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Wireless communications is entering a new phase

with a leap in demand but without a leap in


returns. Can costs be reduced while increasing
performance to meet this demand? Can profits be
preserved? Can operations innovate and give
strategic advantage? Lean Six Sigma is a powerful
concept that helps answer these questions.

The wireless data explosion is driving huge demand


without a corresponding increase in revenue. This
demand must be served, but costs need to be
controlled to maintain profitability.
Lean Six-Sigma and its broad toolkit give a
measurable way of reducing waste, speeding up
processes and increasing quality. It builds innovation
capacity, improves transparency and aligns the entire
organisation, leading to significant cost savings and
increased capabilities.

Summary and Introduction

Lean Six-Sigma (LSS) is a valuable method that can be applied in any organisation to improve performance by
eliminating waste, speeding up processes and increasing quality. It is arguably the most successful change
management and continuous improvement initiative developed in the last two decades. 82% of Fortune 100
companies use Lean Six-Sigma and it is estimated that $427 billion of costs have been saved while delivering
2% revenue growth. The success of the LSS framework is also demonstrated by the fact that it has long
outlived many alternative management philosophies such as management reengineering, service quality,
customer-centred project management, total quality management, and more.
All Lean Six-Sigma projects are based on real world performance improvements where the value to the
business is quantified in advance and a real return on investment is stated. The return on investment is
often five to ten times the actual cost. More importantly, the business gains are not once off but are
sustained for many years into the future. LSS helps considerably in team integration and efficiencies. Rather
than having a number of silos across departments or across business units with disparate processes and
systems, LSS can facilitate efficient processes and systems across multiple boundaries.
Vilicom has delivered dozens of Lean Six-Sigma projects over the past number of years. Our clients have
experienced significant benefits in the form of cost savings, increased customer value and strategic clarity.
LSS also delivers a major side-benefit in terms of transparency and alignment. One of the biggest problems

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faced by a companys leadership is that good news is amplified and bad news is spun. As a result, high
impact decisions are sometimes made using inaccurate information. Lean Six Sigma focuses on facts and is
driven by data removing this spin. This makes it a valuable tool in aligning front-line workers, middle and
upper management. The telecoms industry is entering a phase of consolidation and the growth of demand
is placing an emphasis on cost reduction. The current environment is ripe to take advantage of this well
proven system.

What is Lean Six Sigma?

Lean describes a method to reduce waste and speed up


process throughput while Six-Sigma describes a method
to reduce defects in a process, which leads to an increase
in quality and therefore a decrease in the cost of quality
by making the process more efficient.
Together, Lean Six-Sigma comprises a statistical term to
measure process performance versus requirements, a
set of techniques to improve process performance and a
management approach that describes effective
organisational management, strategy alignment and
organisational structure. Lean Six-Sigma focuses on facts
and data over opinion and hearsay.
Its origins lie in the mid-20th century when W. Edwards
Deming proposed that business processes should be
analysed and measured to identify sources of variation
that cause products to deviate from customer
requirements. He recommended that business
processes be placed in a continuous feedback loop so
that managers can identify and change the parts of the
process that need improvement. As a teacher, Deming
created a rather simple diagram to illustrate this
continuous process, commonly known as the PDCA cycle
for Plan, Do, Check, Act.

Total Cost of
Quality

Cost

Cost of Failure

Cost of Appraisal &


Prevention

Quality
Figure 1 - Cost of quality and its relationship to
prevention costs and failure costs

Figure 2 - The Plan Do Check Act (PDCA) Cycle

In this cycle, improvements are prepared (Plan), implemented on a trial basis (Do) and studied to see if the
changes work (Check). If the changes work as expected they are implemented (Act) and standardised more
widely to hold the gains made. The cycle then begins anew to continuously improve the business process.
Building on this concept, Six-Sigma was developed between 1983 and 1992 by Dr Mikel Harry who was then
with Motorola. It was then refined somewhat in the following two years by ABB. In 1994, Allied signal and
General Electric took the system on board with great results and from 1996 to 2004 most of the Fortune500 companies adopted the system. In 2004, a redesign took place and Lean Six Sigma was born.

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The Concept and Armoury of Lean Six-Sigma

Lean is based on the realisation that there is far more capability and capacity in our organisations, people
and equipment than is actually being harnessed. Lean focuses on eliminating waste, enhancing quality,
reducing costs, improving delivery, speeding up processes and harnessing peoples talents. The three Ms,
Muda (waste), Muri (unevenness) and Mura (overburden) help to explain the thinking behind Lean.

Define

Measure

Analyse

Improve

Control

Figure 3 The DMAIC process

Value creation is at the heart of the process and understanding what is important to the internal and
external customers is essential. Lean seeks at all times to clearly define what is valued by the customer,
identify the parts of the process that create value, eliminate non-value-adding process activities, ensure
demand-driven flow and pursue perfection. Lean is not about eliminating people when their capacity and
talents can be focussed on better value creation. A company that does not use all its employees talents and
ideas likely wastes good ideas for improvement. The Lean philosophy is summarised in the figure below.

Respect for People

Frontline staff as experts


Respect for peoples talents
Employee Involvement
Mistakes as learning

War on Waste

Everyday waste elimination


Remove wasted work burden
Problem surfacing and solving
Waste prevention

Value Creation

Understand customer value


Opportunity awareness
Creativity methods
Innovation process excellence

Figure 4 The philosophy and benefits of Lean

The goal of Six-Sigma is to reduce the variation in a process to a degree that the probability of a defect
occurring is less than six sigma, that is 3.4 defects per million opportunities. Reducing variation requires
standardisation to eliminate errors and defects. The definition of a defect varies from project to project.
Defects are sometimes called re-work loops, but can include late delivery or breach of targets for defined
Key Performance Indicators (KPIs). Slow processes are particularly wasteful as waiting time can never be
recovered and traditional cost accounting is poor at measuring lost opportunity costs.
Lean Six-Sigma begins and ends with the DMAIC. The DMAIC is an improvement on the PDCA cycle. Quality
initiatives will fail if the scope of the project is poorly defined. The DMAIC overcomes this by ensuring that
the project definition is clear and well communicated. The Define phase fully details the project and the
supporting business case. The process begins at Measure, where current processes and data are examined.

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The Analyse phase looks at the root causes of the measured performance. At the Improve stage, new ideas
and solutions are generated. Finally, for the Control stage the outcomes are verified and the new practices
maintained by ensuring their widespread adoption.
The armoury of Lean Six-Sigma is its wide and varied toolkit. One of the strengths of Lean Six-Sigma is that
its toolkit has undergone continuous improvement and it has adopted the tools of other management
practices where this can deliver high-level goals of LSS. Vilicom uses a wide variety of LSS tools including:
- DMAIC Define Measure Analyse Improve Control the over-arching guide to LSS
- FMEA Failure Mode and Effects Analysis helps to solve the root cause, rather than treating symptoms
- SIPOC Suppliers, Inputs, Process, Outputs, and Customers summarises the value creation process and
is used during the Define phase of the DMAIC
- CTQ Critical to Quality key measurable characteristics of a product or process whose performance
standards or specification limits must be met in order to satisfy the customer
- Control Charts tracks process variation process charting average performance, upper and lower limits
and highlights out of control points
- 9-Blocker used to organise ideas and capture the output of brainstorming sessions
- Fishbone Diagram diagrams to identify the causes of outcomes
- Kano Modelling deals with product development and customer satisfaction
- 5s Workplace Design Sort, Straighten, Shine, Standardize and Sustain organises work-spaces for
efficiency and effectiveness
- DFSS Design for Six Sigma used for the creation of new processes or the replacement of processes
that could not be improved to the required standard using DMAIC
- Value Stream Mapping analyses and design the flow of materials and information required to bring a
product or service to a consumer
- Process Mapping a technique to analyse and streamline workflows
- Kanban a scheduling system to improve logistics management
- DOE Design of Experiments An approach for varying process factors and quantifying their effects on
process outputs, so that those outputs can be controlled to optimal levels.
Many studies have been carried out on the effectiveness of Lean Six-Sigma. Some sample results are shown
in the table below.
Year LSS
Launched

Period of
Study

Total Rev.
for Period

Total
Saving($)

Saving %
Revenue

Commonwealth Health

1998

1998-2001

$102M

$7.0M

6.8%

Motorola

1986

1986-2004

$401Bn

$17Bn

4.2%

Honeywell

1998

1998-2000

$72Bn

$1.8Bn

2.5%

Allied Signal

1994

1994-1997

$53Bn

$1.2Bn

2.3%

Seagate

1998

1998-2004

$61Bn

$1.2Bn

2.0%

Dow

1999

1999-2002

$112Bn

$1.5Bn

1.3%

GE

1995

1995-2002

$840Bn

$8.0Bn

1.0%

Organisation

Table 1 Results found in studies of Lean Six-Sigma programmes in seven large companies

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Lean Six-Sigma is not just an efficiency tool. Used correctly it can also be an engine of strategic advantage.
Real strategy relies on doing things differently than competitors, not just matching them. While many
companies rely on LSS, the DMAIC process embeds the principle of strategic innovation and competitive
advantage within the firm. The Improve phase of the DMAIC asks the right questions, stimulates innovation
and harnesses ideas. It ensures that the right level of focus and communication is brought to bear on
innovating new ways of working.

The Case for Lean Six-Sigma in Mobile Telecoms

The European market has reached a watershed. Fast growth from voice and messaging has finished. Data
traffic is growing exponentially but is not replacing lost voice and messaging revenues. In the six years from
2008 to 2013, European mobile operator revenue fell by 10% to 156bn with a significant effect on profits.
In the same period, data traffic grew by a massive 2,617% to over 160PB per month. This is an enormous
challenge to any operator. New technology such as LTE and small-cells is required. This helps to reduce the
cost of carrying data traffic, but it is complex and expensive and it is difficult to match deployment speed to
traffic growth. A well-executed Lean Six-Sigma programme can play an important role along with new
technology in a mobile market being squeezed between growing data traffic and falling revenues.

Figure 5 The growing gap between


traffic and revenue

Figure 6 Falling EBITDA of European mobile


network operators

Conclusions

Lean Six-Sigma is a proven concept used by some of the worlds largest companies, having generated
significant savings and increased revenues over the past two decades. It focuses on eliminating waste,
speeding up processes, enhancing quality, reducing costs and harnessing talent to innovate and understand
customer value. LSS provides firms with a good selection of tools to guide execution and build a momentum
for change within the organisation. Its data-driven approach cuts through nonsense delivering alignment
between front-line staff, middle management and upper management. As the mobile industry matures and
revenue growth begins to ease, the time is right to focus on enhancing operational performance to grow
profits and deliver better shareholder returns. While Lean Six-Sigma provides a clear route to operational
excellence, it also gives an excellent framework to help guide operational innovation and give firms a real
competitive advantage.

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For further information contact:


Baldev Gill
baldev.gill@vilicom.com

Stephen Shannon
stephen.shannon@vilicom.com

Vilicom is an expert provider of


consultancy services with over ten
years of experience in the analysis,
design, test and implementation of
wireless networks. Vilicoms
strengths lie in technology strategy
consulting, the planning of cellular
networks, transmission network
design, implementation of
specialised in-building coverage
systems and network benchmarking
and testing. Vilicom has delivered its
services in over 20 countries for
network operators, network
equipment vendors, industry
regulators and investors. Vilicom
delivers value for its customers by
adopting a flexible, customerfocused approach, retaining cuttingedge expertise and maintaining its
independence.

2014 Vilicom Engineering Ltd.,


71 The Plaza, Park West, Dublin 12.
vilicom.com
+353 1 675 6900

Karn G. Bulsuk, originally published at www.bulsuk.com

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