Lean Six Sigma: Why is it important?
Regardless of the business or operation you run, keeping lean, efficient and on top of quality control is vital. After all, industries thrive not only by keeping their customers happy but also by ensuring that they can continue producing great results time and again with minimal change.
As you may imagine, refining processes and reducing defects is challenging. Depending on the size of an organization, speeding up and improving processes simultaneously can seem like an impossible task! That’s why models such as Lean Six Sigma exist — to help enterprise owners keep things in perspective.
But what exactly is Lean Six Sigma? How does it work, and how could it benefit the average customer-facing operation? Let’s look at a definition and see why this model is proving so useful in industries worldwide.
Lean Six Sigma in brief
Lean Six Sigma is a managerial philosophy of sorts — it’s the process of removing unnecessary defects and waste (physical or otherwise) through any given process.
Ultimately, it’s a combination of both the Lean and Six Sigma methodologies. The combination here provides workarounds to ensure talent, resources, time and money are all used efficiently while helping to create an excellent final product.
Lean was first established in the 1940s, whereas Six Sigma arrived four decades later, so this philosophy combines over 40 years of management methodology.
Business owners use Lean Six Sigma (LSS) to help identify where value is seeping through the cracks. For example, are there any areas of production where money or labor are being wasted? How can you start to speed up the quality control process without taking your eyes off the customers’ needs?
There are plenty of models out there that can help businesses refine their processes and minimize waste; however, LSS has proven itself to be something of a market leader.
What principles does Lean Six Sigma include?
Lean Six Sigma largely focuses on eight main waste areas that create the acronym of DOWNTIME. Here’s what’s included:
- Non-utilized talent
- Extra processing
Under the LSS model, all these areas are potential causes of wasted time, effort and resources. For example, product defects can lead to business owners having to rethink product design completely or having to re-establish the assembly line from scratch.
Overproduction is also an unnecessary creator of waste. Why make more of a product or resource unless you really need to? Waiting time is an obvious driver as it’s important to present end products to clients, as well as each stage of the assembly and quality control process, as efficiently as possible.
Non-utilized talent is an interesting driver that can befall many different businesses. If companies fail to efficiently use the talent they have available, they may find staff are standing around idly, or that certain talents are going to waste in inappropriate departments. Could someone with excellent sales skills move from tech support to cold calling, for example?
Unnecessary transportation not only drives up time wasted, but also increases costs. That goes for labor as well as vehicle investments. Is there a leaner, faster way for raw materials and products to ship and arrive at all points?
Meanwhile, inventory management is vital for the continued lean running of any business. Understocking is inadvisable, but what if you invest in far more materials and tools than you need? Return on investment in stock should be accountable throughout its lifespan. If resources are underutilized, they’re hardly adding value to the business or customers!
Motion in the context of LSS refers to an unnecessary need for personnel, vehicles, machinery or tools moving from station to station. Could process time be improved by simply allocating adequate and relevant resources to their needed stations, for example?
Finally, extra processing refers to unnecessary add-ons. Does the end customer need extra bells and whistles when they require only a simple resolution? If customers widely report that products or services are top-heavy in features, you’ll save money by scaling back.
In a nutshell, these are the areas of waste that an LSS system aims to reduce. Now that we’re clear on what a manager using LSS might want to focus on, let’s look at how they might use this methodology to refine their productivity and boost efficiency.
Working with DMAIC
Once you have a handle on the DOWNTIME model inside LSS, it’s time to acquaint yourself with DMAIC. DMAIC stands for the following:
Each stage of this process helps users to start trimming down the waste categorized under DOWNTIME. Let’s look at how each of these points works in practice.
With the first step, Define, we’re concerned with looking at a problem in detail. What is the opportunity for improvement, and what goals do you need to reach? For example, you may find that you have too many people working on the same part of a project and need to cut costs or spread out the labor.
With the Measure stage, before jumping straight into finding a resolution, you need to carefully evaluate how your current processes operate. This means diving into some data. For example, if you want to reduce employee focus on a specific project area, you might calculate:
- How many people need to work on a task
- How many people are working on the specific task
- The salaries of tasked workers
- How much money the end products generate in revenue
This is just a very simple working example. The Measure stage of DMAIC aims to determine where the problem’s root issues reside. Is it that you have too many people on one platform, or do you simply not have enough specifically trained staff working in that focus area?
The follow-up stage from Measure is Analyze. Once you have your data, it’s time to determine what it actually tells us. As above, does it tell you that you’re spending too much money on resources or staff, or that you’re charging too little for the end products?
How can you feasibly improve the efficiency of your production, or the quality of your end result, while scaling back costs? It’s here where you will need to start listing and costing potential solutions.
The Improve stage should be fairly self-explanatory. It is here where you will start to attack the problems identified so far. This means mapping out your processes, proofing for mistakes and human errors, and looking carefully at the value stream.
As the final point of DMAIC, the Control stage is purely maintenance. It’s here where you set up measures to prevent the conditions that led to DOWNTIME in the first place and where you consistently manage the situation to avoid repeating the same analytics.
This is DOWNTIME and DMAIC in their respective nutshells. So, who might use these systems in practice, and how might they actually apply to you?
Common use cases for Lean Six Sigma
As it happens, where there’s room for improvement and boosted efficiency, there’s room for Lean Six Sigma. When enrolling in a Master of Engineering Management online course at a school such as Kettering University Online, you’ll likely come across a few use cases for LSS that make perfect sense in practice.
For example, consider a situation where there’s likely to be a lot of physical waste, not just time and productivity drain, such as a simple manufacturing business.
In manufacturing, LSS can help business owners reduce physical defects and overspending on unnecessary materials and resources. What’s more, an LSS analysis can also help to ensure products leave the factory in better quality on a more efficient timeline.
In supply chain management, LSS has proven even more useful. Supply chains depend on careful time management and all the checks and measures that arise at each stage in the process. This includes production, assembly, quality control, logistics and customer outreach.
An LSS analysis can help supply chain managers look more closely at the bigger picture. Are all these seemingly disparate parts communicating with each other? If efficiency is grinding to a halt, LSS can help managers to map out what’s happening at each stage of a highly intricate process.
LSS can help from a basic customer-facing standpoint, whether it’s in banking, healthcare, IT or another field. With the end result being customer satisfaction, LSS can help business owners and managers find opportunities to improve customer experiences just by trimming a little of the processing fat.
For example, are too many agents working on a given account or case? What about wait times for interdepartmental approval — could this be more efficient?
Ultimately, LSS is a compound methodology designed to scale up and down with various business needs. While the world has become more efficient over the years, enterprises still have room to streamline their processes.
What are the overall benefits of using Lean Six Sigma?
Beyond the obvious points stated above, LSS helps business owners look at the bigger picture. It’s not always easy to know where to start when quality standards are slipping.
LSS allows managers to lay their businesses out flat and look for areas to trim down or remove completely. The idea of LSS is to be completely ruthless. Why hold onto processes, or even entire departments, if they add little or even detract from the quality of the final product?
Let’s consider a few other reasons why so many business owners rely on Lean Six Sigma to help remap their enterprises.
LSS cuts costs
A huge benefit to using LSS effectively is going lean to reduce overall financial costs. For example, are you hiring unnecessary staff? Do you invest in inventory that’s constantly being overstocked and not being used?
LSS can also help businesses spot areas in their processes where costs are ramping up, and where revenue may be leaking. Looking at more than just the end product allows managers to boost their return on investment. They might already be making profits, but instead of driving extra revenue on top, they could shave costs caused by unnecessary waste.
LSS engages employees
One of the most appealing factors in setting up an LSS program is that everyone gets involved as it’s not a purely managerial system. You’ll need input and insight from people working on your projects and programs across shop floors, assembly lines, contact centers and more.
LSS expects you to gauge employee feedback and learn more about the individual challenges they may face daily. Instead of making potentially harmful assumptions from up on high, LSS helps you find straight answers to often complex questions.
For example, you could ask assembly line workers what needs to happen for efficiency to improve. How could you, hypothetically, make their lives easier? Will it mean investing in new machinery, hiring more staff or rearranging the hierarchy? Are there any important industrial components that could prove to be valuable investments?
Of course, you don’t have to take your employees’ answers as the golden reasons behind problems arising. You can simply use them to contribute to the Analysis stage of LSS.
LSS can help boost reputation
In customer-focused environments, the quality of an end product revolves hugely around how the customer feels. That means you need to satisfy not only their immediate demands but also any emotional needs along the way, in addition to delivering a service within a reasonable time period.
LSS lets you put the customer front and center. That means, while keeping their happiness and continued business at the heart of your remapping, you can ensure your team is doing everything it can to continually improve their standards.
Customer experience is tricky to get right at first, and it’s something that many businesses will need to continue honing for years to come. Thankfully, one of the biggest benefits of LSS lies in the fact that it’s amazingly scalable.
LSS is ideal for continuous improvement
As your business grows, your customer base will likely do the same. Their demands will likely change too, and you may also find that your rivals evolve in directions you didn’t necessarily expect. To keep up with all these potential headaches, a business needs a managerial model that’s built for scalability.
At its core, LSS is infinitely scalable. The Control stage of the process, for example, never has a fixed endpoint. It focuses on keeping the processes you’ve laid out and improved at a high-quality standard. A key aim of LSS is to sharpen your focus!
Continuous improvement is hard to gauge and even harder to manage over time. That’s why many business owners implement LSS and tools and systems built around its principles for long-term growth management.
Constantly monitoring your standards with an LSS system will ensure that you can continue to improve your products and services in the eyes of your customers – and in line with your own checkpoints too!
Is Lean Six Sigma outdated?
Despite the relative age of its combined principles, LSS remains highly useful at this time. The main reason behind its continued success is that it focuses on and drives highly meaningful results for everyone involved.
For the customers, value and quality improve immensely. Work gets easier and may even become more enjoyable for any staff involved in the processes you refine.
As a business owner, you can continue to enjoy lower costs, increased profits and reputational improvements. LSS will also help ensure that your business scales up and down when needed and can even pivot in line with potentially unforeseen future problems.
LSS is a fairly rigid system that, at its core, is also surprisingly simple. It’s adaptable to modern systems and hierarchies. Many programs and tools, such as those based on Kanban principles, have foundations based on the LSS model.
LSS allows business owners and managers to become more flexible and more focused on how they can support each leg of a product’s or service’s journey. That means everyone benefits — from those at the head of the business through the teams involved in processes and to the end customers.
Is it worth learning Lean Six Sigma?
As a series of management principles, LSS is a crucial methodology for modern business ownership. As demands for more efficient yet excellent quality service continue to increase, LSS offers a flexible and robust framework to fit almost any corporate need.
It’s easy to assume that no one managerial model will fit all business needs. To an extent, that’s true; however, LSS is scalable, drives meaningful results and allows managers and business owners to drill deep into what’s happening at the heart of their processes.
If your business has room to grow and/or improve, LSS could offer you the opportunities to make a significant difference.