How to get the most from Lean Six Sigma
Lean Six Sigma was originally devised to eliminate waste and improve manufacturing quality to no more than 3.4 defects per million opportunities. But now the method—made popular at companies like General Electric Co., Xerox Corp., and Johnson & Johnson—is increasingly finding a home in the services industry.
We have seen banks use Lean Six Sigma to support their growth strategy; financial services companies to put mergers back on track; energy companies to lower costs; telecommunications companies to improve customer service; and retailers to increase efficiency while boosting customer service in the store.
But Lean Six Sigma's growing popularity in the services industry masks a downside. Many organizations have trained and deployed legions of Lean Six Sigma experts—known as black belts—only to see little value result from their work. In a recent Bain & Company management survey of 184 companies, 80 percent say their Lean Six Sigma efforts are failing to drive the anticipated value, and 74 percent say they are not gaining the expected competitive edge because they haven't achieved their savings targets.
Drilling deeper, we discovered that mobilizing large and costly squads of black belts in some cases actually slows performance improvement efforts. Managers are unsure how best to deploy the Lean Six Sigma experts, and too often black belts treat all problems, big and small, with the same approach, resulting in less-effective solutions. Moreover, they fail to prioritize the improvements that will make the biggest difference.
This last issue is particularly vexing to companies as they search for ways to reduce costs or boost revenues. While Lean Six Sigma can be excellent at remedying obvious maladies like call-center bottlenecks, it is less adept at uncovering the hidden sources of pain and identifying and sizing the largest opportunities for cost savings, waste reduction, or revenue generation. It's unnecessary and wasteful to run every process through Lean Six Sigma. Knowing where to focus before unleashing the black belts can make all the difference.
Companies that are yielding the biggest gains from Lean Six Sigma are deploying an upfront diagnostic X-ray to help them identify the most critical opportunities.
Performed by a small advance team of black belts, the diagnostic X-ray consists of three steps:
Enterprise Value Stream Mapping, in which the X-ray team scans the enterprise and maps its primary processes to identify the biggest opportunities to reduce cost by reducing wasted time and materials.
Benchmarking, in which the performance of processes is measured against internal and external benchmarks to gauge shortcomings and establish improvement targets.
Prioritizing, in which the X-ray team determines which process improvements will yield the greatest results when the Lean Six Sigma teams are deployed.
Only after the X-ray has identified the most pressing issues do companies begin the traditional five-step Lean Six Sigma DMAIC process—Define, Measure, Analyze, Improve, and Control—on the targeted areas.
An insurance company's biggest source of pain
Lean Six Sigma was originally devised to eliminate waste and improve manufacturing quality to no more than 3.4 defects per million opportunities. But now the method—made popular at companies like General Electric Co., Xerox Corp., and Johnson & Johnson—is increasingly finding a home in the services industry.
We have seen banks use Lean Six Sigma to support their growth strategy; financial services companies to put mergers back on track; energy companies to lower costs; telecommunications companies to improve customer service; and retailers to increase efficiency while boosting customer service in the store.
But Lean Six Sigma's growing popularity in the services industry masks a downside. Many organizations have trained and deployed legions of Lean Six Sigma experts—known as black belts—only to see little value result from their work. In a recent Bain & Company management survey of 184 companies, 80 percent say their Lean Six Sigma efforts are failing to drive the anticipated value, and 74 percent say they are not gaining the expected competitive edge because they haven't achieved their savings targets.
Drilling deeper, we discovered that mobilizing large and costly squads of black belts in some cases actually slows performance improvement efforts. Managers are unsure how best to deploy the Lean Six Sigma experts, and too often black belts treat all problems, big and small, with the same approach, resulting in less-effective solutions. Moreover, they fail to prioritize the improvements that will make the biggest difference.
This last issue is particularly vexing to companies as they search for ways to reduce costs or boost revenues. While Lean Six Sigma can be excellent at remedying obvious maladies like call-center bottlenecks, it is less adept at uncovering the hidden sources of pain and identifying and sizing the largest opportunities for cost savings, waste reduction, or revenue generation. It's unnecessary and wasteful to run every process through Lean Six Sigma. Knowing where to focus before unleashing the black belts can make all the difference.
Companies that are yielding the biggest gains from Lean Six Sigma are deploying an upfront diagnostic X-ray to help them identify the most critical opportunities.
Performed by a small advance team of black belts, the diagnostic X-ray consists of three steps:
Enterprise Value Stream Mapping, in which the X-ray team scans the enterprise and maps its primary processes to identify the biggest opportunities to reduce cost by reducing wasted time and materials.
Benchmarking, in which the performance of processes is measured against internal and external benchmarks to gauge shortcomings and establish improvement targets.
Prioritizing, in which the X-ray team determines which process improvements will yield the greatest results when the Lean Six Sigma teams are deployed.
Only after the X-ray has identified the most pressing issues do companies begin the traditional five-step Lean Six Sigma DMAIC process—Define, Measure, Analyze, Improve, and Control—on the targeted areas.
An insurance company's biggest source of pain
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