach to finding hidden project possibilities is to choose a team of specialists and run through an IPO-FAT tool. This tool encourages a team of subject matter experts to analyze everything in their business area that runs within their Input > Process > Output (IPO) model and explore them from three different prospects: Flow, Accuracy, and Timeliness (FAT). Applying this approach allows the team to focus their reasoning and brainstorm into specific areas that will reveal hidden possibilities.

A team of experts who works through this tool tends to become energized in finding all possible opportunities to improve it. Once all possible ideas are distinguished, the tool also correctly guides the team to prioritize those possibilities. It also helps the team to assume if the projects will likely be using tools that are more adapted toward Lean or Six Sigma or a combination of them.

 

Developing a project Strategy using IPO-FAT tool

The strategy for using this tool would be the following:

• Identify and explore opportunities using the IPO-FAT tool and brainstorming with the team.
• Pilot and implement improvements in the office or workshop.
• Build the necessary control to measure and sustain improvements over time.

Advantages of using an IPO-FAT tool

• The IPO-FAT tool is a method for evaluating a business area to evaluate and prioritize potential opportunities.
• As opposed to the QFD that prioritizes all existing and known opportunities, the IPO-FAT method can help a team to identify new and different opportunities that do not necessarily have been previously considered.
• The IPO-FAT tool is used more effectively when a business area has several problems, with potentially severe and interrelated root causes. It is not immediately known what order to target the root causes. 
• It can also be a very effective method of building and communicating the project strategy.
• The IPO-FAT tool also identifies the priority for each opportunity and the Lean or Six Sigma methodology to use. The color of each box helps us identify the work methodology and improvement that best suits each element.

The idea of using this tool would consist of generating brainstorming within our work team so that it would serve to talk individually about each specific cell to find opportunities for improvement in each one of them.

 

Example: 
A small BPO believes there are problems with its hiring process. Several of the junior technicians that have been hired remained at the company for less than a year. Which is a high cost to the company since recruiting and training new technicians is time-consuming and expensive. The HR manager decides to put together a group of people with extensive experience hiring new technicians. One of their first assignments is to produce an IPO-FAT model of the hiring process as per the below;

 

	Input ➠	Process ➠	Output
Flow	Resumes / Recommendations	Interviews /  Diagnostic test	Job filled
Accuracy	Credit reports/ Academic records	Psychologist review/ Problem-solving exercise	Six-month job performance rating
Timeliness	Portfolio of Job	Hiring manager assessment	Job satisfaction review

 

Used correctly, the IPO-FAT Model offers an efficient way to both analyze and document the critical aspects of a transformation process. 

Benchmark Six Sigma Expert View by Venugopal R

Background

Right from the days we heard of ‘7 QC tools’ we have come across numerous tools that help in catalyzing and facilitating a team-thinking process. Many of the TQM and Lean Six Sigma tools continue to enhance this intent. The IPO-FAT is a tool that helps organize a team’s thoughts to identify potential project opportunities for a given Business Process.

 

Most of us would be familiar with the SIPOC tool that is used during the Define Phase of a Lean Six Sigma Project. One of the important uses of SIPOC is to identify the sub-objectives (small y’s) for a project. By looking at the outputs at each step of the SIPOC we would be able to identify metrics that would serve as sub-objectives for the main objective of the project. As the project progresses, we can also use the SIPOC for identifying the input factors, also known as ‘control’ factors or ‘x’ factors for the project.

 

Though DMAIC tools are largely associated with certain phases, some of the tools are applicable across phases. In this context, SIPOC is applicable even for identifying project opportunities. A Business Process can be defined at a broad End-to-End scale or as a very specific segment. Some of the popular categories for improvement to look for, in a business process would be related to Efficiency, Quality and Time.

 

The IPO-FAT methodology

The IPO-FAT methodology prompts us to break up the Inputs, Process and Output areas of an overall Business Process and look for opportunities related to the 3 categories, viz. Flow, Accuracy and Timeliness. The SIPOC is usually used during the Define phase after the project is identified, whereas IPO-FAT may be considered as its variant that could be used to identify project opportunities.

Once we have a Business Process that we would like to improve, this tool can trigger our thoughts in identifying various project opportunities. The overall Business Process is split as Input, Process and Output, and each of these segments are mapped against the 3 parameters viz. Flow, Accuracy and Timeliness as per the IPO-FAT matrix.

 

How to use IPO-FAT methodology

IPO-FAT provides guidance for

a)    Identifying project opportunities

b)    Prioritization of project sequence

c)    Likely applicable Project methodology

 

Once we tabulate the IPO-FAT table as below, we can look 9 broad areas for project opportunities.

 

The type of opportunities mentioned in cells of the above table are indicatory and may be modified depending upon the chosen situation.

 

You may observe the numbers provided on the cells as guideline for deciding the priority of projects. For instance, any issues on the Incoming Volumes may be addressed first, so that the downstream projects need not be burdened with such issues that are possible to be addressed upstream.

 

The colors of the cells suggest the likely methodology for the project – Six Sigma, Lean or combination of Lean & Six Sigma. However, the actual choice of sequence and methodology may be finalized based on other factors specific to the situation.

 

Example

I have attempted to illustrate the usage of IPO-FAT for identifying improvement projects using a familiar example most of us can relate with… Baggage handling in an airport. I have mentioned one project for each cell as an example.

 

 

With the IPO FAT structure, at least nine project opportunities could be identified for this process. It may be noted that some tweaking has been done for the sequence and the applicable methodology. Though I have suggested them based on lay-man knowledge, with the right teams involved in the process, and using all stakeholder inputs, it will be possible to come up with a relevant and exhaustive list of project opportunities using IPO-FAT methodology.

 

IPO-FAT - Tool

 

Hotelling is one of the favorite occasions for every individual. He likes to visit Hotel, have a delicious food – Lunch or Dinner. Everyone has a comment about the taste of the meal, time taken for the meal, neatness while preparing the meal, ingredients used, quantity consumed and left over etc. There are few aspects associated to that meal. Every meal is graded on all above factors and it is termed as overall Tasty, delicious or not so good meal. Meal received in time. Meal received in presentable way etc, etc.

 

Most of the quality conscious hotels conduct survey and always keep improving themselves for all above aspects to have customer delight. This delight is going to keep them running and serving more and more customer. There is the Growth for them. Surveys give them overall picture. Where exactly to improve is the Big Question. The answer to this question is not so easy and Hotel management and staff have to really work hard to find the area for improvement.

 

This is just one example, this is the case everywhere, and there are processes involved. Process is the basic part of every manufacturing; it may be food or machinery.

 

So to find the step, stage where to focus for improvement for better quality, we need to divide the complete set of steps or stages of whole manufacturing and look at all steps with specific observations, analysis and then actions and improvements. These are the big activities involving compilation of the data from the survey, analysis of the data with the help of statistical tools, making inference from the tools, deciding different line of action for the improvement and achieve the results. In this case tools used for improvement may be Six Sigma DMAIC project, PDCA, Lean tools etc, depending upon the data, improvements required, importance, timelines available, feasibility and available resource.

 

Again after some time same cycle keeps repeating as taste of customer, situations in market, advancements in technology keeps changing rather improving better and better. Every business has to keep evolving to sustain in the competitive market.
 

Generally speaking there are following major aspects for every manufacturing –

I – Input – the starting ingredient for every manufacturing

P – Process – The value addition activity performed to get final (or semi finished)       product.

O – Output – Is the final finished (or semi finished for other process) product.

 

Likewise every aspect is having three perspectives associated with it. These perspectives are very important to look at these aspects, observe them, analyses them and check for improvement.

F – Flow –  The way these aspects are moving.

A – Accuracy – Check for the correct specifications and quality at each stage.

T – Timeline – Most crucial from engagement of resources point of view.

 

So every manufacturing is viewed through glasses of above three aspects and three perspectives – making a 3 x 3 matrix as below. The important steps are numbered 1 to 6 as shown in the table. Each one is analyzed as per sequence of 1 to 6. As per significance the sequence may be changed or some steps may be escaped. Once the steps are analyzed improvement may be done with the help of following methodology.

-       Six Sigma (Effectiveness)

-       Lean (efficiency)

-       Lean & / or Six Sigma
-       IPO-FAT Tool

              

Aspect Perspective	Input	Process	Output
Flow	1. Incoming Volume	2. Work flow Rhythm	Production Rate / RTY
Accuracy	4. Readiness	3. Quality / Value Add	Defect – DPMO
Timeliness	5.  Arrival / Set up time	6. Handle time	Turn Around time (TAT)

 

Practical use of the Tool.

Recently we had conducted a study to reduce the Turnaround time of one of the activity as follow.

The initial duration of the activity was 300 minutes and task was to reduce the duration of the activity to reduce downtime to improve Productivity. This was the activity done every month on 5 to 6 machines and hence was having most impact on productivity.

 

1. Incoming Volume – What opportunities are there to reduce the incoming volume from the prior output? - 

- After brain storming with team there were no much scope for incoming volume for the activity.

 

2.  Work flow Rhythm - How can throughput (takt time) be optimized by evaluating FIFO, batch

Processing or schedule balancing? In this case flow of work is analyzed

 - Yes there were scope and with the help of effective sequencing and balancing of activities nearly 50 minutes were reduced.

 

3. Quality / Value Add - What process steps don't add value, aren't required or don't meet policy/specs? All the activities are analyzed for the value addition as customer pays for only value addition.

  - Yes, there were scope and all non value adding activities were eliminated and 20 minutes were reduced.

 

4. Readiness - How complete or accurate are the inputs before the process? This is very essential. Simple steps of 5S helps a lot to arrange all the input spares and bought out required in easy accessible manner. The team was trained for doing first time right to reduce rework.

 - The readiness of spares and tools in a systematic and easy manner helped to reduce search time which further reduced 15 minutes.

 

5. Arrival / Set up time - How much delay between prior output and current input? How much setup or lead time is required before process? Offline and online activities were also bifurcated and most of the activities taken offline.

 - This was the major contributor and after systematic study it saved another 40 minutes.

 

6. Handle time - How much time to perform value-added steps in process?

 - Setting of the machine was one of the crucial activities.  With the help of PDCA the activity was re defined and few one point lessons were given and displayed. This activity needed lots of accuracy. The effectiveness achieved by further 20 minutes saving.

 

( Due to confidentiality no much details are revealed)

 

Conclusion:- In IPO-FAT tool - Distributing all the activities in simple easy to analyze manner. Brainstorming with team and deciding the tools to be used depending upon the criticalness and suitability the required improvement is brought in. This tool is  most effective and easy to decide the project.

 

 

 

 

Ref- StatStuff.com

 

IPO (Input-Process-Output)
FAT (Flow, Accuracy, Timeliness)

 

IPO-FAT is one of the effective techniques to evaluate and identify potential improvement opportunities in the service area.

 

It is used to
Identify and explore opportunities
Brainstorm
Pilot and device improvements
Build control to measure and sustain improvements.

 

As divergent to QFD which prioritizes existing and known opportunities, the IPO-FAT method can help a team to identify new and different opportunities which is not considered previously

 

It is effectively used under listed scenarios:
Issues/problems associated with critical and interrelated causes
When we are not able to prioritize the problems
When it is hard to identify focus area or start point
 

It is also a very effective method of building and communicating project strategy.

 

 

This tool priorities opportunity while using Lean/Six Sigma methodology for improvements. The color of each box helps us to identify which is the work methodology and improvement that best suits each element.

Using IPO-FAT effectively can help in generating ideas through brainstorming and can subsequently help in identifying opportunity for improvements during the activity.

 

Sudhir G has provided a clear example with prioritization explained. He is the winner for IPO-FAT tool. Other notatble responses are from Mohamed Asif, Sourabh Nandi and Aritra Das Gupta. 

 

do read the response by Benchmark Expert Venugopal.