Blending the Best of Lean Production and Six Sigma for Achieving and Maintaining Operational Excellence

Dr Jiju Antony and Mr Jorge L Escamilla Warwick Manufacturing Group University of Warwick, CV4 7AL, UK E-mail: Jiju.Antony@warwick.ac.uk Mr Peter Caine, Director of Process Improvement Black & Dekker, UK

Abstract The primary focus of Six Sigma initiatives in organizations is to drive out variation from processes and thereby achieve improved process performance and capability. In contrast, the primary focus of Lean initiatives in organizations is to eliminate waste in the form of scrap, non-value added activities, excessive inventory, etc and reduce costs associated with storage and floor space. This paper is making an attempt to compare and contrast the two current popular approaches employed by many companies independently though greater benefits can be reaped by blending the best of the two approaches. The focus of the current research in many academic and research institutions today is to integrate Lean principles and Six Sigma methodology for achieving greater operational efficiency. It is therefore fair to say that manufacturing organizations utilizing the integrated or blended approach would perform better than organizations which utilizes these strategies independently.

Key words: Six Sigma Introduction

Lean

Integration

Strategy

Methodology

Six Sigma has been well recognized in many world class organizations such as GE, Sony, Honeywell, Texas Instruments, Raytheon, Ford, ABB, etc. as an effective means of achieving excellence in product and service quality. Six Sigma primarily

focuses on variation in processes and determines the possible solutions which will minimize or even eliminate variation, which often results in inconsistent product performance, high scrap rate, rework, warranty costs, customer dissatisfaction, etc. Six Sigma entails the use of simple and advanced statistical tools and techniques to bring about radical improvements.

Lean Production is based on the Toyota Production System (TPS) and was developed by Taiichi Ohno, a Toyota Production Executive, in response to a number of problems that plagued Japanese industry. An effective implementation of Lean principles could result in reduced set-up times for machines, improved machine uptime, organized house keeping, reduced waste (material waste, waste from excess inventory, waste from over production, waste from over-processing, etc.).

Six Sigma (coined by Bill Smith of Motorola, but promulgated by Mike Harry) is well referred as a statistical measure of the performance of a product or process and is equal to 3.4 defects or errors or failures per million opportunities (Pande et al., 2000). Six Sigma utilizes a disciplined and rigorous methodology for tackling variability related problems in manufacturing or service processes. The methodology is more generally recognized as Define-Measure-Analyse-Improve and Control or DMAIC. It is probably this methodology which makes the application of Six Sigma successful in many organizations. More information about the methodology can be obtained from Harry and Schroeders book (Harry and Schroeder, 2000).

Lean manufacturing is a philosophy with a whole set of approaches, tools and characteristics that lead an organization to reduce waste and add value to its products

and processes. There are some principles that can be used to define the main characteristics of Lean strategy (Womack and Jones, 1997). These are: 1. Value: It is important to identify which features of a product or service create value and can be obtained from the internal and external customer perspectives. Value is expressed in terms of how the specific product or service meets the expectations of customers. Having determined the value, we need to identify the processes or sub-processes that add value to the final product or service. All non-value added processes should be eliminated from the system. 2. Flow: Flow in this case is the uninterrupted movement of product or service through the system to the customer. Work in queue, batch processing and transportation are the bottlenecks of flow. Improvement efforts should be sought for to make activities within the system flow. 3. Pull: Once the non-value added activities are removed and flow within the system is established, we need to make the process responsive to providing the product or service only when the customer needs it. 4. Perfection: This is the repeated effort to remove waste from the processes, improve work flow, and meet delivery needs of customers. It is important to make a note that by accomplishing the above three characteristics, variation in the processes may be reduced and thereby product or service quality is improved. By identifying and determining the above characteristics, one may be able to set up an assessment method to evaluate Lean levels so that we know where to direct or focus our efforts in accordance with the values, needs and strategic objectives of the organization.

What is Six Sigma? In business terms, Six Sigma is a business strategy and a disciplined methodology, effective use of which leads to breakthrough in profitability through quantum gains in product/service quality, products functional performance, process capability, customer satisfaction and productivity (Antony and Banuelas, 2002). In statistical terms, Six Sigma refers to 3.4 defects or errors or failures per million opportunities, where Sigma ( ) is the variation around the process average (Antony and Banuelas, 2001). The potential benefits from the effective implementation of Six Sigma projects may include: Better understanding of customer needs and expectations for today and tomorrow Development of robust products, processes and services Reduction of costs due to poor quality Reduction of product/service design and development time Improvement of process yield, stability and capability, etc.

What is Lean Production? Lean is a philosophy of eliminating all non-value added activities or waste from manufacturing and all other support functions. Lean production embraces a philosophy of continually increasing the proportion of value added activities of businesses through ongoing waste elimination. The essence of Lean Production is to reduce the amount of time needed to produce a product or service, throughout the entire product/service life cycle. It emphasizes continuous improvement, inventory reduction, cycle time reduction, quality improvement, so on and so forth. The

potential benefits from the effective implementation of a Lean Production System may include: Reduction of inventory requirements Reduction of floor space requirements Reduced waste due to waiting, movement, etc. Reduced cycle time of processes, etc.

Fundamental differences between Lean Strategy and Six Sigma Methodology? Lean strategy brings a set of proven tools and techniques to reduce cycle times, inventories, set up times, equipment downtime, scrap, rework and other wastes of the hidden factory. The focus is on value from a customer perspective and flowing this through the entire supply chain. The statistically based problem solving methodology of Six Sigma delivers data to drive solutions, delivering dramatic bottom-line results. In the Six Sigma school of study, a problem is tackled by a black or green belt, depending on the nature of the problem and the degree of complexity involved in the determination of solutions. Root causes are identified, metrics are developed, process capability evaluated and various solutions tried out until a suitable solution is derived. In the Lean school of study, the problem is typically some form of waste. By utilizing lean tools and techniques, the waste can be reduced to a desirable level. Table 1 briefly presents some of the fundamental differences between the two methods.

Issues/Problems/objectives

Six Sigma

Lean Production

Focuses on customer value stream Focuses on creating a visual workplace Creates standard work sheets Attacks work-in-process inventory Focuses on good house keeping Process control planning and monitoring Focuses on reducing variation and achieve uniform process outputs Focuses heavily on the application of statistical tools and techniques Employs a structured, rigorous and well planned problem solving methodology Attacks waste due to waiting, over processing, motion, over production, etc.

r r r r r

b b b b b
r r

b b

Table 1 Some fundamental differences between Six Sigma and Lean Production methodologies The Synergy of Six Sigma and Lean Production Thomas Pyzdek (2000) has developed a very useful table (see Table 2) to identify his view of the synergies of Six Sigma and Lean Production. The Lean approach offers a set of solutions to muda (waste) in a high variety production environment. Six Sigma applies to the problems common to production. According to George (2002), Six Sigma does not directly address process speed and so the lack of improvement in lead time in companies applying Six Sigma methods alone is understandable. These

companies also generally achieve modest improvement in Work in Process (WIP) and finished goods inventory turns. In a similar manner, those companies engaged in Lean methodology alone show limited improvements across the organization due to the absence of Six Sigma cultural infrastructure (George, 2000). In essence, an integrated approach utilizing the best of Six Sigma and Lean Strategies will maximize shareholder value by accomplishing dramatic improvements in customer satisfaction, cost, quality, speed and invested capital. While the fundamental principle of Six Sigma is to take an organization to an improved level of Sigma Capability through the rigorous application of statistical tools and techniques, Lean Production has a role in eliminating waste and non-valued added activities across the entire supply chain. Lean Production Strategy Use a project based implementation Collect product and production data Understand current conditions Create standard work combination sheets Time the process Six Sigma Business Strategy Project management skills Data collection Knowledge discovery Process stability and control planning Data collection tools and techniques (Statistical Process Control) Optimal value flow is achieved through aggressive elimination of waste and nonvalue added activities Reduce cycle times, set up times, equipment downtime, changeover time, etc. Table 2 Synergies of Lean Production Strategy and Six Sigma Business strategy Seven basic tools, modern management tools of quality, etc. Provides the how to template for eliminating process variation

The companies practicing the integrated approach will gain four major benefits: Become faster and more responsive to customers Strive for Six Sigma capability level Operate at lowest costs of poor quality Achieve greater flexibility through out the business

As companies must become more responsive to changing customer demands, faster lead times are essential in all endeavors. In other words, the integrated approach of Six Sigma and Lean strategy will offer a complete, holistic approach to moving your business forward on the road to achieve the best competitive position. It is fair to state that the disciplined and systematic methodology of Six Sigma combined with the speed and agility of Lean will produce greater solutions in the search for business and operations excellence.

Lean and Six Sigma tools and techniques When we integrate the two approaches, it becomes apparent that we need to understand the role of various tools and techniques. For many quality control and improvement practitioners, the difference between tools and techniques of quality management are still not clear enough. A tool is very narrow in focus and has a clearly defined application to tackle a specific problem. For example, control chart is a tool used within a process to monitor its trend. A technique is broader in scope and requires creativity and specific skills and knowledge to tackle a particular problem. For example, Statistical Process Control is a technique used for hunting special causes of variation in processes.

Most companies using the integrated approach began by applying the basic lean production tools and techniques such as basic house keeping using 5S practice, standardized work, Total Productive Maintenance, etc. Once lean tools and techniques eliminate much of the noise from a process, Six Sigma then offers powerful solutions to chronic problems (Drickhamer, 2002). Table 3 provides a comprehensive set of tools, techniques and principles which can be employed in the integrated approach of Lean Production and Six Sigma business strategies. Six Sigma (Tools, Techniques, Principles) Variability reduction Belt system (MB, BB, GB, YB) DMAIC methodology Statistical Process Control (SPC) Lean Production (Tools, Techniques, Principles) Workplace management Set-up time reduction (SMED) Pull system (Kanban) Total Productive Maintenance (TPM) Process Capability Analysis Measurement System Analysis (MSA) Design Of Experiments (DOE) Robust Design Quality Function Deployment (QFD) Failure Mode Effects and Criticality Analysis (FMECA) Project Management Regression Analysis Analysis of Means and Variance (ANOM & ANOVA) Hypothesis tests Waste identification and elimination (7 elements of waste) Root Cause Analysis Process Mapping Change management tools Table 3 Kaizen Cellular manufacturing Change management tools One Piece flow (Takt time) Standardized procedures/work Production flow balancing Mistake Proofing (Poka Yoke) 5S Practice Value Stream Mapping SIPOC process diagram Just-in-Time (JIT) Visual Management

Tools, Techniques and principles of the integrated approach

Key Barriers in the Successful Implementation of the Integrated Approach 1. Cultural Change A successful introduction of the integrated approach requires a change in the mindset of employees and strong leadership Employees have to be motivated and accept ownership and responsibility for the quality and productivity of their own work. Companies that have been successful in managing change have identified that the best way to tackle resistance to change is through increased communication, motivation and education (Antony and Banuelas, 2002). 2. Training The training should focus on the why, when and how of the integrated approach as early as possible. The benefits of the integrated approach compared to the application of Lean or Six Sigma on its own should be demonstrated with excellent examples during the training program. 3. Leadership, Management support and commitment Similar to any other quality initiatives, the integrated approach requires top management support and commitment and provision of appropriate resources and budget for the successful introduction and development of the blended approach. Without the continuous support from top management, the true importance of the initiative will be in doubt and the energy behind it will be weakened (Pande et al. 2000).

Conclusions Many organizations today are trying to determine what strategy ( Lean, Six Sigma or blended approach) will work best and fit best with their culture. The selection of a particular improvement strategy depends heavily on the nature of the problem,

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objectives to be achieved, the primary and secondary effects of the strategy, etc. It is fair to say that Six Sigma and Lean Production are not an alternative for each other. In other words, they are complimentary to each other. The application of Six Sigma principles combined with the speed and agility of Lean strategy will produce solutions in the never-ending quest for better, faster, cheaper business processes. The list of companies that employs the blended approach for achieving world class performance are increasing exponentially over the last few years. This paper makes an attempt to compare and contrast the two powerful methods (Lean and Six Sigma) for achieving operational excellence in any organization. The paper concludes by providing a comprehensive list of tools, techniques and some fundamental principles associated with the two approaches. The next phase of the research is to develop a model which blends the best features of Lean production and Six Sigma business strategy. This work is currently undertaken by the first author in the Warwick Manufacturing Group at the University of Warwick, UK. The research will also identify how and where the tools and techniques of Lean production and Six Sigma business strategy should be integrated within the model. References Antony, J. and Banuelas, R. (2001), A Strategy for Survival, Manufacturing Engineer, Vol.80, No.3, pp. 119-121. Antony, J. and Banuelas, R. (2002), Key Ingredients for the Effective Implementation of Six Sigma Program, Measuring Business Excellence, Vol.6, No.4, pp. 20-27 Pande et al. (2000), The Six Sigma Way: How GE, Motorola and other top companies are honing their performance, McGraw-Hill, USA. Harry, M. and Schroeder, R. (2000), Six Sigam: the breakthrough management strategy revolutionizing the Worlds Top Corporations, Doubleday, NY, USA.

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Womack, J.P. and Jones, D.T. (1997), Lean Thinking, Simon and Schuster UK Ltd., London, UK Pyzdek, T. (2000), www.qualitydigest.com/jan00/html George, M. (2002), Lean Six Sigma, McGraw-Hill, NY, USA. Drickhamer, D. (2002), Where lean meets Six Sigma, Industry Week, Vol.251, 4, pp. 55-57.

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