Running head: TRACING HISTORICAL INFLUENCES OF LEAN SIX SIGMA

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1 Tracing Historical Influences of Lean Six Sigma 1 Running head: TRACING HISTORICAL INFLUENCES OF LEAN SIX SIGMA The Evolution of Quality Management: Tracing Historical Influences of Lean Six Sigma Scott Thor

2 Tracing Historical Influences of Lean Six Sigma 2 Abstract The evolution of quality management has changed dramatically in the past decade. Once looked upon as only a function for finding defective product, the role of quality in modern organizations has transformed into a proactive role centered on prevention and improvement initiatives. Several key individuals such as Taylor, Ford, Shewhart, Deming, and Ohno have contributed to the quality movement, leading to the most contemporary methodology known as Lean Six Sigma. Lean was born out of the Toyota Production System (TPS) and gained widespread popularity as the Japanese successfully challenged U.S. automakers during the 1980s. Six Sigma was developed at Motorola in the 1980s and targets reducing variation within processes. In recent times Lean and Six Sigma have been combined to form an improvement methodology that offers the full spectrum of quality improvement tools for both simple and complex problems. This paper describes the evolution of quality management and provides a detailed overview of Lean, Six Sigma, and their eventual combining. The paper also provides a historical background of the individuals who have influenced the quality movement. Also provided within the paper are both the positive and negative aspects of Lean Six Sigma. The paper concludes with a look to what the future holds for Lean Six Sigma.

3 Tracing Historical Influences of Lean Six Sigma 3 The Evolution of Quality Management Quality management has significantly evolved over the last several decades. In a traditional sense, the role of quality was initially developed as a mechanism for ensuring control over the output of a process (Addey, 2004). The role of quality was to find defective product before it reached the customer, which placed the quality function in a position of policing an organization s products (Chen, Coccari, Paetsch, & Paulraj, 2000). Deming (2000) popularized the notion that quality comes not from inspection, but improvement of the process, which led to a paradigm shift in quality management in the 1980s. Deming helped move industry from quality control activities being the primary role of quality, to one of quality assurance, where focus is placed on prevention instead of detection. As the quality function started to evolve from detection to prevention, continual improvement began to take hold in the quality profession with the rise in popularity of international quality standards, most notably ISO 9000, and the concept of total quality management (TQM). The ISO 9001 standard gained popularity in the 1990s to help satisfy the need for an international standard for quality management systems (Okes & Westcott, 2001). The widespread acceptance of the ISO standard expanded the scope of quality management toward a focus of compliance with the standard, and continual improvement initiatives aimed at improving organizational processes. The concept of TQM is best summarized as a management system focused on customer satisfaction that involves all employees of an organization in continual improvement activities (Okes & Westcott, 2001). With a greater focus on improvement emphasized by the ISO standard, TQM became a complimentary addition to the responsibilities of quality leaders in the 1990s, elevating their value in organizations striving to compete globally.

4 Tracing Historical Influences of Lean Six Sigma 4 Building on the concept of continual improvement grounded in the ISO standards and TQM, Lean and Six Sigma evolved from the need to reduce non-value added activities, and minimize variation, respectively. The concept behind Lean came from the Japanese automakers that gained significant market share over U.S. automakers in the 1970s and 1980s (Womack, Jones, & Roos, 1990). The primary objective of Lean is centered on improving efficiency by removing waste (Jing, 2009). Lean thinking suggests that by minimizing or eliminating nonvalue activities, which are activities customers are unwilling to pay for, an organization can deliver products and services quicker and at a lower cost with higher quality (Womack et al.). In the last decade Six Sigma has gained popularity because of the bottom line financial results the process focuses on (Eckes, 2001; Hahn, Hill, Hoerl, & Zinkgraf, 1999). The raw statistics of Six Sigma equate to 3.4 defects per million opportunities, nearly a perfect level of quality. The central focus of Six Sigma is based in the idea that quality is defined as meeting customer expectations with minimal variation. The process of Six Sigma can generally be described as defining and measuring the problem, analyzing data, establishing improvement initiatives, and implementing control mechanisms to maintain the improvements (Harry, 2000). The most recent advancement in quality management has been the combining of Lean and Six Sigma. Lean Six Sigma brings together the focus of Lean in reducing non-value added activities, and the fact-based approach of Six Sigma centered on data driven process improvement. Jing (2009) describes Lean Six Sigma as, an improvement program or approach aimed at combining both Lean and Six Sigma to improve efficiency and capability primarily by removing wastes and variation (p. 26). George, Rowlands, and Kastle (2004) describe Lean Six Sigma as having two key aspects that include delighting customers and improving processes. Delighting customers comes from providing a quality product or service quickly, taking

5 Tracing Historical Influences of Lean Six Sigma 5 advantage of the Lean aspects of Lean Six Sigma. Improving processes comes from reducing variation and defects, a key component to Six Sigma, and improving process flow. Both delighting customers and improving processes are based on data and facts. Lean Six Sigma represents not only an improvement methodology, but also the most recent advancement in the evolution of quality management. This paper seeks to trace the evolution of quality management that has led to the development of Lean Six Sigma. The paper describes in detail the key elements of TQM, Six Sigma, and Lean, and provides a historical overview of each methodology leading to the development of Lean Six Sigma. Also discussed are the early pioneers who influenced the concept of quality improvement and how their work led to the modern techniques utilized in Lean Six Sigma. The paper also describes the challenges to Lean Six Sigma and some of the positive and negative aspects in utilizing the process. The paper concludes with a discussion on the future of Lean Six Sigma, and whether the process will continue to develop or be written off as another management fad. Definition of Terms 5S: A key aspect to Lean that drives the organization of work spaces to increase efficiency and eliminate unnecessary clutter. The five S s include sorting, straightening or setting in order, sweeping or shining, standardizing, and sustaining the discipline. Some organizations also include a sixth s that includes safety. Common Causes: These types of causes of variation within a process are inherent in the process. A process with only common cause variation is considered to be in a state of control. Control Chart: A chart used to plot the output of a process over a period of time. This type of chart can be used to plot both variable and attribute data.

6 Tracing Historical Influences of Lean Six Sigma 6 FMEA: This tool is utilized to define and rank potential failure modes of a process or design. Failure mode and effects analysis is completed to help establish proactive efforts where serious failure may occur. Kaizen: An event typically lasting from a few hours to a few days where teams of individuals come together and implement an improvement project. Kanban: This is a tool used to establish a pull system of production. A kanban card is typically used to signal an upstream process that more product is needed to continue downstream processes. The goal of kanban is minimizing the amount of work in process. Pareto Chart: A chart used to rank the frequency of a problem from the highest recurring to the least. These charts aid in identifying where to focus improvement efforts. Scatter Plot: This type of data plot is commonly used to visualize correlations between two or more variables. SIPOC Diagram: This type of diagram helps in understanding the key components in a value stream. The diagram defines suppliers, inputs, processes, outputs, and customers. SMED: Single minute exchange of dies is a concept utilized in Lean to rapidly change from one product to another with minimal change over time. Special Causes: Unlike common causes, special causes are unique causes to variation within a process. These types of causes can always be assigned to a change in the process. Value Stream Map: This is one of the most common tools utilized in Lean. The map establishes a current state to aid in understanding where opportunity to improve exists. The map is also a key tool in understanding the sources of waste in the process. Six Sigma and TQM

7 Tracing Historical Influences of Lean Six Sigma 7 Six Sigma began at Motorola in the 1980s and has since gained widespread popularity in the business media based on its success at large organizations such as General Electric and Allied Signal (Mader, 2008; Pande, Neuman, & Cavanagh, 2000; Shah, Chandrasekaran, & Linderman, 2008). The six generally accepted aspects related to Six Sigma include: 1. Top management leadership 2. A focus on customer requirements 3. Focus on financial and non-financial results 4. Use of a structured method of process improvement 5. Strategic project selection 6. Full-time specialists (Schroeder, Linderman, Liedtke, & Choo, 2008) Traditional definitions of quality have focused on meeting tolerances or staying within specification limits. Six Sigma differs from the traditional viewpoint of quality in that Six Sigma s focus is not only on meeting specifications, but also reducing variation. Six Sigma has been compared to TQM, which gained popularity in the 1980s. TQM programs were introduced to U.S. organizations in response to the competitive onslaught of Japanese companies in the electronics and automotive sectors (Beer, 2003). American organizations had no other choice but to improve their quality management systems to keep up with the high quality products coming from Japan. TQM, much like Six Sigma in the late 1990s, was the latest fad on many executive management teams agendas, hoping it would be the answer to all their problems. Several definitions and descriptions of TQM exist. Gopal, Kristensen, and Dahlgaard (1995) define TQM as an improvement initiative based on four governing principles: Delight the customer

8 Tracing Historical Influences of Lean Six Sigma 8 Management by facts People-based management Continuous improvement Each principle can be used to drive improvement on its own, but the real power of TQM is found in combining each of the principles, building on one another. TQM s primary focus is customer satisfaction and continual improvement, which has some similarities to Six Sigma. Where the two methodologies differ is that Six Sigma takes process improvement a step further and has an added focus on fact-based problem solving, and a direct link to financial results. One could argue that Six Sigma is the next evolution of TQM. The statistical definition of Six Sigma is 3.4 defects per million opportunities, but Six Sigma is more than just a number. Six Sigma is a way of conducting business and creating a culture focused on continual improvement. Several authors, researchers, and academics have defined Six Sigma in the following ways: Harry and Schroeder (2000), two of the initial developers of Six Sigma, define Six Sigma as a process to significantly improve financial performance through process design and monitoring that reduces waste and resources, and increases customer satisfaction. Pande et al. (2000) describe Six Sigma as a method that combines the best current techniques with those of the past to reduce defects to near zero, and reduce variation to minimize standard deviations so that products and services meet or exceed customer expectations.

9 Tracing Historical Influences of Lean Six Sigma 9 Snee and Hoerl (2003) define Six Sigma as a holistic strategy and methodology for improving business performance, integrating proven performance improvement tools to increase customer satisfaction and financial results. The heart of Six Sigma lies in the DMAIC methodology, which consists of the processes of define, measure, analyze, improve, and control (Brewer & Eighme, 2005). The first step in the process is defining the problem. With the problem defined, the next task is measuring the size of the problem, followed by analyzing the collected data, then making improvements to the process, and finally implementing controls to maintain the improvements. The primary outcome Six Sigma projects strive for is the reduction of variation within a process. Many of the statistical tools utilized in the Six Sigma process have been around for many years (Naumann & Hoisington, 2001). Such tools as process capability, statistical process control, and error proofing are commonly used in Six Sigma to understand and control variation (Shah et al., 2008). Experts typically lead Six Sigma projects with varying degrees of knowledge in statistical analysis. These improvement specialists are most commonly categorized as master black belts, black belts, and green belts (Bertels, 2003). Master black belts are at the top of the expertise hierarchy and generally mentor black and green belts, develop and conduct training sessions, and lead in the selection of projects. Black belts primarily act as project managers, leading projects and guiding green belts that are tasked with project oriented activities such as data collection and implementation of improvements and controls. An argument can be made that the concepts and ideas Six Sigma focuses on are really nothing new, and that Six Sigma only combines existing quality improvement tools into a structured approach to process improvement. What is unique to Six Sigma is its focus on bottom line results, which appeals to senior leaders (Evans & Lindsay, 2005). Previous quality

10 Tracing Historical Influences of Lean Six Sigma 10 improvement methodologies have had mixed results in relation to financial improvement (Fuchsberg, 1992; Powell, 1995). Many organizations utilizing Six Sigma also employ accounting professionals tasked with quantifying the results of improvement projects (Pyzdek, 2003), which distinguishes Six Sigma from previous quality improvement methodologies (Bertels, 2003; Pande et. al, 2000). Whether or not Six Sigma has greater staying power than previous quality improvement techniques is yet to be determined, but one thing is certain, if organizations continue to realize financial savings based on Six Sigma the probability of its success is sure to increase. Lean Thinking Lean can both be described as a philosophy and also a system, both of which focus on the elimination of waste. Several types of waste exist and can include overproduction, waiting time, product movement, the processing of product, unneeded inventory, unnecessary motion, and scrap (Ohno, 1988). Lean evolved out of the Toyota Production System (TPS) throughout the course of several decades (Shah et al., 2008). Researchers studying the automotive industry at MIT in the late 1980s coined the term lean (Womack et al., 1990, p. 13) to describe TPS because it generally uses less of everything when compared to mass production. Womack et al. define Lean as a production and business philosophy that reduces the time between order placement and the delivery of a product by reducing the amount of waste in a product s value stream. Womack and Jones (1996) build upon their original work at MIT to expand Lean as a way of thinking. The authors argue that Lean thinking consists of five key principles that include: 1. Value 2. The value stream

11 Tracing Historical Influences of Lean Six Sigma Flow 4. Pull 5. Perfection Lean thinking begins by defining value in relation to specific products with specific capabilities priced specifically through a dialogue with specific customers (Womack & Jones, 1996). To truly understand where waste exists organizations must know what customers value. Understanding the value stream is the next phase of Lean thinking. Womack and Jones define the value stream as: The set of all the specific actions required to bring a specific product (whether a good, a service, or, increasingly, a combination of the two) through the three critical management tasks of any business: the problem-solving task running from concept through detailed design and engineering to production launch, the information management task running from order-taking through detailed scheduling to delivery, and the physical transformation task proceeding from raw materials to a finished product in the hands of the customer. (p. 19) A value stream map, similar to a process flow diagram, is commonly used to illustrate the value stream with the primary goal of understanding where waste within the stream exists. The next step in the process, flow, is where the real breakthrough happens (Womack & Jones, 1996). With a clear understanding of value and the elimination of wasteful processes within the value stream, the focus turns to improving the flow of product and/or services through the value stream as quickly as possible. This can be one of the most challenging aspects of Lean because of the typical function and department mindset most people within an organization have. To truly

12 Tracing Historical Influences of Lean Six Sigma 12 create flow Womack and Jones argue that organizations need to redefine the work of employees so they can contribute to the process of creating value. To create flow Womack and Jones (1996) believe a new way of looking at the whole organization is necessary. They call this perspective the Lean enterprise, which begins by specifying value uniformly throughout the organization, and defining actions needed to bring product from launch to the customer and on through its useful life. With these actions complete, the next step becomes removing those actions that do not create value, and making those that do flow as pulled by the customer, which leads to the fourth principle of lean thinking. One way to describe pull is from the viewpoint of the customer. The customer can be either an internal process contained within the value stream or an external user of a product or service. Unlike traditional mass production where product is pushed to the next process in large quantities, the concept of pull in Lean thinking is that product should be produced at the rate of which the next process, be it an internal user or the external customer, demands it. The primary benefit from going to a pull system versus a push system is the time it takes to go from product concept to delivery to the customer decreases dramatically (Womack & Jones, 1996). A secondary benefit to pull is that a significant decrease in inventory is created, which also increases the levels of cash once invested in raw materials and work in process that can now be invested in other value creating activities. The final principle in Lean thinking is perfection, which initiates the continual improvement process by starting the cycle over and constantly striving for improvement. Lean thinking is a perpetual cycle that continues until there is no waste left within the system. Unlike Six Sigma, which has a high degree of technical expertise required for success, Lean is considered to require a much lower level of competency (Jing, 2009). Most of the tools

13 Tracing Historical Influences of Lean Six Sigma 13 utilized in implementing Lean are intuitive and require minimal amounts of specialized training. The primary tools used in Lean consist of value stream mapping, 5S, Kaizen, one-piece flow, cellular manufacturing, Poka Yoke, standardized work, and total productive maintenance (Upadhye, Deshmukh, & Garg, 2010). A value stream map, mentioned previously, is the primary tool utilized to illustrate the value stream to aid in understanding where value is created and waste exists (Womack & Jones, 1996). 5S is a method that can be used to remove waste associated with disorganization of a work environment (Hirano, 1995). Kaizen is the process of continually implementing small improvement projects focused on removing waste (Cheng & Podolsky, 1996). One-piece flow is a concept that minimizes work in process, which results in reduced inventories, decreases the amount of material handling, and provides quick feedback when a quality problem arises (Sekine, 1992). Cellular manufacturing aims at grouping machines together that produce parts for a similar product to aid in the one-piece flow process (Upadhye, et al., 2010). Poka Yoke focuses on error proofing processes to avoid mistakes. Some typical Poka Yoke devices include guide pins, error detection alarms, counters, limit switches, and checklists (Shingo, 1989). Standardized work establishes best practices based on the best-known sequences using the available resources. A job is broken down into individual steps to determine the most efficient process, which are then used to establish a standard that is taught and sustained through repetition (Jadhav & Khire, 2007). A final key tool utilized in Lean is total productive maintenance (TPM). TPM is an extension of preventive maintenance that involves the operators in the process of maintaining the equipment they utilize (Nakajima, 1988).

14 Tracing Historical Influences of Lean Six Sigma 14 Where Six Sigma is an easily quantifiable approach to improvement, it can create an overly complex time consuming method to solving simple problems. Likewise, the subjective nature the Lean tools utilize make it harder to quantify the level of improvements, but the methodology is arguably easier to implement for quicker results. Until recently the methodologies were looked upon as two different approaches for organizational improvement. Only in recent times have the two been combined, creating the next level of quality improvement that offers both quantitative statistically based results when necessary, and rapid less complex initiatives when the need is focused more on simple improvement projects. Lean Six Sigma Lean and Six Sigma can be characterized by their philosophies, methodology of the tools utilized to implement them, degree of difficulty, duration for a typical initiative, and the level of training and timeframe for implementation. Table 1 summarizes a comparison of Lean and Six Sigma. Both Lean and Six Sigma have a number of similarities and differences. The most significant similarity between the methodologies is their focus on quality management (Shah et al., 2008). Advocates of Lean quite often suggest the use of process capability and statistical process control when defining Lean (McLachlin, 1997; Shah & Ward, 2003). Advocates of Six Sigma, similarly, emphasize quality management through the use of statistical analysis, which is considered to be the foundation of Six Sigma (Evans & Lindsay, 2005; George, 2002). Shah et al. (2008) suggest several differences between the methodologies. Six Sigma tends to focus more on invisible problems such as variation within a process, whereas Lean tends to center on problems that are visible such as process flow. Lean is also typically more of a bottom up approach that has a high degree of involvement from production level employees

15 Tracing Historical Influences of Lean Six Sigma 15 unlike Six Sigma, which more frequently is driven by projects selected by senior management. The level of expertise or specialization is also significantly higher with Six Sigma due to the heavy statistical emphasis versus Lean, which takes a more practical approach that is more easily understood. Table 1 Comparison of Lean and Six Sigma Lean Six Sigma Key focus Eliminating waste Reducing variation Methodology Tools Difficulty Typical initiative duration Training and implementation Specify value, identify the value stream, flow, pull, pursue perfection Value stream maps, 5S, Kaizen events, SMED, Kanban, work cells Low, mostly common sense approach, qualitative, subjective approach Event focused, small incremental improvement through quick Kaizen events, days to weeks Low complexity training and quick implementation Define, measure, analyze, improve, control Control charts, process flows, SIPOC diagrams, scatter plots, Pareto charts High, heavy emphasis on statistics, quantitative, fact-based approach Project focused, structured approach, typically span several months High complexity training, multiple expertise levels (belts), slow implementation

16 Tracing Historical Influences of Lean Six Sigma 16 One could argue that Lean and Six Sigma when combined represent a methodology of quality improvement that offers the best of both ends of the process improvement spectrum. On one end of the spectrum Lean offers a pragmatic approach that is quick to implement, and is readily grasped by employees with little understanding in advanced data analysis techniques. On the other end of the spectrum Six Sigma provides a data rich methodology when problems are less visible and require more rigorous methods to understand how to improve the process. An argument could also be made that quality professionals trained in both methods will yield higher returns than those trained in only one of the methods. Snee and Hoerl (2007) argue that Lean Six Sigma offers a holistic approach to quality improvement that is needed to make long-term gains in performance. The authors suggest that by combining Lean and Six Sigma organizations will be able to more easily create a culture of improvement. Snee and Hoerl also suggest that utilizing a holistic approach to improvement, such as Lean Six Sigma, represents the opportunity to reduce costs, improve quality, and increase the speed of delivery anywhere within an organization throughout the world. Historical Roots of Lean Six Sigma Despite Lean Six Sigma being a relatively new quality improvement technique, one could argue much of the foundation upon which Lean Six Sigma is based is grounded in the work of individuals dating back to the early 1900s (see Appendix A for a detailed timeline). Taylor s scientific management, Ford s creation of the production line, Shewhart s concept of statistical quality control, Deming s seven deadly sins and diseases, and the work done by Ohno in the development of the Toyota Production System have all influenced the principles upon which Lean Six Sigma is based. Frederick Taylor- Scientific Management

17 Tracing Historical Influences of Lean Six Sigma 17 In the first part of the twentieth century Fredrick Winslow Taylor developed what he called scientific management. During this time period Taylor began an effort to divide labor, leading to the creation of scientific management. Taylor is best known for his research on studying workers and doing time and motion studies, which were used to increase efficiency in the workplace. Taylor s (1916) scientific management consists of four key elements: 1. Gathering of knowledge about the work (time and motion studies) 2. Selection of the workman 3. Bringing of the workman and the science together 4. Division of work The knowledge Taylor spoke of gathering began by studying workers and breaking down the work they were doing into its simplest form. Time and motion studies were also conducted to understand the duration for a particular task to be completed. The first element gave Taylor the basis for improvement by providing a baseline of performance. With an understanding of the work, Taylor believed the selection of the workman was of great importance to achieving maximum efficiency. He believed it was management s job to select the workers best suited for the work. If workers were not matched with the jobs they were doing Taylor believed productivity would suffer. The third element of scientific management consists of bringing the worker and science together. Without bringing the two together companies using the scientific management principles could not realize the benefits they offered. In order to bring the two together Taylor (1916) suggested management should offer the workman something he felt was worthwhile for working under the conditions, essentially an incentive to make the workman want to work under the scientific management principles. The final aspect of scientific management is the division of

18 Tracing Historical Influences of Lean Six Sigma 18 work. As Taylor described, under the old system of management the workman did most of the work, but with the new system work was divided into two parts. One component of the work was now given to management, leaving the other for the workman. Taylor argued by dividing the work it created an atmosphere of teamwork between management and the workman because each group was dependant on the other. Taylor s work benefited the workman greatly, increasing his earnings and also lowering the cost of goods produced. A link to Taylor s work can be seen in several Lean Six Sigma tools, most notably, the concept of standardized work and value stream mapping. By breaking down the key steps in the process Taylor laid the foundation for understanding where wasted motion exists. By eliminating the wasted efforts Taylor established the one best way that mimics the modern concept of standardized work. Henry Ford-The Production Line During the same time Taylor was implementing his concept of scientific management at organizations across the U.S., Henry Ford was bringing the automobile to the mass market by driving down the cost of manufacturing through the use of the production line. From 1909 to 1919 Ford was able to reduce the number of hours to produce a Model T by over two-thirds (Williams, Haslam, & Williams, 1992). Several ideas utilized by Ford have links to the modern Lean movement such as work cell design and just in time inventory control. Ford (1922) believed workers who are undirected spend more time walking around looking for materials and tools, which leads to lower output. This thought led to his development of the production line, which is still in use today, and also has similarities to the concept of the work cells utilized in Lean. In creating the production line Ford believed the work should be brought to the man instead of the man looking for the work. Ford writes, We now have two

19 Tracing Historical Influences of Lean Six Sigma 19 general principles in all operations-that a man shall never have to take more than one step, if possibly it can be avoided, and that no man need ever stoop over (p. 80). Ford goes on to describe the principles of assembly as placing men and tools as close to the product as possible, also helping to reduce the distance which product needs to move through the process, and minimizing the motion required by each man to complete a process. Ford (1922) also influenced the concept of just in time inventory control. Ford writes, We have found in buying materials that it is not worth while to buy for other than immediate needs. We buy only enough to fit into the plan of production (p. 143). Ford goes on to say, But we have found that thus buying ahead does not pay (p. 144). Clearly, Ford understood that managing inventory levels and delivering materials as they were needed led to improved performance. Walter Shewhart-Statistical Quality Control and the PDCA Cycle Walter Shewhart is widely considered the father of statistical quality control (Okes & Westcott, 2001). Much of his career was spent at Bell Laboratories working as part of the technical staff. His key contributions include the development of the control chart and the Shewhart cycle. He also spent time working for Western Electric with W. Edwards Deming, whom he greatly influenced. Eventually, the Shewhart cycle would later become better known as the Deming cycle because of Deming s influence on Japanese industry (Wheeler & Chambers, 1992). Shewhart (1980) created the control chart during his time at Bell Labs in the 1920s for plotting data from a process to better identify the sources of variation. Shewhart describes variation as coming from either chance or assignable causes. Chance causes, Shewhart argues, are naturally part of the process. To reduce this type of variation the process itself must be

20 Tracing Historical Influences of Lean Six Sigma 20 improved. Processes with only chance causes are considered to be in an ideal state and producing only product within specification (Wheeler & Chambers, 1992). Shewhart believes that a second type of variation comes from assignable causes, which can be identified and eliminated. Shewhart s work in developing the control chart has played a pivotal role in Six Sigma by helping understand the variation within a process, the foundation upon which Six Sigma is based. Plan Act Do Check Figure 1. Shewhart PDCA cycle. This figure illustrates the Shewhart plan, do, check, act cycle. Another contribution Shewhart made to the foundation upon quality improvement is the plan, do, check, act cycle illustrated in Figure 1. An argument can be made that all process improvement initiatives follow a similar path. The Six Sigma DMAIC methodology previously mentioned has similarities to the Shewhart cycle. Defining the problem can be looked upon as a plan, measuring and analyzing have similar characteristics as the do and check phases, and improving and controlling can be viewed as the process of acting. Likewise, the Lean thinking principle of perfection carries similar meaning to the cycle in that it is a constant improvement process that never ends. W. Edwards Deming-Seven Deadly Sins and Diseases and a System of Profound Knowledge

21 Tracing Historical Influences of Lean Six Sigma 21 W. Edwards Deming has arguably been the most influential individual related to all aspects of quality control, assurance, and management. Deming spent much of his career helping Japanese industry recover after World War II, but gained little recognition in the U.S. until the 1980s. Deming s contribution touches both Lean and Six Sigma. Deming understood the importance of controlling variation stating, If I had to reduce my message for management to just a few words, I d say it all had to do with reducing variation (Neave, 1990, p. 57). Deming (2000) defines his theory of management as the seven deadly sins and diseases, which consist of the following: Lack of constancy Short-term profit focus Performance appraisals Job-hopping Use of visible figures only Excessive medical costs Excessive costs of liability Creating a constancy of purpose suggests that an organization must define its purpose and the values the organization believes in. Deming (2000) also believes many organizations place too great an emphasis on short-term profitability instead of long- term survival. Adding to this argument, Deming believes that performance appraisals add to the short-term focus issue and only promote individuality instead of teamwork. Changing jobs frequently also creates focus on only the short-term, according to Deming. Using only visible figures is also a disease Deming believes organizations have. Not all measures of success can be quantified, according to Deming, although this does conflict to some degree with his view that a quantitative approach will yield

22 Tracing Historical Influences of Lean Six Sigma 22 the best results. Deming s belief related to excessive medical and liability costs were truly ahead of his time, and add to his long-term viewpoint that is now coming to fruition as healthcare and litigation costs are a reality for all organizations. Perhaps Deming s most significant contribution to Lean and Six Sigma is his notion of a system of profound knowledge. This system consists of four components that include knowledge about the system, some knowledge about variation, some theory of knowledge, and some psychology (Neave, 1990). Deming understood the idea behind systems and how they interconnect with one another and the affect variation can have on the system, both of which are key to Lean thinking and Six Sigma. Summarizing Deming s key contributions to Lean and Six Sigma they include utilizing a quantitative process that is statistically valid and employs a methodical approach, and the notion of continual improvement. Although Deming did not contribute a specific methodology to be followed, an argument can be made that his ideas are found in the core elements of Lean and Six Sigma. Taiichi Ohno-Toyota Production System Taiichi Ohno is widely considered one of the fathers of the Toyota Production System (TPS) (Liker, 2004). Ohno spent his entire career working at Toyota developing TPS. Ohno (1988) argues that the preliminary step before implementing TPS is to first identify the sources of waste, or what he commonly refers to as muda (the Japanese word for waste). Ohno suggests there are seven types of waste that include: Waste of overproduction Waste of time on hand (waiting) Waste in transportation

23 Tracing Historical Influences of Lean Six Sigma 23 Waste of processing itself Waste of stock on hand (inventory) Waste of movement Waste of making defective products (p ) Ohno argues (1988) that by eliminating waste within the process a product can be delivered to a customer faster, with higher quality, and lower costs. Ohno is also credited in developing just in time inventory through the use of Kanban. The concept underlying Kanban means signboard or billboard, which are used to signal a process feeding another when more material is needed. The Lean thinking principle of pull, as discussed earlier, is based in the idea behind Kanban. In traditional mass production large batches are pushed to downstream operations, creating waste in the form of over production and unnecessary inventory. Ohno realized by using Kanban cards upstream processes could supply downstream processes at a rate in which they consume product, creating a just in time system with minimal inventory or work in process. Ohno (1988) was also instrumental in developing what has become known as the 5 why problem solving method. This method of problem solving asks the question of why a problem exists five times to better understand the root cause(s) of the problem so that solutions can be implemented. Ohno also focused on developing teamwork between workers passing product off to one another. Ohno summarizes TPS as, All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes (p. ix). Looking back on Ohno s work an argument can easily be made that he was the driving force in what is now known as Lean.

24 Tracing Historical Influences of Lean Six Sigma 24 Challenges and Benefits of Lean Six Sigma Lean Six Sigma has the ability, when implemented effectively, to transform organizational cultures into continual improvement environments constantly focused on reducing variation and eliminating non-value added activities, that ultimately result in increased financial performance and customer satisfaction. Like any improvement initiative, Lean Six Sigma can fail for a variety of reasons including lack of management support, poor project selection, and the challenge of working with suppliers to establish just in time supply chains. Hoerl (1998), in researching key reasons why Six Sigma is successful, states that continued support of top management and enthusiasm are critical to achieving positive results. Hoerl describes how the promotion process at General Electric now includes a requirement for training in Six Sigma and completion of several projects. Sandholm and Sorqvist (2002) state that lack of management commitment and visible support is the number one reason why Six Sigma fails. General Electric and Motorola have emphasized the role of top management in their successful Six Sigma initiatives. Sandholm and Sorqvist note that they are beginning to see a trend in some companies where Six Sigma is not run by top management, creating a lack of ownership in the process. Another problem Sandholm and Sorqvist describe is the role of middle management. The authors suggest that getting middle managers involved in the process is a challenge many companies are facing, and without the support of middle management, who are most often responsible for key functional areas within a company where projects take place, Six Sigma is less likely to succeed. Six Sigma is defined by projects. The challenge lies in picking the right projects. Sandholm and Sorqvist (2002) suggest that the prioritization and selection of projects is critical to the success of a Six Sigma program. Sandholm and Sorqvist state that several key factors to

25 Tracing Historical Influences of Lean Six Sigma 25 selecting projects must be considered. They include financial return, customer impact, and productivity improvements. Gijo and Rao (2005) argue that project selection must align with an organization s goals and objectives. Through their research Gijo and Rao have uncovered many projects where team members lacked the authority to implement the project or collect valid data, causing projects to fail. Gijo and Rao also state that companies often place stringent expectations on belts causing them to consider everything a project when in fact it is simply a task. Gijo and Rao also write that project scope creep also creates a problem that can grow into an uncontrollable project that cannot be completed in the expected timeframe. Lean, despite being significantly less complex than Six Sigma also presents several similar challenges. Upadyne et al. (2010) argues that commitment from top management and total employee involvement is necessary to create a truly lean organization. A second challenge in implementing Lean is working with suppliers to establish just in time deliveries of materials. Upadyne et al. suggest that significant up front work is necessary to establish the development of efficient supply chains, creating what can be significant investment requirements to implement a lean supply chain. Even though there are challenges to implementing Lean Six Sigma the research suggests the benefits typically outweigh the disadvantages. Lean has been argued to improve delivery times, reduce defects, increase on-time delivery, increase productivity, and provide an increased return on assets (Lee & Oakes, 1996; Sohal, 1996). Six Sigma has also been widely shown to lead to bottom line savings (Eckes, 2001; Hoerl, 1998). The Future of Lean Six Sigma What is the future of Lean Six Sigma? George (2002) argues organizational resources will become scarcer, creating the need to continue to combine Lean and Six Sigma expertise.

26 Tracing Historical Influences of Lean Six Sigma 26 Edgeman (2000) believes that the focus on bottom line savings and fewer world resources will continue to push organizations to further scrutinize projects that result in significant return on investment, creating more demand for Lean Six Sigma initiatives. Edgeman and Bigio (2004) suggest that an increasing level of accountability for the public sector will help establish an increase in the popularity of Lean Six Sigma due to the methodology s documented ability to produce results. Another sector suggested by Edgeman and Bigio that is ripe for the need of Lean Six Sigma is the health care industry. As health care costs continue to rise, insurance companies and government agencies will also likely tap into the potential of Lean Six Sigma. As long as Lean Six Sigma continues to produce results it will arguably continue to find new uses and spread across multiple industries leading to what will likely evolve into the next quality management methodology. Conclusion The evolution of quality management over the last century has changed the way people around the world live. Starting with Taylor and his concept of scientific management, Ford in the development of the production line, Shewhart and Deming bringing the concept of variation reduction to management, and Ohno spending decades at Toyota perfecting the process of eliminating waste, they have all influenced the philosophy and methods forming the foundation for Lean Six Sigma. The culmination of this work has contributed to the standard of living and working conditions for the majority of the world, which have arguably increased exponentially in the span of a relatively short time. What will come next is yet to be determined, but what is almost certain is the process of quality improvement will continue moving forward, and evolve into something that is sure to prove even more beneficial to society.

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