Lean Six Sigma for Service - Essay Example

Lean Six Sigma Lean Six Sigma: An Introduction "Variation is Evil", said Jack Welch the CEO of General Electric in 1998. His ment was a resultof the lack of consistency in order to delivery times for General Electric. His statement essentially meant that time is nearly as important a metric as is quality. According to the principle of Lean Six Sigma, "the activities that cause the customers' critical-to-quality issues and create the longest time delays in any process offer the greatest opportunity for improvement in cost, quality, capital and lead time." (George, 2002) It is the synergy of Lean and Six Sigma with a goal of reducing manufacturing overhead and quality cost by 20% and inventory by 50% in less than 2 years (George, 2002). Although Lean manufacturing and Six Sigma have been practiced for several decades now, Lean Six Sigma itself is a relatively new initiative being followed by companies worldwide. Whereas Six Sigma is focused on reducing variation and improving process yield using statistical tools, Lean is primarily concerned with eliminating waste by following a defined approach to implement various Lean principles. Lean brings action and intuition to the table; Six Sigma uses statistical tools to uncover root causes and provide metrics; Lean Six Sigma is a combination of both and provides the tools to create ongoing business improvement (Smith, 2003). The synergy of Lean and Six Sigma bring in the advantages of both, achieving results consistently superior than what either system could achieve alone. Six Sigma Vs Lean Six Sigma Lean Six Sigma is different from Six Sigma in the sense that it marries the principles of both Lean manufacturing and Six Sigma concepts to produce a much enhanced system. Six Sigma is a process for eliminating defects and variation through the development of a disciplined data driven approach. However Six Sigma alone cannot dramatically improve process speed or reduce invested capital. Although it can bring a process under statistical control, variations will still exist in terms of delivery times, assembly times, routings, etc. Incorporating Lean principles within the Six Sigma framework enhances speed and quality by improving and streamlining the processes and creating excellent customer service. According to Badurdeen (2008), "to get to Lean Six Sigma an organization should first incorporate Six Sigma into their process improvement and then engage in Lean Six Sigma to speed up the processes after the systems have been broken down into smaller components". Selecting the Right Team As such, rightsizing Lean Six Sigma teams should be the first priority for businesses that want to ensure the success of 'Lean' projects and realize the full potential of such projects. Some of the factors that characterize an efficient Lean Six Sigma Team are: High level of efficient communications amongst implementers, management officials and other entities associated with the 'Lean' project. The team members are accountable since decisions and actions taken by the team can be traced back to individual members. Team works with a reduced cost of operations because the lesser the numbers, the less will be the amount of resources used for performing the same tasks and duties The team constantly strives in increasing efficiency in solving complex problems and issues and employees know the exact person to contact if they encounter problems during the implementation phase The team shows less chance of conflicts and ego issues. One way we evaluate the success of a Lean Six Sigma initiative or strategy is to measure the involvement in LeanSix Sigma by way of numbers of people involved, i.e., numbers trained, practicing, certified, etc. DMAIC DMAIC is a standard improvement model; it is a structured, disciplined and rigorous approach to process improvement consisting of 5 logically interlinked phases. The 5 phases are discussed in the following section (George, 2002). Define: This is the first step which aims at clarifying the goals and value of a project. A set of tools such as Project ID Tools, NPV Analysis, PIP and SSPI toolkit can be used at this phase to assess the value opportunity in a given value chain. All the current as-is information is gathered in this phase and the team charter, sponsors and team resources are identified and defined. According to the Army Business Transformation Center (ABTC, 2008), the outcome of the define phase must be: A clear statement of the intended improvement (Project Charter) A high-level map of the Processes (SIPOC) A list of what is important to the customer (CTQ) An understanding of the project's link to corporate strategy and its contribution to ROIC Measure: This is the second phase of the cycle where the team members gather the relevant data about the project or process at hand. Data Collection tools like process mapping, brainstorming, value analysis, Pareto Charts, Fishbone Diagrams, Run Charts and Control Charts are used at this phase to measure the data relevant to the project. According to ABTC (2008), one of the goals of the measure phase is to pin-point the location or source of a problem as precisely as possible by building a factual understanding of existing process conditions. An important aspect of measurement is to establish a baseline capability level. Analyze: In this phase the team examines the data it collected in the previous phase to identify and characterize the nature and extent of defects. Tools such as box-plots, marginal-plots, interaction-plots, ANOVA, FMEA and opportunity maps can be used at this phase to pinpoint time traps. These tools at this phase help define sources of variation in process and time bottlenecks. According to ABTC (2008), in this phase the teams develop theories of root causes, confirm the theories with data, and finally identify the root cause(s) of the problem. The verified cause(s) will then form the basis for solutions in the next phase. Improve: This phase aims at finding improvements based on the analysis carried out in the previous phase. Powerful tools such as pull systems, process flows, TPM, Gantt charts, PERT/CPM, Hypothesis Testing and Tree Diagrams can be used at this phase to eliminate defects in both process velocity and quality. This is the phase where ideas are generated and experiments conducted. Based on the new findings action plans are developed and implemented. According to ABTC (2008), the outcome of this phase must be: Reduce lead time, resulting in improved delivery Improve documentation of setup processes, leading to improved processes Decreased inventory and costs, while increasing capacity Control: Once the project has achieved the required quality level, this phase is initiated to lock on the obtained benefits. This phase aims at controlling the standardized process, so that variation in speed and quality can be brought down to a bare minimum. Tolls such as check sheets, run charts, histograms, scatter diagrams and interactive reviews can be used in this phase to instantly detect if all processes are following the level of standardization set and correct the defects if any. Activities carried out in this level are aimed at making it impossible for the process to create any defects. According to ABTC (2008), activities in the Control phase are designed to insure that the problem does not reoccur and that the new processes can be further improved over time. The 4 Keys to Lean Six Sigma To successfully implement Lean Six Sigma, four key elements must be addressed. The 4 key elements are discussed in the following section (George, 2003). Delight your Customers with Speed and Quality: A survey conducted by an agency found employees who had participated in more than six events are 20% more favorable toward the company than those who had not participated (International Survey Research, 2000). Workers feel proud of making better products at the same time they improve their working conditions. According to George (2003), "developing a focus on customers means a lot more than just conducting surveys every now and then. It means, developing awareness that customer needs should shape most of the work we do everyday". It is a conscious effort that companies must take up to check what the company is doing against what their customers want them to do. Improve your Processes: Speed, quality and low costs are interlinked. Anything that is unacceptable to the customer must be eliminated. Efforts must be channelized to understand how work flows through the processes. Work Together for Maximum Gain: In a comprehensive Lean Six Sigma infrastructure, ideas must be shared among various channels within and across teams. Members must share knowledge and work together to achieve maximum gains. In most cases, a problem, one employee runs into would have already been encountered by another employee on a different project. Therefore working coherently minimizes re-invention of the wheel and saves time. Base Decisions on Data and Facts: If one looks at a company's history the enormous number of bad decisions made because of bad data becomes evident. Today, organizations that use their resources most effectively insist on using data as often as they can. According to George, the 4 types of data that must be measured are: Customer Satisfaction: This is essentially data gathered through surveys and interviews about what customers think about a product or service. Financial Outcomes: This is data about how and what impacts the revenue, expenses and costs. Speed/Lead Time: This is data on how fast or slow the process is. If measured at the end of the process, speed is a result measure, if measured at each step, it becomes a process measure. Quality/Defects: This data deals with how many errors have been made, whether the product or service has flaws that affect the customer and so on. From the above discussion we can extrapolate the 5 themes of Lean Six Sigma: 1) Customers are the most important business partners in the value chain of a company, 2) Speed, quality and low costs are interlinked, 3) it is important to eliminate variation and defects, and focus on process flow, if you want to deliver quality, speed and low cost, 4) Data is critical to making sound business decisions and 5) people have to work in synergy to make the kinds of improvements that the customer will notice. Lean Manufacturing applied to Service Industry Service Operations now comprise of more than 80% of the GDP in United States and rapidly growing around the world (George 2003[2]). Service in this context comprises of both service organization and service infrastructure. According to George, Lean Six Sigma for Services Industry is a business improvement methodology that maximizes shareholder value by achieving the fastest rate of improvement in customer satisfaction, cost, quality, process speed and invested capital. The earliest foundations of Lean Six sigma for service organizations arose, not surprisingly, from the service departments of manufacturing organizations such as GE, Caterpillar and Lockheed Martin. Transforming an organization according to the lean Six Sigma for service model is a process of evaluation, definition, implementation and measurement. The biggest challenge in applying Lean Six Sigma to Service is the transition from manufacturing to service. It is important to recognize waste activities in service industry too, which generally gets muddled under the 'everyday-processes" category. Service processes are generally slow processes, which are also expensive. They are slow because there is far too much work in Work in Progress (WIP) status. 80% of the delay is caused by 20% of the activities. Application of Lean Six Sigma to Service Industry is all about recognizing this and consequently improving the quality and speed by controlling delays and waste. Lean Six Sigma for business is all about getting results rapidly. This leaves the customers delighted, and they would be initiated to do more business thereby increasing stakeholder value. It aims at driving results that can be tracked to the bottom line in support of strategic objectives. Integration of Six Sigma and Lean Manufacturing Developing an integrated improvement program that incorporates both Lean and Six Sigma tools requires more than including a few Lean principles in a Six Sigma curriculum or training Lean Experts as Black Belts (Bertels, 2008). An efficient integration of both requires a careful consideration of the differences and effectively utilization. Lean projects are very tangible, visible, and can oftentimes be completed within a few days. An integrated approach should emphasize Lean projects during the initial phase of the deployment to increase momentum. Lean emphasizes broad principles coupled with practical recommendations to achieve improvements. However, Lean principles are oftentimes inadequate to solve some of the more complicated problems that require advanced analysis. Therefore, Six Sigma needs to be introduced during the first year of the deployment to ensure that the improvement roadmap includes a generic problem-solving approach. An integrated improvement program needs to be fueled by a vision of the future state and by a pipeline of specific projects that will help close the gap between current and future state. Whereas the Six Sigma process and tools can be applied to virtually every process and industry, the Lean approach is much more specific and the content needs to be adjusted to industry needs. Effective training must be incorporated, by taking into consideration that both need spate workshops. References George. Michael (2002), "Lean Six Sigma: Combining Six Sigma Quality with Lean Production Speed", McGraw-Hill, ISBN-10:0071385215 Smith. Bonnie (2003), "Lean and Six Sigma-A One-Two Punch", Quality Progress Press, April 2003. Badurdeen. Aza (2008), "Six Sigma Vs Lean Six Sigma", Web Article, Found at: http://www.learnleanblog.com/2008/09/six-sigma-vs-lean-six-sigma.html ABTC (2008), "Lean Six Sigma", Web Article, Found at: http://www.army.mil/ArmyBTKC/focus/cpi/tools3.htm George. Michael (2003), "What is Lean Six Sigma", McGraw-Hill, ISBN-10: 007142668X International Survey Research (2000), "Link to employee Satisfaction", ISR Chicago, Found at: http://www.tbmcg.com/acrobat/press_public/QP_-_Lean_and_Six_Sigma_-_One_Two_Punch.pdf George. Michael (2003)[2], "Lean Six Sigma for Service : How to Use Lean Speed and Six Sigma Quality to Improve Services and Transactions", McGraw-Hill, ISBN-10: 0071418210 Bertels. Thomas (2008), "Integrating Lean and Six Sigma", Web Article, Found at: http://europe.isixsigma.com/library/content/c030721a.asp Read More