James owns a small but fast-growing company that is doing over $10,000 in revenue per month yet he discovers that he is unable to balance his books because most of his expenditures are utilized to fix defects, accommodate cost of waste and, pay for the long and cumbersome process of production. He has also discovered that his closest competitor has about the same level of revenue as his company even though they have less than half of his number of staff. James needs to implement Lean Six Sigma Concepts.
What is Lean Six Sigma?
Lean Six Sigma is about incorporating methodologies into your business to improve processes by eliminating waste, driving up efficiency and improving working conditions to deliver optimal value for you and your customers. It is a combination of two terms — LEAN and SIX SIGMA.
LEAN has its history in motor vehicle manufacturing business when Henry Ford introduced many innovations including the assembly line where each step of building a vehicle flowed naturally into the next. Toyota then developed the work further into their Toyota Production System which was a set of tools that assist in the identification and the steady elimination of waste to ensure that only what is needed, when it is needed, and in the amount needed was produced.
LEAN identifies the eight most common sources of waste in the production system and tried to eliminate them. They are:
- Defects: Defects are the number of time employees spend identifying and fixing production mistakes.
- Overproduction: This occurs when products are being produced that there is no customer demand.
- Waiting: Waiting is the lag time in between each step in production. When employees are left waiting, no value is being added.
- Non-Utilised Talent: This occurs when employees or team members are idle or insufficiently engaged
- Transport: This type of waste occurs when materials or products are moved inefficiently.
- Inventory: This happens when your inventory levels are too high and you have too much work in progress at one time.
- Motion: Motion refers to poor work standards and employees moving inefficiently between tasks.
- Extra-processing: Over-processing occurs when you spend too much time producing a product or produce it in a very inefficient way.
SIX SIGMA was first introduced within Motorola in 1986. Its name refers to a statistical concept on the number of defects per million repetitions of a process, or outputs of a product. Six sigma is a goal to work towards improving the way the quality and measurement systems worked to eliminate errors. It focuses on identifying and eliminating anything that caused variation in the process such that the outcome of any process can be precisely predicted every time to reduce scrap, avoid rework and ensure customer satisfaction.
Six Sigma is organized into five phases, namely:
- Define: Define the problem and document how it is affecting the current process.
- Measure: This phase is carried out by measuring the current data, examining the process that is already in place and identifying what isn’t working you can begin finding ways to make improvements.
- Analysis: The measured data is then analyzed to the root of the problem.
- Improvement: This is the step where you will come up with solutions, test your solutions, and make improvements as needed.
- Control: Once you have implemented a new process you must continue to make improvements over time. These changes will only last if employees continue to refine and maintain the process.
BENEFITS OF LEAN SIX SIGMA
While we have explained the two parts of Lean Six Sigma separately, the truth is that they work together, complementing to serve the same goal: To eliminate waste and create efficient processes. Many business owners, like James, keep driving in a lot of resources to their inputs without receiving the desired outputs. What they need to do is integrate Lean Six Sigma to their operations to help push up their sales and profits, lower their costs while improving quality, improve employee skill and morale, and most importantly guarantee customer satisfaction.
Lean Six Sigma is applied in all industries such as retail, transport, government, financial services, etc and offers tremendous benefits to organizations that utilize it. Kindly contact Ritetrac Consulting if you wish to find out more about Lean Six Sigma