BC Lower Revitalizing6SigmawLean

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Revitalizing Six Sigma with Lean

Arvind Korde

Sunil Mishra

July 2003



When Six Sigma does not live up to expectations 1

How Lean and Six Sigma complement each other 6

Integration approaches: What works, what doesn't 9

How to integrate Lean and Six Sigma 13

Conclusion 21

Contents



Many companies have discovered that the performance improvement program

known as Six Sigma can help them increase productivity by reducing variation in

business processes. In many industries, especially manufacturing and basic

materials, Six Sigma is perceived as an established and dependable method for

extracting profits and raising quality of process output. So many people have

been trained in the Six Sigma vocabulary and problem-solving approach that the

program has turned into a brand. A cottage industry of specialty consulting

shops and training academies has sprung up, preaching the Six Sigma gospel.

Managers who have acquired a robust Six Sigma skill-set carry their knowledge

with them when they change jobs or change companies, disseminating theapproach still further. In the past few years the Six Sigma methodology has been

extended to service industries where processing is a core competency, such as

retail banking and insurance. And recently Motorola, the company that gave birth

to this methodology in the 1980s, well before it was popularized by General

Electric, has announced that it will re-embrace Six Sigma and instill its principles

through every level of the company.

While Six Sigma has been successful in delivering results at a handful of well-

known companies, it has been less successful at many other companies. It has

not lived up to its reputation as a silver bullet. Indeed, many companies have

been disappointed not only in the level of results achieved but also with the

slower-than-expected pace of benefits realization. And even the successful ones

may experience a slowing of the pace of improvement as the program matures,

raising fundamental questions about when Six Sigma methodology is most effec-

tive as well as efficient, and how to take it to the next level.

There are several reasons for the lack of effectiveness. Many times the culprit

is poor execution of the program – including superficial leadership, lack of a

robust infrastructure, and a disconnection of line management from the program.

However, a more fundamental reason for disappointing results may lie in the rigid

process-prescriptive nature of Six Sigma. It forces teams to go through the

DMAIC process (Define, Measure, Analyze, Improve, Control) to find the root

causes and the solution, even in cases where the problem may not be new and

when a tried-and-tested solution may already be readily available in the business

world.

When Six Sigma does notlive up to expectations

1



Six Sigma is a powerful performance improvement program, but its inability to

short-circuit the DMAIC process and go directly for the solution in cases where

solutions exist unnecessarily slows it down. To realize the formidable potential

of Six Sigma, it needs to be accelerated and strengthened by the infusion of

selective subject matter expertise.

Lean, a widely used synonym for the Toyota Production System, offers exactly

such a collection of prescriptive solutions for a variety of problems. Imagine how

dynamic the improvement process could be if the problem-solving teams no

longer needed to proceed through the same five-step DMAIC process, starting

with diagnosing the problem and bringing in the Black Belts to work their statis-

tical magic,when this is not warranted. Instead, with the addition of Lean, teams

could, in certain situations, size up a problem and apply a series of prescriptive

solutions right away. No need to figure it out all over again unless necessary!

It is no surprise, therefore, that many a Six Sigma company has sought to add

Lean to its Six Sigma repertoire. Many operational consultants are touting "Lean-

Sigma" programs. The difficulty, however, is that the approaches to date have

been too simplistic and of the "Add-five-days-to-your-black-belt-training-and-you-

will-be-Lean" variety. These do not take into account the nuances, the strengthsand weaknesses, and the execution challenges of each of these powerful

methodologies before seeking to bind them together.

Lean itself has been around longer than Six Sigma. Numerous companies in

addition to Toyota have derived significant benefits from it. At the same time

many others who climbed on the Lean bandwagon have met with little success.

Part of the problem once again can be attributed to poor execution, but more fun-

damentally, many fail to understand all the subtleties of Lean; they never invest

enough energy to truly launch themselves on the Lean journey. It must be

acknowledged that Lean in its entirety is less well-understood and less effec-

tively branded than Six Sigma and is harder to transmit to the broad organiza-

tion. (That has been part of Six Sigma's appeal and wide application – not only

does its financial bottom line focus resonate powerfully with CEOs, its method-

ology can also be explained and taught quickly). How then should a company go

about adding Lean to its Six Sigma initiative?

2



That is the theme of this essay: how companies that are already fully invested in

Six Sigma can introduce Lean methods to amplify and supplement it. In some

cases Six Sigma will have started to plateau, in others the company may not be

getting the full benefit from its improvement efforts. We are not recommending

dumping Six Sigma in favor of Lean; we are saying that selected elements of

Lean may significantly accelerate and increase the benefits gained from per-

formance improvement. Each program has its shortfalls as well as its strengths.

The challenge for the sophisticated corporation is to diagnose its own cultural

and procedural weaknesses, and to meld the elements from Six Sigma and Lean

that most effectively redress them.

In the pages that follow we will present an in-depth methodology for doing just

that. We will show how companies can layer Lean into their comprehensive per-

formance-improvement regimens so that it fits comfortably on the Six Sigma

infrastructure that has already been put in place.

3



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We think substantial benefits can accrue to companies that layer in Lean to

enhance and supplement existing performance improvement programs based

around Six Sigma. Both are outstanding performance transformation approach-

es. When blended together each complements the other along several key

dimensions.

Six Sigma fosters a strong performance culture by offering:

A highly scalable infrastructure with dedicated resources

Common language and methodology that can be applied generically to all

problems - manufacturing as well as non-manufacturing

Fact-based rigor and a comprehensive set of statistical and non-statistical

tools demanded by the DMAIC (Define, Measure, Analyze, Improve, Control)

process

Focus on financial results

That said, it can be hard to sustain the early gains of Six Sigma, for these rea-

sons:

Six Sigma utilizes a problem-solving process that focuses on the project at

hand. It does not do well in tying all projects tightly into an integrated per-

formance improvement plan aimed at a well-articulated end state.

Six Sigma tends to be process-prescriptive and not content-prescriptive. It

does not incorporate known solutions to standard business problems. Six

Sigma tells practitioners what process to follow to pursue a specific oppor-

tunity for improvement. But it offers no suggestions as to what the solutions

might be, even if the problem is common with existing solutions that have

been used successfully by others in the past.

Six Sigma employs an elite resource model in that it does not quickly pro-

mote widespread involvement of the shop floor and front line in performance

improvement. The highly trained cadre of black-belt experts swoops in to

solve the problem of the day and then moves on to the next assignment.

6

How Lean and Six Sigmacomplement each other



These black belts have been culled from the top 1 percent of employees, who

are believed to be the most innovative and aggressive people in the compa-

ny. Some of their technical skill set gets shared with the green belts in the

organization, but the black belts tend to ride a separate track. This can inhib-

it continuity and the accretion of subject-matter expertise within the organi-

zation.

A performance management system built around project metrics can become

disconnected from key business objectives. And the successes of numerous

discrete projects can lull senior executives into a state of complacency so

that they lose sight of strategic issues and game-changing moves that are a

vital part of business success. In theory all Six Sigma projects are supposed

to be clearly connected to the strategic business objectives through a critical-

to-quality cascade down to all levels of the organization. (Critical-to-quality ele-

ments are those vital few characteristics of a product or service that are

absolutely essential for customer satisfaction. A product or service that does

not deliver these characteristics at a very high level creates customer unhap-

piness and in the technical language of Six Sigma is called a defect.) In prac-

tice, unfortunately, this connection is often broken by the countervailing force

of financial targets. The result is that even when companies are able to

achieve their Six Sigma financial goals, they may not reach a similar impact

on quality and customer satisfaction.

Senior managers who learn to blend Lean principles into an existing Six Sigma

program can successfully bridge these gaps. Lean provides a holistic systems

perspective and a smorgasbord of operating practices, tools, and techniques,

and invites more front-line participants into the problem-solving process. Its

inherent holistic orientation will drive a more robust selection of projects strate-

gically aligned with a longer-term view. Lean's prescriptive solutions will avoid

reinventing the wheel with each project and will lead to better and faster solu-

tions. If companies can skip the discovery phase of DMAIC, so much the better.

By applying the elite resources on the toughest problems and by involving peo-

ple on the shop floor in team problem solving, Lean generates a continuous

improvement mentality, which quickly penetrates all levels down to the shop floor.

And Lean cascades the operational metrics down to the front line, ensuring focus

7



on overall key performance indicators. Based on benchmarks, Lean implemen-

tation results can be impressive: 30 percent to 60 percent gains from inventory

reduction; 10 percent to 30 percent from throughput increases; 20 percent to

40 percent from floor space reduction; 10 percent to 30 percent from capacity

increases; and 30 to 50 percent from quality and productivity improvement.

Finally, we feel that an incumbent Six Sigma capability in turn will help to accel-

erate the usual Lean gains. Implementation of Lean can proceed faster using Six

Sigma infrastructure. The dedicated resources will enable better program trac-tion. In truly difficult operational situations, the statistical rigor of DMAIC will pro-

duce better root-cause problem solving. While both programs are tied to finan-

cial results, Six Sigma contains an explicit cost-reduction methodology that top

executives like. It's useful to be able to set a target of, say, a $250,000 expense

reduction and know that it can be met through Six Sigma. In Lean the financial

targeting is less explicit but the focus on operational metrics (key performance

indicators) makes it more meaningful to the front line and is a better foundation

for continuous improvement.

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As mentioned before, we are not the first to suggest that Lean and Six Sigma

can profitably be combined. Numerous consulting firms have outlined some vari-

ant of "Lean Sigma." But most of these approaches simply add training, usual-

ly classroom time for black belts, and in our view lack the depth and insight nec-

essary to meld two such complex programs. The fault lies in their failure to

acknowledge the intrinsic strengths and weaknesses of each program. Often

they try to force fit Lean into the shoes of DMAIC, simply viewing lean as a tool-

kit rather than a complete operating system. They do not take into consideration

the fact that even though customer satisfaction and a fast-action problem-solv-

ing style are emphasized in each, Lean and Six Sigma approach the goal of sus-tained improvement in fundamentally different ways. Only through a profound

understanding of these differences can companies preserve the richness of

each approach and select the best that they have to offer. Having previously dis-

cussed how these approaches are complementary, we will now outline the key

differences between the two and implications thereof to a sound integration

approach.

Lean's essential principles are reducing waste, synchronizing flows, and manag-

ing variability, whereas Six Sigma focuses on reducing variation. In Lean, the proj-

ect selection is driven by systemic value-stream mapping and clear articulation

of the end-state. Six Sigma uses a rigorous project selection process as well,

but it lacks the holistic product line/value stream perspective. This can result in

multiple disconnected projects being executed very well but without as large an

impact on the whole. The project selection methodology, therefore, must reflect

system level considerations.

Lean cascades metrics down to the front line and involves those workers in ongo-

ing problem-solving. Six Sigma, on the other hand, tries to keep the strategic

business objectives connected to the projects through a disciplined CTQ flow-

down process. But its laser-like focus on financial benefits can result in projects

that do not improve quality. It is important that the performance management

system be re-examined to benefit from lean metrics and performance dialogue

reaching the front line. In addition, its problem solving may not routinely reach

the front line. Good Six Sigma programs have strong dedicated infrastructure

and resources. Lean typically doesn't.

9

Integration approaches:What works, what doesn't





1) What is the takt time and customer demand rate for production? 2) What is

actual daily demand and variation? 3) What is the lead-time to replenish? 4) How

many finished good types are there? 5) Where should we hold inventory and how

much? 6) What type of pull system and kanban controls can we use for sched-

uling? A few other basic questions would likely follow as well. The nature of lean

presents a prescriptive way and set of solution tools to begin addressing the goal

of inventory reduction quickly by immediately attacking the known root causes of

large inventories.

Here is a simpler example: Let's say we want to reduce changeover time on a

machine or process. Again, we could derive a shorter changeover process using

DMAIC, with the difficulties noted above. Or we could just follow the standard

six-step process in Lean Manufacturing called SMED, for Single Minute Exchange

of Die: 1) Measure change over time, 2) Separate internal from external time,

3) Strip out external time and execute before machine shut down, 4) Reduce

adjustment related time, 5) Reduce any remaining internal time, and 6) stan-

dardize the new process. This prescriptive solution to the problem will lead

directly to quick improvement.

Once again, Lean proceeds on the assumption that these problems have beenencountered before and have been solved using specific tools. In a pure Six

Sigma environment, the team, not having access to a pre-existing world-class

solution, will in many cases reinvent the wheel through the DMAIC process.

Indeed, it runs the risk of coming up with a square wheel or a wheel that just

does not roll along as well. It will be very important, therefore, not only to pro-

vide the practitioners the tools but also to give them a roadmap specifying when

to use which tool.

If all this seems almost too pat, there is a complication we must add. These

content-rich Lean approaches are not as intuitive and readily understood as the

generic Six Sigma approach. This has clear implications for capability building.

First, top management needs to acquire an adequate understanding of the

basics of Lean and know how to use it most skillfully within the organization.

Second, the company needs to develop practitioners with deep practical capa-

bilities and the confidence to execute them on the shop floor. This may well

mean that the initial classroom training will have to to be supplemented by true

11



Lean experts until a critical mass of expertise develops within.

Of course Lean's greatest strength is its inherent capability to initiate and carry

out a full transformation within an organization. The whole notion of Lean as

practiced by Toyota and other Lean companies is that it represents a holistic

approach to performance improvement, not merely a set of independent proj-

ects. Lean causes such a change by complementing the manufacturing system

solutions with fundamental shifts in mindsets and behaviors, which evolve from

widespread involvement and accountability for performance. Eventually, Lean cre-

ates a new culture, altering how the organization addresses problems big and

small, how daily routines are managed, and how continuous improvement is sus-

tained. All this has strong implications for the breadth and depth of capability

building.

The understanding of these nuances must be coupled with the knowledge of typ-

ical pitfalls in implementing Lean or Six Sigma. These obstacles range from top-

management alignment, level of resources, method of filling the project pipeline,

performance management system, to middle-management acceptance, and the

way the program is deployed. The integration architecture will need to explicitly

define actions to avoid these pitfalls.

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We have studied Six Sigma and Lean programs at numerous companies over the

last several years. Based on our experience we conclude that a tactical inte-

gration of the two represents the next level of performance improvement and

achievement for Six Sigma programs. Further, such an integration has not been

successfully attempted at any large-scale Six Sigma organization that we know

of. We believe that a successful integration of the two programs would consist

of five elements:

1. Program readiness: Does your Six Sigma program provide a strong platform

to add Lean?

2. Project selection and solutions decision roadmap: How should you think

about selecting from the multitude of Lean and Six Sigma tools for address-

ing each type of problem?

3. Organizational capability building: What lean capabilities must be developed

across the organization?

4. Performance management: How should performance management change

under an integrated Lean and Six Sigma approach?

5. Implementation plans: What would a tactical integration rollout look like?

Let's examine each of these building blocks in detail.

1. Program readiness: The organization should undertake a diagnostic to deter-

mine if the current Six Sigma program is robust enough to serve as a springboard

for adding subject-matter expertise in the form of Lean. Such an assessment

should respond to three overarching themes:

How robust and well designed is the company's Six Sigma initiative? Thequestions in this section will illuminate such elements as leadership com-

mitment and alignment, caliber and training of the dedicated resources, pro-

gram design, inculcation of common language, aligned performance rewards,

and degree of linkage to performance management.

What concrete results have been achieved so far, financially and oper-

How to integrateLean and Six Sigma

13



ationally? Measure these in terms of projects completed, financial impact,

and specific operational improvements on key metrics.

Is Six Sigma embedded into the DNA of the organization? If so, how have the

culture, mindset, and behaviors of the organization been changed by Six

Sigma? This yields insight into how to carry the program forward. Will the

organization be able to muster the support and enthusiasm to lift it to the

next level?

In addition, in organizations that have already attempted to introduce Lean, it will

be helpful to conduct a Lean diagnostic in selected plants to gauge the effec-

tiveness of the program. This exercise should yield one of three possible

results:

The Six Sigma infrastructure is solid and Lean can be layered in right away.

The Six Sigma program is robust enough to start filling in with Lean but sev-

eral shortfalls in the basic program will need to be simultaneously

addressed.

The Six Sigma program needs to be strengthened before any Lean elements

can be introduced.

2. Project selection and solutions decision roadmaps: Many consulting firms

have been tempted to treat the Lean/Six Sigma integration in a very simplistic

fashion. They generally suggest a limited augmentation of the Six Sigma class-

room training and attempt to shoe-horn the Lean tools into the DMAIC frame-

work. On its face, this approach can seem very appealing, but it will fall short of

achieving the true benefits of Lean/Six Sigma integration. It does not address

systemic end-to-end solutions. It forces all problem-solving through the DMAIC

discovery process when additional investigative rigor is unlikely to enhance the

solution, instead of taking advantage of Lean's time-tested prescriptive recom-

mendations. And it ignores even the good habits promoted by Lean. Such estab-

lished frameworks as 5S (five Japanese concepts for setting up and maintaining

an efficient functional workplace) will have to be rediscovered. Furthermore,

Lean's value-stream mapping technique induces a systemic long-term view of a

14



potential end-state that can drive rigorous identification and sequencing of criti-

cal projects.

Therefore, we suggest that a clear two-step process should be used: First, iden-

tify and prioritize projects. Second, choose the right problem-solving approach for

each project. To identify appropriate projects, companies should use multiple

inputs, including manufacturing strategy, value-stream mapping, basic operations

assessment, and brainstorming idea generation. The prioritization of projects

should consider the current state and the target end state, and follow a path of

maximum benefit and least resistance to the target future state.

As regards the right problem-solving approach, manufacturing operations prob-

lems typically fall into four basic categories on the Lean/Six Sigma playing field,

based on whether the root cause is known and the nature of analysis required

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to identify the solution. Each requires a distinctly different problem-solving

approach, from proceeding to implementation forthwith, to engaging in a full-

fledged Six Sigma project at the other extreme.

3. Organizational capability building: We strongly believe that it is important to

build on the training and resource infrastructure of Six Sigma. However, we also

believe that a simplistic solution of adding tool-centric Lean training modules to

the Six Sigma curriculum and targeting that mainly at the black belt population

will not achieve the desired results, for several reasons:

The confidence to deploy Lean's prescriptive solutions often comes from

longer and deeper subject matter expertise.

Senior management will need to develop a deeper understanding of Lean to

be able to walk the talk.

Frontline associates and leaders will play a significant role in institutionaliz-

ing Lean practices, as well as in sustaining continuous improvement.

A tool-centric approach will miss the system design capability needed to drive

the program direction.

For these reasons we think the subject matter expertise required for prescriptive

solutions demands expert assistance beyond classroom training. In the execu-

tive suite, senior leaders need an adequate understanding of Lean to provide

appropriate vision and reinforcement. On the shop floor, training in basic tools

and sound practices must reach front line associates to enlist their full support

and cooperation. And throughout, training will need to transcend the basic Lean

toolbox to generate a sense of the potential benefits to be gained from overall

systems design aimed at defining a future state. How the complex interaction

of man, machine, material, and information should work together to achieve the

maximum improvement possible will have to be considered.

To make Lean really take root and flourish in an organization that is already com-

mitted to Six Sigma, we offer these capability-building imperatives:

Define key operational performance indicators for the organization as a whole

16



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the thrust of the program is so project-centric. Also, Six Sigma's financial orientation –

projects have specific financial goals – may divert attention from operational metrics.

Likewise, these metrics and the dialogue about performance improvement don't always

reach the front line uniformly. And financially oriented projects can be disconnected

from operational critical-to-quality measurements.

Companies generally fall into two categories: those that had strong management in

place, to which Six Sigma has added rigorous project tracking, and those with weak per-

formance management for which Six Sigma has become the de facto and incomplete

substitute.

In the former case, Lean can enhance the system further by translating the key per-

formance indicators into operating metrics to the front line - an ideal situation. It can

also change the performance dialogue at the frontline to the real time discussion of

KPIs and root causes. Finally, the operating performance dialogue now can be more

standardized around achievement of goals for SQDC – safety, quality, delivery, and cost.

The latter situation, where companies are hindered by weak performance management

systems, will require careful handling. Six Sigma is likely being used here as a surro-

gate for the performance management system, but will not be successful in fully replac-

ing it - largely due to its project-centric versus organizational-performance focus. In

general a strong core performance management system can be built from scratch by

using the basic elements of Lean philosophy. The added enhancements from the Lean

arsenal should not be attempted ahead of corrective actions in the core performance

management process.

5. Implementation plans: As is by now evident, the tactical integration of Lean onto a

Six Sigma program is not a trivial exercise. In order for the implementation to proceed

smoothly a fair amount of thought must be given to the program architecture and com-

munication. Assuming that a company's Six Sigma program is ready to add Lean, thetypical sequence for a multi-operation company will look something like this:

Six Sigma diagnostic

Overall program architecture development including a communication and rollout

plan

19



KPI development and cascading

Project selection at a chosen plant

Training and capability building

Pilot demonstration

Enterprise-wide rollout implementation

Communications implementation

Tracking and performance management

Activities to sustain improvements

20



Many companies have embraced Six Sigma as their performance transformation

vehicle. Six Sigma is a powerful program bringing with it a dedicated resource

infrastructure, common language and process improvement methodology, fact-

based rigor, and focus on financial results. However, Six Sigma is essentially

process-prescriptive and not content-prescriptive (and therefore not as effective)

in situations where known solutions to familiar business problems could be

speedily deployed. As a result, after strong initial results, many Six Sigma pro-

grams need to be augmented with content solutions to sustain the rate of

improvement. Many companies turn to Lean principles to provide the required

boost.

The complementary nature of Lean with Six Sigma is widely recognized by com-

panies and consultants alike. The proposed and practiced training-centric inte-

gration approaches tend to be too simplistic. They fail to realize the full poten-

tial of integrating Lean and Six Sigma. Each program has its own nuances and

riches, which must be preserved. A thoughtful program architecture addresses

the problem in multiple dimensions. These include: ensuring the right platform

for Lean addition, selecting projects from a systemic point of view, deploying the

right tools for the right class of problems, creating appropriate capabilities

throughout the organization, and strengthening the performance management

system. The challenges are not trivial, but the rewards can be handsome if a

thoughtful approach is followed.

21Conclusion

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