The Benefits of Integrating Lean and Six Sigma Methodologies
Many companies choose to implement either a Six Sigma or a Lean initiative. However, it is worth remembering that each of these alone has limitations. As we know, Six Sigma will raise the performance bar by causing a process to meet customers' requirements more consistently and eliminating defects. In its purest form it does not address the problem of how to optimise process flow. It [in its traditional form] has no tools specific to taking time out of a process.
We now have to realise that companies must be more responsive to changing customer needs in a highly competitive environment, therefore reduced lead times are essential to long term success in 21st century business.
Lean on the other hand, addresses problems associated with flow through a process. It is associated with speed, efficiency and waste and integrates very well within the DMAIC model.
Let's take a quick look at the two methodologies side by side.
COMPARING SIX SIGMA TO LEAN
At this point you should see the two methodologies as being complementary. They each address different issues associated with process performance enhancement.
INTEGRATING LEAN WITH SIX SIGMA
The integration of Lean and Six Sigma can be as simple or as complicated as anyone wants to make it.
My goal is always to make things as simple as possible so that I (and others hopefully) can understand and apply the concepts in a practical way. Let me see if I can keep it that way in discussing how Six Sigma and Lean might be integrated.
Take a moment to look at the diagram shown below.
The diagram depicts how business improvement might look with Six Sigma. Business improvement ideas are generated in a number of ways, including:
(b) Analysing drivers of cost, revenue, working capital, capital investment and risk
(c) Analysing performance gaps
(d) Finding constraints or bottlenecks
(e) Creating performance gaps by setting new targets
(f) General ideas from the workforce
Improvement projects that come out of the prioritisation process will generally fall into one of three categories:
1. Six Sigma Projects – Projects associated with processes that are repetitive by nature for which the solutions are not known, and the application of the full DMAIC process is relevant.
2. Problem Solving / Solution Identification Projects – Projects to find solutions to problems that do not specifically fit the Six Sigma model and the application of cause and effect analysis or idea generation tools is appropriate. These might include problems for which there is no clear process or one-off type failures.
3. Solution Implementation Projects - Projects that require the application of traditional project management tools to implement some known solution.
THE INCLUSION OF LEAN
Let's take a look at how it might appear with Lean included.
Through the inclusion of Lean, Value Stream Analysis can be used to generate business improvement ideas. Improvement projects can now include those that focus on improving flow and eliminating waste associated with over-production, waiting, non value added processing, transportation, inventory, and unnecessary motion.
The DMAIC model can be used by project team leaders to manage both Six Sigma and Lean projects.
BENEFITS OF LEAN AND SIX SIGMA INTEGRATION
In Chapter 6 of Process Alchemy, I discussed the concept of Quality and Time Savings. I showed that the current state of a business might look something like this.
The proactive way to reduce 'cost of time' (COT) and 'cost of poor quality' (COPQ) is to increase the investment in prevention.
I called this investment the 'cost of speed and quality' (COSQ).The implementation of a Six Sigma initiative is an investment in prevention for the purpose of reducing COPQ. On its own, an organisation still experiences excessive costs associated with time that will probably not be specifically addressed, however variation in product quality will have been reduced.
On the other hand, the implementation of a Lean initiative is an investment in prevention for the purpose of reducing COT. Once again, on its own an organisation will continue to experience unnecessary costs associated with poor quality, however flow through their processes will be continually improved.
Having said that, I recognise that there are secondary benefits of each initiative on their own; i.e. Lean can result in improved quality and Six Sigma can result in improved flow.
When the two methods are integrated into an organisation's continual improvement program, three important business goals can be achieved.
1. Maximised Process Capability – The ability of processes to consistently produce goods or services that meet customer expectations is increased and continually improved. The benefit being increased process yield that results in less waste because of defects. With less variation, customer satisfaction is enhanced.
2. Organisation Speed - The organisation can become faster and more responsive to the changing needs of customers.
3. Minimised Operating Costs – The hidden factory associated with rework and waste can be virtually eliminated. As flow through the production processes is improved, less money is tied up in inventory, space, time and materials.
As results have shown time and time again, these two methods complement one another.