What is Lean Six Sigma?

Lean Six Sigma (LSS) is a powerful, flexible and proven cost and waste elimination method that has been used successfully in both private and public organizations. It is applicable equally to both industrial/manufacturing processes and transactional/customer service processes. LSS traces its origins back to the 1950s via, at that time, the independent Lean process efficiency methodology and the Six Sigma quality improvement methodology. As a combined entity, LSS has been on the scene since the 1990s. Since then, LSS has been shown time and again to enable organizations to reduce total costs by 25% by eliminating wasted time and activities from operations. This waste reduction effort has also served to increase the quality of the organization’s products. Most importantly, LSS builds foundations within organizations that stimulate and nurture cultures of continuous improvement; thus providing these benefits both today and into the future.

In order to understand the power of LSS methodology and to learn of its ability to assist government organizations at the federal, state and municipal levels to both save taxpayer dollars and improve the quality of services delivered to citizens, it is best to consider the major components of LSS—the Lean and Six Sigma methodologies. 

Lean Six Sigma in a nutshell

Define and Measure: The process of waste reduction begins by talking to the the customer or user of the output of the process to Define what they want and value. All costs that do not contribute to that value are waste and can be immediately eliminated. In one of the Naval Aviation case studies, the Navy found that when the customer (the Fleet) measured the number of practice take offs and landings it was far above the readiness level. Those extra costs were immediately cut contributing to a $169 million savings per year.

Analyze and Improve: The Navy found that many F-18 aboard carriers were out of service for repairs, which was of no value to the Fleet. One of the leading causes was the average failure in 250 hours of Auxiliary Power Units (APU). An Industry/Navy/Quality team was formed, and Analyzed the problem and improved the APU increasing its reliability to 2,500 hours. This improved the combat effectiveness of the Fleet.

Control: After these steps have been accomplished the Navy put in Controls to prevent a regression back to the old wasteful performance.
The Define-Measure-Analyze-Control is the heart of Lean Six Sigma and is known as the DMAIC (pronounced duh may ick) process. In federal applications, the Define phase has often never been done, leading to large savings immediately.

WHAT  IS  LEAN?

As stated above, Lean is an approach to organizational improvement that focuses on process speed and efficiency. It does this by a relentless search for all kinds of waste in the functions the organization performs. This waste is generally identified as non-value-add tasks, process steps, review cycles, reporting requirements and personnel practices that distract and take away from the absolutely essential functions the organization must perform. By identifying and eliminating these non-value-add activities, the organization decreases costs and shortens the time required to deliver goods and services to its customers (either customers in the traditional commercial sense of the word or citizens under the authority of a government entity).

Lean was developed in manufacturing environments and was made famous by Toyota Motor Company. It even came to be known as the Toyota Production System. Despite the quality issues Toyota is encountering today, Lean enabled Toyota to rise from a relatively small company in the 1960’s to one of the largest automotive manufacturing enterprises in the world today.

In order to dig deeper into understanding Lean, it is helpful to understand the terms “lead time” or “cycle time” (these terms are often used interchangeably). Lead or cycle time is defined as the length of time required for an organization to deliver a good or service to a customer (to the customer’s complete satisfaction) from the time the request for the good or service was received. The fundamental Lean insight is that the shorter the lead or cycle time, the lower the non-value-add cost.  Further, reducing this cost reduces the total cost of delivering the item. Shorter lead times and faster responses to customer desires are key drivers of effectiveness.
Since long lead times drive large non-value-add costs, it is helpful to have an understanding of the relationship between lead times and the process activities within the organization that the organization can control. This relationship is known as Little’s Law and states that the lead time of any process equals the total number of items being worked at any given time divided by the average completion time of these items. By optimizing this relationship, non-value-add cost can be driven from the organization.

As an example, consider a process that involves the creation of documents. Let it be assumed that 90 individual documents are being worked on and the average completion rate for finishing these documents is 10 per week. Accordingly, the lead time for the process is 90 documents divided by 10 documents per week equals nine weeks. This means that when work on a document is begun it will be nine weeks before it is completed.

If the customer, however, wants a document in four weeks, what are you going to do?  Every process has some maximum average number of items it can complete per day.  This is known as the capacity of the process.  As the demand for output increases toward the maximum capacity, the number of items in work increases.  As the number of items in work increases the process slows down and the opportunity for errors increases. These errors cause reworkthat is waste and increases the demands on the process.

So, back to the question, what must be done if the lead time for the process is nine weeks, but the customer demands that their document be delivered within four weeks? In summary, there are basically two approaches to shortening lead time which are: 1) Reduce the number of items in work within the process and 2) Increase the average completion rate for the items.

Reduce the number of items in work: If we can reduce the amount of rework, we can reduce utilization percentage, reduce the number of items in work, and reduce the lead time of the process. There are several Lean methods known as “tools” that will accomplish this goal.  One of the most powerful drivers of large numbers of items in work and long lead time are revisions and rework. Both are clearly non-value-add cost. Further, increasing rework dramatically increases the number of items being worked on at any given time in the process.
Some of the key Lean tools to eliminate waste and reduce lead time in the process and a brief explanation of each are:

Value Stream Mapping - Value Stream Mapping is a graphical tool that helps one see and understand the flow of the material and accompanying information as a product or service makes its way through to completion. Value Stream Mapping serves to provide the foundation for using other Lean concepts and techniques.   

Value-Add versus Non-Value-Add Analysis - Value-Add versus Non-Value-Add Analysis is used in conjunction with the voice of the Customer to determine what the customer values or will pay for. The objective is to identify and eliminate waste that drives up the cost of the product or service, reduce errors by simplifying the process and creating additional capacity.

5S Program - 5S stands for Sort, Set-in-order, Shine, Standardize, and Sustain.  The 5S program  is a methodology for organizing, cleaning, developing and sustaining a productive work environment. Improved safety, ownership of workspace, improved productivity and improved maintenance are some of the benefits of the 5S program. Increasing the average completion rate can be accomplished by again eliminating non-value-add work within each item in work so more time is available to complete more work per hour. This increases the maximum capacity. By increasing the maximum capacity, one reduces the utilization percentage and hence the items in work and the lead time. A third approach is to add more manpower to the process.  This tends to increase cost, but does not necessarily increase capacity due to Brooks Law (a programming manager at IBM) that states adding manpower to a late process just makes it later. An additional benefit to reducing non-value-add efforts is providing additional “surge” capacity – the ability to perform more work without adding additional resources.

What  is  Six  Sigma?

Six Sigma grew up in response to the need to reduce the variation in microchip parameters as shown in Figure 2.

No matter the parameter, be it current leakage or propagation delay, Hewlett-Packard found American chips had a distribution that followed the dashed curve in figure 2 whereas the Japanese chip was more tightly distributed around the desired mean value (the solid line curve). Variation is measured by the width of the distribution where the curve changes from concave down to convex up, and this width is known as the “Standard Deviation.” It is also called one Sigma and contains 68% of the data.  Another manufacturer, Motorola, reasoned that if their distributions had Six of these Sigma from the mean to the spec limit, they would follow the solid curve and have essentially no spec failures.  But, by far the most important step that American companies took was to overcome the reason that earlier quality improvement programs had failed. Instead of making the Quality Control Department responsible for controlling quality, they made management responsible. At General Electric for example, if managers did not accept this responsibility, they were replaced no matter how much profit they earned. Even more importantly, Six Sigma created roles and responsibilities for each person in the organization (see Figure 3).

Six Sigma also created a generalized problem solving methodology called DMAIC (Define, Measure, Analyze, Improve, Control). In the first step, Define, you must talk to the user of your output to understand what they would like to see improved.  In the Measure phase, you collect data to verify the users’ issues.  The Analyze and Improve phases use the Statistical Process Control tool to reduce variation.  Finally, the Control phase requires the owners of the process to sustain the benefits achieved.  Another key element of the DMAIC process is that management is required to review each project before it moves from D to M, M to A, etc.  The goal is to make sure projects are showing promise are properly resourced, while those that do not show promise are either ended or restructured.  Finally and perhaps most importantly, Six Sigma prescribes organizations assign 1% of its workforces to be trained for five weeks as process improvement specialists known as Black Belts, and to assign them, full time, to process improvement projects.

The unique power of Six Sigma is that it prescribes the infrastructure needed to achieve and sustain success, and no previous CPI process including Total Quality Management and Leanmade such a prescription.  Most of the people who created Six Sigma had lived through the TQM debacle, which made no such prescription of the management infrastructure, and rather focused on the tools of quality rather than on the objectives of the business.

Power of the Combined Lean Six Sigma Methodology
The tools for eliminating waste that we get from Lean and the focus on customers and quality improvement from Six Sigma combined with the latter’s prescribed management and implementation infrastructure has created the most powerful CPI methodology available today.

LSS methodology has been proven effective not only in for-profit businesses,  but has also shown to be very effective at eliminating waste from several organizations across the United States Federal Government to include: Department of the Army, Naval Air Systems Command, General Services Administration, Central Intelligence Agency and Department of Treasury. The U.S. Army, for example, has documented savings in excess of $14 billion. To ensure the highest likelihood of success in bringing cost reductions and quality of service improvements to the entire government, LSS must become the standard way of operating across all departments and agencies.

This is what Strong America Now is attempting to achieve. If you agree with this goal, please contact us. If you would like to read about specific case studies in Government operations in which LSS brought about stunning accomplishments, also please contact us.