Michael George, chairman and CEO of George Group, answers common questions about integrating the Lean and Six Sigma methodologies.
Q: What is Lean?
A: Lean is a methodology that is used to accelerate the velocity and reduce the cost of any process (be it service or manufacturing) by removing waste. Lean is founded on a mathematical result known as Little’s Law:
Lead Time of Any Process = Quantity of Things in Process / (Average Completion Rate/Unit of Time)
The lead-time is the amount of time taken between the entry of work into a process (which may consist of many activities) to the time the work exits the process. In procurement the things in process are the number of requisitions, in product development the number of projects in process, and in manufacturing the amount of work in process. Lean contains a well-defined set of tools that are used to control and then reduce the number of things in process, thus eliminating the non-value add cost driven by those things in process. The pull/kanban system puts a cap on the number of things in process, thus putting a cap on the lead-time. Lean also contains tools to reduce the quantity of things in process including setup reduction, total productive maintenance, 5S, etc. For example, setup reduction allows the reduction of the time spent on producing a quantity of any given offering or product, reducing lead-time without reducing the completion rate. The Lean methodology has a bias for action, leveraging Kaizen to rapidly improve processes and drive results.
Q: Why should Lean be important to Six Sigma professionals?
A: Whereas Six Sigma is most closely associated with defects and quality, Lean is linked to speed, efficiency, and waste. Lean provides tools to reduce lead-time of any process and eliminate non-value add cost. Six Sigma does not contain any tools to control lead time (e.g., pull systems), or tools specific to the reduction of lead time (e.g., setup reduction). Since companies must become more responsive to changing customer needs, faster lead times are essential in all endeavors. Lean is an important complement to Six Sigma and fits well within the Six Sigma DMAIC process. Additionally, the Lean Kaizen approach is a great method that can be used to accelerate the rate of improvements.
You need to improve quality so you can achieve maximum speed, and you need to do the things that allow maximum speed in order to reach the highest sigma levels of quality. In other words, you need both Lean (speed) and Six Sigma (quality) principles and tools to drive improvements in ROIC and achieve the best competitive position.
Q: Can you provide an example of how Lean coupled with Six Sigma would help address a transactional process issue? A manufacturing process issue?
A: The processes of all companies and organizations must:
Only the combination of Six Sigma and Lean can fulfill all three goals. In any process, Lean Six Sigma creates a value stream map of the process identifying value add and non-value add costs, and captures the Voice of the customer to define the customer critical to quality issues. Projects within the process are then prioritized based on the delay time they inject. This prioritization process inevitably pinpoints activities with high defect rates (Six Sigma tools) or long setups, downtime (Lean tools). In manufacturing, a further benefit results from a reduction in working capital and capital expenditure. We have found over the last 15 years that these methods apply in virtually every kind of process from healthcare to financial services to energy to manufacturing.
Q: What role can Lean play in a company that has already started implementing Six Sigma?
A: Lean will add another dimension of improvement in process speed and reduction of non-value add cost. Further, by accelerating process speed, Lean provides faster feedback and more cycles of learning enhancing the power of Six Sigma tools. For example, an L18 design of experiment might require about 100 separate runs to optimize parameters and minimize variation. Reducing the lead time by 80 percent will allow the fractional factorial design to be completed five times faster. In addition, the Lean Kaizen approach allows Black Belts to implement rapid improvements whenever possible.