The goal of Six Sigma is to increase profits by eliminating variability, defects and waste that undermine customer loyalty.
Six Sigma can be understood/perceived at three levels:
Metric: 3.4 Defects Per Million Opportunities. DPMO allows you to take complexity of product/process into account. Rule of thumb is to consider at least three opportunities for a physical part/component - one for form, one for fit and one for function, in absence of better considerations. Also you want to be Six Sigma in the Critical to Quality characteristics and not the whole unit/characteristics.
Methodology: DMAIC/DFSS structured problem solving roadmap and tools.
Philosophy: Reduce variation in your business and take customer-focused, data driven decisions.
Six Sigma is a methodology that provides businesses with the tools to improve the capability of their business processes. This increase in performance and decrease in process variation leads to defect reduction and vast improvement in profits, employee morale and quality of product.
Here's an article with more detail on defining Six Sigma: What is Six Sigma?
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Six Sigma is a rigorous and a systematic methodology that utilizes information (management by facts) and statistical analysis to measure and improve a company's operational performance, practices and systems by identifying and preventing 'defects' in manufacturing and service-related processes in order to anticipate and exceed expectations of all stakeholders to accomplish effectiveness
SummaryBusiness fundamentally exists to make money, either for shareholders or owners. Lean Six Sigma is a combination of methodologies to provide your organisation with greater speed, less variation and more bottom line impact than any other methodology.Central to Lean Six Sigma is the fastest rate of improvement in customer satisfaction, cost,quality, speed and invested capital.The fusion of lean and six sigma is necessary because:
Lean cannot bring a process under statistical control
Six-Sigma alone cannot dramatically improve process speed or reduce invested capital.
Variation is the enemy of all business; lean six-sigma removes more variation than any other process.
Ten Steps to Lean Six SigmaPlease note the Lean Six Sigma does not lend itself well to a ten steps programme, as it is in every way an ongoing process, which is continuously undertaken. The following tensteps should therefore be thought more of an implementation summary.
You will initially require consultants to help you on this path, but they should easily pay for themselves over the long run. You can (should) however expect significant returns within the first year of application. Hence the first step is to go and get help.
Big Hairy Audacious Goals need to be set by the MD or CEO Management engagement into Lean Six Sigma occurs and is seen to occur in a big way. These goals are broadcast to the company during a ‘transformation event’, which is quite an accurate description.
Selection of the Practitioners. Selection of the black belt team is an art form in itself and wants to be done carefully. The best people should be selected and represent the future business leaders of the company.
Training, training, training. The master black belt is ultimately responsible for the training of the black and green belts. Quite a lot of training is necessary and you should be prepared for this. At first you should hang onto your consultants for this purpose.
Kickoff – Company wide Vision. Its time to bring those audacious goals into action and make sure that everyone understands them and that you and the company are totallycommitted to lean six-sigma.
Project Selection and Implementation. First off, the “value streams” that show the most promise for growth are identified, which is quickly followed by projects that will most likely yield the greatest benefits in those value streams.
Monitoring Teams Performance. Since the Lean Six sigma is a financial improvement strategy, which talks the language of the senior management, it is easy for them to monitor and ensure that the teams are producing the necessary improvements. Simple software tools can be used to roll up all those lovely cost savings.
Improving Team Performance. Reviewing the structure of your teams and in particular the ability of your black belts to perform as team leaders is fundamental to success, team realignment and training in soft people skills is always required.
Making it Stick. Ensuring that the improvements initially gained continue to roll in, can be difficult for many firms. Making sure your initial enthusiasm doesn’t wane is key to continued success.
Rolling out into the Supply Chain. After successful projects have delivered real benefits to the company, you will start to notice that more and more problems are surfacing due to external variations. Projects involving the supply chain will be morefrequently suggested, remember here that it is supply chains that compete not companies.
Duration of Lean Six SigmaLean Six Sigma is a permanent way of doing business and is utilised as the primary methodology for business improvement through cost reduction, process speed and variation removal. This will also be the primary conduit along the career path for future managers of the business. Make no mistake Lean Six Sigma needs to be a primary focus of the MD or CEO.
So why use this rather than TQM, Lean or Six Sigma on their own or Hassle-Free Quality for example.
Lets take each of these in turn.Total Quality Management (TQM) received a bit of a bum rap primarily because quality improvements were made regardless of the impact on the bottom line of the company.No improvements projects are undertaken under Lean Six Sigma without the numbers showing that definite improvements will be made to the bottom line. In fact the mainpractitioners of Lean Six Sigma, the black belts, will be given target cost savings to meet every year. The MD or CEO will monitor the savings being made on the improvement projects to ensure that the program is improving the bottom line.Lean manufacturing cannot bring a process under statistical control, it can and does improve the quality of products but only in a limited fashion, the Six Sigma toolkit is powerful indeed in comparison.Six Sigma on the other hand can’t really affect the time traps and process speed that Lean manufacturing does and in addition you’ll find that if you do Lean you’ll probably end up re-inventing Six Sigma and vice versa.Crosby’s Hassle Free Quality makes the statement that quality is free and with many people, including ourselves, is a contentious statement. This really is for the MD or CEO todecide, however it can be easy, like TQM, for “quality improvements” and “pet projects” to be undertaken regardless. Although such improvements may actually reduce the hassle they may actually cost money, it can be very difficult to ascertain if ‘free’ is resultant.Lean Six Sigma selects the right projects to get the best results that directly affect the bottom line. Hassle-Free will result as improvements are made, they have however beenmade in the certainty that the value of the company has increased.Costs of Lean Six SigmaThe entire company is transformed by the implementation of Lean Six Sigma, worse still, the best people switch within their business units from their existing posts to Lean Six Sigma practitioners, with NO replacements.A fundamental point of Lean Six-Sigma is the focus on financial results, and although a lot of time and money is invested up front in training and consultation, a good program will probably start to pay for itself within the first year.Full commitment to Lean Six Sigma typically requires at least 1% of the company’s staff to be turned over full time to Lean Six sigma operations. Quality of the commitment from theentire management team is paramount, it should also be apparent that the career path of future leaders of the business lies within the Lean Six Sigma operations.Lean speedSlow processes are wasteful processes and the majority of products within any factory spend the majority of their time waiting (~95%), waiting for processing or waiting to be sold. Lean aims to eliminate this waiting and the company only produces exactly what the customer wants. This is termed “pulling to customer order” and also requires that small batch sizes, or one piece flow be implemented along with a highly efficient maintenance program. Please see the ten-stepsdocuments on Pull, SMED, and TPM respectively.The immediate benefits of Lean are that cash becomes readily available, generally from stock having to be used up and from Work In Progress (WIP) being dramatically reduced.It is at this point you may want to determine
What cash can be recovered by a reduction in WIP by 50%-80%?
What competitive advantage can be levered from a similar 50%-80% reduction in lead-time.
Reductions in Costs from applying LeanReductions in costs do not occur simply from reduced scrap and rework from less WIP or just from less stock and WIP.Shorter lead times and smaller batch sizes and stock levels have wide ranging benefits
Shorter lead-time – which can increase revenue growth
Less handling
Less storage, stock control and planning
Fewer customer service activities With less WIP you also avoid
Shipping defects to customer
Shipping large quantities of products in one go, whilst paying for the equipment all the time.
Expeditors, overtime and supervisors
Creating defects by having parts lying around
A cluttered shop floor full of WIP.
Making to forecast or making too much to attain an economic batch size and then having to store the rest.
Cycle EfficiencyThe measure of Lean, is process cycle efficiency and determines how fast or slow a process is by comparing the value added time to the total lead-time.
According to M. George [1] a process can be considered Lean if the process cycle efficiency is greater than 25%.Time Delays80% of the delays in the total lead-time are caused by 20% of the workstations, finding the causes of the delays are done by hard work not guesswork.
The cause of any delay in a process is a time trap. Assuming time traps are where materials pile up is generally wrong and each workstation should have its delay injection calculated. As a corollary batch sizes must be calculated from the process values and the total parts produced. Economic Order Quantities that can be used to determine batch sizes do not consider the variation or flow to customer demand, this prevents any improvements in the lead time. Hence you should take from this that process flow, batch size and turnover times are all interconnected.Process VelocityThe number of workstations a product moves through per hour determines the product velocity through the process.
The term “things” can be used since it doesn’t matter what is happening in the process, be it widgets or forms. The velocity is inversely proportional to the number of things in process. Note however that it is an average and can’t be used for determining the time delays.Value Stream MappingHere all the steps that go into creating a product or process, including rework and decision steps are mapped out. Value is assigned to each step and is termed value-added if you do something the customer wants and non-value added otherwise. Non-value added activities can be split into necessary steps required to enable value adding activities and unnecessary steps.To aid in classifying value adding from non-value adding you can ask the following questions about each identifiable step and decision.Value Adding
Does the step add form, function or feature to the product/service?
Does the task lever competitive advantage?
Is the customer willing to pay extra for this step, if they knew about it?
Non-Value Adding (but necessary)
Is this step required by regulation/law?
Does the task support company measurement or reporting requirements?
Does the task reduce risk, defect, financial etc?
Is the task necessary for a value adding step?
Non-Value Adding (not necessary)
Can the task be classified as either: counting, handling, inspection, transportation, storage, rework, expediting, sign off?
Six SigmaSix-Sigma is ultimately a cultural change and not just a set of quality improvement tools. The cultural change is to permanently commit at least 1% of the company’s best staff to the effort backed by full executive engagement.A typical infrastructure encompasses the following members who with care are selected and integrated into powerful teams.Corporate Champions – Such members have direct and unfettered access to the MD and are charged with implementing the strategic goals of the MD such that they maximise shareholder value. Consultants will initially play a large role here.Deployment Champions – These members translate the strategic goals into operational plans and identify which projects best meet these operational plans.Master Black Belt – The master black belt may lead the most complicated projects but definitely acts as mentor to the other black belts and organises the training of black thegreen belts. They may also act as Deployment Champions and will likely have the ear of the MD. Training will initially be performed largely by consultants.Black Belts – Such members identify projects for selection by the business unit champions, once selected they directly implement the lean six-sigma tool set to deliver the identifiedbenefits. Black belts form the core of a six-sigma implementationGreen Belts – Can be thought of as part time black belts who work part time to deliver on specific projects, they receive less training than black beltsSix Sigma – Problem SolvingDefine: Teams and champions identify the value streams that will yield the maximum benefits from improvement actions. The projects and the resources necessary to implement them are identified.Measure: With approved projects the team measures the relevant data on the project, service type processes benefit greatly from this since they generally have never been mapped or measured before.Analyse: The extent of the problems are characterised and understood by analysing the data gathered during measurement and is fundamental toImprove: The most appropriate tools are then employed by the team to quickly eliminate variation, defects and improve lead-time.Control: The team implements the improvement activities such that they stick and become normal operating procedure.But there is another wayDefine the project goals and customer (internal and external) deliverablesMeasure and determine customer needs and specificationsAnalyze the process options to meet the customer needsDesign (detailed) the process to meet the customer needsVerify the design performance and ability to meet customer needs.So what’s the difference?The DMAIC methodology, instead of the DMADV methodology, should be used when a product or process is in existence at your company but is not meeting customerspecification or is not performing adequately The DMADV methodology, instead of the DMAIC methodology, should be used when:
A product or process is not in existence at your company and one needs to be developed
The existing product or process exists and has been optimised (using either DMAIC or not) and still doesn't meet the level of customer specification or six sigma level
Six Sigma – Tool SetThe six-sigma tool set is vast and it’s important not to become bogged down in the semantics of the tools themselves, both George [1] and Bichenko [2] provide excellent information on the various tools. Of import however is that some standard procedure is adhered too.Lean Six Sigma – Selecting People & ProjectsThe selection of the best people in the company for the team roles sends a message to everyone on how committed management is to lean six-sigma. Communication and teamleadership skills are as important in this selection as the ability to master the technical tools and understand new concepts and ideas. George [1] recommends the followingcriteria and reminds us that such people are the future business leaders and their selection should not be rushed.
Team leadership skills
Project management experience
Problem solving abilities
Communication skills
Interest in a process view beyond their unit
Ability to learn financial analysis
Computer and technical skills
Accurate project identification & selection is at the heart of lean six-sigma success. The trade off between delivered value and effort expanded is detailed in the project selectionprocess.The selection process itself is an evolutionary one that goes from the “obvious” projects at the start to those determined via the value stream map once things are up and running.Whilst project selection is the responsibility of the champions, consultants will initially provide a lot of input here.Projects are identified from all areas of the company, from the MD to those on the shop floor but all must pass through various stages of analyses to ensure that the value streams with the largest scope for impact are chosen such that the projects with the biggest hits get worked on. You must insure however that all areas of the company are looked at and that all contribute to the “improvements box”. Concentrating on the manufacturing (back office) without also considering the services (front office), will cripple the improvements process greatly.Everyone will be watching at the start to determine if this is just another management project, i.e. have the best people been chosen and if the MDs or others “pet projects” have been chosen.Making it StickChanging a company is never an easy process, please see the Ten-Steps guide to change, however making it stick is fundamental to getting those drastic improvements you require. Six-Sigma and the belts go a long way to making sure this happens, however making it stick starts and ends with the MD and his/her management team.If the key people drift away from Lean Six Sigma, then the company will (rightly) follow, lean six sigma will no longer be seen as the path to success, either for the company orindividuals. Those leaders must consistently & clearly communicate the concepts and ideas of Lean Six-Sigma.If the company has a standard method of in house communications then Lean Six Sigma, the projects and those who achieve great improvements should be lauded within it, it is best not to make a separate communications. Then improvements can be shared across the business.Training in combination with Visual Management can also make an impact here. By posting the companies health and showing how profits, productivity and lead times are changing as well as providing all your staff with the knowledge to understand such information, makes the language part of the culture of the company. This can also make it easy for lean six-sigma to be extended out from a traditional manufacturing environment into service areas of the business.The Supply Chain needs to come tooAs improvements to your company get made, and variation, lead times and stock levels are reduced, you should notice that many of the problems that dominate stem from outsideyour company via the supply chain.As with the 80/20 rule for workstations, it should come as no surprise that enormous cost savings could be achieved from using these methods.
Key in achieving this, are two methods amongst a variety of others
A reduction in the supplier base to manageable level, where face to face can occur on a very regular time interval.
Kanban (which is only Japanese for card) is used to pull products from downstream as and when they are required by customer order.
The point of this is to effectively control & reduce WIP. Without achieving this control & reduction little or no improvement in delivery time can be achieved. If your products are however particularly complex, then kanban cards can easily become impractical, fortunately an ERP system can be utilised easily to fill the kanbans role.SummaryFor further information on this, or any of our other “Ten Steps” guides, please visit the Agility Group’s web site at
http://www.dur.ac.uk/agility/, or call 0191 374 2588
