19th March 2012
THE application of Lean principles,characterisedby the elimination or reduction of Toyota’s ‘seven wastes’ (transportation, inventory, motion, waiting, over-processing, over-production and defects) has been instrumental in helping several companies to survive during tough economic times. Lean converts have emerged fitter, more efficient and more responsive to changing situations. Most have found that the effect on their bottom lines has also been considerably positive.
As a business improvement specialist, it is a fantastic feeling to have imbued staff of all levels with my enthusiasm for seeing things differently and re-engineering procedures and practices so that their company can enjoy thousands of pounds in savings. However, business improvement should be a continual process; it is not enough to implement change and then sit back.
Organisations everywhere are facing stiff competition, and products, services and technologies are easily replaceable. To be able to compete, businesses need to differentiate themselves by providing products or services faster, better and at a lower cost. So, assuming that your company has already taken Lean on board, what more can be done?
Many businesses have discovered that Six Sigma, a technique pioneered by Motorola in the 1980s, has proved extremely beneficial. So how does it differ from Lean? In actual fact, there are many similarities: both focus on creating value for the customer; both rely on data and problem-solving tools and both require cross-functional teamwork to address issues.
What’s different is the manner in which customer value is achieved. Lean focuses on the elimination of waste through re-engineering the value stream; Six Sigma concentrates on reducing the number of defects and the variation associated with the process. In a nutshell, Lean is a bottom-up technique whereas Six Sigma is a top-down one.
Six Sigma is a strategy used to align business performance with customer expectations. It uses tools designed to deliver improvements in customer value, responsiveness, quality, cost and delivery. The Six Sigma method of business improvement focuses on process capability and reliability, with the emphasis firmly rooted in prevention rather than detection.
As with every new business initiative, there are different reactions to Six Sigma. Some believe that it will be able to solve all the company’s problems with the swish of a magic wand. Sceptics will believe that it involves depleting the workforce and mountains of additional work. It is none of these things, nor is it a replacement for sound judgement, a substitute for creative, experienced people or the only decision-making tool that should be deployed. It requires the engagement of the entire company, not just those selected as company champions.
death to defects
At the heart of every Six Sigma programme is the desire to reduce the number of defects, thus contributing to the bottom line. A defect is classed as anything resulting in customer dissatisfaction – this can apply to product quality, design, processing, speed of despatch, paperwork and so on.
Its goal is to simplify the tools and processes used and follow the DMAIC sequence:
*Define – the business opportunity;
*Measure – the process current state;
*Analyse – the root cause;
*Improve – by eliminating waste and variation; and
*Control – evidence of sustained results.
Some examples of root causes of defects in manufacturing or processing might be a poorly maintained machine, obsolete equipment, or it could be that the combination of flow rate, density, pressure, chemical concentration or moisture level settings are out of kilter, thereby affecting the quality or efficiency of a product.
Deployed correctly, Six Sigma can reap huge rewards for businesses committed to the cause, but these often come in small bites. One such example is at a Hartlepool reactor plant in the UK, where a recent Green Belt Six Sigma programme aimed to achieve a ‘blend first time’ culture. The first phase of the programme resulted in savings of almost £45,000 (c.$70,400) within a very short space of time. The plant generates part containers and/or ex-tanker line material after almost every batch produced on site, and over the years these part containers had not been regularly recharged to subsequent batches and had therefore accumulated across the site. The aim of the programme was to convert excess part containers of the same product into saleable material; reduce the warehouse workload of multiple handling; and reduce the quality controlworkload by reducing material on site over a year old which needed re-analysing.
Applying the Six Sigma methodology of DMAIC achieved excellent results. The number of part containers that were over two years old was reduced by 24%, and the number of one to two year old containers was halved, saving over £7,000. Warehouse reorganisation at the Hartlepool site meant that space was made available to accommodate material from a sister site in Aberdeen. Previously wasted material from the sister site could then be blended with virgin material saving almost £38,000. In total, the project saved close on £45,000. It found the potential to utilise previously lost material, increasing production, material yields and organisational stability.
This type of result is not unusual. Typically, a successful Six Sigma programme reduces costs by 30-40%, lead times by 50%, processing errors by 70%, process steps by 60% and customer returns by 80%. The ultimate goal for Six Sigma is to produce only 3.4 defects per million. Defects can be classed as anything from processing or quality defects to mistakes in paperwork. However, Six Sigma is not appropriate for every situation.
When starting out, you need to be sure that the project you select for the Six Sigma treatment will benefit from DMAIC. So, for example, it should have a measurable defect or one that allows changes to be recorded accurately. It is also essential that you analyse financial information and estimate your pre and post-project savings.
the long haul
Six Sigma is best employed in cases where problems are commonplace, but not well-defined; in unknown causes or situations; in complex situations with many variables and where a broad spectrum approach is inappropriate. It should also be applied where other problem-solving methods have failed.
The other point to note when considering embarking on a Six Sigma journey is that it is going to be a long haul. Anyone looking for a quick fix with instant results should steer well clear. Six Sigma is a way of life – led from the top. There are no half-measures and all involved must be totally committed. It is rare for first year results to outweigh initial investment. This time is spent in training and building a solid platform for sustainable success; the rewards will come later.
Six Sigma’s success relies on an infrastructure of people within the organisation who are experts in certain methods – you may already have heard of Green Belts and Black Belts. Green Belts have undergone appropriate training and implement Six Sigma alongside their other job functions. Black belts oversee the work of Green Belts and work full-time on project execution. Master Black Belts are in-house coaches, employed to guide Green and Black Belts and ensure consistent application of Six Sigma across different functions and departments. Champions are senior management who are responsible for Six Sigma implementation throughout the entire organisation in an integrated way.
the Six Sigma way
The vision for Six Sigma implementation comes from the very top of the organisation – the CEO and other very senior members of staff.
It is very important to note that Six Sigma is a top-down process. Company leaders need to make resources and time available to allow breakthrough improvements to be made and new ideas to be explored. Rome wasn’t built in a day, after all.
You need to plan effectively for the investment (because that’s what Six Sigma is) and build up the training and delivery. Build up your internal support structure and stick to it. Targeted training works best, so resist the temptation to sheep dip everybody and instead pace the Six Sigma rollout. Start small to ensure delivery and underline your commitment to it. This will help to build momentum and support and encourage Six Sigma disciples.
Always remember, though, to align your projects with business goals and objectives.
Jason Barclay (email@example.com) is General Manager of business improvement specialists, Picme Limited.
© Copyright picme® Limited 2011, Freeman House, Orbital 24, Oldham Street, Denton, Manchester M34 3SU.
Registered in England No. 03956376. VAT Registration No. GB 896 412 588.
Part of The Haden Freeman Group.