Six Sigma or Lean

Recent evidence suggests that trends in the use of Six Sigma have evolved into an enhanced state, now known as "Lean Six Sigma". More and more companies are combining the two approaches. GE now call their Six Sigma approach "Lean", and Honeywell call theirs "Six Sigma plus". Lets understand how effectively to merge the techniques of Six Sigma with those of Lean in order to create an appropriate business improvement approach for different business situations.

What is common between the two?

Both concepts have exactly the same objective: Continuous Business Process Improvement.

Both follow a structured approach to identify the root causes of a business problem and find the optimal solution to avoid recurrence of the problem.

Both concepts are focused on business needs as defined by the customer.

Both concepts approach issues from the perspective of business process, rather than striving for the optimum in a given business unit, department or function.

Both concepts require the full participation of all interested parties supported by a well organised training and communications program. They are both founded on the belief that high performance can only be achieved in business processes if all the involved parties, regardless of hierarchical layers and including employees, suppliers and customers, participate in the activities of continuous improvement

Both concepts use cross-functional teams to address business problems in project work Both concepts were initially developed to improve manufacturing processes, but today they are also being applied to transactional businesses. Hence they are being widely used in the services industries, particularly in the Financial Services sector.

So what's the difference?

First, here's a quick overview of the key principles of each concept.

The Lean Methodology

Developed initially by the Japanese manufacturing industry, Lean, as a management strategy, has evolved from the Kaizen philosophy of constant improvement. The mastery of Kaizen, resulting in revolutionary products with unbeatable prices on the world market, was a main contributor to Japan's economic success from the late 1950s to the early 1990s.

Toyota is a great example of this. Toyota has understood not only how to master Lean within its manufacturing plants, but also how to transfer the concept successfully to the entire supply chain, from suppliers to dealerships, and on top of that to all of the supporting processes, too. Continuous improvement has allowed Toyota to become arguably the world's most profitable car maker with the most reliable cars on the market.

Description of the Lean concept

Lean means eliminating waste from everything we do in business or in virtually any type of organisation.

The first step is to identify the true Value Stream of a business process. A clearly defined and agreed upon Value Stream throughout the organisation is the basis for any improvement action to achieve high process performance and a significantly reduced cost base.

Using the Lean concept, the business processes are viewed from the customer's perspective. The value of an activity is solely defined by the customer. Activities that add value to the customer are those that make the product or service resemble more of what the customer actually wants and for which he is willing to pay.

Non value-added activities, however, do not create any value for the customer, and therefore all non value-added activities are considered as waste.

Waste is any activity in the workflow that adds time, effort or cost but does not create value. These activities include:

Rework - any process steps that are not done correctly the first time

Waste of material - any material that does not end up in the end product or is not needed actually to produce the item

Overproduction - output produced in greater quantity, or faster than the subsequent process steps require

Waste of Transportation - unnecessary movements of the process item

Waste of Movement - unnecessary movements of the operator, for instance in searching for instructions, materials or equipment

Waiting - operator or equipment idle time

Waste of human skills - employees who are not fully utilised according to their skills, training and potential.

Common Tools used in Lean:

Quality at source:

Avoid errors from being made (Poka Yoke)

Prevent defects from being passed on to subsequent process steps

Delegate responsibility and authority to the people who perform the process step. Workplace Organisation - (5S) the 5 S's:

Seiri - Sort: Remove any disarrangement

Seiton - Set in order: Organise the work environment

Seiso - Shine: Clean the work environment on an ongoing basis

Seiketsu - Standardise: Use standard operating procedures to perform the process activities and to organise and clean the workplace

Shitsuke - Sustain: Maintain the improved state by empowerment, clear responsibility and ownership.

Visual management

Visual management is a system that enables everyone, i.e. operators, middle management and executives, to assess the current status of a business process, at a glance. This includes:

Visual Controls - Clear separation of Work in Process, Defective Work Units, or transactions and process Output to be passed onto subsequent process steps; Indicators of bottlenecks and backlog; Alert signs where a process is down

Visual Indicators- Ongoing information and measurements of Volume, Defects, Cycle Time, Backlog, etc.

Statistical Tools used in Lean:

Pareto Diagram

Cause & effect diagram

Histogram

Control Charts

Scatter diagram

A Lean process has eliminated all the waste that reduces the speed and efficacy of the operation. It focuses all activity solely on creating value for the customer. In a Lean organisation no parts are produced that no one has asked for, no inventory is built up for material that is not needed right now, no work is duplicated on the same transaction, and no employees have to wait for deliveries in order to ship a customer order.

Lean achieves greater speed, reduced costs, and employees who are more highly motivated, because they understand their contribution to the organisation's success.

The Six Sigma Methodology

Six Sigma is a method for improving quality by removing defects and their causes in business process activities. The method concentrates on those outputs which are important to customers and translates these customer needs into measurable requirements, the so called CTQs (Critical To Quality).

An indicator for the CTQs is identified and a robust measurement system is established to obtain clean and precise data relating to the process. Once this is in place one can compare actual process behaviour to the customer-derived specification, and describe this in a statistical distribution (using mean, standard deviation [s] or other indicators, dependent on the type of distribution).

The Six Sigma drive for defect reduction, process improvement and customer satisfaction is based on the "statistical thinking" paradigm:

All work occurs in a system of interconnected processes

All processes have inherent variation

Data analysis is used to understand the variation and to drive process improvement decisions.

Ashu Arora is the Web Analyst for http://www.qgspl.com a part of Quality Growth Services and a single window service platform offering diverse services such as quality growth services, environment services.

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