Lean Six Sigma

Combining Six Sigma Quality with Lean Speed

by Michael L. George
McGraw-Hill © 2002
300 pages

Focus Take-Aways
Leadership & Management • Adding Lean to the Six Sigma approach creates unprecendented value.
Strategy
Sales & Marketing • Lean management focuses on eliminating elements from the production process
Finance
that don’t add value for the customer.
Human Resources
• Lean doesn’t speed up processes; rather, it cuts downtime between processes.
IT, Production & Logistics
Career Development • Six Sigma aims “to achieve lasting business leadership“ by focusing on quality.
Small Business
• Six Sigma depends on an effective infrastructure of teams and leaders.
Economics & Politics
Industries • Top management must fully commit to Lean Six Sigma to make it succeed.
Intercultural Management
Concepts & Trends
• Prepare your Lean Six Sigma initiative well to get it smoothly off the ground.

• Involve your entire company to ensure that the initiative lasts.

• Use the “DMAIC” approach to structure your improvement projects: “Define” goals,
“measure” the problem, “analyze” the information, “improve” the process and
“control” the outcome.
• Apply Lean Six Sigma principles to the earliest stages of product development.

Rating (10 is best)

Overall Applicability Innovation Style

9 9 10 7

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 Relevance

What You Will Learn

In this Abstract, you will learn: 1) Why combining the efficiencies of Lean production
with the cost control and quality tools of Six Sigma creates value and 2) How to implement
Lean Six Sigma at your company.

Recommendation
Six Sigma devotees may dispute the need to add anything to Six Sigma, but a shot of
Lean thinking provides a production boost. Consultant Michael L. George contends
that Six Sigma reduces product quality variation but does nothing to improve delivery
time. That may not be strictly true. However, the author’s analysis and presentation
of the Lean Six Sigma approach is lucid and straightforward. The explanation of
Six Sigma alone is much clearer than some other texts on the subject and even some
Six Sigma veterans may appreciate the refresher. George provides some compelling
examples of companies that have successfully used the Lean Six Sigma approach.
getAbstract recommends this book primarily to leaders and managers of firms that
rely on factories and other production units. However, the author also supplies practical
information that will be relevant to service providers and to every company that cares
about customer service and efficient production.

Abstract

Why Combine Lean and Six Sigma

General Electric CEO Jack Welch famously described Six Sigma as “the most important
“Sometimes
initiative GE has ever undertaken.” Yet, Welch admitted that Six Sigma alone was not
we regard our
customers like enough to achieve the performance improvements the company needed. In his 1998
the man who has annual report, he said that GE had managed to “move the mean” and achieve great
one foot in the fire improvements. However, it had not managed to eliminate variances.
and the other in
a block of ice: on An improvement of average delivery times, for example, means little to customers. A
average, he should customer does not experience the average. He or she may experience a very satisfying
be comfortable.” faster-than-expected delivery or a very frustrating later-than-acceptable delivery.
Six Sigma focuses on defects, but says nothing about time. When Jack Welch recognized
the insufficiency of Six Sigma, he added a new measure he called “span.” This term
refers to the variation in delivery based on the customer’s requested delivery date.
In December 2000, a survey in Industry Week magazine showed that Jack Welch was not
the only manager struggling with the difficulty of reducing delivery time to a predictable,
reliable standard. The survey found that more than half of the firms that responded failed
to achieve the world-class objective of meeting delivery deadlines 98% of the time, and a
“The fundamental
thesis of Six
whopping three-quarters hadn’t been able to cut their lead times by 20% during the five
Sigma is that years prior to the survey.
variation is evil.”
Lean is all about speed. Six Sigma is all about quality. Together, they make a winning
combination. Lean Six Sigma addresses both the activities that affect the customer’s
perception of quality, and those that cause delays, while simultaneously keeping costs
under control.
Lean Six Sigma © Copyright 2010 getAbstract 2 of 5
 The Essence of Six Sigma
Six Sigma aims to “achieve lasting business leadership and top performance applied
“The Lean Six
Sigma culture to benefit the business and its customers, associates and shareholders.” It provides a
leaves nothing measure to assess quality and sets a goal of near-perfection.
to chance.”
Six Sigma requires a quality-driven culture marked by:
• “Customer centricity” – This entails translating customer input into measurable
aspects of the production process, identifying elements that are “critical to quality”
(CTQs) and defining failures to deliver CTQs as defects that must be solved.
• “Financial performance” – Total Quality Management (TQM), a system that
predates Six Sigma, also focused on quality. It exhorted believers to pursue quality
indiscriminately with the fervor of a revival preacher. It was a moral commitment.
In contrast, Six Sigma is all about financial results. Its leaders must add between a
quarter of a million and one million dollars to the bottom line each year.
“Rapid • “Management engagement” – Engagement means more than lip service. Managers,
improvement even the most senior ones, must take an active role in Six Sigma and must keep its
requires both Lean
and Six Sigma.” projects in line with the organizational strategy.
• “Resource commitment” – Companies must commit between 1% and 3% of their
workforce to Six Sigma. “Champions” and “Black Belts” are full-time Six Sigma
professionals, chosen precisely because they are the company’s future leaders. The
other staff members will also have to contribute to Six Sigma projects.
• “Execution infrastructure” – Six Sigma Champions start by focusing on the
financial performance goals that the CEO sets. They translate these goals into
operational terms, turn the details over to highly trained Six Sigma Black Belts
and pursue the achievement of these goals as leaders of organized teams. The
Six Sigma approach mobilizes every level of the corporation to deliver process
improvement results.
“Eighty percent of
the delay in any
process is caused The Essence of Lean
by 20% of the Lean is a “process philosophy” that aims to “eliminate wasted time, effort and material,”
activities.” to “provide customers with make-to-order products” and to “reduce costs while
improving quality.” Lean doesn’t just mean speeding up the production line. In fact,
haste often does make waste. If you need an hour to do a process correctly, then take an
hour and do it right. But most factories have variable delays between steps in the process.
Maybe a machine breaks or a parts delivery is late, or maybe a scheduling bottleneck or
emergency run causes an unexpected interruption in production. Lean wrings wasted
time out of production processes by reducing the time spent waiting.
Lean relies on a metric called “process cycle efficiency.” This metric is the ratio of “value-
added time” to “total lead time.” Value-added time is the time you spend on a product
that actually increases the perceived value for the customer. Total lead time refers to the
“It does no good to overall production time. The more nonvalue-adding time in your production process, the
have your leaders
nod their heads lower this ratio is – and the more room you have for shortening the variable delays.
in an executive
committee Lean management reduces inventory, thus saving working capital. It reduces handling,
meeting, but then which saves labor expense. It cuts storage costs and space requirements, and reduces
badmouth Lean lead time, thus helping sales and building revenue. When you watch out for “time traps”
Six Sigma to their in your processes, heed these laws:
own troops.”

Lean Six Sigma © Copyright 2010 getAbstract 3 of 5

 • “The Law of the Market” – Prioritize CTQ elements.
“The very
first actions
• “The Law of Flexibility” – Keep your processes adaptable by minimizing your
associated with batch sizes.
Lean Six Sigma • “The Law of Focus” – Note that “80% of the delay in any process is caused by 20%
implementation
of the activities.”
– getting CEO
engagement • “The Law of Velocity” – Velocity moves inversely to work in process (WIP) and
and deployment variations in supply and demand.
planning – are
focused at the
highest level of Lean + Six Sigma
the company.” Separately, Lean and Six Sigma are powerful. By merging them, you may cut 80% from
lead times and 20% from costs, and create a 99% improvement in delivery times. How
do you bring about this combination effectively? Follow these steps:

“Time and again,

1. “Initiatiation” – Involve the CEO, create the vision and train the top level.
at company 2. “Selection of projects and resources” – Dedicate the best people, inculcate a mindset
after company, that does not allow product variations, and train Black Belts in team leadership and
experience shows Six Sigma techniques.
that being able
to deal effectively 3. “Implementation, sustainability, evolution” – Saturate the organization with Lean
with the human Six Sigma.
element of
improvement is No matter what your improvement project is, the “DMAIC” formula can help you
a more critical structure the path from “project idea to an active project.” The acronym stands for:
determinant of
team success
than the rational, • “Define” – Spot an improvement opportunity and outline the project goals.
analytical • “Measure” – Find data that helps you measure the problem and track the progress
processes of the project.
and tools.”
• “Analyze” – Spend time understanding the data you have compiled and detecting
connections between them.
• “Improve” – Implement your solutions.
“Actual stock • “Control” – Make sure your improvements will last.
market data
shows that only Each step includes a series of “tollgates,” which are meetings where managers, Black
companies with Belts and Champions carry out these actions:
differentiated
products and • Hear presentations from the team.
services can sustain
‘above market’ • Question the team.
profit margins.” • Determine whether the project is on track.
• Assess the competence of the team.
• Counsel the team.
• Plan to run political and organizational interference to help the team.
“Once you can
deliver a product • Check progress against schedules.
quickly, Design for
Lean Six Sigma
is the next logical Putting It All Together
step to drive down Caterpillar is one of the leading practitioners of Lean Six Sigma. The company has a
product costs and four-phase approach to deploying Lean Six Sigma in the organization and making it a
improve design standard approach in the company. The phases are:
quality.”
Lean Six Sigma © Copyright 2010 getAbstract 4 of 5
 • “Comply” – Top executives agree to invest in and drive Six Sigma.
• “Commit” – Build true belief, aided by publicizing successes.
• “Embed” – Make Lean Six Sigma a defining part of everything that happens in
the organization.
• “Encode” – Make Six Sigma part of the company’s DNA.
“Any company that
can reduce the Building momentum at the beginning of the institutionalization process is crucial. Select
costs of holding high-profile projects and allow top people to dedicate all their time to the initiative.
raw materials will
gain a competitive Keep up momentum, for example, by communicating Lean Six Sigma’s benefits and
advantage in its success stories. Finally, expand the scope across the organization. And keep in mind that
industry, from a institutionalization won’t happen overnight.
viewpoint both
of lower cost Lean Six Sigma can help improve processes not only in one workstation but in your
structures and
of increased
whole company and even across the entire supply chain. A long lead time, in and of itself,
manufacturing makes it more likely that variation will occur. It creates extra expense. Several Lean Six
flexibility.” Sigma principles help reduce lead times and variation, including:

• Capping the permissible amount of work in process (WIP).

• Keeping WIP flowing smoothly.
• Correlating material in the line to form units or production batches.
• Using a “pull system,” a set of procedures that collectively ensure that material will
enter the line only when the line is ready to receive it. Readiness is a function of the
WIP caps, flows and batch sizes.

Companies reap the greatest gains from Lean Six Sigma when they use this approach
from the beginning, by starting to implement it at the initial product design phase. One
heavy-equipment company redesigned a machine using Lean Six Sigma and managed
“A Lean process is to cut lead time by two-thirds (11 months instead of 36 months), recapture market share
one in which the without sacrificing margins. They successfully boosted customer satisfaction while
value-added time cutting costs.
in the process is
more than 25% of
the total lead time Conclusion
of that process.” Both Lean and Six Sigma take a strongly quantitative approach to reducing inefficiency,
waste, defects and variability in important processes. Lean attempts to make lead times
and delivery times more predictable by reducing the delays that occur between production
activities in a manufacturing process (or service delivery activities in a service process).
Six Sigma targets variations in defect rates and ensures reliable, consistent, predictable
service and delivery performance.

The combination of Lean and Six Sigma promises astounding improvements in customer
satisfaction, revenues, cost reduction and other important performance dimensions.

About the Author

Michael L. George is founder and CEO of The George Group, the biggest Lean Six
Sigma consultancy in the United States.

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