If you are starting to learn about the concepts of streamlining a business process, you are at 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 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.

What is “Value”?

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

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

A process is 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 continuity of a process.

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

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Removing Waste:

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.

Process waste identified in Lean Methodology is known as “Muda”. Muda is a Japanese team for wastes – introduced by the Japanese engineer Taiichi Ohno of (Toyota) in 1960s.

Using the Lean methodology, you can remove 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 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 workman 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

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The Five Principles of Lean

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

Image Source: https://blogs.mtu.edu/improvement/2014/01/08/back-to-the-basics-5-principles-of-lean/

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 quality of product/service. Create Flow: Create flow to the customer by ensuring continuous flow system in producing product or service. Flow will optimize the process to maximize process efficiency. Establish Pull: establish pull approach by meeting system beat time. The beat time is the rate at which a product must be ready to meet the customer demand. JIT (Just in time) is a tool promoting Pull system. This ensures smooth workflow of the process without any disruptions. It also helps to diminish inventory level. Seek Continuous Improvement: Finally, you must put consistent efforts to improve the existing business processes to cater ever-changing customer needs. This ensures elimination of waste and defects 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 a 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 level. Kanban boards can be displayed and managed to see the current inventory level on a real time basis. It also alerts to the management to bring the attention over 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.

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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. Continous 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 in 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,

Analyse,

Improve,

Control.

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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 charter gives an overview of a six sigma project and is approved by top management to give a go-ahead to 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. Analyse 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 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 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?

Defining 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 process. Thereby, the principles of Lean Six Sigma help to improve the efficiency and quality of the process.

Source: www.circle6consulting.com

Why is Lean Six Sigma gaining the importance in today’s scenario?

Today’s environment is very dynamic. Lean or six sigma approach in this dynamic environment cannot bring 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 to exceptional changes in organization's performance. Lean Six Sigma leads to enjoying competitive advantages in various companies in the world. They can be a 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.

Final Takeaway:

In a nutshell, Lean methodology aims at waste reduction in process, while six sigma aims at reduction of process variation. However, both the approaches go hand in hand to realize the full potential of 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.

Hope, now you understand the differences between these three management approaches. They have their benefits when applied to different business processes. They improve the quality of existing processes and make you a better manager.

Become a Lean expert now!