Lean Six Sigma

Abstract

The approach to the successful and sustainable implementation of the integrated improvement initiative some organizations refer to as ‘Lean Sigma’ is presented. The implementation approach considers both the design and installation of a framework that creates the supporting structures necessary to sustain organizational change as well as a tactical deployment methodology. This approach builds on current Six Sigma and Lean principles. The tools of both Lean and Six Sigma are mapped to common business improvement goals. Supporting data from successful, ongoing integrated implementation efforts is presented.

The “Go Faster” Meeting

Anne brushed nervously at the fabric of her skirt while the executive staff settled in their chairs for the meeting. She knew that the Six Sigma implementation project for her division was going well, albeit slowly, and with little or no results “trickling down” to visible cost savings on the balance sheet to date. Defects were down, yields were up significantly, and customer returns and complaints about product quality and reliability were almost non‐existent in the last six months. Almost 50% of the employees had attended some level of the Six Sigma training program. Twenty teams were actively pursuing continuous improvement goals. So why were the members of the executive staff so unhappy? Anne was about to find out.

Anne presented her progress on the implementation project and the results summaries as of the end of the last fiscal month. The staff quietly scribbled notes on each of the results slides she reviewed. When she opened the floor to questions, the measure of their dissatisfaction would be revealed. “Why are our inventories still so high and our turns so low?” asked the director of materials management. “Why do we have such long lead times for customer orders?” asked the director of sales. Operations chimed in, “Why can’t we get our shop floor organized? We’ve had three lost time accidents in the last quarter because of pallet and fork truck collisions in the aisles. The drivers can’t see around the stacks and stacks of WIP.” “Employee satisfaction is at an all‐time low. Isn’t Six Sigma supposed to drive cultural change too?” insisted the human resources department who was not going to be left out of the conversation.

The final comment was made by the COO: “Why aren’t we seeing the financial benefits of all these improvements? Why is it taking so long to see the financial impact in terms of cost reduction and increased productivity to the bottom line? We aren’t moving fast enough. We aren’t seeing the results we expected from this investment. Anne, somehow, some way, you have to get your implementation to ‘go faster.’ We need results, and we need to see something significant by the end of next quarter or we are really going to have to pull the plug on this and try something else.” There it was, Anne thought. They not only want to pursue nearly perfect quality, but they want significant improvements in their operational capability and employee involvement, visible on the balance sheet as cost reductions and increased productivity and sales. And, she sighed, they want it to happen quickly.

As she walked back to her office after the meeting, Anne thought to herself, “Somehow I have to figure out how to make all of these improvement efforts go faster. I don’t want to abandon what we’ve begun to build, and yet it isn’t enough. I need to somehow engage the people of this organization in the process of the improvements. Where in the Six Sigma program does it address WIP and general inventory management strategies? Did I miss that class? I need a bigger tool set than I’m currently using to accomplish what the executive staff is looking for. And I needed it yesterday.”

Sound Familiar?

Today, every industry is facing the same challenge of providing superior quality products or services, at a competitive cost, in a shorter delivery interval than their competitors. The product or service provider should also have the operational capability and flexibility to include innovative (customized) features and capabilities that satisfy a specific customer need. Many organizations have chosen Six Sigma as their primary improvement initiative in the wake of the phenomenal (and highly publicized) accomplishments of Motorola and General Electric, while others have embraced the improvement philosophies of the Toyota Production System or Lean management systems. Some organizations have two continuous improvement offices operating simultaneously: one for Lean or kaizen improvements, and another for the Six Sigma implementation. Regardless of the name on the door of the improvement office(s), the challenge to industry remains the same.

Proponents of Lean management systems believe Lean is the productivity improvement initiative of choice for several reasons. One key aspect of Lean is employee involvement. Successful Lean implementations create and sustain improvement through use of a flexible, capable, and involved workforce. Lean tools are often perceived as “easier to teach and use” than Six Sigma tools. Lean addresses the elimination of waste at all levels of the organization in order to drive improvements in flow, responsiveness, operational capability, product or service costs, and productivity. Results are often realized quickly, both visibly in the work environment and to the bottom line.

Supporters of Six Sigma believe an unwavering commitment to minimizing variation in processes will create significant business results, competitive advantage, and productivity. Through the structured application of statistical tools, team‐based problem solving, and metrics‐driven process management, defects in critical to quality (CTQ) product and service characteristics will be virtually eliminated. The drive to achieve Six Sigma quality levels drives productivity and profitability through highly reliable and predictable process behavior and robust product and service designs. Six Sigma initiatives rely on a structured implementation approach throughout an organization that often takes a year or more to complete. Six Sigma builds involvement, awareness and participation through the understanding and controlling of processes using the tools of Deming and Shewhart. As General Electric disclosed in describing their improvement journey: there is often little or no financial return on investment for at least one year after implementation.

There is much and often heated debate on which of these two proven improvement initiatives is “best,” or which one of these two initiatives an organization should implement “first.” Lean leaders often suggest “Leaning an organization out” before implementing Six Sigma. The argument is often supported by the early financial savings and by building on the organizational inertia caused by the visible results and employee involvement. A Six Sigma champion would counter that flow can’t happen in processes with special cause variation that has not been addressed and the lack of process or machine capability. Six Sigma starts with thoroughly understanding the key customer requirements of the product or service being delivered, and then building capable and flexible processes to consistently meet or exceed these requirements.

There is a great deal of common ground in terms of the goals and tools employed between Lean and Six Sigma initiatives. So why are these two initiatives perceived by many organizations to be mutually exclusive? Recently, several world‐class companies such as Maytag and Lockheed‐Martin Aerospace have abandoned the “either / or” position, and elegantly combined these two initiatives into an integrated approach at achieving excellence in all areas of business performance improvement and productivity: cost, quality, responsiveness, and design innovation.

The Power of Two

Improvement practitioners around the globe are facing the same challenge as Anne: “How can I get the productivity and quality gains my organization needs to stay competitive quickly, while engaging my people, with sustainable results?” In essence, how can organizations make improvements “go faster?” Combining the implementation elements of Lean and Six Sigma, and more specifically, by broadening the variety and applicability of improvement tools available to an organization, deployed within a proven implementation structure provides sustainable and significant business improvements in nearly 50% less time with significantly greater results than using a single initiative, Lean or Six Sigma, alone.

Integrating Improvement Initiatives: The Need for a Common Framework

The integration of Lean and Six Sigma begins with an implementation framework. The use of an overall implementation framework or methodology throughout the organization is critical to successfully deploying an organization‐wide improvement initiative. One such implementation methodology that has been successfully applied in many product and service organizations is SLIM‐IT^® (see Figure 1). SLIM‐IT is an (pronounceable) acronym for the elements included in the implementation methodology: Structure, Lean Daily Management System®, Mentoring, Metrics, Tools, Teamwork, Training and Technology.

Figure 1 – SLIM‐IT Implementation Methodology [1]

This implementation approach provides the synergistic benefits of using tools, teamwork, training and technology together within a sustainable system of change management support mechanisms. These support mechanisms: an organizational structure component, the daily management system, a process that encourages real‐time coaching and mentoring and an alignment of the improvement metrics throughout the organization, allows for the optimal use of teams, tools, training and technology (such as e‐commerce) within each unique organization. This methodology allows for all the supporting and sustaining processes to prevent the lack of people inertia that often derails many organizational improvement initiatives. Through the appropriate and timely combination of teams, tools, training and technology within this framework, organizations can begin to solve problems, innovate new ways of thinking, become more responsive, and achieve the kind of business performance necessary to become and remain a competitive force.

Each of the elements of the SLIM‐IT^® model employs important processes and mechanisms that, when used together, create the sustainable implementation of an improvement initiative. The structure element of SLIM‐IT includes the use of an Executive Steering Committee (ESC), work stream teams, experts, and team charters. The ESC is responsible for directing and coaching the organization through the improvement initiative. The ESC determines the goals and objectives, determines the criteria for project selection and monitoring, charters projects, and directs and coaches the experts in managing and coaching their work stream team projects. The work stream teams execute any projects and activities as chartered by the executive steering committee. Experts (master black belts, Lean champions, and external consultants) provide process coaching and content expertise to work stream teams and provide feedback and guidance to the executive steering committee.

The structure element is complimented by the Lean Daily Management System®. The Lean Daily Management System is the implementation of the structure element at the micro‐process level. Daily, mandated, structured activities are implemented and coached at the work stream team and micro‐process team level. These activities include the use of a primary visual display (PVD) board in the work group areas, a daily shift start‐up meeting, a customized, long‐term improvement plan such as the 20 Keys^® (see Figure 2) [2], a kaizen action sheet improvement system, and a control system for managing important team, technology, and process metrics such as CTQs. Only with rigorous daily application, real‐time coaching, and employee (microprocess team) involvement will any improvement initiative provide sustainable business results.

Figure 2 – 20 Keys^®

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Performance Level

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Mentoring is another important element of the implementation methodology. Mentoring entails the day‐to‐day coaching of managers, supervisors, and team leaders in the tools and techniques used in the improvement efforts as they occur and are implemented. The mentoring process allows for real‐time learning and application of the tools in the work environment. Mentoring also includes short‐interval coaching on leadership behaviors as they relate to implementing Lean and Six Sigma practices, and how they manage and coach their respective work teams in using and understanding the metrics, tools, and technologies employed. The real‐time mentoring by process, content, and leadership behavior experts allows for the institutionalization of the behaviors necessary for sustaining cultural change.

A customer‐focused, consistent, and understandable set of metrics, both at the micro‐process level and at the organization level are necessary to drive improvement efforts. Metrics take time and effort to develop, and as such, are often developed “after the fact.” Customer‐focused metrics such as CTQs must be developed at each level of the organization, and must be aligned in such a manner to support the overall business improvement goals. Moreover, metrics must be understandable by everyone involved in the effort. How, why, when, how often measurements are taken and interpreted must be understood by every employee. Process management and standard work are critical elements in establishing and sustaining useful and relevant metrics. Linkages between micro‐process metrics and the long‐term business improvement goals (lead‐time reductions, yield improvements, inventory turns, increased sales, flow days, etc.) should be readily apparent. If the linkages are not supported by the financial reporting structures, it will be extremely difficult for an organization to “see visible results at the bottom line” without expending extraordinary effort to prove that improvements did in fact occurs. These kinds of non‐value‐adding effort are an example of the type of people energy waste that often derails improvement efforts.

The tools, technology, training and teamwork element of the SLIM‐IT model also provides an excellent environment for the integration of Lean and Six Sigma. An organization that limits the amount of tools, team knowledge capital, training and technology also limits its ability to solve problems and improve processes as quickly as those organizations with a larger tool inventory from which all employees can draw upon. How many tools are available to an organization is not the only limiting factor, the ability of an organization to provide structured, real‐time coaching and decision support on the use of tools will also limit the ability to quickly resolve problems and improve processes. Many quality improvement and quality of work life teams have died a very long and confused death due to the lack of coaching and overall direction. The SLIM‐IT model provides the overall structure, direction, mentoring, metrics development, and daily sustaining support for employees of an organization to successfully implement business improvements. In essence, by combining all of the elements of the model, an organization has the necessary framework to begin to make improvements “go faster.”

How Lean and Six Sigma Can Be Deployed Using a Modified DMAIC Approach

Motorola and GE developed the DMAIC process to be used as the principle problem‐solving approach for Six Sigma improvement project teams [3]. DMAIC is an acronym for Define, Measure, Analyze, Improve and Control. Many companies use this approach or a similar step‐bystep process for guiding improvement initiatives and team activities. Since many organizations are familiar with this process and the overall Six Sigma deployment model used by GE, this integration model will use these as touch points for the integration of Lean and Six Sigma.

The first step in the integration is to thoroughly understand the customer requirements, the business goals of the organization, the core value streams and enabling processes, the employee needs, and the market environment. The examination of these areas is often referred to as “listening to the voices”: the Voice of the Customer, the Voice of the Employee, the Voice of the Process, the Voice of the Business, and the Voice of the Market. An Executive Steering Committee (ESC) would be formed to research, understand, and communicate the key learnings from this analysis. The ESC then determines the overall business improvement objectives such as lead‐time reductions, yield levels, defects per million opportunities (DPMO) targets, employee satisfaction and increased sales. The ESC also defines and confirms the CTQs at an organization‐wide level. The ESC members, often with the help of an external expert, then map the value streams for the key market segments or customers. Those processes not included in the value stream maps are designated as either shared services (such as human resources, finance, information systems, or environmental health and safety) or enabling processes. The ESC then analyzes the key performance indicators and determines the performance gaps for both core value stream and enabling processes. Improvement projects are defined to specifically address these performance gaps and improvement teams are chartered, resourced and allocated budget. The ESC monitors and coaches the improvement team leaders and experts through a structured management system process very similar to the Lean Daily Management Systems® employed at the micro‐process level. As improvements are made, the management and reporting system provides a basis for real‐time team mentoring and coaching, metrics roll‐up, and the capture and communication of lessons learned in improving and sustaining value stream and enabling processes. Improvements are sustained and the processes stabilized through the application of process management and control techniques, standard work, and daily coaching by the value stream team leader and experts.

Figure 3 – Organizational Deployment Example

At the macro‐process or individual value stream level, the process begins with a steering team being formed by the value stream process owners and the value stream customer(s). This value stream steering team then determines, based on the direction and guidance of the executive steering committee, the priority of, charter for, and the metrics to be used in the improvement projects necessary to achieve the goals established by the ESC. The value stream begins to understand and measure the processes within the value stream. The processes are analyzed for waste, defects, responsiveness, cost and conformance to customer requirements. Value stream process owners and experts provide guidance and coaching for the analysis of the root causes for the performance gaps. Value stream teams establish a daily management system to monitor, communicate, and provide feedback and coaching on ongoing value stream performance improvement activities. The value stream teams for both enabling and core value stream processes design and implement standard work and process management systems for the areas to sustain and control these processes.

At the micro‐process, or within value stream organization level, project selection and charter is a result of the direction provided by the value stream process owner’s steering committee and from feedback from active improvement teams working on macro‐process level projects. Work stream teams are formed to define each process, develop metrics, measure the process and determine process performance gaps. The processes are then analyzed for the root causes of the performance gaps, and the work stream teams develop and implement process improvements with the direction and coaching of an expert and a member of the value stream steering team. The micro‐process, or work stream team then implements a measurement system, such as a primary visual display, in the work area to use for daily shift start‐up meetings, kaizen action plans, on‐going improvements and metrics monitoring. The primary visual display at the micro‐process level could also contain information on lead‐time reductions, process control charts, process yield / DPMO, customer complaints, changeover times, machine capability and reliability, safety, work stream team attendance and other issues important to the team. Figures 4 and 5 illustrate the integrated deployment models for both core value stream and enabling processes.

Figure 4 – Integrated Deployment Model – Core Value Streams

Executive Dashboard Executive Steering Committee 20 Keys

Area 20 Keys Scoreboards Area LDMS Primary Visual Displays Statistical Analyses & Metrics

Tracking Mentoring & Coaching

Process LDMS Primary Visual Displays Statistical Analyses & Metrics

Tracking Mentoring & Coaching Tools Application

* High-level transactional ** Detailed transactional

e Lean

e Lean

Six Sigma Tools

Six Sigma Tools

 

Executive Dashboard Executive Steering Committee 20 Keys

Area 20 Keys Scoreboards Area LDMS Primary Visual Displays Statistical Analyses & Metrics

Tracking Mentoring & Coaching

Process LDMS Primary Visual Displays Statistical Analyses & Metrics

Tracking Mentoring & Coaching Tools Application

 

* High-level transactional ** Detailed transactional

Figure 5 – Integrated Deployment Model – Enabling Processes

The power of the deployment models used by companies such as Motorola, GE, Honeywell, and Raytheon in their Six Sigma initiatives is well documented. Absent in these models are the structural elements of the SLIM‐IT model and the often limited tool set. Improvement initiatives will progress more quickly (go faster) and produce greater results in a shorter amount of time when a framework that mandates daily coaching, monitoring, mentoring, and measurement at all levels of the organization is utilized. Improvement projects are chartered and monitored by the executive steering committee. Projects are not chartered or teams formed without an established need. Teams are coached by team leaders, supervisors and experts in the areas of tools, teamwork and technology. Processes are measured and analyzed based on the common goals: improved quality, reduced cost, rapid delivery and innovative features. As value streams and individual processes are defined, measured and analyzed in an integrated approach, teams choose the appropriate tools to insure that each of the common goals are addressed. Six Sigma programs often only applied those tools designed to improve quality while Lean programs addressed only delivery and costs. An integrated approach allows teams to improve processes and value stream performance from many different perspectives at the same time. Table 1 provides a sample mapping of the tools available with an integrated approach for each of the common goals.

Table 1 – The Common Goals Tools Map

The Common Goals Tools Map: Improved Quality
 Process Mapping  Process Management Systems  Process Benchmarking  Data Collection Form Design & Development  Pareto Analysis  Line / Bar Charts  Process Control Charts  Process Capability Analysis  Gage R&R  Cause & Effect Diagrams  Error Proofing  5S and Workplace Organization  Primary Visual Display Boards  Standard Work  Successive Checks  Radar Charts  Regression Analysis	           	Process Redesign Skills Training Total Productive Maintenance Design of Experiments Customer Needs Analysis Descriptive Statistics Hypothesis Testing Histograms Sampling Plans Yield Analysis FMEA / PFMEA Variation Analysis
The Common Goals Tools Map: Reduced Costs
 5S and Workplace Organization  Cell Design  Kanban Systems  Predictive / Preventive Maintenance  Quick Changeover (SMED)  Skills Versatility & Cross Training  Standard Work  Total Productive Maintenance  VA / NVA Analysis  Value Stream Mapping  WIP Reduction  Kaizen / Kaizen Blitz  Cycle Time Analysis  Spaghetti Diagrams  Variation Analysis	   	Design of Experiments Sampling Plans Yield Analysis FMEA / PFMEA

The Common Goals Tools Map: Delivery Capability
 Quick Response Methods [4]  Time Slicing [4]  Work Flow Analysis  DILO Analysis  5S and Workplace Organization  Cell Design  Kanban Systems  Predictive / Preventive Maintenance  Quick Changeover (SMED)  Skills Versatility & Cross Training  Standard Work  Total Productive Maintenance  VA/ NVA Analysis  Value Stream Mapping  WIP Reduction  Kaizen / Kaizen Blitz	       	Cycle Time Analysis Spaghetti Diagrams Pull Systems Supply Chain Management E‐Enterprise Value Stream Teams Variation Analysis Process Control Charts
The Common Goals Tools Map: Innovation
 Work Flow Analysis		Kaizen/Kaizen Blitz
 DILO Analysis		Workplace Layout Analysis
 Fixture Redesign		Customer Needs Analysis
 Cell Design		Rapid Applications Development / Joint Applications
 Integrated Product Design		Development
 Skills Versatility & Cross Training		Change Control Processes
 Business Case Development
 Process Reengineering
 Process Benchmarking
 Project Management
 Boundary Analysis
 Concurrent Product / Process Development
 Design for XX
 Process Simulation
 Monte Carlo Analysis
 Quality Function Deployment

Summary

Integrating Lean and Six Sigma allows organizations to build a synergistic approach to rapidly improving their business processes using the best of what has been learned to date from those organizations that were successful implementing Lean and Six Sigma. Some recent examples of the benefits of this synergy follow.

Len Hadley, CEO of the Maytag Corporation, stated in his 2001 Annual Meeting presentation, “We are continuing to push into Lean Sigma, which is a unique combination of Lean manufacturing techniques and quality principles. Last year we gained a significant amount of manufacturing space by applying Lean Sigma to our existing operations. This has enabled us to avoid constructing new space, and, in several cases, to combine previously separate operations, which lowers our cost base.”

Lockheed Martin Aeronautical Systems (LMAS) reported the average price of a C130J has dropped by about $500,000 since they began inserting Lean production and Six Sigma quality principles into the program. LMAS expects to save tens of millions of dollars in C130J program costs in the next several years as the company quickly transitions from a cost reduction program focused primarily on basic line modernization to one centered on actively applying the tenets of Lean thinking and Six Sigma quality [5].

BAE Systems Controls in Fort Wayne, Indiana captured a Industry Week’s Best Plant award for the year 2000 by blending the two strategies into one three years ago. Management concluded that it would be imperative to do everything faster, to improve flexibility in responding to customers, and to do things right the first time. The results? Value‐added productivity soared 112% in five years, WIP was reduced 70%, product reliability improved 300%, sales per employee is up 97%, and lead‐time has been slashed by 90% in a high‐mix, low volume environment [6].

These results and the recent communication of many other such success stories indicates there is data to support that a synergistic approach will yield results to the bottom line faster than implementing each strategy separately. It is not enough to simply “do both.” But with a structured implementation approach that emphasizes support, direction, coaching, the development of the appropriate metrics, a broad set of productivity improvement tools and expertise available to teams, this blending of two important strategies will yield significant business results to product and service organizations quickly.

Our productivity heroine, Anne, recommended the executive staff to disband their monthly results review meeting. She suggested that instead they form an Executive Steering Committee to design an integrated approach to business improvement using both Lean techniques and quality principles. “You can’t wait for results to happen,” she bravely offered as raised eyebrows met her gaze, “you have to be part of making it happen.”

Acknowledgments

The author gratefully acknowledges the support of the Kaufman Consulting Group, LLC, for allowing me access to their wealth of thought leadership and providing a rich forum (the University of Dayton) in which to fully develop this synergistic approach in partnership with my productivity improvement peers and students.

References

1. Lareau, E.W., 2000, Lean Leadership: From Chaos to Carrots to Commitment, Midland Press, Iowa.
2. Ibid.
3. Breyfogle, F.W., 1999, Implementing Six Sigma, John Wiley & Sons, New York.
4. Suri, R., 1998, Quick Response Manufacturing, Productivity Press, Oregon.
5. Kandebo, S.W., 1999, “Lean, Six Sigma Yield Dividends for C130J”, Aviation Week & Space Technology, New York, Vo1. 51, page 59.
6. Sheridan, J.H., 2000, “Lean Sigma Synergy”, Industry Week, Cleveland, Vol. 249, pp. 81‐82.