Lean Six Sigma Explained | What is Lean Six Sigma?

Lean Six Sigma Explained

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What is Lean Six Sigma?

Lean Six Sigma (LSS) is the prevailing cost and waste elimination method that has been used successfully in both private and public organizations. It is applicable equally to both industrial/manufacturing processes and transactional/customer service processes. LSS traces its origins back to the 1950s with the emergence of two independent methodologies: the Lean process efficiency methodology and the Six Sigma quality improvement methodology.

Lean was developed in manufacturing environments and was made famous by Toyota Motor Company. It even came to be known as the Toyota Production System. Despite the quality issues Toyota is encountering today, Lean enabled Toyota to rise from a relatively small company in the 1960’s to one of the largest automotive manufacturing enterprises in the world today.

Six Sigma grew up in response to the need to reduce the variation in microchip parameters. Variation is measured by the width of the distribution where the curve changes from concave down to convex up, and this width is known as the “Standard Deviation.” It is also called one Sigma and contains 68% of the data. Another manufacturer, Motorola, reasoned that if their distributions had Six of these Sigma from the mean to the spec limit, they would follow the solid curve and have essentially no spec failures.

The two systems were merged into Lean Six Sigma the 1990's and have since shown to reduce costs by an average of 25% by eliminating wasted time and activities from operations. This waste reduction effort has also served to increase the quality of the organization’s products. Most importantly, LSS builds foundations within organizations that stimulate and nurture cultures of continuous improvement; thus providing benefits both today and into the future.

In order to understand the power of LSS methodology and to learn of its ability to improve the quality of services delivered, it is best to consider the major components of LSS—the Lean and Six Sigma methodologies.

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Lean Six Sigma Core Fundamentals

Define and Measure: The process of waste reduction begins by talking to the the customer or user of the output of the process to Define what they want and value. All costs that do not contribute to that value are waste and can be immediately eliminated. In one of the Naval Aviation case studies, the Navy found that when the customer (the Fleet) measured the number of practice take offs and landings it was far above the readiness level. Those extra costs were immediately cut contributing to a $169 million savings per year.

Analyze and Improve: The Navy found that many F-18 aboard carriers were out of service for repairs, which was of no value to the Fleet. One of the leading causes was the average failure in 250 hours of Auxiliary Power Units (APU). An Industry/Navy/Quality team was formed, and Analyzed the problem and improved the APU increasing its reliability to 2,500 hours. This improved the combat effectiveness of the Fleet.

Control: After these steps have been accomplished the Navy put in Controls to prevent a regression back to the old wasteful performance. The Define-Measure-Analyze-Control is the heart of Lean Six Sigma and is known as the DMAIC (pronounced duh may ick) process. In federal applications, the Define phase has often never been done, leading to large savings immediately.

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WHAT IS LEAN?

As stated above, Lean is an approach to organizational improvement that focuses on process speed and efficiency. It does this by a relentless search for all kinds of waste in the operations and activities of an organization. This waste is generally identified as non-value-add tasks, process steps, review cycles, reporting requirements and personnel practices that distract and take away from the absolutely essential functions the organization must perform.

By identifying and eliminating these non-value-add activities, the organization decreases costs and shortens the time required to deliver goods and services to its customers (either customers in the traditional commercial sense of the word or citizens under the authority of a government entity). In order to dig deeper into understanding Lean, it is helpful to understand the terms “lead time” or “cycle time” (these terms are often used interchangeably). Lead or cycle time is defined as the length of time required for an organization to deliver a good or service to a customer (to the customer’s complete satisfaction) from the time the request for the good or service was received.

The fundamental Lean insight is that the shorter the lead or cycle time, the lower the non-value-add cost. Further, reducing this cost reduces the total cost of delivering the item. Shorter lead times and faster responses to customer desires are key drivers of effectiveness. Since long lead times drive large non-value-add costs, it is helpful to have an understanding of the relationship between lead times and the process activities within the organization that the organization can control. This relationship is known as Little’s Law and states that the lead time of any process equals the total number of items being worked at any given time divided by the average completion time of these items.By optimizing this relationship, non-value-add cost can be driven from the organization.

As an example, consider a process that involves the creation of documents. Let it be assumed that 50 individual documents are being worked on and the average completion rate for finishing these documents is 10 per week. Accordingly, the lead time for the process is 50 documents divided by 10 documents per week equals five weeks. This means that when work on a document is begun it will be five weeks before it is completed. What happens, however, when a customer wants the document in three weeks? Every process has some maximum average number of items it can complete per day. This is known as the capacity of the process. As the demand for output increases toward the maximum capacity, the number of items in work increases. As the number of items in work increases the process slows down and the opportunity for errors increases. These errors cause rework that is considered waste and increases the demands on the process.

So, back to the question, what must be done if the lead time for the process is five weeks, but the customer demands that their document be delivered within three weeks? There are two approaches to shortening lead time which are:

1) Reduce the number of items in work within the process

If we can reduce the amount of rework, we can reduce utilization percentage, reduce the number of items in work, and reduce the lead time of the process. There are several Lean methods known as “tools” that will accomplish this goal. One of the most powerful drivers of large numbers of items in work and long lead time are revisions and rework. Both are clearly non-value-add cost. Further, increasing rework dramatically increases the number of items being worked on at any given time in the process.

Some of the key Lean tools to eliminate waste and reduce lead time in the process are:

Value Stream Mapping - Value Stream Mapping is a graphical tool that helps one see and understand the flow of the material and accompanying information as a product or service makes its way through to completion. Value Stream Mapping serves to provide the foundation for using other Lean concepts and techniques.

Value-Add versus Non-Value-Add Analysis - Value-Add versus Non-Value-Add Analysis is used in conjunction with the voice of the Customer to determine what the customer values or will pay for. The objective is to identify and eliminate waste that drives up the cost of the product or service, reduce errors by simplifying the process and creating additional capacity.

5S Program - 5S stands for Sort, Set-in-order, Shine, Standardize, and Sustain. The 5S program is a methodology for organizing, cleaning, developing and sustaining a productive work environment. Improved safety, ownership of workspace, improved productivity and improved maintenance are some of the benefits of the 5S program.

2) Increasing the average completion rate

This can be accomplished by again eliminating non-value-add work within each item in work so more time is available to complete more work per hour. This increases the maximum capacity. By increasing the maximum capacity, one reduces the utilization percentage and hence the items in work and the lead time. A third approach is to add more manpower to the process. This tends to increase cost, but does not necessarily increase capacity due to Brooks Law (a programming manager at IBM) that states adding manpower to a late process just makes it later. An additional benefit to reducing non-value-add efforts is providing additional “surge” capacity – the ability to perform more work without adding additional resources.

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What is Six Sigma?

By far the most important step towards quality improvement is making management responsible for the outcomes, instead of the internal quality control department.

At General Electric for example, if managers did not accept this responsibility, they were replaced no matter how much profit they earned. Even more importantly, Six Sigma creates roles and responsibilities for each person in the organization. Six Sigma also created a generalized problem solving methodology called DMAIC (Define, Measure, Analyze, Improve, Control).

The first step, Define, involves steps such as talking to the user of the output to understand what they would like to see improved.

The Measure phase involves collecting data to verify the users’ issues.

The Analyze and Improve phases use the Statistical Process Control tool to reduce variation.

Finally, the Control phase requires the owners of the process to sustain the benefits achieved.

Another key element of the DMAIC process is that management is required to review each project before it moves from D to M, M to A, etc. The goal is to make sure projects are showing promise are properly resourced, while those that do not show promise are either ended or restructured.

Finally and perhaps most importantly, Six Sigma prescribes organizations assign 1% of its workforce to be trained for five weeks as process improvement specialists known as Black Belts, and to assign them, full time, to process improvement projects. The unique power of Six Sigma is that it prescribes the infrastructure needed to achieve and sustain success.

The tools for eliminating waste that we get from Lean and the focus on customers and quality improvement from Six Sigma combined with the latter’s prescribed management and implementation infrastructure has created the most powerful business methodology available today. LSS methodology has been proven effective not only in for-profit businesses, but has also shown to be very effective at eliminating waste from several organizations across the United States Federal Government. The U.S. Army, for example, has documented savings in excess of $14 billion. 

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Lean Six Sigma Green Belt

Green Belts are employees of an organization who have been trained on the Six Sigma improvement methodology and will lead a process improvement team in addition to their full-time job. While Green Belts do not need to know as much as Black Belts or Master Black Belts, they do need a comprehensive understanding of the LSS methodology. Green belts lead Six Sigma improvement projects part time, usually 25-50% of their time is spent on Six Sigma projects.

Depending on the structure of the organisation Green Belts will serve as either part time team leaders – specifically as part of local Six Sigma projects – or part time team members. As they retain their normal duties as well, it is hoped that Green Belts will be in a position to bring elements of their Six Sigma training into the everyday activities of the organisation.

In particular, a Green Belt is expected to recommend Six Sigma projects based on their own area of expertise, occasionally lead Six Sigma teams in local projects, teach and share their knowledge of Six Sigma tools and methodologies with project team members and co-workers, and complete one Six Sigma project every six months.

Six Sigma training is at the heart of the process. Six Sigma Green Belts and Black Belts are the core of the Six Sigma process are their knowledge of the tools, skills, and concepts of Six Sigma can make or break the success of the process. Not only do smart organizations recognize this and invest in Six Sigma training but increasingly, ambitious individuals are adding Six Sigma certification to their own resumes.

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Lean Six Sigma Black Belt

A Black Belt is a full-time change agent within the organisation. With a demonstrated mastery of Six Sigma concepts and tools, as well as a proficiency in achieving results via the Six Sigma processes, Black Belt’s are tasked with delivering high impact projects that help the organisation achieve its overall strategic objectives.

The role of Six Sigma Black Belt is best described as project management, incorporating leadership, analytical and coaching skills. Specific duties may include acting as a Six Sigma technical expert (a reference for Green Belts and team members) as well as acting as a coach and mentor to Green Belts within the team. Black Belts will often recommend high performing Green Belts for certification.

In practical terms, Six Sigma Black Belts will normally perform a ‘tour of duty’ of between 18 and two years as Black Belts within an organisation, executing numerous high value projects each year. Often viewed as a stepping stone to promotion within an organisation, effective Black Belt training is essential to the Six Sigma process.

Indeed, Black Belts are so central to the execution and delivery of Six Sigma projects that Black Belt training is often the first step for companies implementing the Six Sigma process.

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