Most manufacturers have heard of Lean and Six Sigma. Several have successfully leveraged these proven process improvement methodologies to raise productivity, increase the bottom line and improve quality and the customer experience. Unfortunately, many manufacturers and businesses in general have still not discovered the value of Lean Six Sigma. There are many reasons organizations do not use Lean Six Sigma. Some are valid. Many are misconceptions. Still others are pure fiction. This article explores ten commonly cited reasons for this phenomena along with responses to consider.
Before we delve into the ten reasons, let's review a quick primer on Lean Six Sigma.
Lean focuses on value through the relentless elimination of waste and acceleration in the velocity of processes. Its origins can be traced to Henry Ford of Ford Motor Company and Taiichi Ohno of Toyota. Value is defined in terms of what is important to the customer. Value-add work is something your customer is willing to pay for. For example, does the task add a desired function or feature to the product or service? Or does the task enable a competitive advantage (faster delivery, fewer defects, lower price)? Non-value work, or waste, includes activities the customer is not willing to pay for.
There are eight commonly known forms of waste that can be remembered using the acronym DOWNTIME: Defects, Overproduction, Waiting, Non-Utilized Talent, Transportation, Inventory (too much or too little), Motion, and Excess Processing. Increasing the velocity of processes is not about working faster, but speeding up the entire end-to-end process or lead time. Think of lead time as the time it takes once you order a book from Amazon to the time you receive the book.
Six Sigma is a well defined, customer focused management system that strives for the delivery of near-perfect products or services. Six Sigma's goals are to reduce defects and variation so that processes are more consistent and predictable. Originated by Motorola in the 1980s, Six Sigma translates into 99.9997 percent quality or yield. Dial tone of traditional landline phones, for example, was designed to be available 99.9997 percent of the time. Like Lean, Six Sigma places the customer first. It embraces data to make sound decisions. What has made Six Sigma so popular is the money it has saved companies. According to Praveen Gupta, "Companies have reported saving in the billions of dollars. No other methodology comes close to Six Sigma for savings."
What is "sigma"? The Greek letter Sigma (σ) is a statistical term that measures standard deviation or how far a given process deviates from perfection. The "six" comes from the goal of fitting six standard deviations between the mean and the nearest customer specification or target. To achieve Six Sigma quality (99.9997%), a process must produce no more than 3.4 defects per million opportunities. A "defect" is anything outside of customer specifications. An "opportunity" is defined as the total number of steps in a process where a defect can occur. The central idea behind Six Sigma is that if you can measure how many defects you have in a process, you can systematically figure out how to eliminate them and get as close to zero defects as possible. This means we need to be nearly flawless in executing our key processes.
The best way to describe Sigma may be in terms of human behavior. When we start a new job, enter college, enroll in a training program, open up a new business or even try a new sport, humans generally are operating between 1.5 and 2.0 Sigma on a scale of 0 to 6. In other words, people begin by making errors about 30 to 50% of the time. We learn from our errors, and then improve our performance to an acceptable level. Type "A” personalities strive for 3+ Sigma performance or an error level 5% or less. They're asking questions, taking notes, and practicing their skills. Human behavior can be pushed to Sigma levels above 4 through simple checklists, mistake-proofing or poka-yoke techniques, visual management, and standardized work. Only through machine automation can we can achieve nearly error-free performance to the level of 6 Sigma.
Six Sigma follows a proven, closed-loop framework for tackling problems. It consists of five phases known as DMAIC: Define, Measure, Analyze, Improve, and Control. One of the key tenants that makes this framework work is the methodical discipline of identifying the most significant root causes of a problem before implementing solutions.
When we combine Lean and Six Sigma, we get something powerful -- a business improvement methodology that maximizes shareholder value by achieving the fastest rate of improvement in Cost, Quality and Customer Satisfaction. It focuses on reducing waste by streamlining operations and reducing defects (i.e., services not delivered on-time or within budget).
There are many reasons not to consider Lean Six Sigma in your business. Some are valid. Many are misconceptions. Still others are pure fiction. Here are ten commonly cited reasons I have heard over the years:
1. I've never heard of Lean Six Sigma.
2. Lean Six Sigma is a fad, just like Total Quality Management, the Juran Quality Trilogy, Theory of Constraints, and Business Process Re-Engineering.
3. We don't have time for a Lean Six Sigma program.
4. Our company can't afford the costs of implementing a Lean Six Sigma program.
5. We're too small. LSS is for large companies.
6. We're not a manufacturer.
7. Lean Six Sigma involves a lot of statistics and advanced mathematics. Most of our employees are front-line operators -- not engineers.
8. Lean is a better fit for our business. Six Sigma is too advanced.
9. We've tried Lean Six Sigma years ago and did not achieve good results.
10. Fear of the unknown or failure.
While there are a lot reasons not to consider Lean Six Sigma, the question you should be asking yourself is "Can we afford not to embrace Lean Six Sigma in our business?" So let's address each of the reasons above.
1. I've never heard of Lean Six Sigma. Definitely a valid reason. While growing in popularity, Lean Six Sigma is still not part of mainstream business vernacular. Your best bet is to Google "Lean Six Sigma" and start finding out more about. There are some excellent primers including What is Six Sigma? by Pete Pande or What is Lean Six Sigma? by Mike George. The American Society for Quality (www.ASQ.org) and The Lean Enterprise Institute (www.Lean.org) are great non-profit professional associations. Or attend a free webinar on "Demystifying Lean Six Sigma" at my company by visiting www.riverwoodassociates.com.
2. Lean Six Sigma is a fad, just like Total Quality Management, Theory of Constraints and Business Process Re-Engineering. The origins of Lean Six Sigma can be traced back to the turn of the nineteenth century with business and quality leaders like Henry Ford, Walter Shewhart of Western Electric, Edwards Deming, Joseph Juran, Taichi Ohno and Shigeo Shingo of Toyota. Over the years it has continued to grow, develop and transform itself. Lean Six Sigma differs from other continuous improvement programs in three important ways: 1) Its laser-like focus on the customer; 2) the extensive use of data and analytics to make sound decisions; and 3) its Return-on-Investment orientation -- the language of management.
3. We don't have time to dedicate to a formal Lean Six Sigma program. We're too busy you are putting out fires." When I hear this response, I'm reminded of the story by Harvey Mackay, the motivational speaker, of two lumberjacks cutting wood. One of the men worked hard all day, seldom took a break, and took only 20 minutes for lunch. The other man took several breaks a day, spent 45 minutes for lunch, and even took a 15-minute nap before going back to work. The first man became increasingly frustrated because, no matter how hard he worked, the other man's pile of chopped wood was always much bigger than his at the end of the day. "I don't understand how you do it," said the first man one day. "Every time I look around, you are sitting down, and yet you cut more wood than I do. Why is that?" With a smile, the second man replied, "Did you also notice that while I was sitting down, I was sharpening my ax?"
I would submit that time is an organization's most valuable commodity. Waste it, and you are throwing away an irreplaceable resource. Time is not the enemy unless you try to kill it. An hour lost is never found. As Henry Ford once said, "Time waste differs from material waste because there can be no salvage.” You owe it to yourself and your business to invest some time in understanding how Lean Six Sigma can help you.
4. Our business can't afford the costs of implementing a Lean Six Sigma program. The short response is that Lean Six Sigma Programs don't necessarily require significant capital. I've seen mid-sized businesses jump start their LSS program with just one day of Yellow Belt training on the fundamentals. This is not to say organizations should not consider hiring certified Black Belts from the outside, conduct training for Yellow, Green and Black Belt certification, or purchase statistical and project management software. The point is LSS should be looked upon as an investment. An investment that should yield a return of at least 5-10 times in year 1 with the right projects.
5. We're too small. Lean Six Sigma is only for larger organizations. One of the most frequent comments I hear from small and medium-sized business owners is "We've hit the wall". The "wall" means having cash flow tied up in inventory or receivables even though the company is profitable. It may mean the inability to scale or grow the business with the same resources. Sometimes the "wall" means chronic employee turnover or overtime. Other times, it means not providing the same level of quality and personal customer service when you started the business. Regardless of what "wall" you are hitting, these are signals that the processes that got you where you are today are insufficient to get you where you want to go tomorrow. You need to think differently about how to operate the business. Perhaps thinking about Lean Six Sigma. When I hear the excuse of "we're too small", I think about how we've applied Lean Six Sigma in our own business, Riverwood Associates, a 2-man start-up! Are we undergoing a full Lean Six Sigma transformational deployment? No. But we are consistently using key principles of LSS like the Voice-of-the-Customer to help translate our customer needs into our specific service offerings. We're also learning to identify wastes in the business and how to remove them using the DMAIC framework. One obvious waste was the bottleneck created during the grading process of the Yellow Belt exams. Imagine 50 participants taking the exam at the end of the day, many turning in their exams at the same time. My partner was furiously grading as fast as he could, while I was running around giving out the certificates. It was a circus! After a couple of incidents, my partner decided to do something about it. He diagnosed the problem, identified the root causes (going over the allotted class lecture time, poor test instructions, and uneven flow) by observing the current process, and implemented simple countermeasures including better time management on my end and streamlining the curriculum, clearer test instructions, and a cost-effective scantron grading device.
6. We're not a manufacturer. Tell this to AT&T, The Coca-Cola Company, Bank of America, Merck, Starbucks, Virginia Mason Hospital, and Wal-Mart. While Lean Six Sigma may have originated in manufacturing, the principles apply equally to transaction and service environments. In fact, the service industry actually has more waste than in manufacturing primarily because so much of the work and deliverables in service are "invisible" - no tangible widgets. Keep in mind whenever you have a fairly repeatable process (i.e., employee on-boarding, order processing, delivery, invoicing, or accounts payable), with volumes driving it, and you are collecting data about the process, you have all the ingredients to leverage the principles of Lean Six Sigma.
7. Lean Six Sigma involves a lot of statistics and advanced mathematics. Most of our employees are front-line operators -- not engineers. My experience is that most organizations do not require statistics and advanced mathematics to enjoy the benefits of Lean Six Sigma. In fact, most of the principles and tools can be quickly and easily used by anyone. Some of the most powerful tools include being able to identify waste through a new set of eyes (Eight Wastes). Drawing a simple process map on a white board to identify gaps, redundancies or bottlenecks in a process. Or even asking "Why?" 5 times to get at the root cause. Challenge your team to step up to the plate. If we take the time to explain to our employees what the customer needs, you can be certain they will bring great ideas on how to solve those problems.
8. Lean is a better fit for our business. We're going to start with Lean and then move into Six Sigma. By following this logic, you are cheating your customers, your employees, your business and yourself. Lean and Six Sigma are not mutually exclusive nor have to be applied in a linear fashion. They complement each other. Lean improves the speed and throughput of your business. It's about simplifying the business, doing more with the less. Think "efficiency". Six Sigma improves the quality of products and services by reducing defects and variation. It's about striving to doing things right the first time, quality. Think "effectiveness". When you combine efficiency and effectiveness you get dramatic results. By only doing Lean you sacrifice the benefits of quality. Likewise, when you only implement Six Sigma you miss out on driving efficiencies.
9. We've tried Lean Six Sigma years ago and did not achieve good results. Ask yourself "Why didn't we achieve success?" Was it related to people, processes or technology? What was the catalyst for embarking on the program? Was it driven internally or by some key customers? Was the leadership committed to the program's success? If so, how were they committed? How was "success" defined? Were the goals and timetables realistic? Was it solely about saving money or reducing headcount? Was the organization mature enough for this type of program. Did you provide context to your employees on why you were starting such a program? Were the employees equipped with the appropriate training and tools? How were projects selected? How were projects managed? Were the results tracked and shared? Was there a recognition component to the program? Regardless of the reasons, you owe it to your customers, your employees, your business, and yourself to try again. Maybe take more time on the front end to clearly articulate the vision. Define the problems you are trying to solve with a program like Lean Six Sigma. Engage the front line and your customers to be part of the process. Remember, a methodology like Lean Six Sigma is only as good as the people managing it and the processes for how they are managing it.
10. Fear of the unknown or fear of failure. Of all the reasons listed, this one is probably the most legitimate. The problem is very few people are willing to acknowledge it or share it with others. Certainly pride is a factor. But when you think about it, fear of the unknown or failure can be paralyzing. It prevents us from learning a new skill, taking on a leadership role, or implementing a program like Lean Six Sigma. Fear must be driven out of the organization in order to innovate and thrive.
Psychologists describe four stages of how humans learn a new skill or develop competency. It is based on two dimensions: a person's level of consciousness and competence.
Stage 1 - Unconsciously Incompetent. We do not understand or know how to do something and we're unable to recognize the problem. In other words, we don't know what we don't know. This is akin to not knowing what Lean Six Sigma is nor how to use it.
Stage 2 - Consciously Incompetent. We become aware that we do not understand or know how to do something. This occurs when we're first introduced to Lean Six Sigma through an article, a book or even a webinar. We have a good idea of what it is, but don't truly know how to implement it in the business.
Stage 3 - Consciously Competent. We can demonstrate a skill or knowledge, but it requires intense concentration and effort. This stage commonly occurs after someone has gone through Lean Six Sigma Yellow Belt or Green Belt training. They understand the methodology and how to use the tools, but it takes a lot of practice and discipline to become skilled. This is a very critical stage of learning. Without practicing Lean Six Sigma on small projects, individuals can quickly revert back to being consciously incompetent.
Stage 4 - Unconsciously Competent. At this stage of learning, we have had so much practice developing the skill that we don't need to think about what to do. In other words, the skill has become second nature to us and we are able to perform it with few mistakes. Lean Six Sigma professionals can reach this stage by actively working on projects and honing their skills, broadening their knowledge by reading books and articles on the topic, enhancing their skills by participating in continuous training, attending professional association meetings and conferences, writing articles or books on the subject, giving presentations, and training and coaching others.
No one actually ever reaches a final stage of learning. It is a continuous process -- a journey. Recently, I was attending a leadership conference by Ritz-Carlton. The speaker, Jeff Hargett, Senior Director of Culture Transformation at Ritz-Carlton, was describing the origins of Ritz-Carlton's success. Cesar Ritz was a Swiss hotelier and founder of the famous Hotel Ritz in Paris in 1898 and Ritz Hotel in London in 1906. Cesar Ritz was a perfectionist in every sense of the word and it helped him achieve great success. But it came with a price. Ultimately Cesar Ritz was committed to an asylum. Today, Ritz-Carlton recognizes that leadership is about striving for excellence not perfection. Similarly, Lean Six Sigma is about striving for excellence, not necessarily reaching 99.9997 percent accuracy. So, don't procrastinate about deploying Lean Six Sigma in your business because if you don't have all the pieces in place or have not been trained in all of the tools. Start the process by doing.
Thanks for your attention,
John & Partners team.
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