12 Essential Lean Six Sigma concepts and tools

Lean six sigma is the combination of two different concepts, combined together to form a powerful tool to improve business processes



Adam Muspratt
09/16/2018

Introduction to Lean Six Sigma

Lean Six Sigma has its origins in the electronics company Motorola. It was coined in 1986 as a methodology to reduce defects.

Lean Six Sigma is a powerful tool. Over the last few decades, companies all over the world have saved countless millions by incorporating Lean and Six Sigma strategies into their processes.

Lean Six Sigma has a long record of being applied successfully across many industries. Information technology, telecommunications, sales, healthcare, finance, and even the military have used Lean Six Sigma to transform processes with business process management ideas – often proving the key the key to staying ahead in today’s busy marketplace.

Lean six sigma is the combination of two different concepts, combined together to form a powerful tool to improve business processes. Lean and Six Sigma. 

What is in this article?

Part I: Introduction to Lean Six Sigma

Part II:  8 Examples of Waste

Part III: Executive summary of 12 essential Lean Six Sigma strategies

What is lean?

Lean refers to reducing waste in your business. Waste is anything that doesn’t benefit your bottom line or add value to your organization.

Do you regularly wait for product shipments? That’s waste. Do processes go days without being actioned? That’s waste. Do products sit in a room until they are needed? That’s waste. The purpose of lean management is to synchronize all of your business processes so there is no downtime and your operation runs as smoothly as possible.

SEE ALSO: A guide to robotic process automation (RPA)

A lean approach will help your company eliminate activities that are devoid of value. A major benefit of lean is that you will deliver the same value to your customers but with less effort.

As such, Lean doesn’t mean making employees work harder and faster, or at the very worst, make them redundant. A lean strategy will simply give your employees more time to spend on the value-adding processes that will add to your business's bottom line.

Lean is about working effectively, not quickly.

What is Six Sigma

If lean is about streamlining processes, Six Sigma Is about improving the quality of what your business delivers, ensuring that variation is kept to a minimum.

Six Sigma refers to a method of statistical quality control and is effectively a data-driven problem-solving methodology. The original definition is 3.4  defects per million output units.

Why such a precise figure and how does this relate to the corporate world?

RELATED: The One Secret to Successful Lean Six Sigma

Six Sigma actually has its origins in the world of manufacturing. It is the mathematical symbol for a standard deviation (sigma).  Six Sigma is the ideal acceptable range of deviation from an ideal mathematical measurement.

Each level of Sigma allows a certain number of defects, with the number of defects reducing per level of sigma.

An occurrence that is six deviations from the mean should be incredibly rare, which works out to 3.4 deviations per million. That means 99.99966% of all processes should be completed without any inaccuracies or defects.

Easier said than done, I hear you say?

Many companies take on Six Sigma because it sets a goal that is in the realms of perfection – but realistic enough giving employees across an organization the desire and motivation to meet it.

SEE ALSO: The PEX guide to business process management

Imagine if a busy train station had one million departures and arrivals every year. At Sigma level 4 there would be 5000 mistakes. Is that good enough?

At Sigma level 6 there would only be two mistakes.

Conversely, take a mobile phone which has thousands of components that must be assembled correctly to ensure the device works. A deviation worse than 99.9% would likely result in a device that doesn't work 

At the end of the day, the goal of Lean and Six Sigma is to eliminate waste, optimize processes, foster business process management and improve the quality of your product or service.

To summarise, Lean aims to clean up the activities between the value-adding processes and Six Sigma is about improving the outcome of the processes and the work being done.

RELATED: The value of process in RPA

Lean Six Sigma is a must for businesses of every size as it makes quality a quantifiable statistic. It enables businesses to observe and study processes in a scientific way with the end goal of eliminating waste.

8 Examples of waste

An easy way to remember the 8 examples of waste is DOWNTIME. Check out the picture below.

Waste is applicable to every industry and sector, from defence to hospitality. Here are examples of different kinds of waste and how they can affect your business.

8 Examples of waste
An easy way to remember the 8 examples of waste is DOWNTIME. Check out the picture below.

Waste is applicable to every industry and sector, from defence to hospitality. Here are examples of different kinds of waste and how they can affect your business.

1. Defects

Defects are one of the most visible examples of waste and can be easy to grasp in any industry. Defects refer to any product or service that doesn’t meet commercial specifications and must be discarded, or fixed via additional resources.

SEE ALSO: Follow Drucker’s Lead: Ask the Right Questions

Defects can cause waste in numerous ways in addition to the capital used to scrap or rebuild a product or service. Defects will affect delivery times, logistics, and ultimately customer satisfaction. Your business should not spend an extra second on the rescheduling, paperwork and critical thinking that goes into fixing defects.

2. Overproduction
Overproduction occurs when you produce more product that is required by your customers. Companies tend to make the mistake of producing a product in large batches. This may seem like a good idea on paper, but market forces change and consumer needs change over time. It’s akin to putting all of your eggs in one basket and hoping for the best.

Overproduction leads to excess inventory, which then leads to additional expenditure on storage space and preservation. This does not add value.

3. Waiting
Nobody likes waiting. We’ve all experienced waiting to be served in a grocery store or having to sit on hold waiting for a contact centre. In a nutshell, waiting is the time it takes to begin another process after finishing one. The time spent waiting between processes and transactions will result in dissatisfied customers.

4. Non-utilized talent
Under-utilizing employees’ talents, skills and knowledge can have a detrimental effect on an organization. There are innumerous benefits to recognizing the value of skills and ideas that improve a process, especially from employees on the frontline that see process waste on a daily basis. A few examples include; a lack of teamwork, limited training, poor communication, duplicated administrative tasks and much more. Employee engagement, not micromanagement, is key to finding out how you can fix waste in your company.

5. Transportation
Transportation waste involves the unnecessary movement of product or information that doesn’t add value. This comes in the form of moving a process from one individual to another, within the same department, and to another department. All of this adds unnecessary time onto a process. To eliminate this kind of waste, you can combine tasks and roles, and in extreme cases, reorganize workspaces to reduce physical movement.

6. Inventory
Inventory waste occurs when a product or material is waiting to be sold. This is often the result of:
• Poor monitoring systems
• Misunderstood customer needs
• Unreliable supplier

The difference between inventory waste and overproduction waste is that inventory waste is the value that is being held at a cost. Unlike overproduction, which assumed supplies exceed demand, inventory is material or product that has value but is not moving fast enough to meet customer demand.

7. Motion
Motion is any process that takes up time or capital by employees or machines, that fails to add value to the product being sold. The difference between motion and transportation waste is that motion waste is employee-centric and opposed to product-centric.

Common reasons this occurs include:
• Poor process design and controls
• Poor workstation/shop layout
• Shared tools and machines
• Workstation congestion
• Isolated and siloed operations
• Lack of standard

8. Extra processing
Extra processing involves performing work on a product that does not conform to the customers' expectations. This can occur when a company doesn’t have a firm grasp on customer requirements. This should not be confused with “going the extra mile” which does in fact value to a product or service as it can lead to additional commercial interest.

RELATED: 6 business outcomes to identify process related gaps

An example of extra processing can include duplicated or replicated data, overdesigned equipment’s, multiple signatures and more. This often occurs due to the creation of multiple versions of the same task, process more than is required or long-winded poorly designed processes. Examples include:

• Excessive reports
• Multiple signatures
• Re-entering data and duplicated data
• Lack of standards

How to succeed with 12 essential lean six sigma strategies

 

1. Cellular manufacturing

What is it cellular manufacturing?
Cellular manufacturing is a lean manufacturing approach for process improvement. It is defined by two core characteristics. Grouped components and manufacturing cells. In cellular manufacturing, families of parts are created in a cell of machines. A cell is an area of production that is clearly defined and separated from other manufacturing cells – with each cell having ultimate responsibility for the family of parts and components.
Think of cells like mini production facilities within a larger production facility. This is referred to as group technology.  

 

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It is an alternative to the traditional production line. A production line refers to one continuous line of workers that add value to the product from receiving the raw material to the finished product.

The major downside of a production line is that a disruption in any part of the line can halt the entire process as each component in the line relies on the components that precede it.  

SEE ALSO: The value of process in RPA

Cellular manufacturing involves the re-arrangement of workstations to facilitate production characterized continuous flow and less downtime.

In the world of manufacturing, all operations and machines that are needed to produce a component a placed in close proximity. Specifically a ‘U’ shape.  By placing the machine in small manufacturing cells and adopting a ‘U’ shape, workers spend less time moving to and fro, between manufacturing lots, and more time adding value to the component.

By having equipment and workstations arranged in a sequence that supports logic, you can achieve one-piece flow. Also, know as single-piece flow and continuous flow, one-piece flow is when your products move through the manufacturing process at a rate determined by the needs of your customers.

Tips for cellular management  

  • Group your components together
  • Organize your manufacturing cells into groups and sets.
  • Envision your final product as the result of a number of modules and groups of components attached together

2. Takt Time

What is takt time?
Takt Time refers to the rate at which a finished product is completed to meet customer demand. It is an essential tool for discerning if goods a flowing from each station to the next in an efficient manner, ensuring that you can meet customer demand.

In German, ‘Takt’ resides in the lexical field of time and rhythm. In that sense, ‘Takt’ is the rhythmic pulse of your company, and like a music conductor, Takt Time is meant to give you the means to measure processes to ensure continuous flow and the optimum utilization of machines and processes. 


How to calculate Takt Time
The mathematical calculation for tact time is as follows:
  

The time available for production should reflect the number of time employees spending working on the product, minus variables such as meetings breaks, and other related activities. Conversely, customer demand is a measure of how many products a customer expects to buy.

Both of these variables should be consistent over the same time frame, such as one day or a week.

SEE ALSO: The four worst reasons to use BPM (and three of the best)

Takt Time isn’t the number of man-hours put into creating a product. It refers to the entire time span to create a product, from start to finish, ensuring that continuous flow is achieved and customer demand is satisfied.

The benefits of Takt Time

Takt Time is effectively your sell rate and is a good measurement of how efficient your work processes are. Ideally, an optimal organization should have the capacity that can easily meet demand without having too much stock in inventory. Utilized effectively, Takt Time can Promote efficiency.  Your company will be able to measure waste and easily discern which areas of production are struggling, on schedule, and otherwise need to be adjusted

An Example of Takt Time

Total Time: 8 Hours X 60 Minutes = 480 Minutes

Breaks: 50 Minutes

Time Available: 430 Minutes

Customer Demand in 8 Hours: 100 units

Takt Time: 430 / 100 = 4.3 Minutes = 258 Seconds

In this example, the customer will need one unit every 258 seconds. However, you might like to produce a single unit in little less than 258 seconds in order to accommodate any variation in process steps, it is vital that before you implement takt, you ensure that your processes are dependable and can deliver good quality and that your machine has a very high uptime.

3. Standardized Work

What is standardized work?
Standardized work is a simple concept. It refers to the process of documenting methods, processes, materials, tools, processing times and more. At its core, it is about ensuring your operations run as smoothly as possible and your process improvement strategy is constantly evolving and being adopted by your employees. Standardized work is very important to reaching your ideal Takt Time.

Benefits of standardized work

  • Best practices are followed
  • Process improvement never ends
  • Reduces waste
  • Improves scaling efforts
  • Makes abnormalities more visible
  • Less time spent on guesswork

Tips for standardizing work
Ensuring that your employees are using the best practices Is one of the best ways to increase efficiency. If you want to promote a working environment characterized by standardized work, you need to ensure that your standardization requirements are the reasonable and have scope for improvement.

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In-fact, if you ignore the wishes of employees who will use these standards every day, you may end up with a less efficient work environment as innovation will be stifled. Standardization is simply eliminating alternative methods that are less efficient. Ultimately, this means standardization is more suited to tasks that are repeatable and cyclical,

So, as always, communication is key.

  • To ensure standards are adhered to you need to establish them. This entails:
  • Finding a process or task that is repeatable.
  • Establishing an ideal Takt Time for completing this process
  • Establishing the work sequence and method that is needed to perform each element of work
  • Communicating clearly how the job can be performed – this is typically achieved through

4. One Piece Flow or Continuous Flow

This concept emphasises reducing the batch size in order to eliminate system constraints. A methodology by which a product or information is produced by moving at a consistent pace from one value-added processing step to the next with no delays in between.

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5. Kanban pull system

What is a Kanban pull system?
With a Kanban pull system, a customer process signals a supplying process to produce a product or information when it is needed.

A pull system refers to JIT (Just in Time) efficiency, where the product meets customer demand, not exceeds it. With a pull system you will have an easier time responding to market forces, but, it is chiefly about making what the customer wants when they want it.

RELATED: Process Excellence for SMEs

On the other hand, Kanban refers to the signals used within a pull system via scheduling combined with travel instructions in the form of simple visual cards and containers.

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This is in contradiction of ‘conventional wisdom’ which states that a company should complete products in large batches. This kind of methodology is called a push system, which is a methodology where the product is completed before the customer is ready to receive it. The major downside of this system is that keeping inventory costs money, as does keeping process busy for the sake of it.

Benefits of a Kanban pull system

  • More capital – less money will be invested in storage space for inventory
  • Increased market dynamism – Whether it is market forces that affect scalability or an aspect of the product itself, it can be damaging to have inventory consisting of un-sellable products.
    Less work in progress (WIP)
  • Improved production environment – Kanban provides visual clarity and can promote objective and rational discussion among team members
  • Easy monitoring – All team members will have a constant feedback of performance via a breakdown of every stage from start to finish.

Tips for using a Kanban pull system
To successfully introduce a Kanban pull system into your work environment you need to take three steps.
Map your workflow – Visualizing your workflow it easily definable segments is the core aspect of Kanban. Whether you use a physical Kanban board or a digital version, they typically have 3 sections representing the state of your product. These are; requested, in progress, and done.

  • Pull in work - When you start to receive work only pull in new work if there is concrete demand for it.

  • Manage bottlenecks and work in progress – The purpose of your Kanban board is to enable a smooth workflow. You have to ensure your processes don’t get clogged by putting limits on the amount of WIP cars up at any given time.

6. Five Whys

What are the five whys? 
The five why’s are a tried and true method of analyzing and solving a problem. With the Five Why’s you can often get to the root cause of an issue – instead of applying a quick fix which will ultimately lead to the same issue rearing its head in the future.

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Asking yourself why is important because of the fastest way of getting to the root cause of a problem, cutting through the symptoms and getting right to the underlying issues.

Tips on using the 5 whys

You can use this method to garner an in-depth understanding of a problem, as opposed to filling in the blanks yourself. This makes it great for troubleshooting, but not necessarily problem-solving.

RELATED: Demand, expectation and robots

Another factor to consider is that you can succumb to tunnel vision and focus on a single cause when there could be multiple. It is always a good idea of repeating the 5 why test, while giving alternative answers, or, asking a co-worker to perform the 5 whys for comparison. For this reason, you can go beyond 5 whys, the key is to stop the exercise when the answers become unactionable or no more useful responses are given.

Example of the 5 whys

  • Problem - We missed a customer delivery deadline
  • Why was the deadline missed? Because we sent out the product one day late
  • Why was the product sent out late? Our customer management system wasn’t updated to reflect the new batch of orders
  • Why wasn’t the database updated? Because it was under maintenance
  • Why wasn’t the update finished in time? There are vacant positions open in the IT department which has increased turnaround times.
  • Why are there vacant positions in IT? Several members of the IT staff are on holiday at the same time 


7. Quick Changeover / SMED

What is quick Changeover / SMED? 

SMED is the Single Minute Exchange of Dies, which is a process of reducing changeover time by categorizing machine elements as internal or external, and then converting the internal elements so they can be changed externally while the machine is still running.

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As internal changes can only be performed while the machine is out of action, the internal setup tasks that can be changed to external the better.

A 3-stage methodology developed by Shigeo Shingo that reduces the time to changeover a machine by externalizing and streamlining steps. Shorter changeover times are used to reduce batch sizes and produce just-in-time. This concept aids in reducing the setup time to improve flexibility and responsiveness to customer changes.

Benefits of SMED

Less downtime and improved responsiveness to customers.

  • WIP and lot size reduction. 
  • Improved machine/resource utilization. 
  • By increasing the number of changeovers, we can carry less inventory of raw materials, supplies and finished goods.
  • Become more efficient and identify opportunities for continuous improvement

8. Mistake Proofing / Poka Yoke

What is mistake proofing?
A methodology that prevents an operator from making an error by incorporating preventive in-built responsiveness within the design of product or production process.

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Mistake proofing can be applied to most processes, but areas where it can prove vital include instances whereas certain process has been identified which results in frequent human error, in situations where the customer can make an error, when a minor error turns into a major error, or when at any point where an error will lead to major disruption.          

Benefits of mistake proofing

  • Promotes accountability and process improvement
  • Relatively low effort and not very time consuming
  • Makes sure that proper circumstances exist before the actual creation, and prevents defects from taking place.
  • Identifies and eliminates causes of disruption

Poka Yoke is a great way of nipping errors in the bud before they become bigger issues.

This process improvement methodology is comprised of three steps.

  • Creating a flowchart of the process.
  • Reviewing each step
  • Determining where there is a potential error finding it at its source.
  • Eliminate the source of error or reduce its effect
  • Replace the error with a process that is error proof

9. Heijunka / Leveling the Workload

The idea that, although customer order patterns may be quite variable, all of our processes should build consistent quantities of work over time (day to day, hour to hour).

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This strategy is adopted by intelligently planning different product mix, and its volumes over a period of times

10. Total Productive Maintenance (TPM)

What is Total Productive Maintenance (TPM)?
A team-based system for improving Overall Equipment Effectiveness (OEE), which includes availability, performance, and quality. This aids in establishing a strategy for creating employee ownership autonomously for maintenance of equipment.

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The goal of the TPM program is to markedly increase production while at the same time increasing employee morale and job satisfaction.

RELATED: The art of RoI

11. Five S

5S is a five-step methodology aimed at creating and maintaining an organized visual workplace for continued process improvement and efficiency.

This is a very practical system aids for analyzing the current organizational space and removing what isn’t necessary.

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  • Sorting out – This step entails going through all of your work tools and materials to determine what is needed and what isn’t. To find the value of each item, ask yourself:

    • What is the purpose of this item?
    • Why is it here?
    • How often is it used?
    • Who uses it?

 Can't find useful answers to these questions? You probably don’t need it.

  • Set in order – Once the unnecessary clutter has gone, you can rearrange the workspace to align with the goals and immediate requests of your team.
  • Sweep – Create a plan for regular maintenance and cleaning for tools and equipment
  • Standardise – Turn one time efforts into habits. Whether if its an online checklist or verbal reminders, set aside time to help foster an environment where tasks become routine.
  • Sustain – Ensure long-term sustainability. Whether you’re a manager or new starter, everyone needs to be on board with the new program. This is why documenting procedures and ensuring they are easy to find is so important for process improvement.

12. Problem Solving / PDCA / PDSA

What is the PDCA / PDSA Cycle?
The PDCA / PDSA cycle is a four-phase graphical model for carrying out change at your organization. The method is cyclical, so the PDCA / PDSA cycle should be repeated over and over. It is a good idea to use this model at the start of a process improvement project, especially for processes that are repetitive.

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RELATED: BPM from process to success

  • Plan – Find a problem or opportunity as set out a plan for continuous change. You will need to create a hypothesis for what potential issues may be.
  • Do – This is the testing phase. Realistically, this will be a small scale test where you can easily measure results and gain a greater understanding of your hypothesis
  • Check - Assess if the problem is fixed.
  • Act – If the initial test was successful, repeat it on a bigger scale.