The new paradigm of Lean Six Sigma, key concepts

The new paradigm of Lean Six Sigma transcends more than just a production system – it is a new way of thinking about organising the improving operations. Traditionally one often associates Lean Six Sigma with a collection of tools and techniques on the factory floor. However, there are several tiers in how the new thinking can be applied. At the highest level, the concepts of Lean Six Sigma can be successfully applied across any industry or sector of the economy, such as the construction, aerospace, and financial environments. At the next level down, the operating practices of Lean Six Sigma need to be tailored to a degree, such as the high-level design of a pull system. On the most pragmatic level, the tools and techniques of Lean Six Sigma aim to identify and eliminate waste in the particular environment. These tools must be tailored to the particular environment, such as the particular types of kanban comprising a pull system. 

KEY CONCEPTS
The key concepts of “Lean Six Sigma thinking” can be applied across any industry, and are described below.

Integrated approach
Lean Six Sigma aims to align all functions with the common goal of reducing overall cost for the business, rather than each function attempting to reduce its own costs in isolation. Thus, the manufacturing system is inherently stronger than a traditional system where different departments pursue their own objectives independently of one another. A true Lean Six Sigma transformation necessitates that all functions understand the application of tools and techniques within the manufacturing system.

Elimination of waste
During the Lean Six Sigma transformation, all functions aim to eliminate waste in a manufacturing environment. Waste can be defined as anything above the minimum resources required to complete an activity. Wasteful activities only add cost to a product; they do not add value.

Hidden becomes obvious
As wasteful activities are eliminated from a manufacturing system, the true root causes of problems become visible. Previously, the waste hid these causes. As an example, a large amount of inventory after a process may have concealed the true problem of the process – long changeover times. These long change over times would have necessitated producing in large batches.

Order out of chaos
As problems become visible, the root causes must be solved to fully eliminate the problems. As problems are solved, then the manufacturing system becomes more consistent and predictable. Yet, many traditional organisations are often engaged in a “fire-fighting” mode because company systems fail in the face of variability. To react to this variability, such as a change in customer requirements, additional resources are often brought into processes to “keep the show on the road”. However, a Lean Six Sigma system will adjust efficiently to this variability, helping to bring order out of the chaos.

Standardisation and continuous improvement
As a manufacturing system becomes more consistent, then standards can be developed to ensure that the improvements are maintained. Once standards are in place, they must be continuously challenged in a bid to make further improvements. Striving for continuous improvement is referred to as the Japanese word, kaizen.

Ownership

As standards are created, then ownership of particular processes can be transferred to those closest to the process itself. Experience has shown that a Lean Six Sigma system can only be successful if its ownership is devolved to the people who actually operate it.

The Beyondlean Roadmap illustrates the key concepts and operating principles for Lean Six Sigma.

Profitability
The Beyondlean Roadmap starts with the most fundamental goal for any business – to make a profit. As indicated previously, competitive markets typically set the sales price. An attempt to increase the price could reduce customer demand. Therefore, cost reduction is the only real option for a company in such a position. The best method to achieve this is through a Lean Six Sigma transformation, whose aim is the eradication of wasteful activities and reduction in variation.

Business need
In order to maintain a profit, a business must aim to function in an environment of:

• Total quality. All people are involved with “building quality into” a product.
• Zero defects. Defects are detected, contained, and rectified at their source.
• Lowest possible costs. Resources are used efficiently at varying levels of demand.
• Minimum order-to-delivery lead times. Product flows through the value stream in minimum time.
• Delivery reliability. Low and consistent lead times ensure quick response to demand fluctuations.
• Effective human resource management. Employees feel empowered to take a proactive role in improving operations in the workplace.
• Stable employee relations. A company culture with long term job security fosters continuous improvement efforts.

Most organisations try to satisfy these aspirations through the creation of quality, operating and people systems. However, these systems are normally created and managed in isolation – often leading to inefficiencies. For example, an emphasis solely on improving operations by increasing output could have a detrimental effect on quality.


ENABLER
The solution to this problem is the introduction of a Lean Six Sigma methodology that combines the three previously independent systems into a single, coherent system. Within the single system, the goals of the business systems are aligned leading to optimal benefits. This is enabled by maximising people contributions with the goal of eliminating waste.

#leansixsigma, #beyondlean, #leansixsigmacertification, #leansixsigmatraining

Structure of the Beyond Lean Roadmap

This Roadmap has three main segments. The first introduces the principles of Lean Six Sigma and establishes some common themes, then presents Beyond Lean’s Lean Six Sigma model.

The second gives an overview of the Beyond Lean Roadmap, outlining the high level project approach to achieving and sustaining business benefits through the application of Lean Six Sigma concepts . This approach has five distinct stages, each of which you will pass through on your continuous improvement journey. The amount of time and effort you will spend in each stage will depend completely on your individual business needs and the level of ‘buy in’ and commitment of the senior management team.

The third segment examines key success factors for Lean Six Sigma transformations, starting with the ten most likely causes of failure. An appendix provides a programme check list and a glossary of key terms.


PRECONDITIONS FOR A SUCCESSFUL LEAN SIX SIGMA TRANSFORMATION

There are a number of preconditions for an organisation to succeed in a Lean Six Sigma transformation. Your organisation must possess each of the following attributes before successfully embarking on a Lean Six Sigma transformation.

Will the top management on site:

• Actively participate in Lean Six Sigma production activity on a regular basis?
• Commit to no redundancies as a result of Lean Six Sigma production activity?
• Modify shop floor payment methods, if necessary?
• Modify roles and responsibilities of personnel?
• Spend money on justifiable changes to the production system?
• Allow production personnel involvement in Lean Six Sigma activity during normal production time?
• Systematically review project activity on the shop floor?
• Offer focused maintenance support in the pursuit of a model value stream creation?
• Enforce company policy?
• Provide appropriate resource for the programme?
• Be willing to make sure company measures are compatible with lean six sigma?
• Communicate the overwhelming desire to change?
• Encourage a cross-functional approach to designing systems rather than processes?
• Commit to a long term programme of Lean Six Sigma?
• Be prepared if necessary to make fundamental changes to organisational structure?
• Fundamentally, will the managing director or most senior person on site be willing to change the way he / she operates, becoming a champion of change and drive in the transformation through active involvement in ‘Go, Look, See’ & Process Confirmation activities (Also known as ‘Gemba Management’). 

LEAN SIX SIGMA OVERVIEW

In 1910 Charles Sorensen and Henry Ford created the first moving assembly line as a way of reducing wasted motion and handling complexity in automotive assembly. Without question, the Lean system pioneered by the Toyota Motor Company has a common beginning with these early “work flow” improvements. However, this common heritage led to two very different manufacturing systems: mass production and Lean production.

The objective of mass production is to maximise economies of scale through high capital utilisation. At Ford, the emphasis on flow was limited almost exclusively to the final assembly line, while subassembly processes, suppliers and distribution operated on almost independent production schedules, resulting in large batch sizes and high inventory levels. Inventory at all points was accepted as a necessary buffer to survive schedule and output instability. Quality was inspected and projected into the system through mass inspection and inventory buffers. Capital was a solution to the relentless push for capacity. Finally, production was driven from forecasts, pushing material through the plant in anticipation of actual customer demand. The mass production system flourished in the high growth, boom phase of the automotive industry and was widely copied in other sectors.

The objective of Lean production is the elimination of waste through the efficient use of all resources. In 1945 the president of Toyota Motor Company issued an edict to the company to catch up with America in three years otherwise the automotive industry of Japan would not survive. At the time, labour productivity in Japanese factories was 1/10 that of US automotive manufacturers. Scarce capital and small, highly diverse “island” market did not support large-scale, mass production. Finding a solution to the challenge led to a fundamentally different “Lean Production” system, which ultimately triumphed over mass production during the 1973-4 oil crisis. At a time of global recession and slow growth, Toyota sustained profits and grew US market share while US companies lost on both counts.

A new paradigm

The lean production system pioneered at Toyota created a new paradigm for excellence in manufacturing. This paradigm is founded on the belief that cost reduction is sometimes the only viable mechanism for a corporation to increase profit; price is not always an effective lever. Today, some organisations are fortunate enough to determine their selling price by first taking the product cost and adding on a sufficient profit margin:

Profit + Cost = Price

A company can therefore increase profit by raising the price of its product. However, in a diverse marketplace, most companies do not have this advantage as consumers and market conditions largely determine price. In these markets, companies face the following equation:

Profit = Price - Cost

This is often referred to as the “cost-minus” principle because the company can only increase profit through cost reduction. Cost reduction in a manufacturing environment occurs through the elimination of waste. Waste can be defined as something for which the customer is not willing to pay; it is a non-value adding activity. The elimination of such activities shortens the lead time, so value is delivered to the customer faster and with less effort.

SIX SIGMA

The goals of six sigma:

• Improved Customer Satisfaction
• Defect Reduction
• Reduction in Variation
• Yield Improvement
• Higher Operating Income
• Improved Process Capability
• Target 6 sigma standards
• Constant measurement
• Defeat the Competition
• Breakthrough improvements

Six-Sigma Objectives Are Directly and Quantifiably Connected to the Objectives of the Business.

The many facets of Six Sigma:

1. Sigma is a letter in the Greek alphabet.
2. The term "sigma" is used to designate the distribution or spread about the mean (average) of any process or product characteristic.
3. For a business or manufacturing process, the sigma value 6 is a metric that indicates how well that process is performing. The higher the sigma value, the better. Sigma measures the capability of the process to perform defect-free-work. A defect is anything that may result in customer dissatisfaction.
4. With six sigma, the common measurement index is “defects per unit”, where a unit can be virtually anything -- a component, piece of material, line of code, administrative form, time frame, distance, etc.
5. The sigma value indicates how often defects are likely to occur. The higher the sigma value, the less likely a process will produce defects. As sigma increases, costs go down, cycle time goes down, and customer satisfaction goes up.

So where did Six Sigma start and who else uses it?

• Motorola (1987 First coined the phrase ‘Six Sigma’)
• Texas Instruments - (1988)
• ABB (ASEA Brown Boveri) - (1993)
• AlliedSignal - (1994)
• General Electric - (1995)

Why is this NOT a past tense statement?

Because this is a continuous process

We Are Not Pioneers, We Can Learn From What Others Have Done and the mistakes they have made.

The biggest lesson we can learn is that individually ‘Lean’ and ‘Six Sigma’ are very powerful tools – However, when they are used effectively, together, that power is exponentially increased.

For more information about this part of Lean six sigma tools, please refer to our website

#leansixsigma, #beyondlean, #leansixsigmacertification, #leansixsigmatraining, #beyondleanroadmap

Summary and Introduction to Lean Six Sigma

WHAT IS LEAN SIX SIGMA?

SUMMARY

A Lean Six Sigma transformation can enable operations to drive the overall business strategy, through the creation of many tangible business benefits. Quality may increase through improved process yields and reduce scrap and rectification costs. Cost improves through reduced conversion costs, improved cash flow, and higher return on assets. Delivery can improve through shortened production lead times which more flexible operations that can respond quickly to changes in customer demand.

Despite attempts, most businesses have not been able to capture or sustain the benefits of a Lean Six Sigma transformation. Lean Six Sigma represents a fundamental change and most businesses have pursued change in tactical, rather than a strategic manner. Most failed Lean Six Sigma transformations can be attributed to lack of true senior management commitment and understanding of the change process. Moreover, the methodology of many companies is to rely on a series of quick-hit approaches that deliver short term benefits, but aren’t sustainable in the longer term. Add to this the reluctance of many companies to consider the business as a whole rather than just concentrating on operations or manufacturing and you have a recipe for failure.

The team at Beyondlean have recognised and experienced these potential pitfalls and have created a programme that can help lead a business through the change process. The Beyondlean Lean Six Sigma roadmap takes a narrow and deep approach by focusing on a model value stream. The Beyondlean Roadmap creates the Lean Six Sigma infrastructure to maximise the chance of sustainability. Ultimately, the Beyondlean Roadmap cannot guarantee the sustainability of the system if the business is not willing to invest the required time, resource, and commitment to the change process. If a business is ready to embark on this Lean Six Sigma journey, then manufacturing operations can not only become a competitive advantage, but also deliver new strategic opportunities.


An Introduction to Lean Six Sigma

PURPOSE OF THE ROADMAP

The purpose of the Beyond Lean Roadmap is to guide clients through the Lean Six Sigma transformation process. Many organisations have attempted Lean Six Sigma transformations, and most have failed through several key pitfalls. The team at Beyond Lean has recognised these pitfalls and developed this programme to ensure maximum chance of sustainability for such a transformation. The basis of this programme is a structured and methodical approach to change while encouraging maximum knowledge transfer of Lean Six Sigma concepts to the Business through the application of the accompanying material. It takes significant effort to first maintain and then improve a system. The client must be willing to commit the required time, resource, and attention to ultimately succeed in a Lean Six Sigma transformation.

If you enjoy reading my blogs, please take a look at my many other on-line resources,
Facebook, https://www.facebook.com/leansixsigmacert
Follow me on twitter, https://twitter.com/DrLeanSigma
I have also recently launched a new range of Lean Six Sigma on-line training courses which you can read about here, http://www.beyondlean6sigma.com/

#leansixsigma, #beyondlean, #leansixsigmacertification, #leansixsigmatraining