Gaining synergy through the use of Lean Six Sigma
eng. Vasil Kanev
University of Library Studies and Information Technologies
Increased competitive pressure requires management to take on a new dimension of action in order to achieve market success in today’s global business environment. The entire operational service provision must be rigorously geared toward it, and it should not be just efficient but also effective.
A company can no longer afford to deliver quality that does not conform to specifications. It is high time it got the motto ‘Zero error’, which involves not only creating competitive advantages but also reducing costs. Six Sigma Approach helps companies provide the required quality and at the same time to gain benefits.
The cost optimization of existing processes through elimination of waste as well as a faster turnaround and inventory reduction are essential today. The focus here is the lean, powerful organization. And the lean approach to customer value creation is the one which really helps here.
Nowadays Lean Six Sigma (LSS) is the comprehensive management approach which demonstrably increases the profitability and competitiveness in the global environment. Lean Six Sigma is much more than just an approach and toolbox - LSS is a management philosophy to help businesses succeed.
In modern society there is a huge race in demand and supply of quality. There are different techniques to improve quality, making it difficult for companies to decide which one to implement to improve their business and remain competitive. The Six Sigma method is a very successful tool to improve the quality of production. Over the last three decades, it has been helping many companies to succeed in their sphere.
Six Sigma is a structured method based on statistical tools and process improvement techniques applied in project management principles, both aiming at customer satisfaction and achieving ambitious strategic goals. The method focuses on a better understanding of customer requirements, improving business systems throughout the organization, and improving the organization's financial performance.
"Sigma" is the Latin symbol "σ". It is used in statistics to symbolize how much deviation exists in a set of data and the so-called ‘standard normal distribution’. In the "Six Sigma" method, "sigma" is used as a scale to define the capability or the process quality. The calculation of the sigma level is based on the number of defects per million capabilities, i.e. the focus is on reducing defects. The most basic idea of the method is that if you can measure how many "defects" are present in a process or a product, you can systematically determine how to remove them and get as close as possible to "zero defects".
Six Sigma serves to improve the process quality by means of statistical process control and a comprehensive toolbox.
Trying to be successful in terms of global competition, many companies also use the Lean methods. Lean manufacturing as a management tool is rapidly entering the industry. Companies around the world adopt Lean's methods in a different form and name.
Lean is a manufacturing practice that considers spending money on any purpose other than creating value for the customer for loss. From the perspective of the customer who uses the product or service, the "value" is defined as an action or process for which the client is willing to pay. This helps to identify which production costs to eliminate. The customer certainly does not pay you for the time that a defective product travels back for a claim or for the time two teams from different directories waste in a long meeting which can be replaced by an e-mail, decision making and responsibility.
Lean analyzes what we do in favor of the customer. Thus, resource costs are divided into two groups - useful costs adding value to the customer and unnecessary costs that prevent added value. These are so-called "Losses from surpluses" and Lean's goal is to reveal and eliminate them, or at least limit them to reasonable levels. The surplus attack unleashes bottlenecks in production, shrinking fixed costs, shortening the production cycle (hence delivery times and the financial cycle), and improving the allocation of production resources and working capital liquidity.
Lean Management is a Waste Avoidance Strategy and it lobbies wherever processes take too long or time and materials are wasted.
The report formulated the thesis that Lean Six Sigma is a new successful concept to increase production efficiency by combining Lean practices and statistical methods of Six Sigma. Lean Six Sigma methods contribute to faster, more precise and cost-effective production.
The power of the Six Sigma method
Six Sigma is based on the definition of computational goals and offers methods to solve problems that aim to increase customer satisfaction along with the company's profits. In fact, reducing inferior production such as wastage, repair or reclamation as well as eliminating inherent problems in the production process itself will allow cost savings.
The Six Sigma philosophy states that by reducing variations, in a process or product to be executed within the customer's specifications, defects can be removed to result in improved customer satisfaction, reduced operating costs, and increased profitability. This is because defects are directly related to operating costs and also to customer satisfaction. In fact, the Six Sigma pioneers, like Michel Hari, claim that Six Sigma achieves improved profitability, and improved quality and efficiency are the immediate byproducts of the method.
Once invented, the Six Sigma method has reached three levels - as a toolbox, as a methodology and as a management system. As a toolbox, it aims at reducing defects. The highest level "6s" equals 3.4 defects per million capabilities. As a methodology, it focuses on improving the process, and as a management system it combines the tools and methodology to implement the business strategy and aims to continuously improve product quality.
The implementation of the Six Sigma method is a complex process that can last from several months to years, depending on the size of the company and the complexity of its business processes. In general, there are 5 phases which are defined: definition, measurement, analysis, improvement, and control. These phases are typical of almost any optimization project.
The "Six Sigma" approach is not just reporting defects during the process of creating and manufacturing a product. It is a methodology for improving processes. The Six Sigma method focuses on:
- Managing customer requirements
- Adapting the processes to meet these requirements
- Analyzing data to minimize subsequent changes in these processes
- Fast and sustainable improvement of these processes
Improve production with lean tools
Whether it's a big manufacturing company or a small enterprise, a hospital, a bank, a university, or another organization - all of them exist to create value for their customers and meet certain human or social needs. To accomplish their purpose, all organizations transform a certain combination of incoming resources into finished goods - tangible products or services. Some authors define Lean as a set of methods and tools to improve the process of transformation. Others think it is an improvement system that provides a framework for the organization's overall activity.
The purpose of lean manufacturing is to eliminate losses, reduce inventories, including incomplete production, and consistently shorten the production cycle and increase the speed and fluidity of flow in the supply chain. This makes the concept much related to logistics. Lean has another important touch point with logistics theory and practice - the concept of "total costs". In practice, the implementation of the concept aims to reduce overall costs, not just to adjustments or just to stocks.
Lean production approaches focus on eliminating waste with five key principles:
- Specify value.
- Identify the value stream.
The Lean Six Sigma methodology also refers to an eighth waste: underutilized skills or brainpower. This type of waste is primarily associated with knowledge work and refers to the waste that occurs when not tapping into a worker’s full mental potential. This can occur when companies hire overqualified employees or place workers in positions where they can’t fully exercise their abilities.
Lean Six Sigma as a synergized managerial concept of Lean and Six Sigma
Lean and Six Sigma had a different origin and until about ten years ago they had been presented as separate approaches by the specialized consultants. Due to their complementarity they have been recognized as one approach over the last decade. In fact, most people today talk about Lean Six Sigma.
The two approaches are synergistic, but they focus on different needs. The Six Sigma approach is a quality-related and problem-solving methodology for reducing process variability, whereas the Lean approach ultimately aims at a just-in-time pull-oriented process philosophy.
The first concept of Lean Six Sigma was created in 2001 by a book titled Leaning into Six Sigma: The Path to integration of Lean Enterprise and Six Sigma by Barbara Wheat, Chuck Mills, and Mike Carnell. Lean Six Sigma is a methodology that relies on a collaborative team effort to improve performance by systematically removing waste and reducing variation.
In its present form Lean Six Sigma is a comprehensive management approach whose aim is to increase profitability and competitiveness in the global environment. Lean Six Sigma is much more than just an approach and toolbox - LSS is a management philosophy for managing businesses successfully.
The Lean Six Sigma approach is a structured, phase-based methodology with proven tools that analyzes problems rationally and factually, and supports a sustainable solution. The phases are:
- Define: Describes the problem and its scope and adheres to project management-related benchmarks
- Measure: Measures the extent of the problem
- Analyze:: Rationally identifies the causes of the problem
- Improve: Finds the best solution that fixes the problem
- Control: Introduces control mechanisms to keep the solution sustainable
Increased competitive pressure requires management to take on a new dimension of action in order to achieve market success in today’s global business environment. The entire operational service provision must be rigorously geared toward it, and it should be not just efficient but also effective.
Most deployments (organizations that run quality initiatives within a company) now choose to use Lean Six Sigma rather than any other methodology. The goal is not just zero errors, but an increase in speed, output, overall customer satisfaction, competitive advantages. By consistently applying Lean Six Sigma to the goal of achieving "Business Excellence", this management philosophy becomes natural behavior within the company.
- Lean Six Sigma Secrets for the CIO, William Bentley Peter T. Davis, 2010
- The Definitive Guide to Lean Project Management https://www.smartsheet.com/guide-to-lean-project-management
- Lean Six Sigma Dialog Summit 2015, organized by Swiss Institute of Systems Engineering