Monday, 28 May 2012 23:00

Demystifying Lean Six Sigma

Written by Michael Lilley and David DeCoste
In today's competitive global market, all companies are looking to make improvements that drive bottom line results. Many of these organizations are turning to process improvement methodologies such as Lean Six Sigma. While this is a great starting point, your first question may be, "What exactly is Lean Six Sigma and how is it different from Six Sigma or Lean?" Your next question may be, "If my company is not in manufacturing, would Lean Six Sigma even be applicable for my organization?" In this article, we will answer these questions by providing an overview of the fundamental framework of this methodology. We will also draw on our SEI experience and take a look at how companies are using Lean Six Sigma as well as some of the common pitfalls.

What is Lean Six Sigma? The first point that is important to understand is that Lean, Six Sigma and Lean Six Sigma are three different methodologies. All center on the fundamental concept of doing things better, faster and cheaper, but from different perspectives.

Lean Six Sigma is a natural evolution of the quality and process improvement disciplines that originated in the 1950s to improve manufacturing. It began with a focus on improving quality in order to decrease the cost of producing defective material. This evolved into applying similar principles to improve process efficiency on the factory floor through the elimination of wasted effort by only producing what was needed, when it was needed, instead of filling warehouses. Over time, other parts of the organization saw the opportunity to apply these same principles to business activities other than manufacturing. After all, nearly everything an organization does can be broken down into process form.

The Differences Between Lean, Six Sigma & Lean Six Sigma

Lean and Six Sigma are both disciplines for continuous improvement, but have differences in objectives and approach. Lean is a discipline in which the goal is to eliminate waste and increase process efficiency through a focus on improvements in speed and cost.MLDD1
Six Sigma, on the other hand, is a discipline in which the goal is to eliminate variation and reduce defects through a focus on improvements in quality.
Lean uses tools such as kaizen events, value stream mapping, work load balancing and 7 waste analysis. Six Sigma uses more analytical tools such as Pareto analysis, control charts, statistical analysis and defects per

million opportunities (DPMO) measurements.

Lean Six Sigma is a hybrid that brings both of these disciplines together. It takes a pragmatic view of process improvement with a focus on what is needed and important to the customer. It combines the time-focused strategy inherent in Lean with the analytical tools of Six Sigma, which allows for a flexible solution set to address the broadest set of problems.
DMAIC (Define-Measure-Analyze-Improve-Control) is the fundamental framework of Six Sigma and was adopted as such for Lean Six Sigma, specifically for projects aimed at improving existing business processes.

The DMAIC Framework

DMAIC is a project methodology comprised of 5 phases and is often deployed with specific deliverables identified for each stage.
MLDD2

How Companies Are Using Lean Six Sigma

We can say with certainty that while Lean Six Sigma has its origins in manufacturing, it has moved beyond the factory floor and is being applied across all parts of the organization. Today, companies are using the fact-based principles of Lean Six Sigma to:

• Drive cross-functional process improvement initiatives such as new hire onboarding
Streamline back office functions such as accounts payable
Identify new applications of existing products
• Reinvent functions to improve the quality of service delivery

The bottom line is companies are achieving success through Lean Six Sigma's basic principle of identifying who the real customer is, determining what they perceive as value, and focusing on activities that help deliver that value while eliminating or reducing activities that do not.
A common underpinning of how companies implement Lean Six Sigma is the recognition of various "belts" as a measure of employees experience level. Industry standards define three common belts: Green Belt, Black Belt and Master Black Belt. Organizational approaches and the utilization of these belts, however, vary among companies.
Some companies take a top-down approach. They have a formal PMO (Program Management Office) with trained experts, such as Black Belts, deployed as internal consultants to drive improvement projects throughout the business. Other companies take a bottom-up approach. They have a formal program in which front-line employees, typically following a structured belt certification path, are formally trained and expected to drive process improvement projects. Both approaches offer strengths and challenges. Companies need to identify the best fit for their organization while managing the potential pitfalls.

Common Pitfalls

In its simplest form, Lean Six Sigma provides a methodology and a set of tools to drive continuous improvement through analysis based on facts and direct customer input. Far too often, however, this simplicity is lost in the zeal to achieve measureable results as fast as possible and companies fail to see success. Here are some of the common pitfalls we have seen:

Focusing on belt certification over business value

One of the most prevalent problems companies face in their implementation of Lean Six Sigma relates to the project requirements of belt certification. In order to become certified, Green and Black Belt candidates need to complete a formal project. This potentially creates an environment in which employees pursue projects to satisfy certification requirements as opposed to projects that have real business value.

Not balancing resource demands

Excessive focus on belt certification may lead to many belt candidates requesting the same few subject matters experts (SMEs) to participate in their projects. These key people get pulled into meeting after meeting and project after project until they finally put up a brick wall and stop contributing. Without input from these SMEs, it is difficult to properly define the problem and the opportunities for improvement

Gathering too much data or not letting the data talk

There can be a tendency to collect data for the sake of collecting data because Six Sigma is driven by data analysis. This can lead to poor data quality and analysis paralysis. Human nature can also lead people to enter the analyze phase with preconceived ideas on what the root causes are instead of letting the data tell the story to help define where the opportunity exists.

Implementing a rigid program focused on standardized templates

There is no one size fits all. Lean Six Sigma provides a framework and a set of tools. However, intelligence and experience still need to be applied to select the appropriate tools and techniques for the specific project. When companies impose an inflexible method, people start filling out the approved templates for the sake of complying with the corporate standards instead of garnering the intended value of the particular tool.

Deviating from the DMAIC process

The excitement of making improvements can lead organizations to jump right in and start implementing change without collecting or analyzing data (often because they come into the project with preconceived root causes and solutions in mind). While the end game is to implement improvements, organizations need to let the DMAIC process work in order to accurately identify the problem and the most effective improvements.

Assuming belt candidates have project management skills

For some reason, when it comes to Lean Six Sigma, fundamental project management is often ignored during the selection process for Green and Black Belt candidates. As a consequence, people lacking these basic project management skills may be tasked with leading projects. This may result in a situation wherein the effort is not properly managed and produces no tangible results. Since management has committed to embrace Lean Six Sigma, projects might still be praised as a success with no recognition of the mistakes or lessons learned.

Letting best get in the way of better

Lean Six Sigma is not a static methodology—it's all about continuous process improvement. That is, continuously finding ways to make the process better, faster and cheaper. Many times, companies execute improvement projects with a vision of a perfect process and, as a result, spend too much time and dedicate too many resources to the initial effort.

Bringing It Together

You started with a simple question: "What exactly is Lean Six Sigma and how can it benefit my organization?" In this article, we provided an overview of Lean Six Sigma and how it integrates the efficiency focus of Lean with the analytical tools of Six Sigma to provide a flexible solution set. We also outlined Lean Six Sigma's phased project methodology of DMAIC. In addition, we provided a perspective on how companies are approaching Lean Six Sigma and how they are using it to achieve bottom-line results. Finally, we identified some of the common pitfalls organizations have experienced in their efforts to instill a Lean Six Sigma culture.
We view Lean Six Sigma for what it is: a set of methodologies and tools that drive continuous improvement through analysis based on facts and direct customer input. We take a pragmatic approach and apply our experience as Lean Six Sigma practitioners to bring the appropriate tools to the project at hand rather than follow a prescriptive methodology.

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Michael Lilley, CPA, PMP, CIRM is a consultant with Systems Evolution Inc. (www.sysev.com) with over 20 years of industry experience in the areas of Project Management, IT Program Management, Operations Management, Process Engineering, and Management Consulting. Mr. Lilley has played key roles in driving initiatives such as Sarbanes Oxley compliance, ISO9001, Six Sigma, Lean Manufacturing, Total Quality Management, Project Portfolio Management, and Shared Service Centers.

David DeCoste is a consultant with Systems Evolution Inc. (www.sysev.com) with over 20 years of internal and external consulting experience. His background includes Strategic Project and Program Management, Process Improvement, Business Analysis, Program Development and Implementation, and Change Management. Mr. DeCoste is a certified Lean Six Sigma Black Belt proficient in short-cycle improvement techniques, including Kaizen and Value Stream Mapping.
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