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Lean, Six Sigma, people and organisations

Posted: 5 September 2014 | | No comments yet

Organisations are constantly striving to drive down costs while maintaining the quality of their products and services. In recent years, much has been written in both the academic and practitioner literature on the application of Lean principles for the elimination of waste and focusing of energies on value-creating activities.

Lean Thinking

In theory, the adoption of Lean principles by an organisation has the potential to provide the dual pay-off of increasing customer satisfaction while reducing cost. The bottom-line benefit of a successful Lean transformation process to an organisation is therefore obvious and the reported success stories for true Lean transformations are impressive. Quoted figures such as 90% reductions in inventory coupled with a 50% increase in productivity capture the attention and imagination of managers. However, such success stories remain elusive with a success rate of 10% or less being widely reported in the literature. This article explores factors influencing Lean transformation initiatives in organisations.

Lean thinking

The origin of Lean thinking is attributed to the Toyota Production System (TPS) and was popularised in the western business lore by the books ‘The machine that changed the world’ and ‘Lean Thinking’. The central tenet of Lean thinking is the elimination of waste, where waste is defined as anything that increases cost without adding value for the customer. The five principles underpinning this concept are: 1) value; 2) value stream; 3) flow; 4) pull; and 5) perfection. Lean’s focus on eliminating waste and improving flow has positive effects for product quality as the simplification of processes leads to reduced variation.

Lean is often discussed as a mind-set or philosophy and its emphasis on systems thinking, team work and collaborative problem solving seeks to engage the entire workforce for the development of a culture of continuous improvement. The application of Lean principles facilitates the implementation of significant process improvements without the requirement for a thorough understanding of the underlying process. However, this lack of depth of understanding may well contribute to regression to old practices as observed for the majority of Lean initiatives. Furthermore, Anthony et al (2003) claims that the lack of a clear structure around Lean improvement initiatives constrains the potential scope and size of the improvement delivered.

People and organisational culture

According to Bhasin (2011)10, people-related issues represent the major obstacles to true Lean transformations, and the author ultimately proposes that the realisation of the promise of Lean is dependent on its widespread adoption across the organisation as a philosophy that guides all day-to-day business activities10. This people-centric notion of Lean transformations is echoed by many authors including Pepper and Spedding (2010)7, Arnheiter and Maleyeff (2005)8, and Bhasin and Burcher (2006)1.

It is evident that the success of an organisation is determined by the performance of individuals operating outside of the direct influence of the organisational leadership. On this basis the major guiding principle of a Lean transformation initiative must be the unification of the organisation into a holistic integrated business that is focused on achieving clearly defined and measurable objectives that ultimately delivers value to the customer. It is therefore clear that organisations intent on a Lean transformation must develop and apply policies, systems and rewards that support the vision and goals and foster an organisational climate where individuals are engaged and motivated to continuously improve the processes with which they work for the realisation of the organisation’s vision. Organisations whose cultures are underpinned by Lean ideology often employ the concept of Hoshin Kanri for medium- to long-term strategic planning. This process involves the development of multi-layered plans required for achievement of the strategic vision11. This quality planning and management method was developed in Japan in the 1970s and has subsequently been adopted and adapted by some Western organisations. In this model, senior organisational leadership develop the vision for the organisation and specific stakeholders are then charged with the development of the specific plans for the achievement of the vision. This process can entail the use of catch-balling where feedback occurs between the stakeholders and senior management and the overall vision may be reshaped depending on the dialogue. It is claimed that this process makes the vision more achievable, but also engenders a sense of shared ownership and responsibility due to the employee input process. The plans are ultimately linked to the daily work of the employees and consequently everybody knows how their actions feed in to the overall process. Metrics are set to measure performance against the goals and visual management tools are employed to ensure a high level of visibility and accountability11. Factors with the potential to influence individual engagement with Lean initiatives are outlined in Figure 1.

Lean Six Sigma

Bisgaard and DeMast (2006)12 have discussed the advent of Six Sigma in the context of other quality improvement methodologies such as zero defects, TQM, and quality circles. The authors trace the lineage of such methodologies through the last 80 years and conclude that Six Sigma incorporates many principles from previous incarnations of quality management methodologies and therefore Six Sigma represents the survival of the fittest ideas. The authors point to the strong project management structures of the Six Sigma DMAIC methodology as a significant improvement over previous quality management approaches such as TQM (see Figure 2). In addition, the results-oriented approach of Six Sigma, in terms of quantifiable deliverables, is deemed to also represent an advantage over previous approaches. Snee (2010)13 extends the narrative of Bisgaard and Denhaast (2006)12 when he states that LSS represents an evolution of the scientific approach to business improvement methodology that incorporates the best of previous methodologies while providing new tools. The author states that the Lean and Six Sigma concepts were first integrated in the late-1990s and that today LSS is the improvement approach of choice where inclusion of Lean concepts, methods and tools with Six Sigma methodology provides a powerful method for the identification of key improvement areas and driving rapid process improvement in the identified areas. The synergy of Lean and Six Sigma is discussed in terms of development and maintenance of a Lean manufacturing system where Lean principles are employed to develop the pull systems via which manufacturing progresses in response to customer demand while other Lean tools can add value through process improvement13.

Higgins (2005)14 has stated that implementation of Six Sigma and Lean in isolation within an organisation can result in neither being done effectively as they are constrained by one another’s needs within the organisation. Snee (2010)13 states that the comparison of Lean and Six Sigma with respect to what tools from either methodology may be useful is unhelpful. From a business perspective the focus must be on improvement and the best tools from both camps must be employed as and when they are required. It is therefore apparent that a combination of both approaches, where Lean tools are used to identify areas with the highest potential to add value from the customer’s perspective with focussed improvement efforts facilitated through the use of Six Sigma, may represent an appropriate strategy. Typically, Six Sigma is only used by specific individuals within an organisation for focussing on specific projects while Lean seeks to engage the wider workforce, but perhaps doesn’t adequately equip individuals with the skills and tools to do so. The integration of Six Sigma with Lean therefore has the potential to empower all individuals within the organisation to identify and participate in the elimination of non-value adding activities14.

Hoerl and Snee (2010)15 have proposed a theory for LSS. The authors state that the optimal team size is four to six people and that Pareto analysis is best utilised to identify the main drivers of a process. The DMAIC problem solving methodology is applicable for all business processes and provides a framework for project deployment. There should be an emphasis on the use of proven scientific tools such as Statistical Process Control (SPC), Design of Experiments (DoE) and Measurement System Analysis (MSA). The authors stress the importance of a management structure that facilitates the selection, execution and review of projects and conclude that sustainment of this structure results in the development of a continuous improvement culture within the organisation.

The key benefit in the melding of Lean and Six Sigma is the integration of the human and scientific aspects of process improvement. The scientific statistics-driven approach of Six Sigma and the people-centric customer-focussed approach of Lean complement each other to provide a holistic model that provides organisations with the wherewithal to produce breakthrough results. The emphasis that Six Sigma places on delivering quantifiable bottom-line results is conducive to engendering senior management support for initiatives, while the DMAIC process provides a logical systematic framework for planning, execution and communication of project progress13. In addition, Arnheiter and Maleyeff (2005)8 have described the counterbalancing influence of both approaches where they claim that excessive Lean can result in processes becoming too rigid to respond to the market, while over-emphasis on reducing process variation can lead to losing sight on what represents value to the customer in the pursuit of zero variation. The authors state that the optimal balance is struck when the approach focusses on the creation of value from the customer’s perspective with concomitant reduction in process variation. This approach will result in a controlled cost-effective process that is flexible enough to respond to market requirements8.

Six Sigma deployment in the pharmaceutical industry

The pharmaceutical industry represents one of the most highly regulated and therefore restrictive business environments with respect to implementing change. All manufacturing processes must be validated and tightly controlled for the purposes of delivering products of consistent quality. From a regulatory perspective patient safety is the preeminent issue and the altering of processes is not permissible unless it is supported by rigorous scientific evidence that the change doesn’t impact patient safety. The DMAIC methodology is highly amenable to the introduction of change in such an environment. The process requires the clear definition and scoping of the proposed change, in addition to the assessment of the impact on upstream and downstream processes. Furthermore, the impact of implemented changes are formally reviewed with further actions taken as required. The data and documentation generated throughout the DMAIC process acts as a record that can be presented to inspectors as may be required during regulatory inspections.

Van Arnum (2008)16 has described an organisation-wide LSS deployment by Pfizer. The methodology was used to spearhead a transformation program with the goal of developing a ‘vision-driven global supply chain network’. Six Sigma methodology was initially used for problem solving and process improvement initiatives within the manufacturing sphere across the organisation and was subsequently expanded to all business processes. At the time that the article was published Pfizer had over 3,000 Green Belt and Black Belt projects either completed or in progress with cost reductions of 5-20% in addition to inventory and lead-time reductions of 20-40% attributed to the initiative16. The article also outlines the implementation of six sigma projects with key vendors to address both quality and efficiency issues16.

Conclusion

The potential benefit of both engaging and empowering the entire workforce to actively participate in business improvement initiatives is clear, while the benefit of using structured scientific methods for supporting and driving these initiatives is as also plain. On this basis LSS may therefore offer a means by which the broad knowledge of the front line worker can be harnessed to identify improvement projects and focus the specific expertise required to realise breakthrough improvements. Furthermore, the structured methodology provides a framework for identification, execution and communication of projects that directly impact the bottom line. This approach gains attention and support of senior management which is critical for building a sustainable continuous improvement culture.

References

  1. Bhasin, S. and Burcher, P. (2006) ‘Lean viewed as a philosophy’ Journal of Manufacturing Technology Management, Vol. 17, pp. 56-72.
  2. Sohal, A. and Eggleston, A. (1994) ‘Lean production: experience amongst Australian organisations’ International Journal of Operations and Production Management, Vol. 14, pp. 1-17.
  3. Baker, P. (2002), ‘Why is Lean so far off?’ Works Management, Vol. 8, pp. 6-15.
  4. O’Corrbui, D. and Corboy, M. (1999) ‘The seven deadly sins of strategy’, Management Accounting 10 pp.1-5.
  5. Womack, J.P., Jones, D.T. and Roos, D. (1990), “The Machine that Changed the World”, Rawson Associates, New York, NY.
  6. Womack, J.P. and Jones, D.T. (1996), “Lean Thinking”, Simon and Schuster, New York, NY.
  7. Pepper, M.P.J. and Spedding, T.A. (2010), “The evolution of Lean six sigma” International Journal of Quality & Reliability Management, Vol. 27, No. 2, pp. 138-155
  8. Arnheiter, E.D. and Maleyeff, J. (2005), “The integration of Lean management and six sigma”, The TQM Magazine, Vol. 17, No. 1, pp. 5-18.
  9. Antony, J., Escamilla, J. L., and Caine, P. (2003), “Lean Sigma”. Manufacturing Engineer; Vol. 82, No.4, pp. 40-42.
  10. Bhasin, S. (2011) ‘Performance of organisations treating Lean as an ideology’ Business Process Management Journal, Vol. 17, pp. 986-1011.
  11. Jolayemi, 2008
  12. Bisgaard, S., DeMast, J. (2006), “After Six Sigma-What’s next?”, Quality Progress, Vol. 39, No. 1, pp. 30-36.
  13. Snee, R.D. (2010), “Lean six sigma – getting better all the time” International Journal of Lean six sigma 1 No. 1, 2010 pp. 9-29.
  14. Higgins, K.T. (2005), “Lean builds steam”, Food Engineering: The Magazine for Operations and Manufacturing Management, available at: http://www.foodengineeringmag.com/Articles/Feature_Article/1e1b90115c2f8010VgnVCM100000f932a8c0____.
  15. Hoerl, R.W. and Snee, R.D. (2010), “Statistical thinking and methods in quality improvement: a look to the future”, Quality Engineering, Vol. 22, No. 2.
  16. Van Arnum, P. (2008), “Manufacturing Insights: Pfizer”, Pharmaceutical Technology July 32, 7, p 50.
  17. The views expressed herein are the views of the presenter only and not those of any company, employer, or organisation associated with the presenter.

Biography

Dr. Stephen McGrath is the Site Microbiologist at Teva Pharmaceuticals Ireland (TPI). He is currently Studying for a MBS in Lean Practice and is leading a Lean laboratory transformation at the TPI site. He received his PhD in Molecular Microbiology from University College Cork in 2001 and spent six years in academic research and teaching before moving to industry.

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