8 Facts About Lean Six Sigma You Need To Know Today

WHAT IS LEAN SIX SIGMA?

Lean Six Sigma (L6S) is a fusion between Lean and Six Sigma. It is a problem solving framework, which is based on a culture of continuous improvement that delivers significant benefit to an organisation.

What is Lean and what is Six Sigma? Both Lean and Six Sigma consist of philosophies, methodologies, as well as tools and techniques. Lean and Six Sigma are highly complementary, so it makes sense to combine them.

What is Lean 6 Sigma? Together, Lean Six Sigma is a methodology devised for a collaborative team effort to improve performance by systematically eliminating waste (non-value adding activities) and reducing variation. Lean 6 Sigma strives to eliminate the errors and defects, which invariably, is waste.

The table below lays emphasis on the differing aspects that provides answers to the questions; what is Lean and what is 6 Sigma:

An error is one which was identified and then corrected before the transaction or product reaches the customer. For example, discovering a bug in the software system, which is producing wrong calculations in the documents to be emailed to clients.

A defect, on the other hand, is mainly one which is based on outputs ready to be sent or have been delivered to the customer, but subsequently adjudged not to meet the quality requirement, as had been previously stated. Continuing with the same example above, the client may receive an invoice that is wrongly computed – they may choose to make a fuss about it.

The problems, as referred to above, are those that affect such things as the timeliness, cost, and variability in the delivery of the output and outcome desired by the recipient. This recipient is usually referred to as the customer, of which there are two types – internal customer and external customer. The internal customer is the one who receives the output from another colleague/department, which becomes their own input into their process. The external customer is the one who ideally commissions the order, and usually pays for it, and derives an outcome from the output.

There are lots of Lean concepts, tools and techniques that support the achievement of its objectives. These include the Five Whys, Poka Yoke (Mistake Proofing) and much more. These are applied to the methodology which enable the organisation to invariably remove waste from the process. A lot of these techniques can be put to use by the Yellow Belt certification holder, who makes simple improvements within their respective work areas.

The Lean Temple

The Lean methodology is applicable in manufacturing, where it begun with the TPS (Toyota Production System), as well as in services (such as customer services, order processing, payable/receivable invoices etc). It is based on the view that waste is generated anywhere work is carried out.

A Lean organisation, therefore, seeks to ensure that its processes are performing in an optimal way with a continued search for waste and its subsequent elimination. In fact, it has been suggested that one of the worst damages that is caused by an employee is not so much as the desire to defraud the organisation, but the disregard for the identification and elimination of waste. There are multiple opportunities for removing non-value activities that have become entrenched in the processes of an organisation. These non-value activities are so deep-rooted, that no one recognises them for what they are – waste – and so nobody questions their relevance to the final output that the customer receives.

Lean proposes that more effort be devoted to the activities of removing waste to improve the process flow so that they can invariably achieve speed and agility at lower cost. The focus of Lean is to increase the percentage of value-added work performed by a company and be rid of non-value adding activities. 

THE FOCUS FOR LEAN

“All we are trying to do is reduce the time from order to cash.” [Taiichi Ohno]

Lean is a holistic, action-based management and implementation system to provide enhanced customer value. It is eagle-eye focused on creating more value for customers with fewer resources. The ultimate target is to be rid of waste; hence, the need to ensure a perfect value creation process.

Note that Lean is not a cost-cutting exercise. If your focus is to cost costs, one may end up sacrificing quality, which may invariably lead to losing the customer.

LEAN IN SERVICES

As Lean started in the manufacturing sector, it is not unusual that learners sometimes find it difficult to relate it to the service industries, particularly, where trainers have not been able to provide the emphasis. The principles of the Lean methodology have been applied widely in services – financial services, healthcare, education, call centre, software development, and the list goes on.

What is Service? These are activities that produce value to a customer, and it is not a tangible product. Lean in the service industry is, in itself, subject to continuous improvement as research progresses in this area, in spite of the criticisms levelled against the proponents.

WHAT IS SIX SIGMA?

So “what is six sigma”? Firstly, sigma (σ) is the eighteenth letter in the Greek alphabet. For our purposes, it is used in statistics as a representation of Standard Deviation (σ). Defined, the Standard Deviation is the distance between the mean/average and the point of variation on the normal curve. For example, a “1-Sigma” means that something is one standard deviation from the norm (being, the mean or average). When this is plotted against a Normal Distribution, a “bell-shaped curve” (as shown below) or on a control chart, it indicates how much variance a specific item of data has, away from the average.

The graph below depicts the percentage of data, which falls between standard deviations and normal distribution. Basically, the data points that are shown at the furthest edge of the bell curve represent the greatest variation in the process – in essence, they are the ones causing customer dissatisfaction and we want to eliminate them.

The 68-95-99.7 percentage rule is another way of looking at variation. In a normal distribution, it is assumed that things that occur 68.26% of the time are considered 1-Sigma events; those that are true 95.45% of the time are considered 2-Sigma events; and for those at 99.73%, this implies that nearly all data items lie within three standard deviations of the mean (3-Sigma).

The lower (or narrower) the variation, the better the process performance rating of the organisation. The Six Sigma quality initiative has a goal of not producing more than 3.4 defects per million opportunities (DPMO). Using IT (Information Technology) technical language, it can loosely mean a service level of 99.99966% of getting the output right.

Moving slightly away from technical language, if someone were to say you were one in a million, in Six Sigma language, this means you are one of 7,600 others in the world (based on the current world population estimate of 7.6 billion). Let us look at the simple maths:

• 6 billion divided by 1 million = 7,600
• As a percentage of the 7.6 billion, these 7,600 people gives 0.0001%
• 100% less 0.0001% = 99.9999%; this puts you within the rare group of people, which is above Six Sigma (99.99966% is Six Sigma)
• From the world’s (or organisation’s) perspective, we want more people to have those qualities that put you in the rare group.

UNDERSTANDING THE USEFULNESS OF SIX SIGMA

Six Sigma is a universal benchmarking tool. It should help organisations to aspire towards better achievement. It has been suggested that fewer than 10% of companies are at a 6-sigma level. Six Sigma is a data-driven methodology for the elimination of defects in the output churned out by any process.

When Process Sigma rating is related to process efficiency (as opposed to standard deviation), the higher the sigma rating, the better the processes of the company are adjudged to be. Where the DPMO (defects per million opportunities) is calculated to be 3.4, this equates to a Six Sigma process efficiency rating per the Process Sigma Conversion Table used for this statistical exercise. However, a higher DPMO provides an organisation with the impetus required to do better.

According to GE;

It is not a secret society, a slogan or a cliché. Six Sigma is a highly disciplined process that helps us focus on developing and delivering near-perfect products and services. The central idea behind Six Sigma is if you can measure how many “defects” you have in a process, you can systematically determine how to eliminate them and get as close to “zero defects” as possible. Six Sigma has changed the DNA of GE – it is now the way we work – in everything we do and in every product we design.

The value in making a sigma calculation is that it abstracts your level of quality enough so that you can compare levels of quality across different fields (and different distributions). In other words, the sigma value is a universal metric that can help anyone compare with the industry benchmark/competitors.

Six Sigma uses a broad set of tools interwoven in a business problem-solving methodology. These tools are used to scope and choose projects, design new products and processes, improve current processes, decrease downtime, and improve customer response time.

THE FOCUS FOR SIX SIGMA

The focus is to reduce varied outputs and thereby avoid customers receiving defective products and services. Waste is seen as anything that gives rise to unacceptable deviation (defects) in relation to the prescribed requirements.

Six Sigma created a realistic and quantifiable goal in terms of its target of 3.4 defects per million opportunities. It was also accompanied by a methodology to attain that goal. That methodology was a problem-solving strategy made up of four steps: measure, analyse, improve and control. When GE launched the approach, they improved upon the methodology and added the define phase. This is what is referred to as the DMAIC cycle, which stipulates dealing with the issue in a structured manner, thus:

• Define – What exactly is the issue, and can we deal with it
• Measure – Quantify the current state (determine the baseline)
• Analyse – Identify the root cause of the problem
• Improve – Implement and verify the solution
• Control – Maintain the solution

THE LEAN SIX SIGMA BLEND

The mission statement for Lean 6 Sigma, if there were one, is: Producing products which surpass the expectations of the customer in an efficient and waste-free way.

The two disciplines of Lean and Six Sigma complement one another. However, they do possess their respective philosophies, methodologies, as well as tools and techniques. Whereas the Lean methodology deals with smoothening the process flow and matters of waste that may affect this flow, the Six Sigma approach seeks to promote operational and business excellence with its attention towards eliminating defects in outputs.

Thus, the Lean Six Sigma organisation, is a:

• visibly professional and functional workplace
• that delivers high quality outputs and outcomes for its customers
• by motivated managers and teams

With this methodology, the workforce is better involved in a collaborative manner with management and thus, empowered to manage change with the guidance of trained mentors. If you want to understand better about “What is Lean 6 Sigma” we have highlighted the benefits and uses below.

THE LEAN SIX SIGMA BELTS

Master Black Belt (MBB)

The MBB person adds even more depth to projects and are concerned with embedding culture change in Lean Six Sigma within an organisation. They should be well versed with all aspects of Lean Six Sigma, from technical applications to project management. They are responsible for coaching, mentoring and training Black Belt holders as well as helping the Lean Six Sigma leader and champion keep the initiative on track. MBBs need to have the ability to influence change and motivate others. Some of their activities include the following:

• Provide advice and counsel to company executives
• Provide training and support – in class training and on-site mentoring
• Develop sustainability for the business
• Facilitate cultural change

Black Belt

These are full time technical experts that are involved with complex improvement projects within the business. They should be well versed with the L6S technologies and can drive for results. They also train the Green Belt holders. Some of their activities include:

• Facilitate DMAIC teams in applying Lean 6 Sigma methods to solve problems
• Work cross-functionally
• Contribute to the accomplishment of organisational goals
• Provide technical support to improvement efforts

Green Belt

They may be referred to as small-scale improvement experts. They carry out improvement projects within their functional areas, of which they typically dedicate 20% of their time, and may support the Black Belt holders with their own large-scale projects. They also tend to train Yellow Belt holders. Their activities include the following:

• Well versed in the definition and measurement of critical processes
• Involved in identifying improvement opportunities
• Involved in continuous improvement efforts
  • Applying basic Lean Six Sigma tools
  • Team leaders and members on DMAIC teams
  • Supporting projects with process knowledge and data collection

Yellow Belt

This entails a basic understanding of the Lean Six Sigma methodology. They may also apply the methodology to their own work responsibilities, as functional experts, and serve on projects. Some of their key aspects include:

• Understand the terminology and overall Lean Six Sigma process
• Awareness of the major tools and techniques embraced by Lean Six Sigma
• Understand the underlying philosophy of Lean and Six Sigma
• Acts as a team member under the direction of a Green Belt or Black Belt holder

White Belt

This provides an entry level for those with no knowledge or experience of the Lean Six Sigma methodology. It entails an overview of the Lean and Six Sigma principles as well as the reason why businesses should adopt or have adopted this methodology to eliminate waste and streamline its operations. It can entail a half-day session that is delivered to the top management of an organisation that seeks to adopt the Lean Six Sigma culture.