Business methods can go in and out of favour like designer fashions: all the rage one day and on the clearance wrack the next. But some concepts have proven to be sustainable.
Lean Six Sigma is one method (really two) that has stood the test of time – and even more so today with the amount of disruption organizations must cope with as they respond by innovating and changing. Comprised of two complimentary methods, Lean and Six Sigma, together they can improve both products and services, and help ease the change process required.
Lean, which came out of a study of manufacturing processes at Toyota in the 1990s, is a method that has stood the test of time by its ability to be adapted to different fields. What started as a tool to improve manufacturing efficiency has grown into a philosophy that can be applied to service industries, such as healthcare, where reducing waste allows hospitals, for example, to better serve patients.
This interest in Lean as a way of improving service has grown in recent years as governments have sought to achieve economies without necessarily cutting services to people. Wait times in hospital emergency departments is a prime example, says Michael Ewing, director of the Centre of Excellence in Lean Six Sigma at the Schulich Executive Education Centre.
“It’s more difficult to see the work when it’s a service and not a widget,” says Ewing, but the same mapping and visualizing of processes to eliminate waste and maximize value to the “customer” applies.
In healthcare, the ballooning cost of providing service to a growing population of aging citizens and immigrants forced administrators to look for ways to operate on a more business-like footing without cutting essential services. When word got out that Lean was having a positive impact in hospitals, the demand for training in Lean principles grew. Today, says Ewing, municipalities are adopting the idea of looking at taxpayers as customers and working to change how they deliver services, such as processing building permits, to add value by reducing the time it takes to approve them.
Lean is often associated – and combined – with the practice known as Six Sigma, which it can be useful by itself in introducing organizations to the core philosophy of customer centricity as a means to identify and eliminate processes that add no value. Ewing said what was once a priority for mainly large companies has become more important to mid-size companies as they face increasing pressure to compete in the new disruptive economy.
As interest in Lean has grown, Schulich Exec Ed program directors have responded by adding course components to training programs that show participants how to apply these principles to their specific industry.
An example from a local government’s initiative to improve waste management services illustrates the benefit of adopting Lean principles.
Problem Statement: Customers complained about garbage and recycling not removed in time and was taken separately.
- Two operators on one truck
- Picking Garbage weekly
- Picking Recycle bi-weekly
- Decentralized model, each yard had their own garbage and recycle pick up
- Two trucks back to back, one for garbage and other for recycling and one operator on each truck
- Garbage and recycling picked up weekly and together
- Centralized model, all trucks starting their day from one centralized location
SAVINGS AND BENEFITS
- 12% increase in pickup frequency for both garbage and recycling
- Cost avoidance of $140,000 per annum
Where Lean looks at speed and flow of a process, Six Sigma is about analyzing process to look at variation in quality and effectiveness, and include voice of the customer considerations and analysis of root causes in variation.
Using Six Sigma methods to solve a production problem
Problem statement: Production of an abrasive used in a manufacturing process does not meet sales requirements resulting in too many missed or late orders, excess stock of source materials and waste product.
Project scope: Focus on a specific stage of the production process to increase good quality material with fewer imperfections and less waste, which needs costly re-processing into an alternate material less in demand.
Key learning: Vague work instructions, zero visual aids and metrics, and a lack of understanding for reasons why each task is important, lead to a high degree of variability in an operator-controlled process.
Conclusions: Tighter control of the critical stage in production increased the production of good material and reduced the production of irregular material, improving the agility of operations to meet customers’ varying requirement for one or the other material.
Actions Taken: Revised job method and instructions, visual aids added to operators panel, process metrics were added with daily reviews at three levels – floor to plant manager.
- Exceeded the project target of 65% better material production in Q1.
- Production of sufficient materials to meet orders exceeded 95% target.
- Other benefits: stock of source material dropped, and excess inventory of the alternate material was reduced, cutting the cost of re-processing.
Combining the two methods reduces the effort to make significant change, which is always a challenget – to one attempt instead of two, improving the success rate for any project.
The other component of a successful Lean Six Sigma project is training. People’s fear and resistance to change goes down when they are shown the need for improvement and how to achieve it. Especially for those who are closest to the work.
Schulich Exec Ed offers a number of programs in both Lean and Six Sigma, including the Masters Certificate in Lean Six Sigma (starting Nov. 1, 2019).