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Breakthrough Process Improvement

Integrating Lean and Six Sigma for Breakthrough Process Improvement

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Why Lean / Six Sigma?

Lean / Six Sigma is an integration of two powerful improvement methodologies, Six Sigma quality improvement and Lean productivity improvement. Many companies have attempted one or the other of these improvement strategies, some companies have tried both, but few have integrated the two practices into a single approach for achieving continual improvement.

Each methodology has strengths and weaknesses. Six Sigma has proven extremely valuable in helping organizations achieve internal quality improvement and increased customer satisfaction. Lean has proven valuable for achieving improvements in on-time delivery, labor, material and equipment productivity; and for improving the rate of return on capital employed.

One of the criticisms leveled at Six Sigma is the lack of alignment that sometimes exists between overall business strategy and the process improvement projects selected. Too often process owners (Six Sigma Champions) select projects that benefit themselves; or other internal customers while failing to address the problems that effect external (paying) customers. Lean practitioners often criticize Six Sigma programs for wasting resources addressing relatively minor process issues while ignoring the larger more critical system issues that constrain the process from achieving breakthrough levels of performance improvement.

One of the criticisms leveled at Lean is the lack of a systematic process for deploying the Lean technologies. Too often Lean is an orphaned strategy that becomes the flavor of the month.

For the past 20 years companies in the US have used kaizen events as the method for becoming lean. These kaizen events, lasting a couple of days or maybe a week, achieve improvements and cost savings in the work areas studied; however, many times these improvements are not integrated into the overall production system, and the gains realized and enthusiasm generated are lost when the kaizen event is over. Thus, many companies who claim to have implemented Lean have merely established isolated islands of improvement within their predominantly mass production systems, complete with all seven types of waste.

Recently, a new planning tool, value stream mapping, has been developed to help organizations plan, organize and lead the transformation to Lean as a management system rather than as a collection of isolated techniques. We have incorporated the value stream mapping process into our strategic planning and project management processes to help our clients integrate both Lean and Six Sigma improvement projects and to achieve the critical strategic goals and objectives established by the company leadership.

Value Stream Mapping

One of the great advancements in Lean Manufacturing was the development of Value Stream Mapping. Prior to the development of value stream maps, Lean practitioners used a techniques-oriented approach to implement Lean Manufacturing. First it was cells, then kanbans, then the Five S's; and, finally quick changeovers. Organizations attempted one improvement technique after another with no real vision that Lean is a system of management and not a collection of disparate techniques.

Lean practitioners now use value stream maps to plan and organize the transformation from Mass producer to Lean producer. Value Stream Maps document the flow of information and material from customer order through delivery of completed product or service. A current state value stream map is drawn to describe the flow of information and material under current process conditions. A future state value stream map is then created that describes how this process will be improved through application of Lean thinking concepts and Lean Manufacturing practices. The gap between current and future state performance provides a means for measuring the impact of the transformation on critical process performance measures. Process efficiency improvements measured as: increased percentage of value-added work, reductions in dock-to-dock leadtime and reductions in inventory and labor costs can be determined from this gap analysis.

The gap analysis between current and future state also identifies the specific projects that will be necessary to move from current to future state. These continual improvement projects can then be prioritized and scheduled within the framework of the overall breakthrough transformation project.

Value stream maps provide the roadmap for developing processes with Six Sigma quality and lean productivity. Linked scorecards provide the measurement and monitoring processes that drive continual improvement.

Linked Scorecards

In their book, The Balanced Scorecard, Kaplan and Norton describe a methodology for measuring, monitoring and improving organizational performance. They argue that Managers must develop a set of performance measures that are balanced across four key categories, linked by vision and strategy. The four key categories are: financial, internal business process, customers and employee learning and growth. This approach requires managers to translate their vision and mission statements into objectives and measures in each of these four critical areas. By doing so, they will create a logical link between the performance improvement projects and the company's strategies for long-term growth and prosperity.

Managers interested in measuring, monitoring and driving continual improvement of process effectiveness and efficiency must develop a set of measures (scorecards) that translate the continual improvement strategies into actions (projects) and align those improvement projects with company goals and objectives (profits).

At our company, we have created a set of scorecards for balancing and linking Lean and Six Sigma improvement projects with the overall company goals and objectives. We call these scorecards the Five P's. The Five P's are: profitability, products, processes, projects and people.

Profits are enhanced when Products are improved. Products improve when the Processes that produce those products are improved. Processes are improved Project-by-Project and in no other way. Projects are successful when People grow and develop.

The five P's scorecard links the personal growth and development of employees to specific Lean and Six Sigma projects and links those lean and Six Sigma projects to improvements in process performance. The improvements in process performance (achieving Six Sigma quality and lean productivity) are linked to improved product quality and value (as perceived by customers) which in turn is linked to improved profitability from increased sales and improved margins.

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