Success using lean Six Sigma in terms of operations and business processes
©2015
Textbook
28 Pages
Summary
Lately there's been a great deal of talk around Lean execution. But, some people speak of Lean, some speak of Six Sigma and some use a combination of the two. But, what's the difference? How do you know what's right for your organization? As the market place tightens and companies are fighting for every dollar of revenue, they need to adopt innovative methods to create more efficient processes that will give them a competitive edge of their closest rivals; this is the basis for Lean Six Sigma. Unlike traditional Six Sigma, Lean Six Sigma uses some of the methodology from lean manufacturing along with the Six Sigma approach. Many organizations see Lean Six Sigma as the evolution of the Six Sigma methodology rather than a modification. Lean Six Sigma takes the fundamentals of Six Sigma and incorporates the cost reduction principles of Lean Manufacturing.
Excerpt
Table Of Contents
LIST OF FIGURES
Figure 1 Concept of six sigma ... 2
Fig 2.1 Causes of variation ... 6
Fig 3.1 Operational Efficiency ... 10
Fig 3.2 Combination of Lean and Six Sigma ... 11
Fig 4.1 Lean Value Stream ... 20
1
SECTION 1
1. INTRODUCTION
1.1.
HISTORY OF SIX SIGMA
Six Sigma is a set of tools and techniques/strategies for process improvement originally
developed by Motorola in 1981 Six Sigma became well known after Jack Welch made it a
central focus of his business strategy at General Electric in 1995,and today it is used in
different sectors of industry.
Six Sigma seeks to improve the quality of process outputs by identifying and removing the
causes of defects (errors) and minimizing variability in manufacturing and business processes.
It uses a set of quality management methods, including statistical methods, and creates a
special infrastructure of people within the organization ("Champions", "Black Belts", "Green
Belts", "Yellow Belts", etc.) who are experts in the methods. Each Six Sigma project carried
out within an organization follows a defined sequence of steps and has quantified value
targets, for example; process cycle time reduction, customer satisfaction, reduction in
pollution, cost reduction and/or profit increase
The term Six Sigma originated from terminology associated with manufacturing, specifically
terms associated with statistical modeling of manufacturing processes. The maturity of a
manufacturing process can be described by a sigma rating indicating its yield or the
percentage of defect-free products it creates. A six sigma process is one in which 99.99966%
of the products manufactured are statistically expected to be free of defects (3.4 defects per
million) as shown in fig.1.1, although, this defect level corresponds to only a 4.5 sigma level.
Motorola set a goal of "six sigma" for all of its manufacturing operations, and this goal
became a byword for the management and engineering practices used to achieve it.
Like its predecessors, Six Sigma doctrine asserts that:
Continuous efforts to achieve stable and predictable process results (i.e., reduce process
variation) are of vital importance to business success.
Manufacturing and business processes have characteristics that can be measured,analyzed,
controlled and improved.
Achieving sustained quality improvement requires commitment from the entire organization,
particularly from top-level management.
2
Features that set Six Sigma apart from previous quality improvement initiatives include:
A clear focus on achieving measurable and quantifiable financial returns from any Six Sigma
project.
An increased emphasis on strong and passionate management leadership and support
A special infrastructure of "Champions", "Master Black Belts", "Black Belts", "Green Belts",
etc. to lead and implement the Six Sigma approach.
A clear commitment to making decisions on the basis of verifiable data and statistical
methods, rather than assumptions and guesswork.
Figure 1
Concept of six sigma
The term "Six Sigma" comes from a field of statistics known as process capability studies.
Originally, it referred to the ability of manufacturing processes to produce a very high
proportion of output within specification. Processes that operate with "six sigma quality" over
the short term are assumed to produce long-term defect levels below 3.4 defects per million
opportunities (DPMO). Six Sigma's implicit goal is to improve all processes, but not to the
3.4 DPMO level necessarily. Organizations need to determine an appropriate sigma level for
each of their most important processes and strive to achieve these. As a result of this goal, it
is incumbent on management of the organization to prioritize areas of improvement.
Six Sigma is a registered service mark and trademark of Motorola Inc. As of 2006 Motorola
reported over US$17 billion in savings
from Six Sigma. Other early adopters of Six Sigma
who achieved well-publicized success include Honeywell (previously known as AlliedSignal)
and General Electric, where Jack Welch introduced the method. By the late 1990s, about two-
3
thirds of the Fortune 500 organizations had begun Six Sigma initiatives with the aim of
reducing costs and improving quality.
In recent years, some practitioners have combined Six Sigma ideas with lean manufacturing
to create a methodology named Lean Six Sigma. The Lean Six Sigma methodology views
lean manufacturing, which addresses process flow and waste issues, and Six Sigma, with its
focus on variation and design, as complementary disciplines aimed at promoting "business
and operational excellence". Companies such as GE, GENPACT, IBM and Sandia National
Laboratories use Lean Six Sigma to focus transformation efforts not just on efficiency but
also on growth. It serves as a foundation for innovation throughout the organization, from
manufacturing and software development to sales and service delivery functions.
The International Organization for Standards (ISO) has published ISO 13053:2011 defining
the six sigma process.
1.2
BASICS OF LEAN SIX SIGMA
The Six Sigma approach looks at getting organizations to perform their processes in a more
efficient manner to reduce defects. The next step for organizations is not only to improve
processes but to make them more cost efficient or to adopt more efficient new processes; is
the basis for Lean Six Sigma. As the marketplace tightens and companies are fighting for
every dollar of revenue, they need to adopt innovative methods to create more efficient
processes that will give them a competitive edge of their closest rivals; this is the basis for
Lean Six Sigma.
1.3
SUCCESS USING LEAN SIX SIGMA
Many companies are adopting Lean Six Sigma and having great success not only in
manufacturing but in other industries including service industries. This is due to the fact that
Lean looks at the needs of the customer and making the customer happy not only benefits the
relationship with that customer but the process used to achieve that will help to increase
customer satisfaction for current as well as future customers.
4
1.4 LEARNING
OBJECTIVES
i) Understand DMAIC and Lean methodologies.
ii) What are the differences between Six Sigma and Lean ?
iii) What are the tools used for Six Sigma and Lean ?
iv) Where are Six Sigma and Lean methodologies used ?
5
SECTION 2
APPROACH TO SIX SIGMA QUALITY
2.1.
WHY SIX SIGMA ?
Six Sigma's aim is to eliminate waste and inefficiency, thereby increasing customer
satisfaction by delivering what the customer is expecting.
Six Sigma is a highly disciplined process that helps us focus on developing and delivering
near-perfect products and services.
Six Sigma follows a structured methodology, and has defined roles for the participants.
Six Sigma is a data driven methodology, and requires accurate data collection for the
processes being analyzed.
Six Sigma is about putting results on Financial Statements.
Six Sigma is a business-driven, multi-dimensional structured approach to:
Improving Processes
Lowering Defects
Reducing process variability
Reducing costs
Increasing customer satisfaction
Increased profits
The word Sigma is a statistical term that measures how far a given process deviates from
perfection.
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 and specifically it means a failure rate of 3.4 parts per million or
99.9997% perfect.
6
2.2
KEY CONCEPTS OF SIX SIGMA
At its core, Six Sigma revolves around a few key concepts.
Critical to Quality: Attributes most important to the customer.
Defect: Failing to deliver what the customer wants.
Process Capability: What your process can deliver.
Variation: What the customer sees and feels as shown in fig 2.1
Stable Operations: Ensuring consistent, predictable processes to improve what the customer
sees and feels.
Design for Six Sigma: Designing to meet customer needs and process capability.
Our Customers Feel the Variance, Not the Mean. So Six Sigma focuses first on reducing
process variation and then on improving the process capability.
Fig 2.1 Causes of variation
2.3
MYTHS ABOUT SIX SIGMA
There are several myths and misunderstandings about Six Sigma. Few are given below:
Six Sigma is only concerned with reducing defects.
Six Sigma is a process for production or engineering.
Six Sigma can not be applied to engineering activities.
Six Sigma uses difficult-to-understand statistics.
7
Six Sigma is just training.
2.4
THE BENEFITS OF SIX SIGMA
There are following six major benefits of Six Sigma that attract companies.
Six Sigma:
Generates sustained success.
Sets a performance goal for everyone.
Enhances value to customers.
Accelerates the rate of improvement.
Promotes learning and cross-pollination.
Executes strategic change.
2.5
BASIC STEPS INVOLVED IN THE APPLICATION OF SIX SIGMA
The DMAIC problem solving method that is a roadmap that can be used for any projects or
quality improvements that needs to be made. The term DMAIC stands for the five main steps
in the process; Define, Measure, Analyze, Improve and Control.
Define It is important in Six Sigma to define the problem or project goals. The more
specific the problem is defined the greater the chance of obtaining measurements and then
successfully completing the project or solving the problem. The definition should describe the
issue accurately with numeric representation; for example, "damaged finished goods from the
production line have increased 17 percent in the last three months". The definition of the
problem or project should not be vague such as "quality has fallen". As part of the definition
stage, the scope of the project or issue should be defined as well as the business processes
involved.
Measure When the project or problem has been defined then there needs to be decisions
made on additional measurement that is required to quantify the problem. For example, if the
definition of the problem is "damaged finished goods from the production line have increased
17 percent in the last three months", then additional measurements may be needed to look at
what finished goods are damaged, when are they damaged, the level of damage, etc
