18th March 2012
The application of Lean principles characterised by 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 considerable – in a positive way.
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.
Organisations are facing stiff competition, either here in the UK or from abroad 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’s next?
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. 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 etc.
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 – eliminate waste and variation
Control – evidence of sustained results
Some examples of root causes of defects in manufacturing or processing might be equipment condition i.e. a poorly maintained machine which produces product of variable quality in inadequate quantities. It could also be the design of the equipment or the technology used is now obsolete, meaning slower operation and wastage. 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 processed 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 the Hartlepool Reactor Plant whose recent Green Belt project aimed to achieve a ‘blend first time’ culture. The first phase of the Six Sigma programme resulted in savings of almost £45,000 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. Over the years these part containers had not been regularly recharged to subsequent batches and had therefore accumulated across the site. They aimed to:
By applying the Six Sigma methodology of DMAIC, they were able to achieve the following results:
• Part containers > 2 years old were reduced by 24% and containers between 1-2 years old were reduced by 50%, giving a total one off saving of approx. £7,020
• Niagara heels were removed from one warehouse area and with some ‘sorting’ enough space was made available to occupy material from the Aberdeen site
• Whilst removing and ‘sorting’ the Niagara heels, opportunities arose whereby blending of the excess heels could be achieved resulting in a saving of approx. £37,810. Total saving for the project was approx. £44,830 (equiv. to approx $75,000)
This type of result is not unusual. Typical benefits realised are: 30-40% reduction in cost; a reduction in lead times by 50%; 70% reduction in processing errors; 60% reduction in process steps and an 80% reduction in customer returns. Pretty impressive! The ultimate goal is to produce only 3.4 defects per million. But 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.
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 embarkation on a Six Sigma journey is that 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 vision for Six Sigma implementation comes from the very top of the organisation – the CEO and other very senior members of staff.
I have said previously that Six Sigma is a ‘top-down’ process. This is incredibly important. 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 back up Six Sigma with a strong rewards system to 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.
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