What is Lean Six Sigma?
Lean and Six Sigma are complementary approaches to reducing waste and variability and improving quality. Together, they form a powerful methodology that can be applied to any activity (production of goods or delivery of services) in any industry.
Lean is not an acronym – the concept is to make an organization “lean” (with less fat or “waste”), thus reducing cycle times and costs to improve efficiency. Six Sigma is focused on effectiveness through quality control (accuracy, defects, less variation).
Following are the key Lean Six Sigma principles that, when applied in an organization, will virtually guarantee an improvement in cost, quality, or turnaround time.
- Eliminate waste – learn to see it and then eliminate it.
- Define value – in your customer’s eyes.
- Create value streams that consist of the actions needed to produce the desired product or service.
- Establish the flow for the value-creating steps – not as easy as it sounds and actually feels counter-intuitive (e.g., humans instinctively like to batch things).
- Pull flow – let the customer (or downstream process) pull the product/service, when needed.
- Continually improve – it’s not so crazy to strive for perfection.
- As people learn to specify value, identify the value stream, make the value-creating steps flow continuously, and let customers pull value, a shift in thinking will occur. Members within a Lean culture organization will naturally start to see and apply Lean principles.
Not Necessarily Intuitive
To Batch or not to Batch… One of the things I learned in my Lean Six Sigma training is that our human tendency to “batch” things may not be the best way of doing things. Batching can disrupt the flow of a process, create bottlenecks, and cause a delay in producing final output.
To determine the optimal flow for a process, several variables need to be examined and adjusted such as Lead Time, Work in Progress (WIP), and Capacity. Principles, such as Little’s Law can also be applied to deliver value to the client faster by optimizing the operation’s density. For example, imagine a batch process with a certain number of workers producing the product or service, with three customers awaiting the output. In a classic batch and queue model, all three customers will receive their product or service after 12 hours (the lead time). However, we could reduce the lead time by having the workers all work on one piece at a time (not batching) and the end result could be Customer A receives their product or service first (maybe after four hours), then Customer B (after eight hours), and finally Customer C (after 12 hours).
One of the neatest things I’ve learned is how to measure the efficiency of a process – called the Process Cycle Efficiency (PCE). PCE is simply a calculation of overall value-add time over the lead time in a process. Lead time is the total time, from start to finish, to complete final desired output of a process.
A world class benchmark standard for PCE is 35%, which means that 35% of activities in a process are true value-add. The reality in most organizations is far lower (in my experience, the PCEs for different clients ranged from 1% to 11%).
There is real technique to obtaining a PCE. The accuracy of the PCE is dependent on uncovering the true value-add activities versus the waste. Here is a definition of Value-Added (VA), Process Value-Added (PVA), and Non-Value-Added (NVA) activities:
- True Value-Added
- The few activities required to produce the client’s desired results.
- What the customer is willing to pay for.
- Process Value-Added (“necessary” waste)
- Activities required to support existing processes.
- Must be continuously reduced.
- Waste: Non-Value-Added
- Activities that add no value whatsoever.
- Must be continuously eliminated.
Learning to “See”
When I did my first official Gemba walk – Gemba is a Japanese term roughly meaning “the real place” – I hadn’t been trained in specifically what to look for. So I took copious notes and learned about the process and the workers’ frustrations. There is nothing more telling than seeing the process in action.
Now that I’ve learned to recognize value-add activities versus those that are done to sustain a process and those that are pure waste, I know precisely what to look for and which questions to ask. Going to Gemba, along with conducting “Voice of Employee” and “Voice of Customer” interviews, are my essential starting points for the Data Collection phase of all Lean Six Sigma projects.
Learning to see and then guiding organizations through improvement projects and, ultimately, a continuous improvement culture, requires commitment, experience, and patience. If you’re an analytic who loves process and working with people, I’d highly recommend the Lean Sig Sigma methodology.
But warning, process improvement becomes habit-forming and your tolerance for inefficient and ineffective processes will be reduced. Just remember … Rome wasn’t built in a day … but it may have a started with a great “Kaizen” event :-) (more on Kaizens in my next blog).