3.4 PER MILLION
What Comes After the Low-Hanging Fruit?
Making smart choices about lean Six Sigma applications
by Douglas P. Mader
There are four major approaches for organization-wide improvement efforts that fall under the label "lean Six Sigma," as evidenced by current practices at many industrial organizations, service organizations and consulting firms:
- Traditional Six Sigma (TSS).
- Lean Six Sigma plus (LSS+).
- Lean Six Sigma light (LSSL).
- Traditional lean (TL).
Each has its own strengths (see "Four Versions to Vet"), but how do you determine which deployment model to use?
The first thing you need to understand is what a typical lean Six Sigma deployment involves. There are many permutations that have been practiced, but they all involve these four high-level steps:
- As a result of the strategic planning exercise, organizational gaps are typically identified. If the gaps and associated potential financial gains reside primarily in operations-oriented functions, then the leadership team likely will opt to deploy lean Six Sigma.
- The leadership team will set financial targets for the corporation and cascade the financial targets down to the business units so each business unit, function and department will have its own financial target.
- Middle management (under the guise of lean Six Sigma Champions) will determine the resources required to achieve the local financial targets—for example, in terms of number of lean Six Sigma belts and the number of projects.
- The lean Six Sigma Champions will employ a structured process to identify potential lean Six Sigma projects, rank them, select the best projects based on return on investment, organize the required resources and support, and launch the projects.
- The Champions and Master Black Belts (MBB) will assist Black Belts (BB) and Green Belts (GB) to carry out their projects by managing them using the define, measure, analyze, improve and control (DMAIC) improvement strategy, which can be based on the LSS+ or LSSL model.
- As a natural course of events, the organization initially will gravitate toward easy, high-return projects, which most people refer to as the low-hanging fruit (LHF) projects. As time passes and LHF projects are completed, several things happen. Projects start to take longer because they are more complex relative to the initial projects. Project savings begin to decline relative to the initial projects because the higher-return projects have already been completed. Project failure rates begin to rise along with the complexity of the projects.
The cumulative results of lean Six Sigma deployment are directly proportional to the size of the LHF projects in the organization before it started the lean Six Sigma deployment.
Many of the early adopters of Six Sigma and lean Six Sigma in the mid 1990s had abundant opportunities in the organization and therefore saw huge financial returns. It is perhaps natural for management to expect a very successful deployment of lean Six Sigma based on what other companies have done.
Many of the early adopters, however, pursued lean Six Sigma deployment vigorously for no other reason than because they had such abundant opportunities. Many of the organizations just starting lean Six Sigma deployments today perhaps do not suffer from the same acute need as their predecessors. This means that forecasts of monumental savings based on the early adopters’ results might prove to be less than accurate.
This also means that as an organization begins lean Six Sigma deployment, it will use up LHF projects faster and, in turn, see reduced savings per project sooner. Perhaps some uninformed managers then will begin to question the merits of the lean Six Sigma deployment.
When an organization has reaped the benefits of LHF projects and even the more difficult, high-priority projects, what remains are projects that are generally smaller in scope and require only simple tools to be executed to realize certain levels of improvement. As a result, there’s a natural tendency for some lean Six Sigma managers to gravitate toward simpler tools and methods to be used in the DMAIC process when projects start to become simpler.
The problem is that this mentality seems to appeal to some leadership teams and managers who simply don’t want to build a strong lean Six Sigma competency in the organization. The perception seems to be that simple, non-quantitative lean tools are sufficient and that more rigorous statistical tools—traditionally components of Six Sigma—are not necessary. As you would expect, the consulting industry will follow a client’s desire, and we now have multiple organizations pushing that LSSL model.
A problem becoming more apparent is that teams and deployment managers seem to think they can skip the core Six Sigma tools and proceed to focus exclusively on lean tools. This means only certain types of problems can be thoroughly addressed, and any problem that does not directly pertain to the flow of materials, information or transactions will simply be addressed via guesswork.
The first thing to do to resolve some of the issues mentioned is to recognize that every lean Six Sigma deployment follows a similar lifecycle. In the early stages, more resources are expended, LHF projects are addressed, and return on investment should be proportionately high.
For most organizations, LHF projects will become very difficult to find after 24 months or so, and the average savings per project will be cut by a factor of four. While this could cause a leadership team to think lean Six Sigma has run its course and a method change is warranted, perhaps there is a more mature viewpoint.
At that time, a prudent leadership team will do four things: expand the GB effort, implement design for Six Sigma (DFSS), implement structured improvement in markting and expand lean Six Sigma into non-operations business functions.
Expand the GB effort: It is perfectly acceptable for an organization to decide to focus on simpler lean tools as a lean Six Sigma deployment matures. This allows people to use methods that are appropriate for common issues such as cycle time, substandard work procedures or inefficiencies due to process design.
As project opportunities become scarce, what some organizations have done very successfully, however, is convert existing BBs to coaches for GBs. The operative thought here is that many smaller projects can yield significant savings when fewer big projects are possible.
Implement DFSS: By definition, the DMAIC process is an inherently reactive problem-solving process. We identify an opportunity for improvement (because it exists), define the problem and assign resources to correct the issue. You then might argue that it is inherently obvious that an organization should shift some of its BB resources to more proactive pursuits when the lean Six Sigma results become more difficult to obtain.
DFSS is meant to be a method that can be plugged into any existing design process; it does not replace the design process. Having MBBs and BBs who can play leadership roles in the use of quantitative tools, probabilistic design or statistical tolerancing, for example, is critical to the prevention of problems in the design of new products and processes.
Implement structured improvement in marketing: For many organizations, the marketing function is carried out based on qualitative guesswork more than quantitative research. Having core competencies in statistical analysis can greatly bolster an organization’s ability to define new markets, define market segments, better position products and confirm market performance. Core Six Sigma skills can then be leveraged to support structured improvement in marketing where customer, market and product research would be the main objectives rather than cutting expenses using the DMAIC method.
Expand lean Six Sigma to non-operations business functions: DFSS deployment is one example of leveraging lean Six Sigma principles outside of operations. It only makes sense to try to accomplish the same thing in marketing, supply chain, administration and support functions. The lean Six Sigma DMAIC process will be more applicable in supply chain, administration and support, but the quantitative tools and methods involved in LSS+ can make significant improvements in marketing research, product planning and portfolio management.
As a result of the deployment of the LSS+ model, we have seen exceptional financial and operational improvement from many organizations since the late 1980s. As LHF opportunities have become more scarce, there is a tendency to question the utility and effectiveness of the LSS+ model and more toward the LSSL model.
While simpler tools that focus on cycle time and flow problems are certainly warranted, they cannot be the only means by which organizations improve. Perhaps a balanced approach that includes the TL model, GB deployment, DFSS deployment, marketing improvement and expansion of improvement activities outside of operations is a better way to move forward.
There are four major approaches to improvement under the label "lean Six Sigma" as evidenced by current practices at many industrial organizations, service organizations and consulting firms:
- Traditional Six Sigma (TSS): The TSS model has come to be a very effective problem-solving strategy for existing processes and products. It effectively integrates the Six Sigma, business process reengineering and project management bodies of knowledge and has also been effectively tailored to financial services, healthcare and other specialized industries. As a result, it is no longer limited to typical brick-and-mortar manufacturing companies.
- Lean Six Sigma plus (LSS+): Under the LSS+ model, Champions and Master Black Belts make a determination as to the type of problem under consideration and then determine the method best suited to the problem in terms of time, cost, quality and the predicted results. If a Six Sigma approach is warranted, a project is launched under the traditional define, measure, analyze, improve and control (DMAIC) model. After the analyze phase is completed, however, the Champion and Black Belt could decide that lean tools might provide a more effective solution. On the other hand, if a lean approach is warranted, then the duration of the define, measure and analyze phases of the DMAIC process can be shortened. If the lean tools will provide an appropriate solution, the time involved in the improve phase can also be shortened.
- Lean Six Sigma light: (LSSL): This model entails use of the DMAIC structure, a limited set of Six Sigma tools (leaning toward the simpler ones) and the mainstream lean tools. This method can be effective on well-understood problems that have to do with the flow of product or work units through a multistep process. But the number and types of problems that can be solved with the LSSL method are limited to issues pertaining to flow of work or material and to solutions that can be brainstormed without detailed quantitative analysis.
- Traditional lean (TL): The traditional lean model involves the use of a number of tools that have been adapted from the Toyota Production System approach. The TL model has proven quite effective when applied systematically to repetitive processes involving flow of material, transactions or physical product. The TL model usually involves some basic statistical methods, such as control charting, but the main Six Sigma tools involving data analysis and quantifying root cause are uncommon. This method has proven most effective for operations that involve the production, processing or distribution of work or product. —D.M.
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- Dennis, Pascal, Lean Production Simplified: A Plain Language Guide to the World’s Most Powerful Production System, Productivity Press, 2002.
- Keyte, Beau and Drew Locher, The Complete Lean Enterprise: Value Stream Mapping for Administrative and Office Processes, Productivity Press, 2004.
- Liker, J. K., The Toyota Way: 14 Management Principles From the World’s Greatest Manufacturer, McGraw-Hill, 2004.
- Ruffa, S. A. and M. J. Perozziello, Breaking the Cost Barrier: A Proven Approach to Managing and Implementing Lean Manufacturing, John Wiley & Sons, 2000.
- Womack, J. P. and D. T. Jones, Lean Solutions: How Companies and Customers Can Create Value and Wealth Together, Simon & Schuster, 2005.
Douglas P. Mader is the CEO of SigmaPro Inc., a consulting firm in Fort Collins, CO, that specializes in deployment of lean Six Sigma and design for Six Sigma. Mader earned a doctorate in mechanical/industrial engineering from Colorado State University and is a senior member of ASQ and the Institute for Industrial Engineers.