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.

In short, Lean Six Sigma recognizes 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 (details on DMAIC) 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:

1) Lean cannot bring a process under statistical control

2) Six Sigma alone cannot dramatically improve process speed or reduce invested capital

3) Both enable the reduction of the cost of complexity

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

· Requires data driven decisions and incorporates a comprehensive set of quality tools for effective problem solving

· Provides a highly prescriptive cultural infrastructure

· 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

· Centers on the separation of "value-added" from "non-value-added" work to eliminate the root causes of non-valued activities and their cost

There are 8 types of waste / non-value added work

a) Wasted human talent

b) Damage to people

c) Defects - "Stuff" that’s not right \ needs fixing

d) Inventory - "Stuff" waiting to be worked

e) Overproduction- "Stuff" too much/too early

f) Waiting Time - People waiting for "Stuff" to arrive

g) Motion - Unnecessary human movement

h) Transportation- Moving people \ "Stuff"

i) Processing Waste

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.