Six Sigma Blog

Understanding the principles of ‘Lean’ and 'Six Sigma'

Do you know what ‘Lean’ is in business processes? Have you tried incorporating lean principles into any of your business processes to ward off the cost incurred via non-value and redundant processes?

Lean principle is a set of defined rules that assist in speeding up any business process by cutting off the redundant and non-value adds processes which unnecessarily emaciate quality time. Lean principles start with by finding the lead time involved in any business process. ‘Lean’ principles constitute tools and mechanisms to avoid non-value add processes thereby speeding up the pace of the current project.

Six Sigma is a methodology that operates on DMAIC principle thereby solving defects existing in a business process. It does not however contain any tool to accelerate the process under consideration.

In brief, Lean principles reduce the lead time and speed up the process while Six Sigma practice helps in ensuring the quality of the business process.

Read one of our previous post on 'Lean Six Sigma' to know how companies have embraced the concept of Lean Six Sigma to cut out waste and increase productivity while sustaining quality!

Incorporating Lean Principles into Six Sigma

By Priya Venkatesh, Staff Writer

Do you want to integrate lean principles and six sigma processes? Are you not clear with the thin line between six sigma and lean principles? Read on to know more details.

The steps that involve in the incorporation of lean principles to six sigma business processes can be summarized as follows:

• Try to stretch the malleable business processes and start applying lean principles to the stretched business process.
• Resolve the defects that are currently present in the business process.
• Make sure that the consistency in quality of the defect removal is taken care of while moving on to the removal of the next defect.
• If in case the business process is not malleable, try solving the defects by applying six sigma tactics and then start applying the lean principles.

Read one of our previous post titled "Applying Lean Manufacturing to Six Sigma" to know more on applying lean principles to Six Sigma processes in detail.

Driving Value through Lean Six Sigma

Now companies have acknowledged that Six Sigma and Lean share a common objective: to create value-based end-customer requirements. Recently, I had written a post titled "Applying Lean Manufacturing to Six Sigma" that talked about Lean and Six Sigma. Six Sigma has stimulated the concept that if a process lies within six standard deviations of the mean, production quality is definitely guaranteed. However, quality alone is not enough for the process.

The ability to eliminate process waste in the supply chain while delivering Six Sigma levels of quality will win the current race. If you keep a close watch on industry activities, you will find that there is rush among enterprises for achieving Six Sigma and lean standards in their organizations.

Lean Six Sigma in Corporate Sector

Lean Six Sigma is quickly gaining popularity among Defense and civilian agencies. It started as a tool for improving manufacturing in car factories. Now it has morphed into a symbol of corporate efficiency. In the recent years, Lean Six Sigma has turned into the latest government catchphrase for eliminating waste and reducing errors.

It is believed that in the next two to five years, there will be a significant increased push in the civilian agencies to adopt these approaches. Lean Six Sigma can help identify waste through its systematic way of looking at problem areas such as defects and wait times. Most organizations implementing Lean Six Sigma focus on training leaders with the expectation of getting them on board before launching a broader initiative. To know more about Lean Six Sigma in business world, read my previous article titled "Lean Six Sigma".

Identifying Six Sigma Steps

Organizations can make huge profit, if they learn to think in terms of Lean. Lean is based on the philosophy of eliminating waste. Lean shortens the time between the customer order and shipment. There are several steps that provide a strong foundation for any organization that wants to incorporate Lean into its operations. These steps are:

• Value
• Value Stream
• Flow
• Pull
• Perfection
• Replication

Lean thinking can be started by giving due consideration to value, which is customer's ultimate requirement. The value of any products or services is defined by customer needs and not by any non-value added activity. Hence, customer is always prepared to pay for the operations that transform the product in a meaningful way.

Read my previous post titled "Why Six Sigma Has Become the Most Powerful Improvement Tool?" to know more about Six Sigma.

Applying Lean Manufacturing to Six Sigma

A few days ago, I came across a discussion forum, which emphasized on applying Lean Manufacturing to Six Sigma. Participants on that forum strongly argued in favor of this, which made me think over the issue deeply. I found that there are continuing questions about the relationship between Lean Manufacturing and Six Sigma techniques. Now, companies believe in stretching the process applying Lean techniques.

Lean Manufacturing with Six Sigma solves the problems of deviation from the standards and ensures maintenance of the improved status using Six Sigma techniques. If the system and processes are poor, Six Sigma techniques should be applied to solve some of the problems. Industries that will largely benefit from applying Lean Manufacturing to Six Sigma belong to ITES, Banks, Insurance companies and Hospitals.

Why Lean Manufacturing and Six Sigma Fail?

Many Lean Manufacturing or Six Sigma begins with much fanfare. However, most of them fizzle out within the first six months. There are ways to avoid this. However, many people who introduce these initiatives are not willing to do what is really required to ensure success. The current trend suggests that most businesses have not been able to capture or sustain the benefits of a lean transformation.

Lean manufacturing represents a fundamental change and most businesses have pursued change in a tactical manner. They must adopt effective strategies to pursue this change. If Lean Manufacturing and Six Sigma fail, this is due to the lack of true senior management commitment and understanding of the change process. The ultimate responsibility of the success of any change program, whether it is Lean Manufacturing or Six Sigma, falls on the shoulders of the most senior leadership on the site. If the leadership fails, all programs and projects follow suit.

Lean Accounting Performance Measures

When the enterprises implement lean manufacturing, they might feel the need for Lean Accounting Performance Measures. Lean Manufacturing helps companies identify and reduce waste and giving them extra capacity. This is vital for small manufacturers. Traditional accounting is a marker of financial performance. However, companies also it to measure overall performance.

Lean Accounting Performance Measures are designed to give today's companies the information they need to make the right decisions. They do not replace the traditional accounting. Rather, they work in tandem so that the changes in processes and in accounting can work together into the future. While traditional accounting is still absolutely necessary for measuring financial performance, Lean Accounting Performance Measures are meant to provide additional information.

Lean Six Sigma in Distribution Channel

Lean Six Sigma initiatives help in enhancing competitive performance with strong economic returns. Distribution channels play important role in implementing the Lean Six Sigma initiatives. Lean Six Sigma also enhances the relationship that exists between the manufacturers and dealers. It is important to note that both share a common goal of creating and delivering outstanding value to the end users.

Lean Six Sigma deployments require cooperation, trust and a sense of partnership between various distribution channel entities. All channel systems must align in a most efficient manner to provide these values. Lean Six Sigma lets organizations in creating a delivery system that requires the cooperation and partnering of all distribution channel entities.

Benefits Provided by Lean Manufacturing

It is often noticed that Lean practitioners ignore the true potential of the Lean technology. They fail to recognize that Lean technology can bring in creating a Lean environment so that a simple review of Lean Manufacturing will help in identifying the key areas for growth and development. Most Lean practitioners follow a multi-step process for achieving the Lean goal of any organization. Lean Manufacturing also takes care of Value Chain and Flow Production. It builds value chain maps for the high volume products of the companies and removes non-value added activities.

Lean manufacturing process also improves the production by reducing setup times. It also make the cycles faster. Lower volume products with variable demand may actually contribute more to the process. There is segregation between the products and the creation of production cells. It raises a question whether production cells are required for Lean or not. The original concept of eliminating the waste is caused by non-value added tasks. Now Lean practitioners have IT solutions, which simply the whole process.

Russia is looking for Lean Manufacturing

Russia has become an important player in the world economy in the recent years. It has made significant progress economically, thanks to the rich gas and oil resources. Now, Russia is planning to improve its competitiveness by banishing wastes from processes in industries and organizations. The first Russian Lean Forum was held in the city of Yekaterinburg in the industrial heart of Russia. More than 250 top managers from various industries participated in the forum to discuss the benefits and implementation of Lean Manufacturing.

Lean Manufacturing experts from the USA, Japan, Italy and Turkey have made presentations in the forum. OrgProm LLC, a Yekaterinburg-based company, was the main sponsor of the forum. The company believes that the forum will be an annual event in the city, as it is accessible to all parts of the country through a large railroad and air hub.

According to Ural Business Consulting -

Present were representatives from such Russian and international companies, as the “GAZ Group” (automotive), Russian Aluminum (RUSAL), KUMZ (aluminum), EvrazHolding (steel), KAMAZ (heavy truck producer), VSMPO-AVISMA (titanium), ZMZ (car engines), URALMASH (machine building), Boeing, the European Bearing Corporation and many others.

Lean Manufacturing and Six Sigma at Raytheon IAD

The Raytheon Integrated Air Defense (IAD) center in Massachusetts has 4,000 employees including 1,500 union members. It is a prime contractor for the military. The IAD started with Six Sigma in 1999 and added Lean in 2003. The IAD has several customers including the US Navy, which wanted Raytheon to adopt a Lean program to improve production. The Raytheon Lean Manufacturing program focuses on cultural change while connecting with the people who perform their duties with respect and integrity.

Raytheon has displayed positive approach towards the program. It emphasizes on setting a vision, establishing commitment from the executive team and planning a change management process. The adoption of Lean has affected their information system to a great extent. With Lean, Raytheon has identified a need to facilitate cross-functional teaming. MMS Magazine has published an article on the Same Topic.

The tour included three major manufacturing lines within Raytheon's facility. They were electronic printed circuit board assembly (surface mount devices), metal fabrication (CNC machining and welding), and mechanical assembly.

Lean Six Sigma

After the dot-com bust of 2001, the IT industry have focused on cost-reduction, downsizing and scaling back. Companies adopted different processes to survive the scare caused in the industry. However, some companies embraced a particular approach called Lean Six Sigma. Lean six is a prescription for regaining business health and transforming a company to cut waste from its operations and increase productivity while improving quality.

Companies deploy Lean Six in various phases. There is little doubt that Lean Six helps them to turn profitable. Most of the companies claim that their improved business results are a direct result of Lean Six and they are looking to increase those results by applying Lean Six beyond their companies to customers and suppliers. Lean Six is a blend of two methodologies. The lean approach focuses on eliminating all types of waster including overproduction, waiting time, transportation and processing. It improves quality and reduces production time and cost.

World's Largest Lean Six Sigma Forum

Six Sigma IQ is the largest global provider of Six Sigma, Lean and Process Quality conferences and summits. It has announced the agenda for the Lean Six Summit West 2006. The summit will be held at the Venetian Hotel in Las Vegas in September 2006. The entire even it expected to become the largest ever in the world. Yahoo Finance reports:

Jack Welch wowed the 400 strong audience in 2005 - a tough act to follow, but six sigma IQ have managed to secure the former Chairman of Harley Davidson, Richard Teerlink (arguably the most successful turn-around ever recorded in corporate history) as this year's honored keynote.

Integration of Lean and Six Sigma

Six Sigma has been a part of Raytheon Integrated Air Defense (IAD) center in Andover, Massachusetts, since 1999. In 2003, the center added the Lean Manufacturing program. The practice of Lean has been aided by a change of mindset at Raytheon. The focus now is now results, and Lean is practices in four phases: set a vision, establish commitment from the executive team, plan a change management process, and develop people's skills. ARCwire reports:

The adoption of Lean also affected their information systems. With Lean, they identified a need to facilitate cross-functional teaming. Previously, many of the software applications were independent silos of information. Now, they have connected the appropriate applications for information integration. 

Lean Six Helps Electronic Cos.

Electronics companies are discovering that implementing Lean Six methodologies will help them stay in business, and even reap profits. An interview conducted by Electronic Business with four electronics companies that are in various stages of deploying Lean Six has proved that three of them are already showing profits, while the fourth one is on the verge of doing so. All of them claim that their business results have improved over the past five years. As a result, they are contemplating applying Lean Six to areas other than manufacturing, like their customers and suppliers. 

Catch the Error at the Source

Error Proofing follows the common adage that prevention is better than cure. Preventing errors from happening rather than spending time, money and effort to correct them after they occur is a question of using common sense rather than expensive technology. The word is derived from the Japanese term poka-yoke, "poka" meaning "inadvertent errors" and "yokeru" meaning "to avoid". There are three fundamental error-proofing categories:

• Warnings - which prevent the error from occurring in the first place. This involves detecting the possible error-causing defects at the source before value has been added to the product.
• Shutdown - which stops the system as soon as an error occurs, thus preventing further mistakes from happening.
• Auto Correction - which detects a mistake and allows correction or self-corrects the problem before it blows out of proportion.

Maintaining Total Productivity

Total Productive Maintenance (TPM) focuses on the continuous maintenance of the plant and machinery used in the manufacturing to minimize the occurrence of downtime that leads to extra costs and less productivity. The concept of TPM assigns responsibility for the maintenance of machinery to the operators who man them, thus including them in the overall quality and productivity process. They are in charge of autonomous maintenance tasks (preventive maintenance) while maintenance staff concentrated on improving the reliability of the machines (productive maintenance).

Preventive maintenance includes daily tasks like cleaning, inspecting, oiling and re-tightening that will prevent deterioration as much as possible, and measure the rate of deterioration. TPM concentrates on the ongoing process of maintenance rather than repairing machines after they break down or are on the verge of breakdown. Among the advantages of TPM are:

• Minimal wastage
• High quality products with zero defects
• Reduced costs

Cellular Manufacturing

Cellular manufacturing, like all other principles of lean manufacturing, stresses on the elimination of waste. Here waste refers to the time taken in moving materials between different stages in the process and the amount of material moved. The aim of cellular manufacturing is to minimize movement of materials and the time taken to move them between workstations, and as a result minimize the cost of the process. For this reason, workstations are usually placed close to each other, and in-process inventory is limited to only those items that are being used. Like JIT, cellular manufacturing utilizes kanban to signal the end of an inventory cycle, and also reduces the need for large inventory storage spaces. This process involves efficient coordination between the production, purchase and cost accounting departments.

Cellular manufacturing uses multiple machines instead of one, multi-process machine. This means that the workers who use these machines have to be trained in efficient multi-tasking. However, this set up helps eliminate defective products by identifying the first such product immediately, instead of after a whole batch has been manufactured. As with JIT, strong relationships with supply partners will decide how valuable your cellular manufacturing process is.

Mapping Values on Paper

Value stream mapping is a tool or diagram that portrays a visual presentation of material and information as it flows from the raw material to the finished product in the hands of the customer. It can be used during manufacture or during the design of the product and helps eliminate waste at each stage. It is a communication tool, strategic planning tool, and change management tool, all rolled into one. It maps the present state of activities and processes with details like cycle times, down times, in-process inventory, material moves, and information flow paths, and shows how you can direct them to the future desired state. Value Stream Mapping:

• Identifies and decreases waste, with waste being defined as anything that does not add value to the process.
• Facilitates easy decision-making by making the flow visible
• Shows the connection between the information and material flows
• Serves as the foundation for the formation of an implementation plan

Just In Time For JIT

JIT or Just-In-Time is a lean manufacturing principle that works on the theory that minimizing the inventory on hand, either raw materials or work-in-progress inventory, will only serve to enhance efficiency of processes and reduce waste. The name is derived from the fact that inventory arrives just in time to be processed into the finished product. The salient features of JIT are:

• Elimination of warehouse space
• Building strong, long-term relationships with a handful of suppliers who can be relied upon to deliver on demand. If one of them is unable to supply for some extenuating reason, the others should be willing to step in and make up the difference.
• Standardization of parts
• Usage of assembly line manufacturing process
• Easy identification of bottlenecks and weak points in the production line
• Usage of visual, manual systems to signal the shortage of inventory, where the level of items in standard sized containers is used as a reorder point rather than a computer-generated report. The Japanese coined the word Kanban to describe this process.
• Improvement of the process of developing new products

Ins and Outs of Lean Manufacturing

Moving on to lean manufacturing, we see that it is an approach that helps manufacturing units in waste reduction and consolidation of processes. The method adds continuous value to business activities through continuous waste elimination, and delivers higher quality products at lower prices and faster delivery times. Lean techniques and principles include:

• 5 S
• Organization of the workplace
• Just In Time principles
• Cellular manufacturing processes
• Value stream mapping
• Multi-skilled workforce based on teamwork
• Standardizing work
• Visual management
• Total Productive Maintenance (TPM)
• Balancing workflow
• Pull systems
• Smooth production
• Error proofing
• One piece flow
• Reduction of inventory

As with the Six Sigma techniques, we will cover each of these in detail in the weeks to come.

The benefits of lean manufacturing methods:

• Reduction of wastage and inventory
• Optimization of floor space usage
• Creation of more robust production systems
• Development of apt delivery systems, for both inbound material and outbound goods
• Improvement of factory layouts for increased flexibility in manufacturing

Six Sigma and Lean Compared and Ranked

Six Sigma and Lean have emerged as the two leading efficiency and variation control programs for the modern business environment.  And yet, those new to these technologies are often at a loss as to which alternative to choose.  Based on recent evidence, however, it appears that far more business users are choosing Six Sigma over Lean.  A recent report by The Avery Point Group indicates that the book sales of Six Sigma far outpace those concerning Lean, search engine keyword searches for Six Sigma, outpace Lean by a margin greater than 2 to 1, and Internet job postings searching for Six Sigma professionals are over 50% greater than those looking for Lean experts.  The Avery Point Group has pointed to the fact that Six Sigma has made the transition from its original use, manufacturing, to encompass many other business disciplines.  The same cannot be said to be true for Lean, which is consistently regarded as a purely manufacturing related process. YahooFinance reports:

"This perception is changing as more and more businesses across the board are looking to blend the best of each methodology to accelerate their continuous improvement efforts," says Noble.  "Companies are increasingly realizing that these are truly complementary tool sets and not necessarily competing philosophies."

Read More: Lean Versus Six Sigma

PlantMaster Incorporates Six Sigma to create leaner manufacturing

Using Microsoft Windows and Oracle, Plantmaster builds upon BarcoCIM's more than 15 years of experience in plastics processing to allow companies an ever more effective manufacturing software program.  The program allows for real-time production monitoring, scheduling, and maintenance management and allows companies to trace their products from raw material all the way through to finished product.  All these technologies combine to offer many plastic production companies userability and effectiveness they were never able to dream of before.  The program is particularly noted for its integration into a larger Six Sigma/Lean manufacturing environment.  Because the program is so flexible, it allows a company to subtly change the way it does business on a regular basis without having to undergo major software restructuring.  This ability to change and try new business models is an integral part of the Six Sigma efficiency program.  ManufacturingTalk Reports:

As such Plantmaster offers a powerful and flexible management tool that provides managers with real time visability on all Key Performance Indicators (KPI), enabling them to achieve operational excellence.

Read More: Manufacturing execution system goes on show

Using Six Sigma to Streamline RFID

There has been a great deal of concern about compliance with regulations regarding the implementation of RFID.  In many ways this has clouded the ultimate goal of the technology, to help companies be more efficient and competitive.  RFID or Radio Frequency Identification is a technology that involves using extremely small sensors in consumer products to track the movement and sale of products in real time.  This allows companies to maintain smaller inventories and to identify shortages of products almost instantaneously.  Ultimately it may also allow companies to track which products are bought in conjunction with their product to allow for more effective marketing.  Recently however, concern about meeting regulations regarding the use of RFID has made the process less appealing for many producers.  Applying the Six Sigma efficiency program to RFID implementation, however, can eliminate many of the concerns about implementation and lead to a more cost efficient and streamlined RFID program. IndustryWeek Reports:

"RFID can essentially computerize every widget produced, trigger actions, and eliminate human errors," explains James Williams, partner at Avatar Partners.  "Even our customers that are not entrenched in Six Sigma benefit from using this methodology with RFID."

Read More: RFID Strategy -- RFID: The Lean Machine

Facility Management Incorporates Six Sigma

As competition for large and mid-sized firms becomes ever stiffer with the entrance of new foreign competitors, success requires cost cutting and efficiency oriented strategies in every facet of the company.  With managing facilities accounting for 30% of an average organization's annual spending, this area can no longer afford to be overlooked.  Maintaining quality infrastructure and reducing overhead are now critical strategies to the growing numbers of companies who outsource business peripherals.  To function correctly, facility managers must incorporate a wide variety of disciplines in an effort to coordinate and make most efficient people, places, processes and technology.  The importance of this sector in areas such as workplace resources, asset management, statutory complience, and employee safety and services can not be overstated.  Consequently, more and more companies are approaching the position in a formal way, by utilizing Six Sigma and other efficiency oriented programs. The Economic Times Reports:

These new priorities have made a facility manager a part of the apex decision-making authority of an organisation.

He must ensure that everything is picture perfect and help the company and employees concentrate on their core responsibility.

Read More: Facility management key to efficiency

Celestica Uses Lean over Six Sigma

Celestica Inc. is still riding high off its reception of the Shingo Prize for Excellence in Manufacturing.  Thri firm was the first EMS provider to have been awarded the prize in its 18-year history.  This award was given based upon the companies famed manufacturing process which has helped achieve better bottom lines for a number of large companies including Toyota Motor Corp.  According to executives at the firm, the success of the manufacturing process is due to the company's incorporation of LEAN a process they felt offered them more variability than the more widely-known Six Sigma process.  Executives argued that LEAN provided them with the ability to apply efficiency changes to a real world environment, something they may have felt limited in doing with other efficiency methodologies.  My-ESM Reports:

"Lean is known by most manufacturing experts to be the best production system in the world at providing cost and execution results despite the variability that exists in the real-world environment," said Stephen Delaney, chief executive officer of the Toronto-based company.  "Lean is gaining momentum in our industry; it provides some differentiation for Celestica.

Read More: The Lean Journey

ESM Company Turns Fate Around with Lean and Six Sigma

The recent Shingo Priz for Excellence in Manufacturing winner, a prize named after the father of Lean Manufacturing, is Celestica Inc. of Monterrey Mexico.  It is the only Electronics Supply and Manufacturing company to be awarded the prize in its 18 year history.  The award was based upon the companies vast improvment in efficiency through deep incorporation of Lean and Six Sigma.  The company says that its incorporation philosophy was not just a superficial understanding of the terms by management and employees, but rather it adopted more simplistic terms so that individual employees could comprehend the concepts behind the words and be able to achieve greater efficiency. My-ESM Reports:

Business results are materializing. Celestica reported lead-time reductions of 60 to 70 percent, quality yield improvements of 40 percent, a 30 to 40 percent decrease in the effort required to manufacture products, and on-time delivery rates in the high 90 percent range.

Read More: The Lean Journey

Cutting Through Catch-Phrases and Getting Your Company Lean

Editorial Director of outbound, Mitch MacDonald says that tools like Six Sigma should be focused on the end of attaining a leaner company, a link that can often become muddled by those employing the technique as a mere catchphrase.  A recent report by researchers at Georgia Southern University write, "Lean is a systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection."  The problem for many smaller companies, is that they get caught in the details of programs aimed at achieving cost-effectiveness and miss the larger picture. DC Velocity Reports:

The authors also point out that although it's billed as a "cutting edge" approach to manufacturing, the edge really isn't all that sharp. In fact, they note that the basic concept of lean can be traced all the way back to Henry Ford's assembly lines circa 1920, when the notion of continuous flow was first introduced. Still, as with so many business management concepts, what's old has become new again. And so, it seems, lean is all the rage.

Read More: time to lean up your act?