Lean Six Sigma (LSS) is an advanced operations management concept and when applied properly can dramatically transform an organisations effectiveness.
Well constructed LSS programs typically deliver over 40% improvement in productivity and can shorten the product delivery life cycle from months to hours.
Unfortunately many implementations of LSS are poor and fail to take account of where the organisation is starting from. Furthermore, LSS is often implemented on a piecemeal basis using the tools and techniques in isolation of the whole. Short term benefits that are often easily realised are frequently mistaken for the true transformational benefits that come from a professionally implemented LSS program.
To successful realise the benefits from LSS, an organisation needs to commit to a minimum of 2 years to truly realise the benefits of this powerful methodology, although individual teams can see dramatic improvements within 4-6 months.
The reason for this is that LSS is a dramatically different approach to management and execution within an organisation. As such it requires the building of a new set of capabilities and attitudes from the front line staff up to the CEO and the Senior Management Team (SMT).
In the sections below we look at the two major components of LSS, Lean Operations with its roots in Ford & Toyota and Six Sigma whose roots are in Motorola, Allied Signal and GE.
Lean Operations
James Womack and Daniel Jones in their book, “The Machine That Changed the World” presented MIT’s global study of the automotive industry and in it coined the term "Lean Production" to represent the best practices in operations management as exemplified by the Toyota company.
Lean is a whole new way of thinking that includes the integration of vision, culture, and strategy to serve internal and external customers with high quality, low cost and short delivery times.
The core of Lean is based on the continuous pursuit of improving the organisations processes. It is a “whole systems” approach to creating a new culture and operating philosophy for eliminating all non-value adding activities from the organisation.
The essence of Lean is the compression of the end to end cycle time of a businesses core processes. The results of this time compression are increased productivity, increased throughput, reduced costs, improved quality and increased customer satisfaction.
A key enabler of this time compression is the elimination of waste from the process & business.
Adopting a Lean mindset requires taking an aggressive view of what waste in an organisation is. Simply stated, waste is everything that does not add value when viewed from the customers perspective.
An example of this might be a mortgage application process. In a case with which we (http://www.mclaw.ie/) are familiar, a bank examined the time it took them to process each and every mortgage application they had processed in the preceding 2 years.
They measured the process cycle time from the receipt of the application by them to the time the mortgage was implemented . Expecting to see a result with an average close to 14 days they were horrified to discover that the data showed an average of 47 days.
The enormity of this was further driven home when it was pointed out that the amount of value-added effort in the process ( from the customers perspective) was only 17 minutes, which was the average amount of time that the banks credit centre spent in making a decision on the
application.
Traditional operations methods would typically take the 47 days and target a percentage improvement of what might be thought of as an aggressive number, say 25%.
The Lean Operations approach takes the 17 minutes as the starting point and examines why everything else can’t be eliminated. It is this “targeting of excellence” along with the other key principles of Lean Thinking/Operations that have resulted in the extraordinary levels of improvement that organisations have achieved after the adoption of the Lean Operations methodology.
Businesses that have achieved an Operational Excellence capability typically also have excellent Business Strategy’s due to the powerful feedback mechanism's provided by the Operationally Excellent environment.
The adoption of “Lean Thinking” is now considered a basic requirement for achieving World Class Operational Excellence or Business Execution. Companies who aspire to excellence are seriously disadvantaged if they fail to adopt the Lean approach.
Six Sigma & Voice of the Customer (VOC)
Sigma is a statistical measure of variation about a mean (average) and is measured on a scale of 1 to 6, 6 being the better score. A process that exhibits a 6 Sigma score is said to so predictable that less than 3 in a million transactions fail to meet the same consistent level of performance.
We therefore say that a process achieving a Sigma score of 4 or more is deemed to be “under control” and that the “mean” or average performance achieved is predictable and reliable.
Note however that being consistent is only one measure of performance. If our local Pizza company were to proudly declare that they operated to a 6 Sigma level of performance guaranteeing to deliver their Pizzas in a reliable 90 minutes we probably would not be impressed.
Another key measure of performance therefore is how well the process meets the requirements (voice )of the customer.
In our Pizza example, if customers need/want a 30 minute delivery time and competitors are consistently delivering in 30-45 minutes then our 6 sigma capability will not stand for much.
Conversely, if another Pizza company promised an average delivery time of 30 minutes ( the VOC target) but its actual performance ranged from 15 minutes to 2 hours then customers would arguably view this as worse service.
The Six Sigma methodology is a powerful toolset in its own right for bringing consistency to the performance of a business process.
When combined with the Lean methodology however the 2 in combination create a powerful frame work for dramatically improving the performance of a business. For Six Sigma to be effective however their needs to be sufficient data available on the constituent components of the processes and there needs to be a basic operational and statistical level of competence in the management team.
Service Operations Fundamentals
These are often some of the major hurdles to be overcome in deploying a Six Sigma methodology, particularly in service organisations.
To this extent we (http://www.mclaw.ie/) have developed a Service Operations Fundamentals program for businesses that are "Pre-Lean". With its focus on building the basic skills and operational models necessary to control and manage the effectiveness and efficiency of the business, it provides the foundational competences and data necessary for successfully deploying a Lean & Six Sigma program.
With these fundamentals in place it becomes much easier to select the right people for the more advanced Yellow, Green & Black belt training which is eligible for a recognised industry certification (American Society for Quality http://www.asq.org/ ) on completion of an appropriate projects and exam.
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