INTRODUCTION:
LEAN and SIX SIGMA , have been defined as the two leading business process improvement strategies that bring a gamut of necessary tools to the workplace, which, when used properly combined with leadership , support and managerial commitment, can make a profitable difference in the way companies work.
Lean manufacturing: definition :
Lean Manufacturing can be defined as an operational strategy which is oriented towards the achievement of the shortest possible cycle time by waste elimination principles. It has been derived from the famous Toyota Production System(TPS) and the key is to achieve increase in the value-added work by the elimination of waste and incidental work reduction. The technique works on decreasing the time gap between customer order and shipment. The technique is designed for profitability improvement, customer satisfaction, employee morale and lastly, throughput time . The benefits seen , include lower costs, higher quality, and shorter lead times.Lean manufacturing as a concept , represents half the human effort in the organisation , reduced investments in tools , engineering and maintenance and engineering hours .
Six sigma : An overview
Six Sigma methodology creates a business processes usingDFSS(Design For Six Sigma) principles. Six Sigma aims for perfection. It allows for only3.4 significantdefects per million opportunities for each product or service. Six Sigma relies primarily on statistical techniques to reduce defects and measure quality.
THE PROJECT (REPORT) THEME :
Lean Six Sigma : A PERFECT BLEND OF SPEED AND PRECISION :
The lean six sigma approach is a dynamic , synergistic force and not two competing initiatives. Lean and six sigma are collaborative and complementary in nature and when performed efficiently , represent a long term business practice that produces unparallel results. While Lean focuses on elimination of non value added steps in a process , six sigma focuses down its approach on reduction of variation over the remaining value added steps . lean ensures the work of the organisation focuses on the right activities and six sigma enables the organisation to do the right thing , the very first time , they are done . The definition and establishment of value flow as demanded by the customer is defined by Lean and the value flow is smooth and uninterrupted , is what is ensured by six sigma .
SECTION 2 :
FINDINGS AND LITERATURE REVIEW ;
INTEGTRATION OF LEAN AND SIX SIGMA ( THE L.S.S PERSPECTIVE )
(The integration of lean management and Six Sigma Edward D. Arnheiter and John Maleyeff Lally School of Management & Technology, Rensselaer Polytechnic Institute, Hartford, Connecticut, USA)
The performance of a business is determined by the complex interactions of people, materials, equipment, and resources in the context of the program that manages these interactions. It is fair to say that management theory regarding operating systems is still evolving. While both Six Sigma and lean management represent the state-of-the art, each system gives priority to certain facets of organizational performance. Therefore, in a highly competitive environment, diminishing returns may result when either program is implemented in isolation. A detailed analysis of the two programs infers probable reasons why the programs in isolation may fail to achieve absolute perfection (Arnheiter and Maleyeff , 2005).
A lean Six Sigma (LSS) organization would be capitalizing both on the strengths of lean management and Six Sigma processes . An LSS Organization would include the following primary tenet of lean management . It would incorporate an overriding philosophy that seeks to maximize the value-added content of all operations.
LSS in service sector :
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As per an article by the Deputy under the Secratory of the Army, Knowledge Center (DUSA, 2009) Lean Six Sigma for service can be defined as a business improvement method which maximizes shareholder value by achieving the fastest rate of improvement in customer satisfaction, cost, quality, process speed, and invested capital. The integration of Lean and Six Sigma improvement methods is required because:
- Implementation of Lean in isolation , cannot bring a process under statistical control .
- There cannot be a dramatic improvement in process speed or reduced invested capital by Six Sigma implementation in isolation
- Combination of Both can reduce the cost of complexity of processes .
Fig 2 – THE INTERDEPENDENCE AND CORRELATION OF LEAN AND SIX SIGMA
(Courtesy : WMEP 2008)
Six Sigma:
Six Sigma has Emphasized the need to identify opportunities and eliminate defects as defined by customer perceptions and specifications . It recognizes that variation hinders the organisations ability to relatively deliver high quality services. Six Sigma requires analytical decisions and encompasses a set of quality tools under a framework for effective problem solving(DUSA , 2009 ).
Lean:
Lean focuses on maximizing process velocity for operations . It provides tools for identifying process flow at each activity in a process , it primarily centers on the separation of value-added from non-value-added work with tools to eliminate the root causes of non-valued activities and their cost implications (DUSA, 2009)
DUSA has identified 8 types of waste / non-value added works that include ;
- Wasted human resource and talent- Damage to people
- Defects- processes that are not right & require fixing
- Inventory- Material & stocks waiting to be worked
- Overproduction- overwork – too much/too early
- Waiting Time- People waiting for work/processes to arrive
- Motion- Unnecessary human and mechanical movement
- Processing Waste- Non value adding product or service being produced .
- Transportaion of material , processes and services .
The two methodologies , Lean and Six Sigma interact and complement each other, in a way that gains in Return on Investment Capital (ROIC) are more steady if Lean and Six Sigma are implemented together. In short, what makes , Lean Six Sigma more effective and different from its solitary islolated components is the fact that it optimizes the balance between “just quality” and ” just speed” . It is a balanced process that helps an organization with improving service quality, within a set time limit (DUSA, 2009 ) .
THE SUPERIORITY OF LSS OVER OTHER QUALITY IMPROVEMENT INITIATIVES
Dr Jiju Antony Division of Management
Caledonian Business School Glasgow Caledonian University , Glasgow, G4 0BA:
Lean Six Sigma(LSS) strategy places a clear focus on achieving quantifiable and financial returns to the underlying strategy of an organisation . No LSS project is approved unless the underlying impact has been clearly defined , analysed and achieved . LSS strategy has placed unparallel importance on passionate leadership and the support required for its success , deployment and implementation (Antony, 2008 ) .
The LSS methodology integrates the human/customer elements like (culture change, customer focus, etc.) and process elements (process management, statistical analysis of data, measurement and system analysis, etc.) for improvement. The Six Sigma methodology uses the business improvement tools and techniques for identifying and fixing problems in processes in a sequential mannerism . Individual tools and techniques within the Six Sigma methodology has a unique role to play and when, where, why and how these tools are to be be applied , decides the difference between success and failure of any Six Sigma project(Antony, 2008).
LSS : ADVANTAGES :
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The complimentary practices of Lean and Six Sigma , when performed properly can represent a business perspective , which is Long term and produces unprecedented results .
1. Lean emphasizes on the elimination of non-value added steps and allied procedures and activities in a process
2. Lean ensures the distribution of work on the right activities
3. Lean establishes the flow of value as demanded and expected by the customer
4. Six Sigma bases its focus on reduction of variation from the core value-added steps
5. Six Sigma emphasizes on doing the right thing , the first time .
6. Six Sigma accounts for uninterrupted and smooth value flow through interconnected processes .
Lean and six sigma , implemented together , complimentary to each other , on a basic standalone platform can result in the following advantages ;
LSS : THE LIMITATIONS :
Dr Jiju Antony , Division of Management , Caledonian Business School, Glasgow Caledonian University, Glasgow, G4 0BA
The following are some of the limitations of Lean Six Sigma which create operational challenges to the implementing organisation . The problems and challenges faced by an organisation in gathering quality data , significantly in processes where no primary or metadata is available to begin with(Antony , 2008) . The effective analysis , selection and prioritisation of an organisations projects can be one of the most
critical factors for success of a Lean Six Sigma program. Many organisations , still base the prioritization of programs , on a purely subjective basis , which often leads to program or project failure .
* Statistically , the definition of Six Sigma signifies 3.4 defects or failures per
million opportunities. However , In most of the service processes, a defect can be anything that does not meet or fulfil customer requirements . Hence , It would be illogical to take the assumption that all defects are equally bad when the Six Sigma capability of a process is calculated .
* Lean Six Sigma implementation is most vulnerable to digress into a mere beaureaucratic exercise if the project focus shifts on things such as the number of trained Black and Green Belts, etc. instead of bottom line organisational savings.
LSS in the Service Industry:
How to get the most out of Lean Six Sigma :
As the popularity of Lean Six Sigma implementation grows dramatically in the global service sectors , so do the disappointing results . As suggested and designed by Bain and company , An upfront diagnostic process X-ray technique has helped companies , world over to get better results of their capital and operational efforts .
Lean Six Sigma was originally devised as a combination to minimize the existence of non value adding services to an organisations core processes and also to minimize and eliminate waste and improve manufacturing process quality to a maximum acceptable limit of no more than 3.4 defects per million opportunities. , However recently , the method popularised at companies like General Electric Co., Xerox Corp etc , has increasingly gained unprecedented respect in the services industry(Guarraia et al , 2006).
It has been observed and noticed that , Banks have been using Lean Six Sigma to support their growth and development strategy. Financial services companies implemented Lean Six Sigma to put their mergers back on track, LSS has been found to be used implicitely in the energy sector to lower costs , sectors like retail and telecommunication , where customer satisfaction is the primary focus have also used Lean Six Sigma technique to improve overall customer satisfaction levels and lower costs(Guarraia et al , 2006).
The Companies that are making the most efficient use of Lean Six Sigma and have been yielding the biggest gains have been noticed to deploy the diagnostic X-ray technique to help them identify both internally and externally the most critical opportunities. Being executed
by an advance team of capable black belts, the diagnostic X-ray mainly consists of three basic steps:
Enterprise Value Stream Mapping in which the enterprise is scanned by the x-ray team and the primary processes are mapped in order to identify the biggest opportunities and probable techniques of waste reduction through time and material wastage removal and hence cost reduction .
Benchmarking : the internal and external benchmarks are analysed to gauge shortcomings and improvement targets are established , by measuring the performance of processes
Prioritizing : the process improvement techniques that will yield the greatest results , when the Lean Six Sigma teams are deployed , are determined in this step , by the X ray team(Guarraia et al , 2006).
LSS IMPLEMENTATION : EXAMPLES ( SERVICE / MANUFACTURING ORGANISATIONS)
THE IMPROVEMENT OF CUSTOMER SERVICE AND COST CUTTING BY A MOBILE PHONE PROVIDER .
A European mobile phone had to beef up customer service , in order to prevent the loss of customers to competitors in a highly competitive marketplace . The root of the problem was identified as the company’s customer service center .The basic problems included , a poor track record for customer complaints , limited budget and overexerted operators with customer queries . The company formulated a two-pronged solution , which included ,
- A new call-center strategy transforming the operations in a way that they generate revenue .
- Strategic zero in by the organisation on the most critical customer service improvement initiatives .
The groundwork for the Lean Six Sigma deployment in accordance with the X-ray technique after deployment , developed both solutions . The inefficiencies of the call center were exposed , which were driving customer defections in many cases . The biggest cost saver was identified as a redesign of systems such that operators can resolve problems on the very first call , allowing the company to cut costs by reducing staffing , hence turning the call center in a revenue generator . Now knowing as to where to focus its efforts , the new call center strategy has significantly improved customer service and started generating revenue (Guarraia et al , 2006).
THE RECOMMENDATIONS FOR A MORE EFFICIENT L.S.S.
1) Putting strong players on the LSS team and train them thoroughly.
Ensuring adequate training is given ; if the team doesn’t know how to apply Lean Six Sigma methodology, they won’t be able to meet their goals.
2) Check progress regularly and establish a few simple success metrics.
3) Refocus the team if needed. Often, problems get resolved more quickly than expected and don’t need team attention for as long as planned.
4)Managers also need to review LSS efforts continually to make sure the highest value opportunities are getting attention.
LSS : THE FUTURE :
Dr Jiju Antony , Division of Management , Caledonian Business School, Glasgow Caledonian University, Glasgow, G4 0BA
As identified by Dr . Jiju Antony(2008) , as far as Lean Six Sigma projects, continue to yield measurable and quantifiable, bottom-line results in monetary or financial terms, it will continue to gain popularity in both service and manufacturing sector . The capabilities of Black Belts who tackle the real time challenges and projects in organisations often end up in beaureaucratic miscommunication, which is one of the real dangers of Lean Six Sigma deployment . The attitude of many senior managers , that consider Lean Six Sigma as an Instant solution to solve their ever-lasting problems , is another danger that has lead to project failures in organisation deploying LSS. The point has been accentuated that Lean Six Sigma provides effective means for statistical thinking, which has been based on the following
rudimentary principles:
- All the work at hand in a system occurs as a single interconnected process .
- There is existence of variation in all processes , and
- The data that explains variation in processes, needs to be understood and analysed .
The above principles of statistical thinking within Six Sigma and Lean frameworks are robust and therefore it is fair to say that Lean Six Sigma will continue to grow in the forthcoming years.