Mike George, Dave Rowlands, Bill Kastle - What is Lean Six Sigma?

Summary

This book is an introduction to Lean Six Sigma, a method that many international companies use to improve their profitability and quality.

Part 1: The Basis of Lean Six Sigma

Chapter 1: The Four Principles of Lean Six Sigma

1. The objective is to satisfy customers: improve speed and quality.
2. To achieve this objective, one has to improve the process. This means that you have to look for the causes of the errors. An error is anything that is unacceptable for the customer. This way you are forced to examine the underlying flow in the proces.
3. The solution is found when collaborating with employees working in different parts of the process.
4. All decisions are based on pure facts and data.

Chapter 2: Principle 1: Satisfy Your Customers with Speed and Quality

• A Lean Six Sigma project always starts with analyzing how customers compare your products with the products of your competition. Note that the 'customer' can be an external customer as well as an internal customer - but you have to look further than just your manager or boss! Your biggest challenge is developing the awareness that every decision about a product or service must begin with the wishes of the customers.
• The Voice of the Customer (VOC) refers to the opinions and needs that the customer uses in the decision over products and services.
• The objective of Lean Six Sigma is to eliminate defects. A defect is anything that does not satisfy the customer. You have to define and measure these defects, so that you know what the customer wants compared to what he or she is now getting. Next you need to find a way to satisfy the needs of the customer, and you need to check for consistency.
• The relationship between quality, speed and low costs:
  1. With high quality (a low number defects) you attain a high speed.
  2. You have to create speed of process (in other words: eliminate delays) if you want to have the highest quality.
  3. The only way to offer the lowest price consistently - and still make a profit! - is to improve the quality and speed.
• The Critical to Quality components are those parts of a product or service that the customer values most.
• Work with the customer in mind: The needs of the customers determines what the work will be and how it will be done.

Chapter 3: Principle 2: Improve Your Processes

• Most of the problems are caused by the system used, and not by an individual. Therefore the objective is to find the fault in the system, and fix it.
• Lean Six Sigma focusses on:
  1. Identifying the steps in the process.
  2. Analyzing the work flows between humans or work spaces.
  3. Equip people with the knowledge and methods to improve their work constantly.
• Most process improvement methods have one of these two goals:
  1. Eliminating variation.
  2. Improving processflow and speed.
• The Greek word sigma is used in statistics as a symbol for the amount of variation observed in a process, a collection of data or any other measurable thing.
• A customer desires a certain goal for the product. However, the customer is likely to be satisfied with a slightly different product. These acceptable measures are often called specifications. Then variation in the production process (which is measure by sigma) affects your ability to satisfy the customer.
• In order to realize a result with little variation, everything that leads to results must also function properly.
• Track the physical route of the work flow to improve the processflow and speed. Eliminate those steps that are not really necessairy. Put critical work places close to each other to reduce transit time and work distance travelled.
• Eliminate waste within a process. Determine which costs really lead to the end result.

Chapter 4: Principle 3: Work Together for Maximal Revenue

• Employees need training for the following specific competencies, so they can bring about an effective coalition:
  1. Good listening skills to really understand what people exactly mean.
  2. Use brainstorming sessions with the team and apply techniques to have a discussion.
  3. Organize ideas. Select the key items from the list and assign priorities.
  4. Take decisions. To facilitate this, ask yourself:
     • How should a decision ideally be made?
     • What groups and employees must be involved to make the decision?
     • What is their role?
     • How do they both bring knowledge and have their voices heard?
     • What criteria are to be developed to come to a decision between several alternatives?
• Seven tips for well functioning teams:
  1. Set objectives.
  2. Assign responsibilities.
  3. Find balance between conflict and openness.
  4. Take the way decisions are made into consideration.
  5. Assure yourself from effective meetings.
  6. Facilitate a perpetual learning process.
  7. Work together with other groups.

Chapter 5: Principle 4: Base Your Decision on Data and Facts

• In a Lean Six Sigma project we use data to learn and to monitor process performance.
• Often there are a few obstacles to collecting data:
  1. Lack of available data.
  2. Little training in the collection and analysis of data.
  3. Data is commonly used to reward or penalize employees; using data to make better decision is not so common.
• In general we collect two kinds of data:
  1. Result measurements show the result of a process or procedure.
  2. Process measurements show what is needed to bring about the result.
• Four types of data used by many teams:
  1. Customer satisfaction (result measure)
  2. Financial results (result measure)
  3. Speed / lead time (result or process measure)
  4. Quality / defects (result or process measure)

Chapter 6: The Five Laws of Lean Six Sigma

• Important terms in Lean Six Sigma you should know are:
  • WIP (Work-in-Process) is the amount of work that's officialy still in the process, but not finished.
  • Completion Rate is the amount of work that is finished within a certain amount of time.
  • Lead Time and Process Speed is defined by Little's Law:
    Lead Time = Amount of Work-in-Progress / Average Completion Rate
  • Delays / Waiting Times.
  • Value adding and non-value adding work (waste): Every process should add value in the eyes of the customer.
  • Complexity is the number of different things that you have to deal with in a process.
  • Process Cycle Efficiency (PCE) gives you an estimate for the amount of cost reduction possible for the process:
    Process Cycle Efficiency = Value-add Time / Total Lead Time
    where value-add time is the time with added value of work that the customer sees as necessary to deliver his or her products or services, and total lead time how long the process takes from beginning to end.
• The five laws of Lean Six Sigma you should know are:
  1. Law 1: the Law of the Market says that the needs of the customer defines the quality and therefore has the highest priority when you want to make improvements.
  2. Law 2: the Law of Flexibility says that the speed of every process is directly related with the flexibility of that process.
  3. Law 3: the Law of Concentration says that 20% of the activities in every process cause 80% of the delays and problems.
  4. Law 4: the Law of Speed (Little's Law) says the speed of every process is directly inverted related with the amount of Work-in-Process.
  5. Law 5: the Law of the Complexity and Costs says the complexity of your product or service usually leads to more costs and more WIP, than bad quality (low Sigma) and a low speed (no Lean) lead to problems in the process.

Part 2: Implementation of Lean Six Sigma

Chapter 7: Start with Lean Six Sigma

• The combination of specialized employees with Belt-functions, plus the other employees that work with Lean Six Sigma, is often called the Lean Six Sigma infrastructure.
• The organisation of personnel with Lean Six Sigma and the different roles:
  1. Champions are top positioned managers who are responsible for the management and controling of the efforts toward Lean Six Sigma.
  2. Black Belts are employees that have followed at least four to five weeks of leadership training, and know how to solve problems.
  3. Master Black Belts are Black Belts with a more advanced training in the more complex techniques in solving problems.
  4. CEO & Executives determine whether or not to adopt Lean Six Sigma.
  5. Business unit managers work closely together with a Champion and with relation to the goals of the business unit, they together determine criterias for the selection of projects.
  6. Line managers / process owners is the 'owner' of the process that is being improved with Lean Six Sigma. If the projects are launched on their own departments, then the line managers function also as project sponsors.
  7. Green Belts / Yellow Belts / White Belts / Employees are all the people in the organisation who recieved a short training at a certain level in Lean Sig Sigma.
• Examples of Lean Six Sigma training programs are:
  1. An awereness training (White Belt Training)
  2. An introduction course (Yellow or Green Belt Training)
  3. A competencies training (Black Belt Training)
  4. A specialisation course (Master Black Belt or deepening course)
• Two special methods to support the Lean Six Sigma improvement process and connect it with business priorities:
  1. Design a system to select the best projects. Follow the process of deriving a hierarchical chart from company wide goals (burning platform) to value creation or destruction at business units, further down to value adding streams and finally arriving at a group of projects.
  2. Set up tollgates for periodiek evaluation and review of projects. In a tollgate review a manager checks a project between every phase of fixed order that the activities in a project go through; Define-Measure-Analyze-Implement-Control (DMAIC).
• Take into account the following when working out Lean Six Sigma for your company:
  • Much is done in the first 100 days.
  • Lean Six Sigma starts at the top of the company, with management training and planning.
  • An official announcement follows for the rest of the company.
  • Both the project selection as the training occurs in wave movements.

Chapter 8: Work on Persistent Improvements

• The first step is to get a roadmap to the project: the Champion helps the managers to create a project charter defining what the team has to accomplish.
• The Define-Measure-Analyse-Improve-Control (DMAIC) process is a proven technique based on data for solving problems. With it:
  1. You take specific actions in a specific order.
  2. You collect data in every phase of the project.
  3. You are sure that the solutions eliminate the cause of the problem.
• The objective of the first step 'Define' is that all the members of the team and its sponsors agree with each other what the project involves.
  • There can no longer be misconceptions about the how and why of the project.
  • Get it while it is hot.
  • Agree with the management to a realistic size for the project.
  • Make firm agreements about how to measure the success.
• The SIPOC-diagram is an example of a Define tool. This is an instrument to draw a general process description of the process. The letters stand for Suppliers-Input-Process-Output-Customers.
• The Value Stream Map is another example of a Define tool. This scheme not only shows the process flows, but also shows the actual process data.
• The objective of the second step 'Measure' is to combine data, knowledge and experience in order to really improve a process. This is important because of the following reasons:
  • You must be able to rely on your data.
  • You make decision based on facts and the reality.
  • You record what is really happening in a process.
  • You understand what has to be improved.
• An example of a Measure tool is to observe the process.
• Another example of a Measure tool is to create a Time Value Map showing how the time is utilized within the process.
• Yet another example of a Measure tool is to draw a Pareto-scheme with the intention to combine improvement efforts.
• Finally, the Time Series Plot is also a great example of a Measure tool.
• The objective of the third step 'Analyse' is to find the real causes for the delays, the waste and the bad quality from the collected data. Your look for (recurring) patterns and sticking points.
• The cause-and-effect diagram (also called the fish-bone diagram) is the first example of an analysis tool.
• The scatter diagram is another easy tool for finding the relationship between two measures or indicators. It is a powerful tool because it visualizes what possible factors are related to the core of the problem.
• The sole objective in the step 'Improve' is to eliminate the observed defects, waste and additional costs that are related to the customer and that are identified in the step Define.
• A PICK-scheme, which stands for Possible, Implement, Challenge and Kill scheme, is a great tool to compare possible solutions in a quadrant. The solutions that are easy to implement and lead to big results are the ones you should be after.
• Another great tool to improve is the in-four-steps-to-a-fast-setup method. This Lean instrument to reduce set-up problems is based on eliminating everything that hinders or interrupts the productivity, such as switching between sub-processes and changing gears all the time.
• The fifth and final step 'Control' is essential to assure yourself from permanent improvement. This step:
  • Prevents falling back.
  • Allows you to respond quicker to future problems.
  • Lets you share the lessons with others in your organisation.
• An example of a control tool to detect outlyers and reduced variation is a control chart. The control charts shows the movement of a times series around a mean and its upper and lower confidence intervals in chronological order.

Chapter 9: Real World Experiences with Lean Six Sigma

• Experts tell you how things should work. Managers tell you how things could work. Personnel tells you how things work in reality.
• It is important to have the support of a Champion in your Lean Six Sigma project. The Champion can solve some difficult problems and remove barriers that lower Belts cannot.
• Similarities and differences in your projects:
  1. The chosen problem is critical for the company.
  2. Belts work with a small core team and experts are consulted when needed.
  3. Simple tools are sufficient if the project has never been looked at before.
  4. Big problems are often taken care of by experienced Belts.
  5. Most companies put pressure on making results fast.
  6. In many organizations all team members get a degree of training.

Chapter 10: Six Things Managers Have To Do

• The are six steps managers have to follow in order to facilitate the employees in Lean Six Sigma methods:
  1. You know how to select the right projects.
     • The projects are directly related to the strategies and the priorities of the company.
     • The projects are realistic in size.
     • Projects have identifyable and measurable results.
     • Have plenty of projects to choose the most promising from.
  2. You find the right people for the project.
     Take into account the proper combination of skills, knowledge and personality.
  3. You follow the procedure.
     • Always ask your employees for data.
     • Work together with a Black Belt to make waste visible.
     • Participate fully in the DMAIC-reviews for your teams.
  4. You define tasks and responsibilities.
     A division of people based on RACI may help you out, where the Black Belt ideally has a role a facilitating employee. The letters stand for:
     • Responsibility
     • Accountability
     • Consultation
     • Inform
  5. You communicate, communicate, communicate.
     • Communication with the project leaders.
     • Communication with members of the project teams.
     • Communication with and by all employees internally (and with the rest of the organization).
  6. You support education and training.
     • You teach yourself.
     • You support education and training of your employees.
• Focus + Setting Priorities = Fast Results

Posted on 7th May 2008 by Quintus Hegie

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