Lean vs Six Sigma - What is the difference between them?

What is LEAN?

LEAN means you’re getting more outcome, output or result than a process would usually deliver. It means removing waste from your business processes.

LEAN is also known as;

• LEAN Manufacturing

• LEAN Production

• LEAN Management

You’re using the lean principle if you’re,

• Completing activities in lesser time without performing poorly

• Occupying lesser storage space

• Getting things done with lesser human efforts

• Using less machinery without sacrificing efficiency

• Consuming less material without sacrificing quality

“LEAN" is a brainchild of Toyota Production System (TPS). 

The LEAN process is a method you’d use to eliminate or limit waste. Your goal is to increase efficiency and productivity without consuming more resources. LEAN aims to boost resource management.

Adopters of the LEAN methodology leverage it to boost their operational efficiency. They spot and remove Non-Value Added (NVA) activities from their systems.

The process also aims to save time by not dwelling on rigorous data analysis. Although LEAN originally came from manufacturing, it adapts well to all processes and systems.

Albeit, adapting LEAN to your particular use isn’t always obvious.

Most users struggle to tailor the process along with their unique needs. So they don’t know how to apply the methodology to their business situations and challenges.

The LEAN methodology brings our attention to two important factors – Value Added (VA) and Non-Value Added (NVA) activities. Value is what the customer cares for. Doing Value-Added activities would be focusing on processes that boost the value of your offerings.

Similarly, you’d remove Non-Value added activities from the process to boost resource management efficiency.

The practical aspects of LEAN are as follows,

Introduction to Six Sigma:

Six Sigma is a disciplined, process-centric, and data-driven methodology for eliminating variations in any process, domain, function, company, and industry. This methodology infuses a set of techniques and tools for process improvement.

The Six Sigma strategies improve the output ‘Quality’ of a process. It initiates these improvements by identifying and removing the root-causes of targeted ‘Defects’ in the process.

The word ‘quality’ is relative or generic in nature here. You want to define the “quality” you want to improve.

According to the Six Sigma methodology, variation in any process is directly proportional to the number of defects in the process. More variation equals more defects and less variation means fewer defects.

The Six Sigma methodology helps eliminate or minimize variability in your business or production process. It uses a set of quality management methods, with a focus on empirical and statistical methods, to deliver on its promises.

Six Sigma aims to help businesses achieve and sustain customer and vendor satisfaction, while they remain profitable. It achieves this goal by doing three things

• Standardizing and streamlining operations,

• Improving different dimensions of quality and

• Eliminating defects in every organization-wide process.

Principles of LEAN Methodology:

Principle #1 - Define Value:

The first principle focuses on specifying and quantifying value from the user’s perspective. The user could be your employees or customers. Your user defines what “value” should mean.

The customer or user wants specific products, with specific capabilities, at specific price ranges. So defining “value” is the first step in LEAN thinking. Get value wrong and nothing works!

Principle #2 - Map Your Value Chain:

The second principle focuses on mapping the value stream. The value stream or value chain is the series of activities and the process you use. This chain includes both your Value-Added and Non-Value Added activities.

Production and delivery of products and services follow chains of activities. These chains of activities would depend on the user’s needs and demands.

Based upon the knowledge of these needs of the user, you’d develop a value stream. Businesses can create value chains for individual products they manufacture or bring to market.

And then, applying the LEAN methodology, firms can eliminate any bottlenecks or wastes in their value chain.

Principle #3 - Improve Workflow:

Principle number three is to improve your workflow and enhance your value-generating activities. You want to improve your order here and get your products to users in the most orderly manner possible.

Source: Freepik.com

Enhanced workflow helps you move products, services, or information down the value stream with zero delays.

You enhance your workflow by eliminating stops, delays, and queues while improving the flexibility and reliability of your processes. You’d define this process as generating flow.

Principle #4 - Draw Value from Business Activities:

For the fourth principle, once flow generation starts, the customer must pull value from the next upstream activity.

Based on the PULL production method, each step in the process must take only it’s required product, service, or information. The step in the process must take these elements in only at the moment it needs to take it, and only from the processes that precede it.

PULL is initiated by end-customer demand. It ensures that your processes follow an unbreakable sequence. No action is independent. Each preceding movement in your system is responsible for initiating the next activity in the system.

Principle #5 - Keep Perfecting the Process:

This fifth principle addresses the need to constantly seek improvement and to perfect the system. Based on this fifth principle, you want to keep iterating and perfecting your business operations and processes here.

In an ideal world, you want to reach a state where you deliver the best value possible with zero waste in the process. At this stage you’d have achieved these goals:

• Specified value

• Identified value streams

• Removed Non-Value Adding activities (NVA)

• Flow and Pull are successfully in place

Reduction of waste brings the operational process or business closer to perfection. The closer a process is to perfection or excellence, the more you’d find the room for improvement.

Similarly, once you reduce stock and overproduction, new wastes and bottlenecks come to light. This exposure of new leakages gives you the opportunity for improvement. Ultimately, the ongoing endeavor to seek perfection means always keeping the customer in focus.

Principles of Six Sigma Methodology:

Please note improvement with Six Sigma methodology requires finding and working with critical X’s in a process. Solving problems using Six Sigma methodology can best be described by the relationship of Y = f(X).

If there are multiple X’s, then Y = f(X1, X2, X3…….Xn). 

In this equation, ‘Y’ is a ‘Dependent Variable’ or the process output.

The variables, X1, X2, X3……Xn are ‘Independent Variables’ or process predictors.

The letter ‘f’ is the function that defines the relationship between the process output (Y) and the process predictor variables (X’s).

Y is the effect or the symptom which is caused by the X’s (i.e. X1, X2, X3……Xn). 

Understanding the Equation:

Each process consists of inputs and outputs that you can monitor. You can optimize the process you’re measuring by measuring your process inputs and outputs.

You must state your process input requirements. That clarification helps you control your key input quality metrics.

The equation is read as: Output Y gets functioned or processed by one or multiple X’s; which are also the inputs here.

The interpretation will be: Controlling the inputs will help us control the output.

The second one would be read as: The effect Y is the function of one or multiple causes (X’s); which are also the causes here.

The interpretation for the second one would be: Controlling the causes will help us control the effect.

This thinking mechanism or approach is called ‘Y = f(X)’. Six Sigma is all about finding the critical X’s which affect the Y or the output of a process.

Six Sigma at Work:

In Six Sigma methodology, the practical or business problem is the defect or pain area. This pain would be chronic and affects the production or shop floor.

You want to take a few things into consideration here.

Is this defect type new?

Has the process or business with the defect been running for years or several months?

Is this process or business having other problems?

Based on the answers you glean you’ll study and analyze the historical data to find patterns. You want to find any early symptoms of these defects.

Next, you’ll need to convert this practical problem into a statistical model. You’ll present the problem using statistical tools and techniques.

For example, let’s assume the business problem affects the stability of its processes. Now, you’d draw up a control chart for discrete or continuous data. This chart quantifies the current instability or the lack of statistical control.

Next, you’d then work out that statistical problem into a statistical solution. This solution gives you reliability and mitigates your risk levels, so you don’t have to presume anything. You don’t arrive at a statistical solution based on gut feelings, but based on verifiable data.

Not every stakeholder would understand statistical representations of a business solution. So you must convert the statistical solution into practical or business solution they can digest.

Six Sigma Problem-Solving Framework-DMAIC:

DMAIC stands for Define, Measure, Analyze, Improve and Control. It is a problem-solving and process improvement framework in Six Sigma methodology. 

The DMAIC structure provides a useful framework for creating a “gated process” for project control. The oversight defines and reviews the criteria for completing each project phase. This review ensures all the criteria for the project received due attention in the process before the next phase launches. If all parameters of the criteria are met, then the gate (e.g., DEFINE) is “closed”.

The overview of the DMAIC framework is as follows,

Conclusion: 

Over the years, many methodologies have emerged, but only a few of the principles have continued to survive. These concentrated principles form LEAN & Six Sigma. The strength of LEAN & Six Sigma is based on its quality culture infrastructure. Both these methodologies have well-defined roles and responsibilities & a particular (read data-driven) mindset. 

In a nutshell, Six Sigma is a problem-solving methodology, which focusses on the reduction of variability. It uses human assets, data, measurements, and statistics to eliminate waste & defects while increasing customer satisfaction, profit, & customer value. Whereas, LEAN is described as a set of waste identification & elimination tools, which is based on the principles of Toyota Production System focussing on the reduction of waste while increasing value from the customer point of view. 

LEAN & Six Sigma methodologies are complementary and can be implemented in parallel; if implemented correctly.
 

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