By now, you have a basic idea that Lean and Six Sigma(LSS) is used, primarily, in business management. You may have heard about the companies like Toyota, Motorola, and GM demonstrating savings, not in the thousands, not in the millions, but in the billions of hard cash money. These methods are borrowed by companies who enjoyed the same benefits. Their secret is found built within their ideologies and practices. For example, you'll come upon the term JIT, or "Just in Time", which in the past dealt with inventory to the point of not having a warehouse. Imagine, buying and using what you need on a real time basis, instead of a "Just in Case" scenario where large and wasted economies of scale and mass production were common practices.
What’s the catch? Lean Six Sigma combines several business management strategies: Toyota’s Production Systems / Lean Manufacturing and Motorola's Six Sigma. While Lean and TPS focuses on creating value and eliminating non-value added activities, Six Sigma defines, identifies and eliminates defects in a design and development process; a method that, through decision-making, reduces inefficiencies and increases quality.
From a zero-point position, Lean saves companies monies by targeting and eliminating waste, while Six Sigma does the same by concentrating on eliminating defects. With that said, the focus is such that if costly inefficiencies, due to both waste and defects, were eliminated, these companies with poor profit and loss income statements will save and, in essence, earn more money. Bottom line, this is a true statement and the back-to-back testimonies and healthy balance sheets verify it. By now, you’re wondering why I’ve segregated Lean and Six Sigma when during the onset, the topic of discussion was Lean Six Sigma, an all-inclusive concept.
There’s a reason for this, but for now, I’m going to continue this segregation because it helps with the learning process and because they are, in history, different methods and processes.
Right now let’s summarize that:
- Lean saves monies by eliminating and reducing waste.
- Six Sigma saves monies by eliminating and reducing defects.
I: Inventory
M: Motion
W: Wait
O: Over-processing
O: Over-production
D: Defects
DEFECTS / SIX SIGMA
- Lean adds value by eliminating WASTE
- Six Sigma adds value by eliminating DEFECTS
- Lean works on present processes.
- Six Sigma evaluates past problems and then designs corrective and preventive actions.
It’s the lack of process and planning that catches us off guard. Despite good intentions, we aren’t prepared to deal with negative consequences, especially when we don’t know what to look for. In lean, these issues are recognized for what they are: WASTE.
I’ve taught this part successfully to groups of oil field employees, owners and managers. Many of them believed that it was nothing but a waste of time. Fundamentals have always been the way to start up a conversation, and, after grass roots encounters, I’ve used it successfully to change and Lean. Sometimes called Lean Enterprise or Lean Manufacturing, developed by James Womack, John Krafcik and Daniel Jones, brain trust engineering professors at MIT aimed at optimizing manufacturing processes by reducing cycle time; identifying the value of a product from a customer's perspective and costs of development. Based on principles derived from Ed Deming and his Total Quality Management Theories, Japanese manufacturing industry incorporated these concepts and adopted them into the Toyota Motor Corporation. Lean is oftentimes referred to as TPS or Toyota Production Systems. Long story short, Lean is the American version of TPS.
WASTE
In the world of scientific management, waste is the main reason for failure. Three types of waste identified by Toyota uses the Japanese terms: “muda”, “waste”; mura “uneven”; and muri “over processing". As Lean Manufacturing places great emphasis on activity, rather than on design or implementation, TPS has further identified seven deadly wastes popularly known as TIMWOOD, an acronym taken from the words: Transportation; Inventory; Motion; Waiting; Over Processing; Over Production; Defects (and/or rework). Costs attached to each of these types of waste have measurable significance. Cost are either passed on to the customer, or recorded as a loss.
The following excerpt will spend a considerable effort in explaining what WASTE is in Lean.
It could be more information needed for this level of training, but it will be repeated almost every day in every way, to ensure that those practicing Lean Manufacturing will do so correctly.
In the world of scientific management, waste is the main reason for failure. Three types of waste identified by Toyota uses the Japanese terms: “muda”, “waste”; mura “uneven”; and muri “over processing". As Lean Manufacturing places great emphasis on activity than on design or implementation, TPS has further identified seven deadly wastes popularly known as TIMWOOD, an acronym taken from the words: Transportation; Inventory; Motion; Waiting; Over Processing; Over Production; Defects (and/or rework). Costs attached to each of these types of waste have measurable significance. Cost are either passed on to the customer, or recorded as a loss.
In Lean, waste is the main reason for failure. It is bad for business. It is important to be keen on what it is and how it impedes progress. You’ve heard it before. “Man that was a total waste” It’s said after the fact. What follows is someone saying “hindsight is 20-20”. Wish I knew about this beforehand.”
It’s the lack of process and planning that catches us off guard. Despite good intentions, we aren’t prepared to deal with negative consequences, especially when we don’t know what to look for. In lean, these issues are recognized for what they are: WASTE.
Lean management requires several key processes. One is to identify which steps add value, and which do not. By classifying these activities into several categories, improvements begin. The clear identification of 'non-value adding work', as distinct from waste or work, is critical to identifying the assumptions and beliefs behind the current work process and challenging them from within.
The following "seven wastes" identify resources which are commonly wasted. They were originally founded by Toyota's Chief Engineer, Taiichi Ohno as part of the Toyota Production System.
- Transportation - When a product is moved, it stands the risk of being damaged, lost, delayed, etc. as well as being a cost for no added value. Transportation does not make any transformation to the product that the consumer is willing to pay for.
- Inventory - Inventory, be it in the form of raw materials, work-in-progress (WIP), or finished goods, is a capital outlay that has not yet produced an income either by the producer or for the consumer. Any of these items not being actively processed to add value is waste.
- Motion - Motion refers to the damage that the production process inflicts on the entity that creates the product, either over time (wear and tear for equipment and repetitive stress injuries for workers) or during discrete events (accidents that damage equipment and/or injure workers). This definition is in contrast to transportation, which refers to damage to products and transaction costs associated with moving them.
- Waiting - A large part of an individual product's life is spent waiting to be worked on. This is a cost that can be averted through proper planning.
- Over-processing - Any time more work is done on a piece than what is required by the customer, this is considered “over-processing” that includes using tools that are more precise, complex, or expensive than absolutely required. To tell you the truth, I like the example of “working too hard”. For example, lifting 300 pound weights as opposed to 25 pound weights. Attempting to move 300 pounds even if you have the ability is, in effect, working too hard or over processing. This also goes for mental exertion, like telling someone how a clock is made in Switzerland when, all he asked of you was what time it was.
- Over-production - Overproduction, considered the worst muda because it hides and/or generates all the others, leads to excess inventory, which then requires the expenditure of resources on storage space and preservation, activities that do not benefit the customer and occurs when more product is produced than is required at that time by your customers. To avoid this waste, avoid the production of large batches, as often consumer needs change over the long times large batches require.
- Defects - Defects occur as extra costs are incurred during reworking the part, rescheduling production, etc.
An easy way to remember the seven deadly wastes is the word: TIMWOOD.
The goal here is to remember Tim Wood as a fictional character who, if remembered, can lead to high dividends.
Lean Six Sigma has more to offer in the area of process management. TIMWOOD is one of the good tools of many.
Bill Smith and Motorola conceived the Six Sigma business management system. This practice relied on statistical analysis to optimize an organization's production process. Six Sigma, like the Japanese Martial Arts, identified and certified levels with a color belt system, the Master Black Belt being the highest level. Six Sigma is validated in many Quality Manuals measuring the number of defects during a process with a goal to score no more than 3.4 defects per million. What this means is that if you were making pencils, the goal is to manufacture 999,996.6 pencils without a minor defect.
By the way, it's important to differentiate "defects" from "defectives". Defects mean that a project has not been scrapped. However, once a part is defective, it goes in the scrap pile. Until specifically instructed, defective parts occur when two (2) defects are found during the production run and not eligible for repair.
Six Sigma seeks to eliminate defects through a process called DMAIC, which is an acronym for:
- Define – Once a problem statement is identified, a brain storming process occurs that “defines” all the cause and effects key process indicators.
- Measure – Once the problem is defined, all facts and data are collected to build a potential story behind the defined problem.
- Analyze – Once facts and data are collected, then the team reviews the information and uses special statistical tools to zero into the cause.
- Improve – The problem is then corrected.
- Control – The problem is controlled and measures taken to prevent future problems and sustain good and best practices.
An organization whose goal is to fine-tune its daily operations would do well with Lean methods.
Six Sigma is preferred by those companies that focus on defects using Peter Drukcer’s Management Objective and Walter Shewhart’s Statistical Process Controls or SPC.
Lean decreases production waste, Six Sigma implements methods that increase product quality.
Together Lean Six Sigma is an effective way to address issues on speed, quality, and cost, and eliminates waste. It also unlocks opportunities for innovation.
In closing, there is one more key point between the two. Lean works on present processes while Six Sigma works on problem statements, which means the event occurred, a past tense evaluation.
