INTRODUCTION TO LEAN SIX

SIGMA

Dr.R.RAJU
PROFESSOR
DEPARTMENT OF INDL., ENGG.,
ANNA UNIVERSITY, CHENNAI -25.

EVOLUTION OF LEAN SIX SIGMA

In 1996, the CEO of GE, Mr. Jack had praised six sigma was

the most important initiative, GE has ever under taken.

In 1998, Mr. Jack had pointed out that in spite of successfully
implementing six sigma in their organization; they could not
reduce order-to-delivery time.
In 2000, the same jack announced a additional goal for GE;
reducing the variation in lead time (SPAN)
SPAN is a measurement of operational reliability for meeting a
customer request.
SPAN is the time window around the customer requested
delivery date in which delivery will happen.

EVOLUTION OF LEAN SIX SIGMA

Jack positioned the focus on SPAN as an addition to six

sigma, not a replacement for it.

Quality and reliability reducing process lead time which also
reduces overhead cost and inventory is the province of an
entirely different set of principles and validated tools known as
lean methods.
Use of lean tools enhances the rate of reduction of lead time
and manufacturing overhead and quality cost.
Thus, Jack paved the way for integrating six sigma with lean
tools.
Michael George,CEO of George group of consultancy
conducted a study during 2000 taking samples of 170
manufacturing industries and found that nearly half of the
industries lead time performances had declined between 1995
and 2000.

EVOLUTION OF LEAN SIX SIGMA

The study has proved that tier 1 auto suppliers have

improved 300% in less than two years.

It is to be seen that the auto suppliers had used both
lean and six sigma in their industry.
SPAN technology used in GE and lean six sigma
utilization in the auto industries demonstrated the
integration of lean and six sigma.

THE SYNERGY OF LEAN AND SIX

SIGMA.
Six sigma does not directly address process speed.
Six sigma does not include speed acceleration tools

like TPM, Time value analysis, kaizen, 5S, etc.

Six sigma alone cannot dramatically improve process
speed or reduce invested capital.
Six sigma rarely gets into a discussion of classifying
activities as value-added or non-value added nor is
elimination of non-value added activities a central
tenet of six sigma.
It is of no use in applying six sigma when there is a
lack of improvement in Lead time.

THE SYNERGY OF LEAN AND SIX

SIGMA.
Six sigma do not make link between quality and

speed ,nor do they address instituting pull system

caps on the amount of WIP. Unless WIP is capped at
some maximum value first, reduction of cycle time is
just wishful thinking.
Also companies apply six sigma generally achieve
only modest improvement in WIP and finished goods
inventory turns.
Lean does not explicitly prescribe the culture and
infrastructure needed to achieve and sustain results.
Lean cannot bring a process under statistical control.
Lean does not recognize the impact of variation.

THE SYNERGY OF LEAN AND SIX

SIGMA.
Rapid improvement across the company is not

possible without the six sigma cultural infrastructure.

Customer critical to quality needs are not front and
center.
Six sigma quality is approached much faster if Lean
eliminates non value add steps.
When a company uses both lean and six sigma
simultaneously, dramatic improvements across the
company are achieved much more rapidly, and indeed
the combination is in fact a prerequisite for rapid
rates of improvement.

THE SYNERGY OF LEAN AND

SIX SIGMA.
Lean six sigma drives quality, speed, and cost

simultaneously.
It is the synergy of Lean and six sigma together

that can help companies to reduce manufacturing

overhead and quality cost in less than two years.

 WHAT IS LEAN SIX SIGMA?

Lean six sigma is a methodology that maximizes
shareholder value by achieving the fastest rate of
improvement in customer satisfaction, cost, quality,
process speed, and invested capital.
THE PRINCIPLE OF LEAN SIXIGMA
The activities that cause the customers critical to
quality issues and creates the longest time delays
in any process offer the greatest opportunity for
improvement in cost, quality, capital and lead time.

PURPOSE
The purpose of lean six sigma is two fold:
To transform the CEOs overall business strategy from vision
to reality by the execution of appropriate projects.
The CEOS range of strategic choices going forward.

SCOPE FOR LEAN SIX SIGMA

Most material in a manufacturing process spends 95% of its

time waiting.
By reducing this wait time by 80% by Lean six sigma,
manufacturing overhead and quality cost (cost lever) can be
reduced by 20%.

FEATURES OF LEAN SIX SIGMA

Lean six sigma offers advantages that are critical in todays

market place. The acceleration of cost reduction in particular

and of process speed in general allows a firm to respond to
market conditions and opportunities faster than the
competition.
One of the most critical factors in lean six sigma is creating a
culture that incorporates learning and provides a welldefined infrastructure for CEO engagement, training,
coaching, results tracking and regeneration via internal
training capabilities.
Combining the capability for those kinds of achievements with
the gains provided by lean methods including reduced costs
and improved speed provides the key link of an
improvement methodology with the everyday business of the
organization.

FEATURES OF LEAN SIX SIGMA

Lean six sigma translates strategic goals for share holder value

creation into an implementable set of initiatives.

Projects that are primarily Lean (concerned with process
velocity and efficiency) pay off very quickly in inventory and
manufacturing cost reductions
The six sigma projects that are working to improve quality
(reduce defects) provide a mid-range addition, aided by the
faster process cycle time achieved from the lean efforts.
Design for lean six sigma efforts have much longer payoffs, as
they impact 50% of the product or service cost determined by
design.
Lean six-sigma will convey competitive advantage and better
shareholder returns at a faster rate than any other currently
known process.

FEATURES OF LEAN SIX SIGMA

Lean six sigma offers the CEO the means of creating

and sustaining a significant competitive advantage.

Actual experiences has shown that companies using
both lean and six sigma methods can reduce lead
times by up to 80%.
Lean six sigma can reduce manufacturing over head
and quality costs by 20% and improve delivery times
to above 99%.
Applying lean to product development process can
reduce time-to-market by 50% and enable the
reduction of material cost by 5%-10%.

THE LAWS OF LEAN SIX-SIGMA

INTRODUCTION
Lean means speed; it applies to all processes
Slow processes are expensive processes.
The lean metric is process cycle efficiency
Batch sizes must be calculated using flow variables
95% of the Lead times in most processes is wait
time.
To improve Speed, we need to identify and eliminate
the biggest time traps, which is possible using the
three laws of lean six sigma.

THE LAWS OF LEAN SIX-SIGMA

ZEROTH LAW: The law of market, customer

critical-to-quality issues must be addressed first.

FIRST LAW: The Law of Flexibility, Process

Velocity is directly proportional to flexibility.

Maximum flexibility is achieved by launching

minimum batch sizes:

Min Batch Size
=(Customer Demand Rate) x
Work Station turn over time

Number of Activities in the Process

Process Velocity = -----------------------------------------------Process Lead Time
Number of Items in the Process
Process Lead Time = ---------------------------------------------Completions per hour

Process Velocity

(Completions per hour)(Number of Activity)

= ------------------------------------------------------Number of items in the Process

 SECOND LAW: The law of focus. 80% of the

delay in any process is caused by 20% of the

activities.
THIRD LAW: The Law of Velocity. The Average

velocity of flow through any process is inversely

proportional to both the number of items in the
process and average variation in supply and
demand.

The key elements of LSS

The key elements of LSS are:

Quality

Delight customers
Speed
Variation defects

Improve processes
Process flow

Team work
Data and facts

The LSS model can be built using

the elements of LSS as below:

Element 1:
Delight your customers with speed and Quality

Only customers can define Quality- VOC

The companies who will do best in the market
place are those who take the time to see
everything through their customers eyes and
deliver what they want.
What aspects to your product or service are
most important t your customers?
Find ways to determine whether or not you have
met those needs.

 How likely is it that customers will consistently get

something they are happy with?

Where we order a product or service, we want it
delivered as quickly as possible and on time
(speed), with no errors (quality), and at the lowest
possible price(low cost).
A process that makes a lot of errors cannot keep
up its speed. So high quality makes it possible to
attain fast speed.
A process that works that slowly is prone to errors.

 Bad things happen to work that sits around

waiting.
We have to do the things that create process
speed (meaning eliminate delays) if we want to
achieve the highest levels of quality.
Low quality and slow speed are what makes
processes- and services and products- expensive.
The only way to consistently offer the lowest priceand still make a profit is to improve quality and
speed.

Element 2: Improve your process

According to Dr. Deming, Most quality problems

are in the process, not the person.

Dr. Demings 85/15 rule is based on the promise
that 85% of the problems were built into the way
work was done and only 15% of the problems,
were really the fault of individual employees.
If we want to improve quality, we have to change
the way work is done process improvement.
Document how work gets done

 Examine the flow of work between people or

work stations
Give people the knowledge and methods they
need to constantly improve that work.
Eliminate variation in quality and speed.
Variation affects out ability to meet customer
needs
Improve process flow and speed
Get rid of the waste in processes

 Process improvement is the only way to

improve the results that your company wants

to improve.
To become process thinker ask the following
questions:
Was there clear communication to the person
about what was expected?
Did that person have all the information,
material, equipment, etc., needed to perform
the job correctly?

 Was that person trained properly in how to do

that work?
What are the critical factors that allowed the
goof up and how can we prevent it form
ever happening again?

Element 3: Work together for

maximum gain(Team work)
The organizations who have encouraged

team work have reaped the benefits.

Getting good at working together: The skills of
collaboration.
Listening skills, brain storming and discussion
techniques, organizing ideas and decision
making are the specific skills that all
employees need to be trained in to have
effective collaboration.

 Set goals, assign accountability, handle

conflict, pay attention to how decisions are

made, make sure you have effective
meetings, faster continuous learning and
collaborative with other groups are the other
skills required for effective team work.

Element 4: Base decisions on data

and facts
Data and facts form the true foundation of

lean six sigma

You need to collect data to know who your
customers are and what they want?
You will need to collect data on variation,
defects and process flow, if you want to
improve process.
We should have a rule that people must
support their opinions with facts.

 Having data, can make a huge difference in

the decisions we make every day on the job,

particularly important in improvement
projects.
A lack of available data, little training in
collecting or analysing data and a historical
pattern of using data only to punish or reward
individuals, not to make decisions about
improvement are the road blocks to data
habits.

 Result measures and process measures are the

two categories of data that are to be collected.

Customer satisfaction and financial outcomes
are result measures.
Speed/lead time and quality/ defects are either
result measure or process measure.
The organizations that are using data as often as
they can.
What does the data tell us? will make huge
difference in improvement efforts.

BENEFITS
Reduced manufacturing lead-time.
Increased WIP inventory turns.
Reduced manufacturing overhead and quality cost.
Increased gross profit margin.
Increased operating margins.
Increased ROIC.
Increased competitive advantage.
Increased capital turns over.
Increased value to the customer/share holders.
On-time delivery.
6 Sigma quality performances.