What is Lean Six Sigma?
Research shows that waste, rework, excess inventory, needless complexity and other productivity problems cost manufacturing companies 15 – 25% of sales revenues. These costs are often called the Costs of Poor Quality (COPQ). In service companies, losses are estimated to be closer to 30%.
Simply put, Six Sigma is a measure of variability, typically for a given business process. When a process is performing at Six Sigma levels, output variability is so low that the process is considered to be virtually defect-free.
Motorola coined the term “Six Sigma” in the 1980’s as a stretch goal for first-pass product quality. In the 1990’s Six Sigma evolved into a disciplined, structured performance improvement methodology aimed at reducing cost, reducing lead-time, improving profitability and increasing customer satisfaction. Six Sigma is different from other improvement methodologies in four crucial respects:
- It employs a disciplined, structured approach,
- It is highly data-driven,
- Decisions are made based on objective evidence, and
- It focuses on achieving specific, documented improvements in cost, quality and customer satisfaction.
Although Six Sigma encompasses a large body of knowledge, two of its most powerful tools are applied science and statistical reasoning. Improvement projects are carefully chosen using objective data as the foundation for any improvement-driven activity to ensure a significant Return on Investment (ROI) to the organization.
The origins of Lean can be found in the innovations of Henry Ford but it is the Toyota Motor Corporation and their single-minded pursuit of waste elimination that has defined Lean performance today. Creating a Lean enterprise simply means providing the greatest value for customers using the fewest resources.
Lean applies to any process across the organization and is primarily common sense combined with profound, but often counter-intuitive principles. The methodology and the body of knowledge has been developed and refined over the past 50 years and it is not dependent on systems, software, or technology.
Lean Six Sigma
Organizations will benefit if they apply one of these powerful methodologies, but those that apply both in an integrated fashion will get the maximum benefit. Six Sigma alone will not eliminate the maximum waste from processes, nor speed the flow of products, services and paperwork. Lean alone will not help you understand the variables affecting product/service performance.
Practitioners of the Six Sigma DMAIC (Define, Measure, Analyze, Improve, Control) framework who are imbued with lean thinking will execute “Lean DMAIC” and save time and effort by avoiding analysis overkill.
ETI Group offers a broad range of Lean, Six Sigma and Lean Six Sigma training and consulting support services. Our services are tailored to fit the individual needs of each organization and regardless of where you are in the improvement process we have the skills and experience to help.
1. Recent Client Successes
- A Semiconductor Manufacturer reduced failure rates by 50% with an annual cost saving of 3,600,000.
- A Plastic Extrusion company saved $2,200,000 per year by solving a problem of parts failing final inspection due to cosmetic damage and out of tolerance dimensional variation.
- A Plastic Molding company saved $700,000 per year by solving a problem of parts failing final inspection for cosmetic damage.
- A Metalworking company saved $230,000 per year by reducing the number of damaged or contaminated parts at final inspection.
- A Laser Diode Manufacturer developed and implemented solutions to reduce wavelength variation resulting in annual savings of between $150,000.
- A project team identified the major causes of “ED on divert.” They developed and implemented a “divert mitigation action plan” that reduced the daily hours of ED divert from 6 to 0.6, providing an annual revenue increase of $2,900,000.
- A project team reduced the average time lag from point of patient care to posting of patient charges from 5 days to 1 day. Daily charges for this organization are about $1,000,000.
- A project team redesigned Emergency Department procedures to reduce the percentage of patients who leave without being seen providing an annual revenue increase of $400,000.
- A project team identified the major causes of in-patient falls. They developed and implemented a set of preventive measures and a rigorous “lessons learned” procedure resulting in a 50% reduction in the annual cost of litigation and payouts.
- A project team identified the causes of wasted medication in a hospital central pharmacy. They developed and implemented an improved process that reduced the costs associated with wasted medication by 92% with an annual saving of $1,100,000.
- A city government improved its court collections process, resulting in a $400,000 increase in annual revenue.
- A city government improved its petitioner-initiated annexation process with a 60% reduction in errors; a 30% reduction in overall lead time; and a 25% reduction in overall staff time. This reduced the cost per case by $954.
- The purchasing process in a city government had an average cycle time of 38 days. By applying Lean concepts and methods, a project team reduced the average purchasing cycle time to 5 days.
- A library improved its processes for ordering, cataloging, and shelving new materials reducing the average lead time from 28 days to 14 days.
- A logistics company improved its delivery processes for the highest volume categories. Late shipments, due to factors under the company’s control, were reduced by 43%.
- A logistics company had a picking accuracy of 98% at the order level, but only 50% at the shipment level. A project team was able to identify the major causes of picking errors, and increase the shipment-level picking accuracy to 80%.