Basics of Lean and Six Sigma

Lean is a set of principles, practices and tools aimed at creating precise customer value originally developed within the Automotive Industry. It can be applied to all aspects of an organisation, from product development and provision through administration and finance to customer services and support.

 

The goal of 'Lean Thinking' is to create high quality, defect-free products and services at all stages of the customer experience, whilst using less capital, space and effort to produce this.

 

Lean classifies every activity that we do into three types:

 

- Value Add - activities that a customer would be willing to pay for which help create the final form or function of the finished article

- Non Value-Add, but essential - things that need to be done, but that don’t bring any value to the finished article (e.g. waiting for a document to print, the time it takes for paint to dry etc.)

- Waste - actions that bring no value to the article and are therefore unnecessary

By applying 'Lean Thinking', benefits are seen in cost reduction, shorter cycle times, improved customer service, greater employee productivity and increased profit margins. In fact, often it is not untypical for waste to account for up to 75% of a non-leaned process!

 

Sigma is a statistical term used to measure how far a given process deviates from perfection: Six Sigma is a highly disciplined, structured programme that delivers near perfect products and services.

 

Organisations use Six Sigma to identify and eliminate costs that provide no value to customers. They analyse their processes to find out where and how defects occur, measure them and eliminate the problem areas.

 

The idea is that, if you can measure the number of defects there are in a process, you can then systematically attempt to eliminate them to get as close to zero defects as possible. The generally accepted definition of the Six Sigma benchmark is 3.4 defects per million opportunities for each product or service transaction. Processes that operate with 'six sigma quality' over the short term are assumed to produce long-term defect levels below that threshold. 

 

The principles of Six Sigma are:

 

- Understand the critical to quality requirements (CTQs) of customers and stakeholders
- Understand processes ensuring they reflect these CTQs
- Manage by fact
- Involve and equip the people in the process
- Undertake improvement activity in a systematic way

 

The benefits include:

 

- Cost reduction
- Shorter cycle times
- Improved customer service
- Greater employee productivity
- Increased profit margin