A Brief Introduction To Lean, Six Sigma And Lean Six Sigma

 

If you are starting to learn about the concepts of streamlining a business process, you are in the right place. We will introduce you to the methodologies of Lean, Six Sigma, and Lean Six Sigma. People with no experience in this area can get an idea of what it is all about. So let's begin:

Section I: Lean Methodology

What is Lean?

Lean is a systematic approach to reduce or eliminate activities that don't add value to the process. It emphasizes removing wasteful steps in a process and taking the only value-added steps. The Lean method ensures high quality and customer satisfaction. 

It helps in

• reducing process cycle time,

• improving product or service delivery time,

• reducing or eliminating the chance of defect generation,

• reducing the inventory levels and

• optimizing resources for key improvements among others.

It is a never-ending approach to waste removal, thus promotes a continuous chain of improvements.

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What is “Value”?

Let’s understand what is  "Value” in the above definition of Lean:

Depending on the type of business process & industry context, the customer defines “value”. “Value” is related to the customer’s perception of the product(s) or service(s), which he or she is willing to pay for. 

A process is a set of activities, which converts inputs into outputs using resources. In a process, these activities can be classified into three types. They are:

• Non-Value-added Activity: These activities do not add any value to the processor products. They form the wasteful steps. A customer doesn’t pay for the costs associated with these activities willingly.  Rather, if present excessively they result in customer dissatisfaction.

• Value-added Activity: These activities add value to the process and are essential. They improve processes for productivity and quality.

• Enabling value-added Activity: These activities do not add value to a customer. They are necessary for the continuity of a process.

In any process, almost 80 – 85% of activities are non-value adding activities. The aim of the LEAN approach is to identify them in the process. And use specific lean tools to eliminate or reduce them. Thus, Lean improves process efficiency.

Types of Waste & Waste Removal

Lean concept obtains its genesis from TPS – Toyota Production system. TPS model typically is well suited for High Volume Production environment. However, Lean finds its application in any environment, where process wastes are witnessed. Lean can be applied to manufacturing as well as service industries. It causes no doubt that Lean, nowadays, is being adopted by service sectors with both arms. 

Taiichi Ohno, who started his career working with Toyoda Spinning and rose through the ranks later, believed that the lean approach is a step-by-step reduction of waste. Stemming from the Toyota Production System, the 3M model – Muda, Mura, Muri – exposes inefficient processes that are a hindrance to customer value generation.

• Muda: Muda refers to any activity that does not add value to the creation of the product or service for the customer. There were 7 types of lean wastes identified in manufacturing processes. Removing them was believed to be the key to value delivery to customers. Later on, the 8th lean waste was added - Underutilization of Skills.

Source: Lean Manufacturing Tools

• Mura: Mura refers to inconsistencies in business operations leading to fluctuations in production. Variation in production or process leads to sub-optimal utilization of resources. Uneven workloads, inventory accumulation, and waiting are some examples. The presence of Mura leads to Muda.
• Muri: Muri takes place when there are too much stress and strain on people and machines. Overtime data in offices and over-utilization of machinery in plants are some examples. When processes are not scheduled to optimize resources, it can result in dissatisfaction amongst people or downtime for machines. Although outcomes might be met. Muri also leads to Muda.

Using the Lean methodology, you can remove the below mentioned eight types of waste ("DOWNTIME" is the acronym for the eight wastes). These wastes are further explained below:

 

Waste		Definition of waste
D	Defects	The efforts involved inspecting for and fixing errors, mistakes through reworks.
O	Overproduction	Producing more products or services that the customer needs or downstream process can use.
W	Waiting	Idle time created when material, information, people, or equipment is not ready. It includes high job set up time in manufacturing. Or excessively high data processing time in the service industry.
N	Non – Utilized Talent	Not adequately leveraging peoples’ skills and creativity. Employee empowerment can counter this waste as advocated by Japanese quality pioneers.
T	Transportation	Moving products, equipment, material, information, or people from one place to another, without any value addition to the final product or service.
I	Inventory	Unnecessary/ Unwanted stocking or storage of information and/ or material (eg WIP, WIQ – work in the queue)
M	Motion	Unnecessary movement of people or machines that takes time and uses energy. It may cause fatigue to workmen due to unwanted movement of a body.
E	Extra Processing	Process steps that do not add value to the product or service, including doing work beyond a customer’s specification.

Table 1: Explanation of Eight Deadly Wastes

The Five Principles of Lean

These Lean principles can be applied to any process to reduce wastes. They are:

 Source: Michigan Technological University

Figure 2: Lean Principles

• Define Value: The customer defines the value of a product or service. Hence, the first step is to identify customers. Ask yourself, what does the customer value? Figure out customer’s expectations from your products or services. Classify the process activities into Non-Value added, Value-added, and Enabling value-added. 

• Map the Value Stream: The value stream mapping shows the workflow process steps for a product or service. The value stream mapping helps to identify & eliminate NVA activities. This eventually helps you to reduce the process delays and thereby improves the quality of product/service.

• Create Flow: Create a flow to the customer by ensuring a continuous flow system in producing products or services. The flow will optimize the process to maximize process efficiency.

• Establish Pull: establish a pull approach by meeting system beat time. The beat time is the rate at which a product must be ready to meet customer demand. JIT (Just in time) is a tool promoting the Pull system. This ensures the smooth workflow of the process without any disruptions. It also helps to diminish inventory levels.

• Seek Continuous Improvement: Finally, you must put consistent efforts to improve the existing business processes to cater to ever-changing customer needs. This ensures the elimination of waste and defects of free products & quality service to customers.

Introduction to Some Important Lean Tools

• VSM (Value Stream Mapping): As already discussed, VSM helps to identify process wastes and causes of these wastes.

• Kaizen: It’s a continuous improvement approach focusing on small – small improvements. It involves the commitment of down level people in the organization towards process improvements, facilitated by subordinates and supported by management. 

• Just in Time: It’s a pull approach to meet customer demands as & when it flows from a customer.

• SMED (Single minute exchange of dies): It improves equipment changeover time. It works on the principle of reducing changeover time to within ten minutes.

• Poke Yoke: It’s a mistake-proofing device used in assembly to alert operators on defects or failures.

• Jidoka (Autonomation): Also known as intelligent automation. It stops the assembly or production line if a defect occurs.

• Heijunka: It’s the concept of Line Balancing. The aim is to evenly distribute the load by balancing production lines.

• Gemba (Go & See): The aim is to go to the actual place of work. Observe the process and executions in real-time with care. Record the observations. It’s another way to find process pitfalls.

• Kanban: It’s a signal system to manage inventory levels. Kanban boards can be displayed and managed to see the current inventory level on a real-time basis. It also alerts the management to bring attention to excessive inventory. Excessive inventory ties up the working capital and blocks it from productive usage.

Now let’s understand about management approach of Six Sigma.

Section II: Six Sigma

What is Six Sigma?

Six Sigma is a data-driven problem-solving methodology. The focus is on process variations and emphasis is given to customer satisfaction. Continuous process improvement with low defects is the goal of this method.

The Goal of Six Sigma: 

The aim of  Six Sigma is to make a process effective with - 99.99996 % defect-free. This means a six sigma process produces 3.4 defects per million opportunities or less as a result.

Six Sigma is a structured problem-solving methodology. Problem-solving in Six Sigma is done using the DMAIC framework. There are five stages in this framework. They are 

- Define
- Measure
- Analyze
- Improve
- Control

Source: Pinterest

Six Sigma Phase	Description of Phase
Define	In this stage, project objectives are outlined. A project charter is an important component of this phase. A project charter is a blueprint document for a six sigma project. A typical charter contains the following information: Business case Problem statement Goal statement Project scope Resources Timelines Estimated benefits This chapter gives an overview of a six sigma project and is approved by top management to give a go-ahead to the six sigma project.
Measure	Process variables are measured at this stage. Process data is collected. The baseline is obtained and metrics are compared with final performance metrics. Process capability is obtained.
Analyze	Root cause analysis is done at this stage. Complex analysis tools are utilized to identify the root causes of a defect. Tools like histograms, Pareto charts, fishbone diagrams are used to identify the root causes. Hypotheses tests are conducted to verify and validate root causes, Viz Regression test, ANOVA test, Chi-square, etc.
Improve	Once the final root causes are identified, solutions need to be formed to improve the process. Steps to identify, test, and implement the solutions to eliminate root causes are part of this stage. Simulation studies, Design of experiments, Prototyping are some of the techniques used here to improve and maximize process performance.
Control	After implementing the solutions, the performance of the solutions must be recorded. A control system must be in place to monitor the performance post improvement. And a response plan is developed to handle solution failure. Process standardization through Control plans & work instructions is typically a part of this phase. Control charts show the process performance. Project benefits are discussed and verified against the estimated one. The main purpose of this phase is to ensure holding the gains.

Table 2: Six Sigma Phases and their descriptions

Section III: Lean Six Sigma

What is Lean Six Sigma?

ASQ (The American Society for Quality) states, 
“Lean Six Sigma is a fact-based, data-driven philosophy of improvement that values defect prevention over defect detection. It drives customer satisfaction and bottom-line results by reducing variation, waste, and cycle time while promoting the use of work standardization and flow, thereby creating a competitive advantage. It applies anywhere variation and waste exist, and every employee should be involved.”

Lean Six Sigma combines the strategies of Lean and Six Sigma. Lean principles help to reduce or eliminate process wastes. Six Sigma focuses on variation - reduction in the process. Thereby, the principles of Lean Six Sigma helps to improve the efficiency and quality of the process.

Source: Circle 6 Consulting

Three Key Elements of Lean Six Sigma

The three key elements comprise of - 

• Customers: The moment of truth from a customer standpoint arrives at the time when they experience your product or solution. Today’s customers have more access to both information and choices. They will demand the best at the lowest and would expect to be supported throughout their product experience. This calls for an outside-in approach to business processes, which is the core of Lean Six Sigma.
  
  
• Processes: With an outside-in approach comes the need to define the business process value chain. Customers will pay for the product only not for inefficiencies like rework, revisions, and wastages. Lean Six Sigma helps organizations focus on consistently producing quality output and improve the value chain so customers get the best quality within expected timelines.
  
  
• Employees: Peter Drucker once said, ‘Culture eats strategy for breakfast.’ Unless a well-defined business process transformation strategy is driven at a grass-roots level, events might tend towards the status quo. Lean Six Sigma has to be driven as DNA within the organization so all stakeholders at all levels speak the same language and practice what is being preached.
  
  

Why is Lean Six Sigma Gaining Importance In Today’s Scenario?

Today’s environment is very dynamic. Lean or six sigma approach in this dynamic environment cannot bring the full potential to improvements if applied in isolation. Integration of Lean & Six Sigma ensures exceptional improvements. In this management approach, traditionally the lean methodology is used first to remove the waste in a process. Later, the Six Sigma tools are used to improve process variations. However, these two methods go hand in hand in today’s time. The ultimate objective is to improve processes by reducing variation and eliminating waste. It’s a continuous improvement process, where Lean methods and Six Sigma approaches, both take their turn during PDCA. The extent of approaches may differ depending upon process complexities or improvement sought. The combination of these two methods helps to develop streamlined processes with high quality & results. It improves bottom-line profits and helps meeting business goals. 

The integrated Lean Six Sigma management approach is being used across sectors and industries. It promotes exceptional changes in an organization's performance. Lean Six Sigma leads to enjoying competitive advantages in various companies in the world. They can be product or service-oriented companies. The LSS methodology improves processes and makes them efficient. The key to success is management support, employee engagement, and commitment to improving customer satisfaction.

Lean Six Sigma and Innovation Management

All innovations stem from a need. In today’s day and age, customers demand newer products and solutions on a daily basis. Comfort, convenience, and efficiency take prominence over the brand.  

In this environment, it is imperative for organizations to continue to churn out innovative solutions, most times pre-empting the market needs. Lean Six Sigma methodology becomes a solid basis for innovation to be driven as a culture within organizations. At the base is the common motive of delivering quality products and solutions consistently to customers.

Implementation of the Lean Six Sigma Methodology Within Enterprises

So, why do organizations of varied size and levels of maturity use the principles of Lean Six Sigma? For reconnecting to the core goals of a business enterprise like-

• Customer delight
• Improving the bottom line
• Enhanced products/service quality
• Employee satisfaction
• Cost efficiency
• Managing and adapting to change
• Enhancing organizational agility
• Building a culture  of Operational Excellence
  
  

Possible Traps That Can Emerge During the Implementation of This Methodology

‘A fool with a tool is still a fool’ as the age-old adage goes!

Lean Six Sigma offers a methodology and a set of tools that lead to continuous improvement. In a well-embedded Lean Six Sigma culture, from the voice of the customer to measuring delivery success, what gets measured gets improved. In a zest to achieve quick-fixes and instant outcomes, companies fail to realize the long-term benefits of the methodology.

Some common traps that most organizations fall into are -

• Focus on theoretical knowledge than application
• Lack of focus on resource optimization than utilization
• Focus on data collection without driving business intelligence
• Use of static and traditional execution approaches to new-age dynamic ones
• Lack of alignment between organization mission/vision and individual goals
  
  

Similarities and Differences Between Lean and Six Sigma

Lean and Six Sigma both signify a system for continuous improvement of business processes. While Lean focuses on waste reduction/elimination, process simplification, value stream mapping, and reduce rework in the value chain. Six Sigma focuses on setting up a set of systems and people-aligned processes focussing on improving consistency of quality outcome to customers. 

• Lean helps increase process efficiency by focusing on speed and cost optimization. Lean ensures the stability of processes.
• Six Sigma focuses on quality improvement by reducing variation using statistical tools and techniques.
• Six Sigma employs the DMAIC model (Define, Measure, Analyze, Improve, Control) for existing products/services while DFSS (Design for Six Sigma) is deployed for new products/service design. 

Lean Six Sigma evolved over the last few decades as a convergence of both these methodologies was imminent to many organizations. Lean Six Sigma blends both the methodologies and thereby creates a pragmatic approach to process improvement within a company. It is characterized by a multi-pronged approach to problem-solving thereby fixing value chain blockages and ensuring consistent delivery of quality products/solutions.

The foremost benefit of a blended Lean Six Sigma approach is that it aids focus on customer goals and caters to building efficiencies which is important from an investor standpoint. It also takes away the misperception of a long-drawn deployment duration across large businesses as both foci on outcomes that are the highest priority from a customer standpoint.

Lean Six Sigma Principles

An outside-in approach is key to the success of an LSS deployment within organizations. Some fundamental principles to enable this are –

1.  Customer Focus: Defining what ‘quality’ and ‘satisfaction’ means to the customer and aligning the business processes and people to achieve the customer and business goals should be at the center of any LSS deployment.

2.  Define Roadblocks to Consistent Quality: Many organizations get excited about doing too many things at the same time without doing a real assessment of what matters most to the customer and the business stakeholders. Define your problem well and set priorities in line with the same. Access to qualitative and quantitative data at this stage enables a more rational approach at this stage.

3.  Eliminate Inefficiencies: Define very clearly what is the customer not ready to pay for. Demarcate between non-value added and value-added steps in the business process. Apply a philosophy of eliminating, simplify, or automate across the organization supported by consistent measurement of the outcomes. What gets measured, gets improved.

4.  Communicate and Align People: Consistent and seamless communication and training and handholding of people across the organization is the key to achieve success with any change, especially with the deployment of LSS. Encourage people to fall in love with problems and get excited about solving them. Inculcate a culture of group problem solving using group-think techniques. Ensure behavioral sponsorship to the new way across the organization, especially at leadership and managerial levels.

5.  Be Flexible and Adaptable: Change is uncomfortable, to begin with, and each person in the organization will move on the Change Curve at a different pace. Be cognizant of this aspect and ensure organizational structure and management philosophies are aligned to the new realities. Markets are ever-changing and it is important to keep an eye on what customers might demand in the future. With that in mind, keeping the business processes capable of dynamic shifts and building a culture of adaptability and agility across the organization becomes imperative for the deployment of LSS as well.

Benefits of Lean Six Sigma

Lean Six Sigma methodology impacts the core of an organization’s approach to delivering customer outcomes. The benefits of deploying LSS are multifarious, some noteworthy ones captured herein.

1.  Talent Development: LSS deployment needs every person in the organization to understand the principles and practical application of the techniques. This enhances focus on talent development and embeds learning as a culture within the organization. Growth comes with improved outcomes and continuous learning/upskilling becomes a part of the organizational culture.

2.  Quality Delivery Enabled Through Efficient Business Processes: Data-driven decision making, right first time, improved throughput, and increased transparency are direct benefits of LSS. A customer-centric focus on quality ensures that customer voices are continuously heard and product/solution designs plus delivery mechanism quickly attuned to the new market realities.

3.  Scalable Across Different Sectors: Although there used to be a misperception that Lean Six Sigma is more applicable to manufacturing and engineering companies. In the last few decades with the application of these principles within other sectors like BFSI, IT, and Retail have proven that LSS techniques have cross-industry application capabilities.

4.  Becomes The Basis for Cutting-edge Technology Deployment: LSS drove continuous improvement initiatives blend with digitization and deployment of cutting-edge technology. LSS is vital to a successful Digital Transformation and becomes a subset of the larger Business Transformation strategy for organizations.

5.  Enhances Brand Value: Customers trust organizations that are able to respond to their challenges in a timely manner and resolve the same with integrity. LSS sets-up a culture of people and a sequence of processes and practices that help build upon this customer success quotient, thereby enhancing brand value further.

Lean Six Sigma Belts

Defined as roles within some organizations, let’s refresh our understanding of the different Belts within Lean Six Sigma. Belts signify different levels of certification within the LSS school of knowledge.

• Master Black Belt (MBB):  Expert in Six Sigma methodology and statistical tools. The MBB provides Six Sigma guidance and technical leadership for a specific function or department in an organization. Coaching, mentoring and training Black Belts also fall within the ambit of the MBB. MBBs are the final authorities in signing off BB projects.
• Black Belt (BB): Usually whole-time professionals leading Six Sigma projects. They are experts in the methods and tools within Lean Six Sigma. Most importantly, responsible for providing coaching and Six Sigma expertise to Green Belts.

Source: 6 Sigma Certification Online

• Green Belt (GB): Usually alongside a functional or leadership role. GBs are leaders responsible for driving operational excellence within their teams or functions. Through the real-time application of Lean  Six Sigma techniques in process improvement and under the guidance of BBs, they manage Six Sigma projects from concept to completion. It is a defining growth and development criteria within most organizations.
• Yellow Belt (YB): A relatively new and evolving term. YBs demonstrate basic knowledge of Lean Six Sigma. Usually support a GB or BB project as a core team member or SME.
  
  

How Does Lean Six Sigma Work?

The question is not whether Lean and Six Sigma work. The key point is what happens when organizations approach transformational initiatives in isolation to proven process improvement methodologies like Lean Six Sigma.

The result is a set of automated processes that seem sophisticated but miss the key aspect of customer orientation and scalability. And when customers are ignored for cosmetics, results are disastrous.

More organizations who aim to be in business for the long-term approach continuous improvement through tried and tested Lean Six  Sigma methodologies or variations to the same.

For the ones who choose to grow from a start-up to a unicorn only to realize they are moving into obscurity due to lack of customer focus, some of the Lean Six Sigma techniques and LSS  professionals could be the saviors.

Final Takeaway

In a nutshell, Lean methodology aims at waste reduction in process, while six sigma aims at reduction of process variation. However, both approaches go hand in hand to realize the full potential for process improvements. An integrated approach of lean six sigma helps improving process efficiency, optimizing resources, and increasing customer satisfaction while improving profits and curtailing cost.

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