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A Whitepaper from Juran
Lean Six Sigma
The Source for Breakthrough
5 Unexpected Ways Continuous Improvement With Lean Six Sigma Can Improve Your Company
1
Juran
Our expertise has been developed over more than six decades of real-world experience, and our methods areuniversal and have been applied in nearly every industry and culture around the world. We are trusted advisers,
enabling global leaders to achieve measurable, breakthrough results. We provide best-in-class servicesdesigned to improve our clients’ organizational performance and business results. Improvement is our business,
and we are fully committed to our clients and believe that our clients’ success is our success.
2 5 Unexpected Ways Continuous Improvement With Lean Six Sigma Can Improve Your Company
For most organizations, the terms Leanand Six Sigma mean measures andmethods of quality that strive for near-perfection. Lean focuses on minimizingwaste in processes, products, andservices, while Six Sigma focuses onreducing the variability and causes ofdefects. They are both highlydisciplined continuous improvementprocesses that help companies createand sustain competitive advantages.
About Lean
The essence of Lean is that anyexpenditure of resources for any goalother than the creation of value for theend consumer is wasteful – and, thus,should be eliminated. “Value” isanything the customer would bewilling to pay for. The ultimate goal ofLean is to provide perfect value to thecustomer through a perfect valuecreation process that has zero waste.Accomplishing this requires thatorganizations – whether service,manufacturing, or healthcare –optimize the flow of products andservices through entire value streamsthat flow across technologies, assets,and departments to customers. Theresult is the ability to respond tochanging customer demands whilemaintaining high quality, low cost, highvariety, and enhanced throughputtimes.
About Six Sigma
While Six Sigma also enablesorganizations to pursue perfection, thefocus is not on removing waste, butrather on using statistical and qualitymanagement methods to identifydefects and errors andminimizing variability in manufacturingand service business processes. SixSigma projects follow a series ofprescribed steps to achieve specificquantified targets, such as reducingbilling errors, manufacturing defects,or increasing customer satisfaction. Toachieve Six Sigma quality, a processmust produce no more than 3.4defects per million opportunities. An“opportunity” is defined as a chancefor nonconformance, or not meetingthe required customer specifications.This means that for a process to reachSix Sigma, it has to be nearly flawless.
Six Sigma uses two sub-methodologies: DMAIC, which standsfor Define, Measure, Analyze, Improve,and Control, is used for existingprocesses; DMADV, which stands forDefine, Measure, Analyze, Design, andVerify, is used for new processes.
5 Unexpected Ways Continuous ImprovementWith Lean Six Sigma Can Improve Your Company
3 5 Unexpected Ways Continuous Improvement With Lean Six Sigma Can Improve Your Company
Together, Lean and Six Sigma – orLean Six Sigma – provide acomprehensive set of methods andtools that enable organizations toimprove quality and reduce costs – allfor the ultimate goal of continuousvalue creation for the customer.Certainly, these are strategicadvantages for any company.However, there are five additionalbenefits that Lean Six Sigmacompanies enjoy.
#1: Strategic Planning
Strategic planning is driven by anorganization’s mission and visionstatements, with the mission statementfocused on why the organization existsand the vision statement articulatingwhat the organization hopes toachieve. The very best strategic planstranslate the vision statement toquantifiable and measurableobjectives, such as increasing marketshare or reducing employee turnover.Lean Six Sigma can accelerate thepace at which those objectives areachieved.
For instance, if a company objective isto increase market share, one strategymight be to lower prices by reducingcosts, another strategy might be toreduce product or service complaints,and a third strategy might be to addproduct or service features andbenefits that will hold the price level.
Whatever the strategy happens to be,Lean Six Sigma can help make yourcompany the best at what it does.
#2: Productivity
As organizations reduce waste andvariation from their processes, thenoticeable effect is that it increasesemployee productivity. This happensfor several reasons. First, with lesswaste and less variation, there is lessrework. When you get it right the firsttime, you don’t spend time fixingerrors. Imagine if your billingdepartment operated at Six Sigmalevels, meaning that a billing erroroccurred just once every couple ofmonths (depending on how many billsyour company processes and thenumber of line items on each invoice).The number of hours required tocorrect erroneous bills would drop tonear-zero, which means you wouldeither need fewer billers or couldprocess more bills without addingstaff.
Second, Lean Six Sigma forcesorganizations to rethink how work getsdone, which creates naturalefficiencies. Departments that oftenwork collaboratively are moved closertogether, supply rooms are eliminatedas inventory moves to just-in-time-models, paper processes areeliminated for more efficient electronicmethods, and more. Every time wasteor variation is removed from a process,
4 5 Unexpected Ways Continuous Improvement With Lean Six Sigma Can Improve Your Company
it makes those who interact with theprocess not only more effective, butalso more efficient – and greaterefficiency leads to higher productivity,which allows organizations to growwithout adding employees, oreliminate vacant positions that are nolonger needed.
#3: Employee Satisfaction
With increased employee productivitycomes increased employee motivation,as well as higher employeesatisfaction. Employees who don’thave to fight through poorly designedprocesses, devise work-arounds to getthings done, or spend time on non-value-adding steps are moremotivated and happier. But this isn’tthe only employee benefit. Asorganizations imbed Lean Six Sigmainto the fabric of their companies,employees naturally become moreattuned to identifying waste andvariation, as well as seekingopportunities to improve quality andcreate additional customer value.
For organizations that have taken amethodical approach to implementingLean Six Sigma, the result is usually thetransformation of employees into“improvement experts.” When all ofyour employees are actively involved increating customer value by seekingopportunities to remove waste andvariation in processes, the sustainablecompetitive advantage is enhanceddramatically. Not only that, employees
see their roles within the organizationas more than just the duties defined bytheir job descriptions; their jobs arenow aligned with the mission andvision of the organization. When thathappens, employee motivation andsatisfaction rise, too.
#4: Customer Loyalty
Imagine a company that was adept atcreating customer value, reducingdefects, reducing variation in itsproducts and services, increasingfeatures and benefits, offering a highvariety of options at little to noadditional cost, and increasing thespeed at which the products andservices were delivered. That companywould certainly enjoy high customersatisfaction, which translates to equallyhigh customer loyalty and retention.
That’s not all. Organizations that areskilled at Lean Six Sigma also discoverthat their customers become powerfulreferral sources. Customers not onlymaintain a loyalty to the organization’sproducts and services, but they alsooften become raving fans, tellingcolleagues, family, and friends abouttheir experiences.
#5: Supply Chain Management
What mature Lean Six Sigmacompanies usually discover is that tocontinuously improve processes,suppliers must eventually becomeintegrated into their qualityimprovement initiatives. To fully
Organizations that areskilled at Lean Six
Sigma also discover thattheir customers become
powerful referralsources.
5 5 Unexpected Ways Continuous Improvement With Lean Six Sigma Can Improve Your Company
reduce waste and variation in yourprocesses, your suppliers must reducethe waste and variation in theirprocesses, too. For instance, if 25% ofone supplier’s product is regularlyreturned because it doesn’t meet yourspecifications, this increases yourcosts, decreases cycle time, reducesemployee efficiency, and more. Evenworse, there is a greater likelihood thatone of your supplier’s defective partsmakes it into your inventory and iseventually passed on to a customer.
Involving every aspect of the supplychain – beginning with your suppliers –becomes a tremendous competitiveadvantage. Whether your suppliersimprove their processes, or you drivedown the number of your suppliers –or both – the ripple effect it hasthroughout your organization cannotbe overstated. This is why the mostsuccessful Lean Six Sigma companiesmove as far up the supply chain aspossible – sometimes even having asupplier move its facilities next door –because ineffective supply chainmanagement can cause theorganization to become infected bywaste and variation.
The Organization Health Check
Juran Global’s Organization HealthCheck analyzes internal andenvironmental factors critical to yoursuccess in today’s volatile marketplaceand compares them to performanceexcellence industry standards. You getmeaningful data on your organization’sstrengths and weaknesses that canhelp you close the gaps and achievesuperior quality and sustainableresults. With more than 1,000assessments completed, we have theexperience and insight that can helpjumpstart your journey to becoming aworld-class organization. TheOrganization Health Check provides aquick qualitative review – or “fitnesstest” – against industry best practices.We provide a summary of yourorganization’s ability to meet your ownplans and your customer needs.
To learn more about the OrganizationHealth Check or take a free HealthCheck, please visit our website athttp://bit.ly/juran3, or contact us at:
Juran
160 Main Street
Southington, CT 06489
800.338.7726
http://www.juran.com/contact-us
© Juran Institute 2014. All rights reserved.
