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How A Lean Six Sigma Strategy Impacts Business Improvement

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Lean Six Sigma is really a part of any business improvement strategy.  And let’s face it; most companies are doing business improvement in one form or another.  Where they often fall short is in one of the most important elements of business improvement – the identification of improvement projects.

We’re Already Doing Business Improvement!

In my 20 years of doing this work I’ve found the vast majority of companies have similar approaches to business improvement.

To understand what I mean take a look at this sample list of business improvement projects for a medium sized clothing business.

Improvement project list:

  • Expand the warehouse and implement a bar coding system
  • Renegotiate ‘per unit’ supply rates from the suppliers of blank shirts
  • Implement a ‘cascading’ based system of performance management
  • Negotiate a new freight contract
  • Introduce the PASS safety system across all warehouses
  • Replace key access with proximity card system
  • Distribute a quarterly company newsletter
  • Individually cling wrap dress shirts
  • Negotiate a corporate alliance with the Zenith Hotel chain

What do you make of that list?

Notice it’s simply a list of solutions.

Each idea is a way of solving some perceived problem. For example ‘renegotiation of unit supply rates’ is a solution for the problem of ‘increasing cost of producing a unit’ of whatever it is they manufacture.

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In the absence of an improvement strategy like Lean Six Sigma, this tends to be the way business improvement is approached.

Ideas for making the business better, in solution form, are identified and undertaken as improvement projects. Managers genuinely believe they are doing business improvement and have no idea why you would want to add a Lean Six Sigma methodology to it.

I’ve even seen a situation like this where one manager believed the company was already doing Lean Six Sigma.

Here’s What’s Missing

The major shortfall with this approach is many opportunities for genuine performance improvement are missed because SOLUTIONS ARE NOT KNOWN. This approach produces a list of improvement ideas that answer one question:

‘What can we DO to improve our business?’

The business improvement approach is significantly broadened when improvement ideas are captured for which SOLUTIONS ARE NOT KNOWN. A new question should be asked:

‘WHERE can we improve that would add value to the business?’

In the case of our clothing manufacturer, this question might generate ideas like these.

  • The number of incidents of incorrect order processing
  • The cycle time for turning around an order
  • The proportion of on-time creditor payments

All are worthwhile projects because they positively impact customers as well as the business. Yet none of them are solutions, only focal points for business improvement.

A broadened approach to Business Improvement looks like this:

lss-improvement-strategy-002

The Role of Lean Six Sigma

Where methodologies like Lean Six Sigma come into play is in identifying solutions for improving the performance of PROCESSES.

Because of the orientation of these methodologies towards the use of data, the more appropriate processes for Lean Six Sigma focus are those that are HIGHLY CYCLIC and have REPETITIVE or STANDARDISED process steps.

For example, reducing order errors in an order filling process, or reducing cycle time for order processing in an order filling process are both perfect as Lean Six Sigma projects. Solutions are NOT KNOWN, the process is highly cyclic and steps are repetitive.

Non Fit With Lean or Six Sigma

Not all improvement ideas without solutions will be Lean Six Sigma projects.

For example reducing the number of late creditor payments may be solved by using some of the process mapping and cause effect analysis tools from the Lean Six Sigma suite.

However, if the team identified ‘compliance with terms of payment’ as the main issue, the project is obviously not a perfect fit for the Lean or Six Sigma methodologies.

Opportunities such as ‘improve employee morale’ or ‘improve staff awareness of company performance’ or ‘increase the quality of induction training for new employees’ are also poor fits with Lean and Six Sigma in their pure form.

However, work on those problems will benefit from the use of Lean Six Sigma tools in finding solutions.

Here’s My Point

Business improvement with Lean Six Sigma is still just business improvement. However, it establishes a framework where the company can work on:

(a) projects where solutions are known as well as projects where solutions have yet to be identified, and

(b) both process improvement and non-process oriented projects.

Business Improvement with Lean Six Sigma looks like this:

lss-improvement-strategy-003

Notice the existing business improvement system is not eliminated … it’s actually ENHANCED by the INCLUSION of Lean and Six Sigma methods.

So what about business improvement project identification?

If you’re going to undertake a formal business improvement initiative, then use a project selection approach that has GENERIC application in that it’s suitable for companies utilising a range of business improvement methodologies such as:

  • Six Sigma,
  • Lean Manufacturing,
  • Design for Six Sigma,
  • QFD
  • Theory of Constraints …..etc

The step of IDENTIFYING business improvement project ideas is a critical one in the sequence as it sets the initiative up for either success or failure.

More Than One Way to Skin a Cat

We don’t want to take an approach quite so unsophisticated as just asking ‘What do we need to do to improve our business?’ Let’s inject some science and strategy in the way we tackle the question of where and how to improve our businesses.

Some of the more robust scientific ways are these:

  • Problem or performance gap identification
  • Problem or performance gap creation
  • Business driver analysis
  • Analysis of processes for constraints
  • Analysis of performance against customer expectations or any other key business measures

Opportunities can and should be identified by taking a look at the business from a variety of angles.

Why There Isn’t The ONE Way

Firstly, let’s acknowledge that all businesses differ; no two are exactly the same.

The way in which a business identifies opportunities for growth in value will be driven by many factors including maturity, market forces, operating methods and culture.

Secondly, business and operating thinking patterns vary so greatly that no single approach is best.

Source: This article is adapted from Process Alchemy (with Lean Six Sigma) 2nd Edition, available from the AOBIL bookstore.

 

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