Lean Six Sigma

The root of both Lean and Six Sigma reach back to the time when the greatest pressure for quality and speed were on manufacturing. Lean rose as a method for optimizing automotive manufacturing; Six Sigma evolved as a quality initiative to eliminate defects by reducing variation in processes in the semiconductor industry. It is not surprising that the earliest adopters of Lean Six Sigma arose in the service support functions of manufacturing organizations like GE Capital, Caterpillar Finance, and Lockheed Martin.

Key Concept In short, what sets Lean Six Sigma apart from its individual components is the recognition that you cannot do "just quality" or "just speed," you need the balanced process that can help an organization to focus on improving service quality, as defined by the customer within a set time limit.

Lean Six Sigma for services is a business improvement methodology that maximizes shareholder value by achieving the fastest rate of improvement in customer satisfaction, cost, quality, process speed, and invested capital. The fusion of Lean and Six Sigma improvement methods is required because:

• Lean cannot bring a process under statistical control
• Six Sigma alone cannot dramatically improve process speed or reduce invested capital
• Both enable the reduction of the cost of complexity

Ironically, Six Sigma and Lean have often been regarded as rival initiatives. Lean enthusiasts note that Six Sigma pays little attention to anything related to speed and flow, while Six Sigma supporters point out that Lean fails to address key concepts like customer needs and variation. Both sides are right. Yet these arguments are more often used to advocate choosing one over the other, rather than to support the more logical conclusion that we blend Lean and Six Sigma.

How is it that Six Sigma and Lean are complementary? Here’s a quick overview

Six Sigma:

• Emphasizes the need to recognize opportunities and eliminate defects as defined by customers
• Recognizes that variation hinders our ability to reliably deliver high quality services
• Requires data driven decisions and incorporates a comprehensive set of quality tools under a powerful framework for effective problem solving
• Provides a highly prescriptive cultural infrastructure effective in obtaining sustainable results
• When implemented correctly, promises and delivers $500,000+ of improved operating profit per Black Belt per year (a hard dollar figure many companies consistently achieve)

Lean:

• Focuses on maximizing process velocity
• Provides tools for analyzing process flow and delay times at each activity in a process
• 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
  • The 8 types of waste / non-value added work
    • Wasted human talent – Damage to people
    • Defects – "Stuff" that’s not right & needs fixing
    • Inventory - "Stuff" waiting to be worked
    • Overproduction – "Stuff" too much/too early
    • Waiting Time – People waiting for "Stuff" to arrive
    • Motion – Unnecessary human movement
    • Transportation – Moving people & "Stuff"
    • Processing Waste – "Stuff" we have to do that doesn’t add value to the product or service we are supposed to be producing.
• Provides a means for quantifying and eliminating the cost of complexity

Did You Know? Approximately 30% to 50% of the cost in service organizations is caused by costs related to slow speed or performing rework to satisfy customer needs.

The two methodologies interact and reinforce one another, such that percentage gains in Return on Investment Capital (ROIC%) are much faster if Lean and Six Sigma are implemented together.

In short, what sets Lean Six Sigma apart from its individual components is the recognition that you cannot do "just quality" or "just speed," you need a balanced process that can help an organization focus on improving service quality, as defined by the customer within a set time limit.