What is Lean Six Sigma (6 sigma explained)

What is Lean Six Sigma?

Six Sigma is a structured method based on statistical tools and techniques to improve the process, applied in the principles of project management, aiming at both customer satisfaction and achieving ambitious strategic goals.

The essence of the Six Sigma concept

The 6σ model is a statistical method for improving the quality of processes from the consumer's point of view. It determines service levels and measures deviations from them.

This method is completely "customer-oriented". It is based on the eternal rule - "to satisfy customers, you must produce quality products."

The Six Sigma methodology was created by Motorola's manufacturing division in the 1980s. It was subsequently adopted by other major manufacturers such as General Electric and Honeywell International.

Today, CIOs from a variety of industries are beginning to implement it because it requires continuous process improvement based on facts and quantitative indicators, as well as its ability to quickly and successfully eradicate shortcomings in the company's work and processes.

Quality philosophy based on aggressive short-term goals in forming a long-term perspective:

• Goals - 3 to 6 months;
• Perspective - over five years.

The 6 Sigma approach provides:

An effort to identify all organizational operations affecting the quality of products and services;

Detection of defects in the performance of these operations;

Providing measurement of each operation and subsequent efforts to improve it.

Management style and 6 Sigma

6 Sigma is more than a refinement project. Top management and leaders of the organization study the tools and approaches of the concept (new ways of thinking, planning, and working) to achieve practical results, thus creating a specific organizational culture. Read more: Manager or Leader: What are the differences and similarities

The 6 Sigma concept is a real attempt to work smarter, not harder.

Statistical concept

To measure processes through the defect number parameter. Reaching the 6 sigma level means that only 3.4 defects per million possibilities occur during the analyzed process. It is aimed at reducing the variability of processes and stabilizing the characteristics of processes and through them the products and services.

Sigma (Latin letter name)

A statistical term is a measurement parameter that is also called standard deviation. When this letter is used in business, it indicates the number of defects in the process output and determines how different the process is from the perfect one.

A comprehensive methodology for improving business processes. The number of defects per unit of output or million events is used for measurement, but in fact, the goal is:

• Elimination of unproductive actions;
• Reducing the time of the production cycle;
• Increasing profits.

User-oriented measurements are used, aiming at continuous improvement at all levels.

The long-term goal of 6 Sigma

Development and implementation of processes, including administration and service, that are so perfect that several defects per million events are measured at levels.

Features of Six Sigma

• Active participation of the top management in the "six sigma" projects;
• Management based on analysis of facts and data;
• Orientation at all levels in the organization to the user;
• Process orientation of all types of activity;
• Demolition of organizational barriers;
• Striving for a very high level of defect-free;
• Unified methodology for solving problems

Basic principles of the 6 Sigma concept

The number of defects per unit of output and the number of defects per 1 million events are standard measurements that can be applied to all aspects of any enterprise: production, development, services, and administration.

It is mandatory to conduct intensive staff training with the subsequent deployment of project teams for:

• Increasing profitability;
• Reduction of production and other activities;
• Reducing the production cycle time.

It is important to use corporate sponsors responsible for the activities of the project teams. These sponsors provide the mechanisms needed by the teams to:

• Overcome resistance to change;
• Receive additional resources;

They keep the teams from deviating from the strategic goals of the organization.

Green and Black belts

The Six Sigma Implementation Program trains qualified experts to improve business processes (called "green belts", "black belts" and "leading black belts"). They must be able to apply qualitative and quantitative tools to improve processes to achieve strategic business goals.

All indicators for measuring the process are identified in advance, and their meanings should reflect the business results before and after the changes, as well as their role in the final result.

Objectives (tasks) are set, oriented to a magnitude of improvement one order of magnitude (10 times) higher.

The training and implementation of the concept last from one to three years. During this period, certified experts in business process improvement lead the project teams.

Basic principles 6 sigma

Sincere interest in the client

In this approach, customer orientation is brought to the fore.

Examples:

The client with his needs and expectations is a specific parameters when considering the level of defect-free;

The quality of improvements is determined by the degree of customer satisfaction.

Database and fact management

In the Six Sigma system, the concept of "factual management" is used at a higher and qualitatively new level.

The implementation of the Six Sigma systems includes:

Clarify which criteria play a key role in measuring the effectiveness of the organization;

Analysis and data processing, which are performed based on the key variables to optimize the results.

Process orientation

In the Six Sigma system, every action or operation is considered a process. Whether it is product design, measuring results, increasing efficiency, customer satisfaction, or managing the organization as a whole, the basic principle remains the same: The process is the engine of success.

Proactive management

Proactivity means anticipating events with actions. Proactive management is a launching pad for creativity and effective change.

In practice, proactive management means:

Setting ambitious goals and their constant updating;

• Accurate distribution of priorities;
• Preventing problems instead of dealing with their consequences;
• Asking questions like "why do we do this" instead of saying "this is what we do".

Cooperation without borders

Effective cooperation both within the organization and between organizations is extremely important.

Huge sums are lost every day due to a lack of coherence, even hostility between groups, which must work together in the name of the common cause - creating added value for the client.

Six Sigma creates an environment and management structures conducive to effective teamwork.

Six Sigma supports the collaboration by:

Allows associates to see their role in the organization and its perspective;

Teaches them to identify and measure the interdependencies between operations at all stages of the overall process;

It enables them to understand the real needs of end users;

Determines the place of each in the chain of transformations that accompany the passage of the product through the process of production and marketing. Read more: Market research. Definition and classification of market research

Striving for perfection

Organizations that stand in the way of the Six Sigma path must always strive for perfection, approaching it without ever being able to achieve it, as consumers' perceptions of perfection are constantly changing.

At the same time, they are condescending to individual failures and seek to manage them.

Practice shows that:

• Each victory is associated with many losses;
• He who does not sin does not win;
• New ideas and approaches are always associated with certain risks.

Reasons for the success of the concept

The literature discusses the various reasons for the success of the 6 Sigma concept, and in general, the key success factors can be summarized as follows:

A high degree of organization - all activities are carried out within projects, each of which has established goals, deadlines, budget, distribution of rights and responsibilities and assessed risk, detailed records, etc.

Orientation to the final financial result. no project receives approval if its final result in the form of profit is not determined

Existence of built infrastructure - providing the improvement activity with the necessary resources.

Using an integrated approach - combines the orientation to process organization with fuller use of the human factor.

Combining the tools for improvement in one system - effective use of well-known and powerful methods with the help of well-trained teams.

A time-tested and proven approach (MAIC cycle) for the implementation of improvement projects

Leadership and active position of top management

Making decisions based on facts, not assumptions - a developed information system.

6 sigma methodology

Six Sigma is a registered trademark of Motorola, which includes a structured approach to improving business performance, as well as a toolkit with a set of statistical and non-statistical methods.

It is used for:

• Development of new processes, products, and services (DMADV tools);
• Cheaper and process automation (DMADDD toolkit);
• Improving existing processes, products, and services (DMAIC tools).

Concept 6 Sigma pays special attention to reducing the instability of the processes to a level where the resulting deviations are so insignificant that there is no need to correct them.

This requirement is satisfied by the level of 3.4 defects per million possible defects, which corresponds to a process stability level of 6σ. It is this parameter that is basic in the methodology for improving all key processes of the organization.

More on the topic: What is Scrum?

Sigma level

Motorola sets the sigma level in defect units per million chances of a defect or error.

This mathematical norm made possible the emergence of such a system, which is universally applicable to all goods, services, and processes.

The application of a common standard for measurement allows to set achievable short-term and long-term quality goals and to measure the respective results. The sigma parameter was developed to help:

Concerning the consumer

To formulate indicators of activities concerning the consumer for which they pay real money. Many of the indicators used by companies (working hours, costs, sales volume) do not interest the consumer at all.

To create a single method for measuring and comparing different processes. Using the Sigma scale, everyone can compare the performance of completely different processes - for example, the manufacture of blanks and the delivery of furniture.

Understanding the sigma indicator and its meaning starts from the moment it is established what exactly the consumers want. In 6 Sigma, consumer requirements and expectations are considered critical to quality and hence to company success.

Route map 6 Sigma

The following sequence is used in the implementation of the concept:

1. Identification of key processes and users;

2. Defining consumer expectations;

3. Measurement of current results;

4. Setting priorities, analysis, and implementation of improvements and innovations;

5. Expansion and integration of the Six Sigma system.

Measurement

1. Selection of the characteristic to be changed

2. Setting standards of work

3. Confirmation of measurement system

Analysis

4. Establish the capabilities of the product

5. Setting goals in terms of productivity

6. Detect the source of deviations

Improvement

7. Review of potential causes

8. Finding the relationships between variables

9. Establishing operational tolerances

Control

10. Confirmation of measurement system

11. Determining the possibilities of the process

12. Implementation of process management tools.

The control methodology Six Sigma and its roles

Within the framework of the six sigma concept, a certain business environment and infrastructure are created, through which the implementation of this approach is carried out and the culture of the organization is built.

The Six Sigma concept is not implemented by senior executives (although its role is too important), nor is it guided by middle management (although its involvement is mandatory).

The ideas, solutions, and improvements that result from the implementation of 6 Sigma are generated and implemented by the "front end" of the organization.

Companies that have taken the path of Six Sigma strive to delegate as much responsibility as possible to employees working directly with consumers.

Strong leadership

Six Sigma is a system that combines strong leadership, team energy, and universal participation.

The list of persons who can be called agents of 6 Sigma includes:

• The projects are implemented by cross-functional teams.
• Team leaders wear a "black" or "green" belt.
• Leaders are helped by a "champion" and a "process owner".

Champions and sponsors

One of the senior executives knows the ideology of the concept and actively works for its implementation (for example, the executive vice president of the company).

In addition, the following definitions are used:

Champions - informal leaders who use the 6 Sigma methods in their daily activities and share these ideas at every opportunity.

Sponsors - the owners of processes that support the Six Sigma initiative and coordinate the relevant activities within their responsibilities.

Master of the black belt

Persons with high technical and organizational skills. They provide technical guidance for 6 Sigma programs.

Black belt masters must:

• Know everything the black belts know;
• Understand statistical methods and be able to apply them in non-standard situations;
• Be able to train in the use of statistical methods for the black and green belts, as well as to check their activity.

They are fully engaged in training and mentoring.

Black belts

Persons who have undergone training and special program training and are engaged in work on Six Sigma projects from 50 to 100% of their time.

Training scheme - a week of training and then three to four weeks of application of the studied methods in the workplace in the process of implementing the next 6 Sigma project, then again a week of training, etc.

They are responsible for measuring, analyzing, and managing key processes and are fully engaged in this activity.

Green belts

Leaders of specific projects, leading the respective teams. They received a reduced training course (6-10 days), and unlike black belts spend for a project of 6 sigma only a small part of their time.

Yellow belts

Most often temporary workers who have undergone introductory training on DMAIC instruments, consciously participate in the work of the team led by the black and green belts.

6 sigma agents

The approximate number of agents is as follows:

Criterion - the number of staff 1000 people and 100 million dollars turnover

Black Belt Master - 1

Black Belts - 10 (1 black belt per 100 staff and $ 10 million turnovers)

6 Sigma projects - 50:70 per year (5: 7 black belt projects per year)

Average savings per project - 150 to 240 thousand dollars.

Training agents 6 sigma

The full "belt" Six Sigma must go through many levels of serious theoretical and practical training.

The preparation of a real, internationally-certified "black belt" is possible in many countries. The candidate is trained for four to five months. At the same time, a week spent abroad alternates with three weeks of practice in the organization.

The cost of such a learning process is in the range of 15-20 thousand dollars.

Integrated Lean Six Sigma concept

The concept integrates the capabilities of two proven practice approaches to building an effective organization.

Adaptive production

The ability of the organization to respond flexibly to changes in market conditions, achieving significant results by applying the principles of Economic Production and 6 Sigma.

Economical production

Abbreviated designation of the desire to reduce losses, simplify production procedures, and speed up the introduction of new products.

The table shows that in the concept the answers to the question "How to organize the activity" are taken from 6 Sigma, and to the question "What to do?" - mainly from the concept of Economic production.

In doing so, the Lean Six Sigma concept uses a unified set of measurable indicators and a unified set of methods and tools to improve processes.

Basic elements of the concepts

Six Sigma Concept

• The concept of "Economic production"
• Integrated Lean Six Sigma concept
• Formalized management responsibilities
• Formalized distribution of resources
• Formalized training and distribution of responsibilities and authorities
• Graduation of the specialists involved in the project (category "black belt", etc.)
• Realization of the concept in the format "problems, selection and implementation of projects"
• Short-term improvement projects - Kaizen (Read more: What is Kaizen?)
• Monitoring using metrics
• Using the DMAIC principle in the implementation of projects
• Using statistical methods to reduce process variability.
• Detection and elimination of losses and non-productive costs in the process.
• Increasing the speed of the process
• Reducing losses from "diversity"
• Elimination of losses from "savings"

Xerox demonstrates the benefits of Six Sigma

The company has successfully applied the promising methodology for the optimization of processes related to the replenishment of stocks

Finding the balance between minimum stocks in the warehouse and a high level of customer satisfaction is known among specialists in the field of inventory management as the task of the "Holy Grail".

Indeed, this is a rather ambitious goal, as it is always difficult to predict how many parts and consumables will be needed to meet needs in the future.

But it was this task that was highlighted as a priority for Xerox in the analysis of a series of projects aimed at increasing efficiency. Thus, the company's team set about solving it and at the same time applying 6σ for the first time.

6σ methodology

The 6σ methodology provides a structured project management system in the company, based on the systematic collection and statistical analysis of data.

The activity is developed in the form of projects. Each project aims to improve the economic aspect of the processes and to meet customer expectations while achieving a certain financial result.

The introduction of 6σ in the numerous structures of Xerox around the world has been underway since 2002 and is a personal initiative of the company's CEO Anne Mulcahy.

In addition, the methodology, which is aimed primarily at eliminating defects and achieving quality, is introduced in combination with the popular "Lean" approach for organizing flexible production, aimed at reducing losses and increasing process speed. Read more: What is Lean and MVP

The implementation of Xerox Lean Six Sigma

Deployment of the Xerox Lean Six Sigma began more than two decades ago with employee training. The 3-level courses and the accompanying tests are conducted online.

Everyone at Xerox is certified for the initial level of competence - "yellow belt" according to the terminology of 6σ.

Xerox customer service professionals already have a "green belt" certificate - the next higher level of competence that requires longer training - both online and in-person courses, more tests, and experience in a completed project.

An important step for the Xerox team is the selection of the first project in which the Lean Six Sigma approach will be applied.

Principle of Pareto

After analyses conducted on the principle of Pareto, the optimization of the process of filling the stocks, focused on increasing customer satisfaction and at the same time reducing the number of orders for spare parts and consumables by courier, was highlighted as a task of the highest priority.

We work with companies that use high-end Xerox machines on a subscription basis and we have arrangements for the maintenance and provision of consumables within certain deadlines. We must be 100% perfect so that their business processes are not disrupted.

To be able to react on time, Xerox maintains a warehouse with consumables and spare parts. In many cases, it is necessary to order parts and consumables by courier, as various factors change the needs of customers.

Reducing the level of expensive courier orders

The company aims to improve the level of their satisfaction while reducing the level of expensive courier orders, without allowing unnecessary stocks, and with minimal downtime of parts and consumables in the warehouse. These are several contradictory goals between which a balance must be struck.

Starting our work on the project, we focused on a small part of the warehouse - consumables and often replaced parts for large black and white production plants.

The idea was that by finding a solution that worked, we could then easily apply it to the rest of the warehouse. We focused on the parts and consumables for these machines because they provide a significant part of the annual income of the service.

Step by step to the goal

According to Xerox representatives, one of the most important steps in implementing a 6σ project is defining the problem - defects could not be eliminated if we did not know what they were.

This first step of every 6σ project starts outside the organization and focuses on answering the question of how we can make customers more competitive, which is critical to their success.

Properly defining what exactly customers want is extremely important to increase their satisfaction.

In addition, in this phase, the scope and duration of the project, the team members, the main input, output, and process parameters are determined.

Value creation from a customer and business point of view 

All stages of the process that do not lead to value creation from a customer and business point of view are identified and all sources of loss of funds and time are identified.

The measurement step follows. The main goal at this stage is to collect statistical information on the relevant process parameters and later based on this information to analyze the current process.

The data collected in this step is also used to compare the old and already improved process.

In the analysis phase, the collected statistical information about the input and output parameters of the process is evaluated and the main reasons for the unsatisfactory results are determined.

Based on their impact on the result, they are prioritized. This makes it easier to find solutions that eliminate the root causes of the problems. This is the most interesting and thought-provoking stage.

The next step is improvement - the most creative stage of the 6σ project when potential solutions to the causes of the problems identified in the previous stage are sought.

In this phase, Xerox decided to optimize the process of filling stocks, using the methods of statistical analysis.

Winning decisions

The main new point in the actions taken to optimize the warehouse is the introduction of the so-called. "buffer warehouse" - a quantity to serve as a reserve in case of possible problems with the delivery time, the quality of the materials, and small fluctuations in the cost.

A service factor has also been introduced, which shows in how many of the 100 cases the part is available in the warehouse. This factor also takes into account the expected level of customer satisfaction and varies depending on the nature of the application of the machines - production, office, home, etc.

Another input parameter is entered, which takes into account the monthly fluctuation of the expected fingerprint volume.

Constant customer feedback allows a more accurate prediction of future consumption of consumables and spare parts. Statistical methods prove that optimized warehousing and optimized customer interaction are more closely linked than they seem at first glance.

For example

Christmas is approaching. Users of Xerox machines in companies for printing services, advertising houses, photo studios, etc. enter the phase of active loading. By collecting preliminary information from them about the expected volume of copies,

Xerox will be able to meet their needs. Thus, the printing service companies will be able to meet the intensified demand in the specific period and, accordingly, to achieve higher profits. In the long run, this means expanding their business and eventually buying new machines.

Results

In defining the problem, Xerox aims to:

• Eliminate courier orders for consumables and reduce courier orders for spare parts from 9% to 5%;
• to prevent an increase in the average stay of consumables in the warehouse, which is 28 days;
• to reduce the average stay in the warehouse of frequently replaced spare parts from 75 to 65 days.

With the introduction of the Lean Six Sigma methodology, an approach has been adopted in which the replenishment of the warehouse is based on the cost of parts for previous periods, as well as on the expected volume of fingerprints.

The optimal quantities to be kept in stock are calculated as a function of variations in cost, delivery time, order interval, and set customer satisfaction level. The number of cases in which a part is needed and missing in the warehouse decreases. The structure of the warehouse is improved and the stocks are reduced.

The team's expectations

Overall, the results of the Lean Six Sigma implementation project exceed the team's expectations. For August and September, the goals have been exceeded in all indicators:

• courier orders for consumables and frequently replaced parts are eliminated;
• the average stay of consumables in the warehouse is reduced to 24 days (13% over fulfillment of the target);
• the average stay of frequently replaced spare parts in the warehouse is reduced to 51 days (21% over fulfillment of the target).

"Lean Six Sigma is a universal approach that can be used by any company to optimize observable and measurable business processes. As a result, it leads to increased customer and employee satisfaction and reduced costs," said Violeta Antonova.

Conclusion

It is important to understand 6 Sigma correctly - this methodology is not just about product quality, where only 3 defects per million are at the core of the system. But at the same time, it is what is important for the client, whether it is an internal or external problem.

It is focused entirely on creating added value - both for the customer and the market. For example, Polaroid had sales of over US $ 2 billion in 1988 and operated very well on the stock exchange.

It started with the introduction of Six Sigma and sometime around 1997, it became a 6 sigma company. In late 2001, they filed for bankruptcy.

The reason for this was the fact that Polaroid focused only on the quality of the products, without making a full assessment of the needs of customers and the market.

Questions and Answers

What is Lean Six Sigma?

Lean Six Sigma is a powerful and widely-used methodology that combines the principles of Lean and Six Sigma to improve business processes, enhance quality, and increase operational efficiency.

What are the key principles of Lean Six Sigma?

The key principles of Lean Six Sigma are reducing waste, improving process flow, and minimizing variation to achieve higher levels of productivity, quality, and customer satisfaction.

How does Lean Six Sigma work?

Lean Six Sigma follows a structured approach known as DMAIC (Define, Measure, Analyze, Improve, Control). It involves identifying process issues, measuring performance metrics, analyzing data to identify root causes, implementing improvements, and establishing control mechanisms to sustain improvements over time.

What are the benefits of implementing Lean Six Sigma in organizations?

Implementing Lean Six Sigma in organizations can lead to significant benefits, including reduced costs, increased efficiency, improved product and service quality, better customer satisfaction, and enhanced decision-making based on data-driven insights.

What types of industries or sectors can benefit from Lean Six Sigma?

Lean Six Sigma is versatile and applicable across various industries, including manufacturing, healthcare, finance, information technology, logistics, and service-based sectors, among others.

How does Lean Six Sigma help in waste reduction?

Lean Six Sigma aims to identify and eliminate various types of waste, such as overproduction, excess inventory, unnecessary transportation, waiting times, defects, and overprocessing, which ultimately streamlines processes and reduces costs.

How is Six Sigma different from Lean, and how do they complement each other?

Six Sigma focuses on reducing process variation and improving quality, while Lean concentrates on eliminating waste and optimizing flow. By combining these methodologies, Lean Six Sigma addresses both quality and efficiency aspects of processes, making it a comprehensive approach to continuous improvement.

What are the various levels of Six Sigma certifications?

Six Sigma certifications are typically categorized into different belt levels, including Yellow Belt, Green Belt, Black Belt, and Master Black Belt, each indicating varying levels of expertise and responsibilities in driving improvement projects.

What is the role of data analysis in Lean Six Sigma?

Data analysis is fundamental to Lean Six Sigma. It involves using statistical tools and techniques to measure process performance, identify root causes of issues, and make data-driven decisions for process improvements.

How can organizations sustain Lean Six Sigma improvements over time?

To sustain Lean Six Sigma improvements, organizations must establish control mechanisms, monitor process performance, provide ongoing training to employees, engage in continuous learning and improvement efforts, and ensure leadership commitment to the methodology.

Related posts:

• The five functions of Fayol's management

  Henri Fayol identified 5 functions of management, which he labeled: planning, organizing, commanding, coordinating, and controlling

• Cog's ladder of group development

  Cog's Ladder is a popular tool with which managers can better understand the dynamics of a group, respectively, and accelerate its development.

• Manager or Leader: What are the differences and similarities

  What are the differences and similarities between the manager and the leader?

• What is Lean Six Sigma (6 sigma explained)

  Six Sigma is a structured method based on statistical tools and techniques to improve the process applied in the project management principles.

• Strategies for stress management in the organization

  All employees and managers of an organization experience stress, which has been a major topic for research in recent years.

• Skills and roles of the manager

  What are the important skills of the manager and what roles he performs?

• New business organization

  Modern business management for managers