In manufacturing two sets of concepts are often discussed (though less often implemented). These are “lean” and “six sigma.” Each when applied in its own right brings enhanced value to companies and their customers. Both are often ignored in small business – often thought of as “too complex,” or “not for our small company.” In fact, there are simple lessons from both which, when combined, can bring operational improvement to any firm – even non-manufacturers.
First, a couple basics. Lean focuses on value. Simply put: what’s important to the customer? Its key principles involve the elimination of waste and accelerating the velocity of processes. It traces its roots back to Toyota. If value is defined as “what matters to the customer” then value-added simply means work your customer is willing pay for. Everything else is waste, to be identified and eliminated in a process of continuous improvement.
A simple acronym helps remind us of the 8 key forms of waste: DOWNTIME: Defects, Overproduction, Waiting, Non-Utilized Talent, Transportation, Inventory (too much or too little), Motion, and Excess Processing. As you reduce or eliminate these, you become leaner. Meanwhile, “accelerating the velocity of processes” does not mean working faster; it means speeding up the end-to-end process, or the entire “lead time.” Think of this as the time lapse between ordering something online and when you receive it. Compressing those lead times at each incremental step possible increases velocity and makes you leaner.
Meanwhile, six sigma is a well-defined system of striving for the near-perfect delivery or products or services. Without getting into its technicalities – books have been written – the idea is that if you can get to six “standard deviations” (a mathematical concept relating to how far a given process deviates from being perfect) you will have arrived at better than 99.999% (“five nines”) reliability in your process. (Since one of our staff is a Six Sigma Black Belt, I’m sure I’ll hear about it if I’ve misled anyone here…)
Like lean, six sigma also has an acronym to describe its framework. That would be DMAIC: Define, Measure, Analyze, Improve, and Control. As implied above, with six sigma, you identify the root causes before implementing solutions.
When you combine the two, as Peter J. Sherman, an APICS Certified Supply Chain Specialist (CSCP) at Riverwood Associates writes… “we get something powerful — a business improvement methodology that maximizes shareholder value by achieving the fastest rate of improvement in Cost, Quality and Customer Satisfaction. It focuses on reducing waste by streamlining operations and reducing defects (i.e., services not delivered on-time or within budget).”
While companies generally prefer to utilize some outside assistance in solving their own individual continuous improvement initiatives, isn’t it heartening to know that at the core of it all, the concepts are so beautifully simple and logical? The challenge, as is so often the case, lies in having the discipline and technique to pursue a successful initiative.