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Issue 15

Lean Six Sigma and Innovation Management

Monica Petraru
Senior Business Analyst
@UNIQA Raiffeisen Software Service
MANAGEMENT

The idea of innovation is approached by numerous companies which focus on the optimization of their internal processes and finally on increasing the business value, adding the benefit of seeing their clients extremely satisfied with the products they offer. Lean Six Sigma, a relatively well-known approach for obtaining some excellent and efficient results, can help the executives of multinationals to discover new innovation opportunities beyond carrying out simple operations, to reach a high degree of productivity, a solid financial performance, as well as an inherent disposition towards innovation.

On today"s global market, we all know there is an extremely competitive environment, as all the companies are permanently searching for improvements. Thus, in order to reach their goals, they will turn to expert consultants for help, whose aim is to implement these methodologies. Many of these organizations are willing to implement the performance optimization method offered by Six Sigma. While this is an excellent starting point, the first question that arises is: "What precisely is Lean Six Sigma and how is it different from Six Sigma or Lean?" You, dear colleagues from the IT world and not only should ask yourself the following question: "If my company is not in production, could Lean Six Sigma be applied even to my organization?" In this article, we will try to answer these questions in detail, offering an overview of the fundamental frame of this methodology.

Before starting to use a methodology of improving the processes within the companies in which we carry out our daily activity, it"s good to know what exactly we are dealing with. Thus, it is essential for us to understand the fact that Lean, Six Sigma and Lean Six Sigma are three totally different technologies. Obviously, they all have as an epicenter of their existence the objective of defining value for the client, and by value, everyone has to understand the client"s financial potential he can count on and, at the same time, the amount he wishes to invest. Therefore, all of the three methodologies mentioned above involve processes optimization by reducing loss and simplifying the activities that eventually lead to the delivery of a valuable product.

Nowadays, everybody has heard of the Lean Six Sigma methodology and evidently they wonder what it is all about, where it has started from and how it needs to be applied in order to get the desired results in the end. The answers sought and wanted are not complicated at all. It is good to notice the fact that at a first sight we realize from the play on words "Lean Six Sigma" that this methodology is a combination of the good things taken from Lean with the advantages of Six Sigma, thus it can be defined as an integrated management approach. It focuses on obtaining a constant improvement of the processes. In order to do this, it absorbs both elements of the Lean methodology with the purpose of reducing the time of their progress, by eliminating the loss factors, as well as elements of the Six Sigma methodology, represented by a decrease of the variability degree of the process. This method can be used in any company or enterprise which registers losses on the cycle of processes with input and output parameters that are fluctuant in time.

Lean Six Sigma is a natural evolution of the subjects of improving quality and processes, which have their origin in the 1950s, in view of making the production mechanism more efficient. It all started with defining the focus on quality improvement, in order to reduce the cost of the flawy material production. This evolved in the implementation of similar principles in order to improve the efficiency of the process at factory level, by eliminating the waste of effort only to manufacture the necessary quantity, not to over-agglomerate the storehouses. In time, other parts of the organization have felt the need to approach this process optimization perspective, a relevant example in this respect being also the commercial departments within an enterprise.

The difference between Lean, Six Sigma and Lean Six Sigma

Lean and Six Sigma are both study subjects for the continuous improvement of processes within a company, but they differ in stating their prime goals and their approaching manners. Lean is a subject whose goal is that of eliminating waste and increasing the process efficiency by focusing on speed and cost optimization.

Lean is defined as a subject whose goal is to ensure the stability of the processes by reducing loss and simplifying the activities which offer value to the client. Elements such as reducing loss, value flow or process flexibility represent archetypal components of a Lean type structure or company, no matter the activity domain or area in which they carry out their activities: production, public services, health, financing etc.

If Lean ensures process stability and their development in a continuous flow, the Six Sigma management methodology focuses on quality improvement, through the reduction of variability, by means of different statistical and qualitative tools.

While in Lean one uses Kaizen type events, mapping the value stream, work load balancing and waste analysis, the Six Sigma methodology will employ the DMAIC model (Define, Measure, Analyze, Improve, Control) in view of reducing the variability of processes, by a deeper orientation towards the client. Thus, the understanding perspective of the critical points of each offered product or service will improve also by making some decisions based on the available values and the circumstances.

In the table below, one can observe the features of the two above mentioned methodologies:

Based on the definitions enunciated above, the Lean Six Sigma is defined as a hybrid: it absorbs both Lean type elements as well as Six Sigma elements. What is required is a pragmatic approach of process improvement within a company, with focus on what is necessary and important for the client. Characteristics such as time-focused strategy of Lean with statistical analysis tools from the Six Sigma methodology allow a flexible solution within the context of approaching a complex set of problems.

The central axis of the Lean Six Sigma methodology is represented by the DMAIC framework (Define, Measure, Analyze, Improve, Control). As one can notice, it has been adopted also by this hybrid, especially for those projects which aim at improving the existing business processes.

The DMAIC framework

DMAIC illustrates an extremely rigorous project methodology whose essential goal is to increase the capability degree and at the same time to reduce the flaws identified in the process - the optimization of services, products and processes within a company / enterprise. In order to do this, it is necessary to go through the following steps:

  1. Define
  2. Measure
  3. Analyze
  4. Improve
  5. Control
Source: www.sixsigmadaily.com

1. Define

  • The aim of this step is that of setting the goal and purpose of the project.
  • Collecting the necessary information related to the process and the client.
  • For the time being, the final goals of the project will be estimated in accordance with all the knowledge regarding the strategic goals of the company, the clients" claims, as well as the process which is to be improved.
  • One wishes to reach a higher level of sigma type.

2. Measure

  • Process understanding.
  • Maximum focusing on the effort of improving the current situation.
  • Establishing an optimal level of capability in order to obtain a high degree of process performance.

3. Analyze

  • Once the initial data have been established, one can more easily identify the origin of causes.
  • Consequently, during this phase, one can locate and identify the causes, as well as their confirmation, by using a set of concrete data.

4. Improve

  • Defining and validating the system of monitoring and control of the new process.
  • Identifying the possible manners of optimization.
  • Elaborating some pilot studies.
  • Adjusting/ Re-evaluating the potential solution.

5. Control

  • Controlling the performance of the new process.
  • Defining some internal standards and work procedures.
  • Implementing a statistic control process.
  • Drawing up a plan for the statistic control process.
  • Estimating the capability of the new process.
  • Elaborating and transferring the solution to the project"s beneficiary.
  • Reducing the costs and increasing the profit.
  • Completing the project and the documentation.

The implementation of the Lean Six Sigma methodology within enterprises or big companies

If so far we have tackled things from a theoretical point of view, surely the aspects we have focused on must also be translated into practice, within our daily activities.

Therefore, I dare you imagine yourselves in the position of a multinational company manager, a company whose processes are complex and complicated. The question is what we can do in the future in order to optimize these processes…

Nowadays, companies use the basic principles of the Lean Six Sigma methodology in view of reaching the following targets:

  • Real focusing on the client"s claims - increasing the customer"s satisfaction;
  • Increasing the profit;
  • Enhancing the quality of the products;
  • Increasing the satisfaction of the employees;
  • Reducing the operation costs and regaining most of the invested capital;
  • A mechanism of generation of the management of change;
  • Reducing flaws;
  • Cultivating the extraordinary feeling of excelling.
Source: deakinprime.com

Possible traps that can emerge during the implementation of this methodology

Lean Six Sigma offers a methodology and a set of tools that lead to continuous improvement, through an analysis based on facts and permanent feedback from the client. This simplicity is often lost in the eagerness to obtain measurable results as quickly as possible, and the companies fail to see the imminent success. Here we can identify some of the most common traps:

  • Focusing on the study in view of obtaining the certification;
  • Avoiding the balance of resource allocation;
  • Maximum focusing on collecting as much information as possible;
  • Implementing a rigid program based on standard models;
  • Deviation from the observance of the steps characteristic to the DMAIC methodology;
  • Assuming the fact that certified people possess the professional skills specific to project management;
  • The tendency to obtain the best results right from the very first moment of approaching this methodology.

Conclusion

Any person who wishes to become initiated in this methodology or to involve effectively in its implementation can notice the fact that Lean Six Sigma measures the performance of a product or process on a statistic level (or the degree of satisfying the customers" claims). At the same time, this methodology provides organizations with all the tools necessary in view of optimizing the capability of its processes, increasing the performance of the business environment and reducing the variation of the results → higher quality of the products and services.

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