Imagine that there was news of a plane crash every week or that the Post Office misplaced 1,600 pieces of mail every year. Or imagine that every time you sat down to read a book, there were two spelling errors on each page.
Clearly, there are many industries where a high rate of failure is unacceptable. This is the premise behind Lean Six Sigma, a framework that helps businesses improve effectiveness and efficiency by eliminating waste.
If you are running a Lean Six Sigma company, then for every one million opportunities there should be no more than 3.4 inefficiencies. So, in short, Lean Six Sigma strives for near perfection.
The purpose of Lean Six Sigma is to improve the customer experience by eliminating all variation.
Jack Welch, former chairman and CEO of General Electric, wrote in his 2005 book, “Winning” that variation is evil.
This is because a customer’s affection for your company can quickly disappear at the first sign of inconsistency. Consistency is important because it builds your business’s integrity and allows customers to trust you.
In this guide, we’re going to teach you…
- What’s Lean Six Sigma and how it helps businesses achieve more
- What are the main benefits of Lean Six Sigma
- How to implement Lean Six Sigma and make your company more efficient
- How Process Management Software can help facilitate Lean Six Sigma, making the implementation easier
What, Exactly, is Lean Six Sigma?
Both approaches aim for improving overall company efficiency, but each focuses on a different goal.
Lean’s focus is cutting costs by reducing different types of waste:
- Defects – Defects are negative variations in product quality (broken pieces, faulty software, etc.). A few of the causes of defects can be poor quality control, low standards, poor design or poor processes
- Overproduction – Company producing more goods than customer demand. If the products remained unused, they’re essentially just a waste of money.
- Waiting – Waiting occurs anytime the work has to stop due to some external factor, whether it’s a broken part, an overwhelmed employee or understaffing. This leads to inefficiency since the employees are unable to create value during this time.
- Non-Utilized Talent – Under-utilizing talent is often seen in wasteful administrative tasks, poor communication, a lack of teamwork, and poor training. Any organization should focus on getting as much value out of their employees as possible
- Transport – Too much transportation will increases costs, waste time, and increases the likelihood of product damage.
- Inventory Excess– This type of waste occurs when the supply exceeds customer demands. It is caused by poor monitoring systems and a lack of understanding as to what the customer needs
- Motion Waste – Motion waste is any excess movement that doesn’t add value to the product or service. It can be caused by poor standards and poor process design.
- Extra-Processing – This occurs when there are multiple versions of the same task or the process was poorly designed.
Eliminating these wastes is done by implementing different tools or methodologies, some of which we’ll explain later.
Six Sigma, on the other hand, is about minimizing defect rates organization-wide, which leads to higher customer satisfaction rates.
If your business is operating at a Six Sigma level then there will be no more than 3.4 defects for every one million opportunities. A defect is defined as anything outside of the customer’s expectations.
The ultimate goal is to improve every process to a Six Sigma level or higher. In 2006, Motorola reported saving $17 billion using Six Sigma methods.
Top 3 Benefits of Lean Six Sigma
Organizations from all industries have seen massive transformations and savings through implementing Lean Six Sigma practices. The United States Army saved over $2 billion, General Electric reduced costs by $1.8 billion, and Allied Signal saved over $800 million.
Lean Six Sigma can even help non-profit organizations; this Ohio hospital used Lean Six Sigma training and certifications to streamline processes at a food bank and speed up the amount of time it took for people to receive it.
When the program started, the time that elapsed between food donation and delivery was 92 days. After employing Lean Six Sigma principles, they were able to reduce this number to 39 days and the team is confident that in time, this number can be reduced to a mere 20 days.
The general improvement in efficiency, though, is only one aspect of Lean Six Sigma. Other than improving the company bottom line, there are several other potential benefits…
- Customer Satisfaction – Lean Six Sigma allows companies to improve their processes and quality control. This, in turn, leads to a better product or service in terms of price, quality, lower defect rates, and so on. And as a given, the better the product or service, the happier the customer.
- Customer Loyalty – Consistency in quality is something your customers notice. You’re far more likely to get repeat business if your customers are always satisfied.
- Improved Employee Performance – Lean Six Sigma isn’t just something company management does. Rather, it’s evident in everyone’s day-to-day work. The employees learn how to perform better at their job, as well as how to set and surpass goals.
Implementing Lean Six Sigma – Best Practices and Methodologies
The “how” part of Lean Six Sigma can be a bit confusing, considering the fact that everything we’ve talked about seems theoretical. So the general goal of the methodology is to make the company business processes more efficient (faster, fewer defects, higher quality, etc.).
This is accomplished done by using a combination of tools from both Lean and Six Sigma methodologies on a daily, operational basis for the company.
Some of the most popular ones are…
For the purpose of this guide, we’re only going to cover DMAIC. You can always check out the rest of the articles on our blog, though.
Before we explain how to use DMAIC to improve your organization, though, we’ll cover a handful of best practices for implementing Lean Six Sigma in any organization.
Lean Six Sigma Best Practices
The first step in implementing Lean Six Sigma is to get buy-in from the company management. The implementation is not something you can just one day decide to start doing. You’ll need organization-wide commitment and willingness to change.
Then, you’ll need to create teams that will handle the implementation. This can involve company management (for approving or disapproving team decisions), technical experts (to figure out how, exactly, to carry out the improvements) and employees (to help figure out ways to improve processes).
Once you’ve formed a specialized team, you’ll need to arm each type of employee with very specific know-how…
- Management – The “why” and “how” of Lean Six Sigma. How is it going to benefit the business, and what can the management do to help with the implementation
- Technical Experts – Process improvement methodologies & tools. How to use techniques such as DMAIC, process mapping, etc. to facilitate Lean Six Sigma.
- Employees – How to help the technical experts find inefficiencies in processes & apply them.
Then, the team can start applying different Lean Six Sigma tools to improve individual company processes. One of which is…
DMAIC stands for define, measurement, analysis, improvement, and control and it has played a vital role in eliminating errors from business functions. It consists of 5 steps…
During this phase, you will define the goal of the project implemented and identify customer requirements. This is also the stage when you would evaluate available resources, organizational support, and develop a plan and milestones.
Measurement involves looking the pros and cons of the system already in use so you can discover where improvement is necessary. Once you have collected and measured all the available data you can find both the problem and the opportunity present.
A lot of analysis is needed before implementing a Lean Six Sigma project because you need to discover not only whether the process needs changing, but also whether it will be able to survive any changes you do make.
This analysis will also help you determine whether the implementation will be worth the cost or not.
This phase involves improving the process by eliminating defects and usually involves brainstorming, performing experiments, and correcting potential solutions.
The final step in the DMAIC process, this stage involves making improvements and creating strategies that will control future process performance.
BONUS: Using Business Process Management Software to Help Facilitate Lean Six Sigma
Lean Six Sigma will increase the performance of your business in many ways; it will transform your employees into problems solvers who see products defects and come up with solutions and it will decrease costs because you will produce a higher quality product with fewer problems.
And as the customer’s expectations are being met and variation is eliminated, both customer demand and customer loyalty will increase.
Achieving this, however, isn’t easy. Find and implementing process improvements can be a daunting task, even for the most experienced process expert.
To maximize your chances for success, you can use Business Process Management Software, such as Tallyfy. The system can be helpful in several different ways…
- Find Bottlenecks and potential improvements
- Compare different processes in terms of efficiency
- Automate process enforcement. i.e, the software keeps track of the deadlines, assigns tasks to employees based on process progress, etc.
So, if you’re considering implementing Lean Six Sigma in your business, give Tallyfy a try. Unlike most BPM software, it’s free to start!
For more information on how this works, you can look at our case studies to see how we have helped other businesses just like yours.