CHAPTER 11: INTEGRATING SIX SIGMA AND LEAN 11.01 LEAN THINKING B oth Six Sigma and Lean have proven consistently over the past quarter of a century that it is possible to realise dramatic improvements in quality, cost and time through focusing on continual process performance enhancement. It seems that Six Sigma has dominated focus in recent years. However, the truth is that Lean has been around for as many years as Six Sigma. What is Lean thinking? Before I delve further into this topic, let me talk about shirt folding; that s right, shirt folding. What has that got to do with Lean and Six Sigma you might ask. Just bear with me for a few moments. How long does it take to fold a t- shirt or polo shirt? I put my family to the test recently and the time to fold the shirt so that it could be put away averaged approximately 10 seconds and ranged between 8 seconds and 15 seconds. As I studied the process I found that it took around 8 to 10 steps to complete the cycle. To fold the shirt even faster, they simply tried to complete these same steps in less time. During 2004 someone shared a video with me of a new shirt folding technique that takes around 3 seconds to complete. The process comprised the following five steps. Page: 371
Step 1: Lay the shirt out flat. Reach across the shirt and grasp a point about halfway down the shirt body and a point directly in line with this at the bottom hemline. These two points form a line that represents the fold line on one side of the shirt. Step 2: Bring the hemline hand over the middle point hand and grasp a spot on the shoulder in line with the two other grab points. Step 3: Lift the shirt, uncross the hands and pull the material tight with a shake. Step 4: Lay the shirt front neatly down and fold the sleeves back into the middle. Page: 372
Step 5: Fold the front of the shirt over to make a rectangle. With practice, this will produce a perfectly folded shirt. The reasons I shared this with you are twofold. Firstly, you might find this useful at home. As I personally discovered, it is definitely a way to impress your partner. Secondly, the process demonstrates Lean thinking in a simple way. By reducing the number of steps in the process to only those that add value to the outcome, the shirt folding process is far more efficient now than it was originally. It is now a lean process without any unnecessary steps or motion. Lean Thinking Lean was first described by Womack, Jones and Roos (1990) in The Machine that Changed the World. These three men started the International Motor Vehicle Program in 1985 and operated out of the Massachusetts Institute of Technology in the United States. Their intent for the program was to study new Japanese techniques for production (which they subsequently named lean production), contrasting this to the traditional western techniques of mass production. The book is based on the conclusions drawn by these three men after five years of studying these techniques in the motor vehicle industry. The term lean comes from the concept of using half the manufacturing space, half the human effort, half the tools and half the time to develop a new product. While a mass producer would traditionally have a good enough view of Page: 373
production and believe that to get better would cost more than it was worth, lean producers have an entirely different belief and continue to pursue perfection. Responsibility for improving processes is pushed farther down the organisation structure to the individual employee The roots of lean can be traced back to the 1950s to the work of a young Japanese engineer names Eiji Toyoda. Toyoda visited one of Ford s production plants in Detroit to study mass production techniques. Henry Ford was quite open about his techniques and was happy to share these with engineers from around the world. After a lengthy study, Toyoda returned to Japan and in conjunction with a production genius named Taiichi Ohno, they came to the conclusion that mass production would not work in Japan. This was the beginning of what became known as the Toyota Production System, and eventually Lean Production. Lean thinking recognises that few processes are created to deliver customer defined value in the most time efficient way. In most cases, processes are created to maximise the quality of a product. For example, my company produces Audio CDs for personal development. The process involves the once only activity of making the recording, and then the ongoing activities of burning, printing, packaging and shipping. The focus of our work in designing the process was on the quality of the product. The concept of flow through the process was never considered. The CD cases are stored wherever space permits with no thought to how much movement we have to undertake to fill orders, a large number of disks are stored for future supply and sometimes these get moved around as we clean or rearrange the office. Now while time and flow were never considered, we get away with it due to the size and nature of our organisation. However, that does not mean it s efficient. How many larger organisations, particularly those that have products passing through a Page: 374
production line or documents passing through a process of approval or even customers moving through a queue, focused on making sure their processes produced high quality outputs with little thought to maximising flow and minimising waste? In working with literally hundreds of companies, my experience has been there are many opportunities to enhance performance by including these concepts in the scope of their continual improvement endeavour. Value Adding Steps Every person working in a process is extremely busy. I m sure that s true of you and everyone else in your organisation. Take a look around you at work. Would you not agree that most people are extremely busy and working hard? Think about your own working day - are you busy? A question worth asking is how much of this working time is actually spent adding value to the business and respective customers. Studies have found as little as 10 to 15 percent of steps in a process are involved in adding value for a customer, and this can be as little as 5 percent of overall cycle time. As much as 95 percent of time is engaged in non value adding activities, in other words waste. Six Sigma As we have already discussed, in its purest form Six Sigma focuses on reducing variation and increasing process capability and yield through the application of statistically oriented tools. In a nutshell, Six Sigma is the study and control of process variables. Lean Thinking Lean on the other hand is primarily concerned with eliminating waste and improving flow through a process via the application of Lean principles. We Page: 375
can define waste as anything that is not necessary in the process of producing the product or service. For example a loan application with four levels of approval contains waste. Lean clears the path of waste. When integrated with Six Sigma, an organisation can undertake improvements in quality and variation as well as improving flow through the process and removing unnecessary time. What is waste? I have mentioned waste a number of times, so it would make sense to be sure we are all clear on what waste is. All of the seven following activities or outcomes are waste. Defects Inventory Motion Transportation Over Production Waiting Non Value Added Processing A useful acronym once told to me for remembering these seven forms of waste is - D.I.M.T.O.W.N. Defects Any product or service that does not conform to customer specifications or expectations, and results in dissatisfaction is a defective product or service. The hidden costs associated with defects include unnecessary labour and wasted materials. The costs that are hard to quantify are those associated with lost business in the future because of poor quality. Page: 376
Inventory This is waste. Goods, regardless of what they are, sitting in a store ties up capital. Hewlett Packard reported a $1 million saving in reduced inventory due to improved flow. That is cold hard cash directly in their pocket. Inventory includes excess raw materials, work in progress, completed or finished goods as well as repair parts and supplies. Inventories not only tie up capital, they require a company to locate and allocate space and use time to handle whatever it is in the inventory. Motion This term refers to unnecessary steps or movement undertaken by workers or equipment involved in core business processes to accommodate inefficient layout or anything that does not add value to the process such as defects, reworking, reprocessing and storage. Suppose an employee s job was to service a piece of mobile machinery, and his toolbox was in such a location that every time he needed a new tool, he had to walk five metres to the toolbox and back again. How much of the total time to service this vehicle would be involved in that movement to and from the toolbox. Most people would say the time is of little consequence. How much time would that amount to over the course of a full year? I think you d agree that the total accumulated time would probably be equal to the time it would take to service a number of vehicles. The point is this, motion adds time to a process, just like transport, and is ultimately wasted time. Seen once, it seems like a nothing, but it accumulates and offers a great opportunity to increase throughput for no more effort. Transportation This is unnecessary movement of materials such as the movement of partially completed units from one operation to another. Transportation results in (a) additional non value adding time to a process, and (b) increased risk of damaged units. Over Production Over production is the continued production of units resulting in excess quantities that must be stored. In effect, over production is Page: 377