How to improve productivity and gain a competitive edge
By James Abbott
My interest in efficiency and Lean Thinking has led me to Six Sigma.
It sounds like a complicated system but actually it is not and it marries well with Lean Thinking. You really need to undertake both programs in order to make your business sing.
So what is the difference? Six Sigma is problem-focused, with a view that process variation is waste.
Lean Thinking, on the other hand, is focused on process flow and views any activity that does not add value as waste.
Six Sigma uses statistics to understand variation. Lean uses visuals: process mapping, flowcharting, and value stream mapping, to understand the process flow.
Don’t be intimidated by the terminology, it is all just about narrowing in on improvements.
Lean Thinking Basics
Lean Thinking is ideal for mature (energy), slow growth (automotive), low transaction industries (small business) or an organisation where mathematical tools are not common. Lean begins to use systems thinking and considers all of the process interactions.
But be aware that lean does focus on eliminating waste (cutting costs). What is needed is to balance the resources released through Lean with an increase in throughput and need for resources. Otherwise you enter a cost cutting, job losing cycle and your process improvement program will grind to a halt.
There are five basic steps in assessing lean operations:
- Identify the activities that create value
- Determine the sequence of activities (also called the value stream)
- Eliminate activities that do not add value
- Allow the customer to “pull” products/services
- Improve the process (start over).
Another important tool used in lean thinking is the 5S system of organization. The idea is that a messy workplace, desk, or manufacturing cell makes it hard to find things, easier to get distracted, and can introduce accidents or mistakes.
The “5S” stands for:
- Sort – Sort needed and unneeded items
- Set in Order – Arrange things in their proper place
- Shine – Clean up the workplace
- Standardize – Standardize the first three S’s
- Sustain – Make 5S a part of the job (make it ongoing)
Lean Thinking is very visual, picturesque. It is definitely a state of mind. Clean, clear, and focused at the task at hand and nothing else. It does not require a lot of mathematical analysis, unlike Six Sigma.
What is Six Sigma?
It is almost imperative in these days of aggressive competition in the marketplace that organisations reduce their rate of defects to an absolute minimum and with Six Sigma, almost zero.
Six Sigma evolved through a necessity to develop a better method of controlling quality and was developed by Motorola, however it was not until General Electric implemented the system that it gained notoriety.
For Xerox, competitive advantage came with the implementation of Six Sigma. Xerox achieved a number of benefits, such as slashing the time required for testing by 60 per cent, a 53 per cent reduction in cycle time over three years and a reduction of 33 per cent in defects per hundred machines.
All up, this meant savings in Six Sigma projects for Xerox in 2004 of $2.7 million. This was on top of a $6 million return on a $14 million investment in Six Sigma in 2003.
While the main theme of quality is Continuous Improvement, the philosophy behind Six Sigma exists around three aspects:
- Focus on the customer, which includes a methodology of listening and gathering information known as Voice of the Customer.
- Focus on return on investment, known as Return on Quality, and
- Focus on management, as ownership and undertaking in Six Sigma projects is critical, as the very success of Six Sigma relies on top down leadership.
The term “sigma” is derived from the Greek letter “σ” representing standard deviation, a statistical method to describe variation in data or a group of items. Essentially, the objective of Six Sigma is to control variation so that it does not exceed six standard deviations from the mean to the nearest specification limit.
Six Sigma could be likened to a management system that statistically measures a product or process towards a goal of near perfection, with less than 3.4 defects per million opportunities.
However, to start down the path of implementing Six Sigma into an organisation, a certain amount of training and restructuring needs to take place. There is an investment to be made in terms of people and time.
Six Sigma project teams are structured in such a way that they cover a diverse range of skills for process improvement including technical expertise and creativity in developing solutions. Sounding like a karate school, the structure is what brings organisation to Six Sigma and consists of an interrelationship between the roles of:
- Champions, who are members of senior management, have a thorough understanding of, and are dedicated to the cause of Six Sigma.
- Master Black Belts, who are well trained in the tools and techniques of Six Sigma.
- Black Belts, who are responsible for successful implementation of Six Sigma projects, have completed at least two or three improvement projects.
- Green Belts, who have received introductory training in the tools and methodology of Six Sigma and, in some companies, have completed at least one improvement project.
- Yellow Belts, who receive 16 hours training in the first three modules of the Green Belt curriculum.
When a Six Sigma project has been identified, you then use the problem solving methodology DMAIC – Define, Measure, Analyse, Improve and Control. Using the problem solving methodology of DMAIC, a structured approach can be introduced to reduce defects to almost zero.
The DMAIC process is appropriate for both large and small businesses.
The define phase is essentially the process of “drilling down” to the specifics of the problem and describing it in terms of operation and declaring a specific problem statement, referred to as “project scoping”.
The measure phase consists primarily of collecting data, however effective tools need to be developed to prevent the collection of unambiguous data. The collection of accurate data can be done via the preparation of check sheets, spreadsheets, and effective questionnaires.
The analyse phase hones in on why a variation exists and through statistical analysis, resolves that variation.
The improve phase is potentially the most creative of the DMAIC process, for once the root cause is determined, ideas need to be generated and responsibility delegated for a successful implementation.
The control phase is the final step of the DMAIC methodology and critical in realising the goal of Six Sigma because this is where the variation is permanently removed, and where improvements are tracked and monitored over time.
Effective change management must run alongside the implementation of the DMAIC process.
That way some of the following challenges may be avoided or at least minimised:
- Resistance from managers in surrendering their high performers
- Aligning projects with organisational objectives
- Recognition of its deficiencies
- Identification of projects, and
- Being able to break large projects down into smaller bite-sized projects.
By employing both Lean Thinking and Six Sigma programs your business will definitely have a competitive advantage – just what Australian manufacturing needs.
* James Abbott is the Managing Director of Challenge Engineering, specialising in CNC machining and based at South Granville, Western Sydney
Ph: 02 9632 0010