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Introduction to Lean & Six Sigma
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Introduction to Lean and Six Sigma
What is Six Sigma?
Originally Six Sigma was a term coined by Motorola to express process capability in parts per million defects. Technically a “Six Sigma process” generates a maximum defect probability of 3.4 parts per million (PPM) when the amount of process shifts and drifts are controlled over the long term to less than +1.5 standard deviations.
That’s a bit of a mouthful. Today, Six Sigma usually refers to a project based continuous improvement methodology aimed at reducing defects in processes, both in manufacturing and service industries. It can be applied in every industry and in every department. Typically a company’s employees are trained to work in teams and apply a series of rigorous tools and techniques to improve processes, customer satisfaction and profitability. The Six Sigma methodology can also be applied in not for profit organisations to improve service delivery and value for money.
What is Lean?
Originally “Lean Manufacturing” was a term coined by Womack and Jones to describe the Toyota Production System in their book, ‘The Machine That Changed the World’. Currently, “Lean” means the systematic removal of waste. Again, typically, a company’s employees are trained to work in teams and apply a series of tools and techniques. However this time the focus is on identifying value-adding and non value-adding process steps. A value-adding step is defined as anything which the customer is willing to pay for in the transformation of material into customer requirements. The team then streamlines the processes selected for improvement, takes out waste and this activity usually reduces cycle time. The result is faster, slicker processes which enhance customer satisfaction and reduce cost.
How do I know if I need Lean or Six Sigma?
Ask yourself, “Do we get customer complaints?" "Do we miss deliveries?" "Do we have waste and modification?" "Are costs too high?" "Are we losing market share?" "Are we growing so fast that things are getting out of control?" "Is staff turnover too high and morale too low?" If the answer to any or all of these questions is “yes” then your company can apply Lean and Six Sigma techniques to good effect. Why both?
Well, if you apply Lean techniques alone and reduce the cycle time of doing things without reducing defects you’re just making defects faster. If you just reduce defects and things take as long as they always did you run the risk of remaining uncompetitive.
What could happen if we don’t adopt continuous improvement techniques?
Your processes may stagnate. Induction training for new employees may be more complex than it should be. Processes may take too long and create too many defects, leading to scrap, rework, internal and external customer complaints and a gradual erosion of your market share.
I’ve heard of Lean and Six Sigma but I don’t think it applies to us. Am I right?
Every company has processes. Every company has employees who have a tendency to do things their own way and that can lead to misunderstandings, mistakes and rework. Customers want less mistakes and things done more quickly. Lean tools will reduce cycle times and mistakes. Six Sigma techniques will find and eliminate defects.
We haven’t done much continuous improvement. Does that matter?
No. Selecting improvement projects should be quite easy as many people will be able to come up with ideas from the customer and process issues they have been coping with for some time.
We know nothing about Six Sigma. Does that matter?
No, not at all. If the consulting partner knows what they are doing they should have experience of tailoring the training and support to your specific needs. Many people who have no knowledge of statistics have delivered very successful improvement projects using the Six Sigma methodology.
We don’t need to do Six Sigma because we do Lean. Is that true?
This is an often quoted remark. It couldn’t be further from the truth. If your company applies Lean techniques alone and reduces the cycle time of doing things without reducing defects you’re just making defects faster. Customers and shareholders won’t like that much!
What benefits will we see from applying Lean / Six Sigma?
You will find you can do more with less. The ratio of your costs to sales will improve because customers will see improved quality, delivery and cost and give you more business. Your employee turnover will reduce and lots of non-value added processes will simply disappear.
Your market share and profitability will increase. You’ll want to do more continuous improvement and less fire fighting. You’ll replace a vicious circle of restructuring with a virtuous circle of improvement.
What commitment is required on our part?
Consistency of purpose. Don’t start if you expect quick wins. You will need to provide appropriate resource and support to the people engaged in process improvement. When reviewing projects you will need to be patient, avoid discussion of content and ask questions of your staff about which problem solving tools and techniques they are applying. Think about inputs to processes and the results will happen. Give your staff the time they will need to solve problems using techniques that are new to them.
How long will it take to see results?
It depends which techniques you apply. You can see improvements with Lean waste removal techniques in days and weeks. Problems with unknown, often deep-seated root causes need the patient systematic rigour of Six Sigma problem solving, and results will take 5-6 months to show through. As trainee practitioners become more experienced in applying the techniques they have learned, projects can be solved in a couple of months, depending on scope and resource allocation.
How much will it cost?
It all depends on what you expect in return. It is possible to start small and trade up to something bigger and better, so don’t be put off by stories of huge initial investments that did not deliver. Someone probably bought something they didn’t need, so no wonder they felt disappointed!
How many people in my company will be involved?
Some industries’ processes are more people dependent than others so there is no one size fits all answer. Not everyone can spend all their time engaged solely on improvement projects. However, insufficient investment in the right proportion of staff trying to improve processes rather than just live with the current processes is a road to stagnation and loss of market share.
What sort of people should be involved?
That’s easy. People who want to become involved. Not everyone has a process improvement mindset. Those staff that do should be encouraged to learn and apply waste reduction and variation reduction tools and techniques so your processes, particularly your customer facing processes “do what they say on the tin”.
How often do deployments fail?
Most people don’t like to admit to failure. The reality is more Lean Six Sigma deployments fail than you might think.
Why do deployments fail?
Deployments usually fail through a lack of consistent leadership. If the leadership group see these techniques as flavour of the month and move on to some new initiative with a different “badge”, staff will soon become sceptical and your company will not see the huge return on investment these approaches definitely do yield. Leaders must really lead, as opposed to cheerleading, the change process to achieve success.
What do we look for in a consulting partner?
Ask them to show you evidence of past successes. Barriers to entry in consultancy are relatively small so people may appear to be what they are not. A consulting partner should be able to show you numerous examples of specific project case studies in many industries. Look for integrity, for testimonials you can check for yourself, for evidence that as people move jobs they rehire the same consulting partner in their new job.
What kind of experience should the consulting partner have?
They should be able to demonstrate that the tools and techniques they are selling have actually been applied to solve the problems for which they claim success. Ask them to go behind the shiny sales talk and show you the detail.
Should I get references from other clients?
Yes, and try and ask why they think well of the consulting partner being recommended.
Ask yourself if what’s being said is a key deliverable for your company. Try and imagine your company one or two years on and ask yourself is what you are hearing what you want and would expect after working with a consulting partner.
How do I know they can deliver what I want?
Do your homework before engaging a consulting partner, particularly if they appear to be selling on price and promise alone. Ask them about the detail of past successes, not just lists of names of well known companies, but what was actually done, and how it was done. Ask them how issues were addressed and problems were overcome. Ask the people in the companies the consultants quote as references the same questions and test the similarity of the answers.
Do they work to recognised standards?
Lean and Six Sigma are not yet established professions like accountancy or law. The existence of recognised standards is less and the standards applied from country to country are, at present, less consistent. This means you should ask to see their certificates, but also means you should place a lot of weight on evidence of past successes. You don’t want to appoint charlatans, but neither will you want to appoint a theoretician, if your customers are complaining and you need to improve your core processes.
How do I know who I can trust?
There is no easy answer to this question. Don’t make a quick decision, especially one taken based on price.
Do your homework. Establish their credentials for yourself. Don’t just rely on claimed numbers of consultants or a high profile name. Find out if you are going to get an experienced consultant, not a junior from a large firm or an older person with the experience of a junior.
Do we need to do projects?
Yes, and do the projects concurrently with the training so your staff can ask tools and techniques questions of the consultants that are highly pertinent to their real life situation. It is too late to expect miracle memory retention when trainees are being asked to assimilate sometimes alien concepts with examples they cannot relate to.
How big should the projects be?
Not too big and not too small. In other words, project scoping depends on the experience of the staff being assigned to the projects. By that we don’t mean experience in the firm, but experience actually applying Lean and Six Sigma techniques. As leaders, you are responsible for pace and direction in a business. You will want to set the scope of the projects so that the project leaders succeed, and succeed before everyone gets bored and has moved on to new issues. If this means project leaders in training are assigned projects that are smaller than the issues keeping you awake at night, that is a good thing. Eat the elephant in bite size chunks!
How much time will be spent out of the business?
If leaders pick projects where the root cause and the symptoms are in the same span of control the time out of the business on project work will be dramatically reduced. If the projects are part of the issues the people assigned to them are responsible for anyway the time out of the business is limited to the time being trained, as rework is almost certainly happening, albeit often hidden, in the current processes.
How will I get buy in from colleagues in the business?
Talk about process not people. Most people are trying to do a good job, but unclear specifications lead to misunderstandings, variation, waste, cost excess and loss of market share. Engaging staff in structured process improvement, using waste reduction and variation reduction techniques will show the validity of the focus, pace and direction of the organisation and lead to colleagues buying into such an approach, even if they have to give up the time of some of their staff to contribute process knowledge or data to an improvement project team discussion.
Six Sigma for Finance training brochure
When can we expect to be self sufficient?
The average time that companies decide they can apply Lean and Six Sigma techniques internally, without the help of a consulting partner varies, but is often within 14-20 months.
Put the right support systems in place and you can plan for self sufficiency earlier.
If we haven’t answered your questions or you need help with any aspect of continuous improvement or Lean Six Sigma deployment advice, we’d be happy to hear from you.
Please contact us at info@palomaconsulting.com or use the Contact us page for further information.
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