The new paradigm of Lean Six Sigma, key concepts
The new paradigm of Lean Six Sigma transcends more than just a production system – it is a new way of thinking about organising the improving operations. Traditionally one often associates Lean Six Sigma with a collection of tools and techniques on the factory floor. However, there are several tiers in how the new thinking can be applied. At the highest level, the concepts of Lean Six Sigma can be successfully applied across any industry or sector of the economy, such as the construction, aerospace, and financial environments. At the next level down, the operating practices of Lean Six Sigma need to be tailored to a degree, such as the high-level design of a pull system. On the most pragmatic level, the tools and techniques of Lean Six Sigma aim to identify and eliminate waste in the particular environment. These tools must be tailored to the particular environment, such as the particular types of kanban comprising a pull system.
The key concepts of “Lean Six Sigma thinking” can be applied across any industry, and are described below.
Lean Six Sigma aims to align all functions with the common goal of reducing overall cost for the business, rather than each function attempting to reduce its own costs in isolation. Thus, the manufacturing system is inherently stronger than a traditional system where different departments pursue their own objectives independently of one another. A true Lean Six Sigma transformation necessitates that all functions understand the application of tools and techniques within the manufacturing system.
Elimination of waste
During the Lean Six Sigma transformation, all functions aim to eliminate waste in a manufacturing environment. Waste can be defined as anything above the minimum resources required to complete an activity. Wasteful activities only add cost to a product; they do not add value.
Hidden becomes obvious
As wasteful activities are eliminated from a manufacturing system, the true root causes of problems become visible. Previously, the waste hid these causes. As an example, a large amount of inventory after a process may have concealed the true problem of the process – long changeover times. These long change over times would have necessitated producing in large batches.
Order out of chaos
As problems become visible, the root causes must be solved to fully eliminate the problems. As problems are solved, then the manufacturing system becomes more consistent and predictable. Yet, many traditional organisations are often engaged in a “fire-fighting” mode because company systems fail in the face of variability. To react to this variability, such as a change in customer requirements, additional resources are often brought into processes to “keep the show on the road”. However, a Lean Six Sigma system will adjust efficiently to this variability, helping to bring order out of the chaos.
Standardisation and continuous improvement
As a manufacturing system becomes more consistent, then standards can be developed to ensure that the improvements are maintained. Once standards are in place, they must be continuously challenged in a bid to make further improvements. Striving for continuous improvement is referred to as the Japanese word, kaizen.
As standards are created, then ownership of particular processes can be transferred to those closest to the process itself. Experience has shown that a Lean Six Sigma system can only be successful if its ownership is devolved to the people who actually operate it.
The Beyondlean Roadmap illustrates the key concepts and operating principles for Lean Six Sigma.
The Beyondlean Roadmap starts with the most fundamental goal for any business – to make a profit. As indicated previously, competitive markets typically set the sales price. An attempt to increase the price could reduce customer demand. Therefore, cost reduction is the only real option for a company in such a position. The best method to achieve this is through a Lean Six Sigma transformation, whose aim is the eradication of wasteful activities and reduction in variation.
In order to maintain a profit, a business must aim to function in an environment of:
- Total quality. All people are involved with “building quality into” a product.
- Zero defects. Defects are detected, contained, and rectified at their source.
- Lowest possible costs. Resources are used efficiently at varying levels of demand.
- Minimum order-to-delivery lead times. Product flows through the value stream in minimum time.
- Delivery reliability. Low and consistent lead times ensure quick response to demand fluctuations.
- Effective human resource management. Employees feel empowered to take a proactive role in improving operations in the workplace.
- Stable employee relations. A company culture with long term job security fosters continuous improvement efforts.
Most organisations try to satisfy these aspirations through the creation of quality, operating and people systems. However, these systems are normally created and managed in isolation – often leading to inefficiencies. For example, an emphasis solely on improving operations by increasing output could have a detrimental effect on quality.
The solution to this problem is the introduction of a Lean Six Sigma methodology that combines the three previously independent systems into a single, coherent system. Within the single system, the goals of the business systems are aligned leading to optimal benefits. This is enabled by maximising people contributions with the goal of eliminating waste.