Guest Post By: Alex Pejak
Follow Alex on Twitter: @AlexPejak
What is Lean Six Sigma?
Lean Six Sigma is a methodology that relies on a collaborative team effort to improve performance by systematically removing waste; combining lean manufacturing/lean enterprise and Six Sigma to eliminate the eight kinds of waste: defects, overproduction, waiting, non-utilized talent, transportation, inventory, motion, extra-processing (abbreviated as “DOWNTIME”).
The Lean Six Sigma concepts were first published in a book titled Lean Six Sigma: Combining Six Sigma with Lean Speed by Michael George and Robert Lawrence Jr. in 2002
Growing your business with Lean Six Sigma
Organisations face constantly rising costs and ever increasing competition. Lean Six Sigma helps combat these problems and grow your business in many different ways: it increases revenue, decreases costs, improves efficiency, and develops effective people. Best of all, with the right training, it needn’t be difficult to implement. Let’s consider the benefits in a little more detail, and look at what it takes to bring them to your organisation.
Implementing Lean Six Sigma increases revenue by streamlining your processes. By being able to process transactions more quickly, you can complete more per month and your revenue goes up. These streamlined processes mean services or products are done more efficiently and quickly, with no disadvantage in quality. This, in turn, increases your revenue — your organisation can do more with less, selling, manufacturing, and providing more products and services in a given time period, using less resources.
Lean Six Sigma decreases your overall costs. It does this in two ways: one, it removes the “waste” from your processes. (Waste, in this context, are all the activities which are not required to manufacture products or provide services that are up to specifications.) Two, it solves problems which are caused by a given process. These “problems” are any defects in the product or the service which cost you money. Fewer defects means lower costs. In a nutshell, Lean Six Sigma lets you fix the processes which are costing your organisation valuable resources.
Lean Six Sigma improves overall efficiency. Your organisation’s efforts towards delivering satisfactory products or services are maximised, and your organisation is able to allocate revenue and resources from your new, improved processes to growing the business. By creating efficient processes on the Lean Six Sigma model, your organisation can simply deliver more to more satisfied customers than before.
Developing effective people
Finally, Lean Six Sigma helps develop effective employees. It does this by ensuring employees are involved in the process of improvement, promoting active participation and resulting an accountable, engaged team. It also builds trust: by encouraging transparency in all levels of the organisation, Lean Six Sigma promotes a general understanding of how everyone is important to the success of the organisation.
The result is a sense of accountability and ownership amongst all your employees, which increases their overall effectiveness and ability to deliver results for every improvement project in which they’re involved. It’s a crucial benefit that is often overlooked by people implementing Lean Six Sigma, but the advantages serve to dramatically increase the chance that Lean Six Sigma and your business will continue to succeed.
Implementing Lean Six Sigma
Lean Six Sigma is not something you adopt simply for saving money, nor is it a “cookie cutter” solution which works the same way in every organisation. It takes significant discipline and governance, and senior management must be both 100 percent invested in as well as committed to achieving it.
Lean Six Sigma training happens on several different levels. The core concept is the “belt system”, where those who will be championing the implementation take training that certifies them on a scale from “Lean Six Sigma Champion” to “Lean Six Sigma Black Belt.”
These courses teach them to implement Lean Six Sigma projects throughout the organisation. In many cases they will also learn standard project management techniques, like how software such as MS Project can speed up and enhance the implementation projects on which they work.
However, attending courses is simply the first step. The company as a whole must be willing to invest the appropriate resources in the initiative, and all the participants and stakeholders will have to work as a team.
The process of implementation means creating a feedback loop that produces results which can be validated over the long term — this might mean that the finance department documents monetary savings, or that the service department is flooded with positive feedback from customers.
In some cases, the results can be dramatic and immediate, like the company which managed to reduce its scrap rate by 35% in the first year, saving around 3.5 million dollars annually in labour and materials cost and reducing lead time from five to three weeks.
Yet the overall focus must always be on changes which have the greatest impact on quality, rather than the changes which produce the fastest results.
Alex Pejak is an economist currently working on a few projects in Australia. She is interested in topics related to project management and business improvement.