Quality and Process Improvement: Lean Manufacturing and Six Sigma

Lean Manufacturing and Six Sigma

2013

INTRODUCTION Companies are pressured to remain competitive, as globalisation, rapid technological changes, innovation and product variety proliferation all have increased and intensified competition in many industries and business sectors world-wide. This trend pushes companies to constantly improve and implement best management principles strategies and practices (Carpinetti and Martins, 2001). Therefore, the importance of processes and quality management strategies, such as lean manufacturing, six sigma and quality circles, have been recognised to play a crucial, complementary role in the creation of sustainable competitive advantage (Russell and Taylor, 2009). The following will discuss two of the many business management and continuous improvement strategies; Lean Manufacturing and Six Sigma.

LEAN MANUFACTURING Lean manufacturing is a philosophy which strives for simplicity and emphasizes continuous improvements through the elimination of waste (i.e. non-value adding activities), to ultimately achieve defect-free operations (Hicks, 2012). Lean principles originated from the manufacturing operations as a set of tools and practices to eliminate waste and inefficiencies in production towards cost reduction, quality and reliability improvements, and quicker cycle-times (Corbett, 2007). The concept was pioneered by the Toyota Production Systems in the late 1980s which focused on waste reduction and low cost automation. It arose from the pressure for efficiency after the World War II where Japanese manufacturers were faced with material, financial, and human resources shortages (Abdulmalek and Rajgopal, 2007) and could not afford mass production facilities used by its American rivals (Hicks, 2012). Gradually, Lean has evolved from manufacturing organisations to include those in the service sector such as insurance companies, hospitals, retailing, and banking (Corbett, 2007; Russell and Taylor, 2009). This approach aims to „meet demand instantaneously, with perfect quality and no waste‟ (Slack et al., 2010). Thus the flow of products and services in Lean will deliver exactly what customers want, in the right quantities, at the right place and time, at the lowest possible cost. Consequently, lean produces a synchronised flow of products and services through processes, operations and supply networks (Slack et al., 2010). It emphasises on customer-centricity, education and 1 Atiqah Ismail

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training, internal and external customer-supplier relationships, perfection, synchronised flow, reduction in variation, inclusion of all people, and waste elimination (Slack et al., 2010). Lean manufacturing identifies seven common types of ‘wastes‟, these are overproduction, transportation, waiting, unnecessary processes, unnecessary inventory, motion and defects (Ohno, 1988; Womack and Jones, 1996; MacInnes, 2002; George, 2002). McAdam and Donegan (2003) identified the eighth form of waste as unused human resources. Later, service operations researchers (e.g. Bicheno and Holweg, 2009; Maleyeff, 2006) redefined the manufacturing wastes for service operations. Table 1 lists these types of wastes.

Table 1: Types of Wastes in Lean Manufacturing Waste

Service Waste

Overproduction

Delay

Waiting

Duplication

Transportation

Unnecessary movement

Unnecessary processes

Unclear communication

Unnecessary inventory

Defects

Process inefficiencies Lost opportunity to retain or win customers Transaction errors

Unutilised human resources

Resources inefficiencies

Motion

According to O‟Rourke (2005), the identification of these wastes is uncovered through the recognition of what the customer values. In identifying wastes, customer values are determined through a lean initiative called the value stream mapping (VSM) (O‟Rourke, 2005). A value stream is all the activities and processes involved in creating and delivering the final product (Abdulmalek and Rajgopal, 2007). Accordingly, VSM is a lean technique which aims to identify and eliminate all types of waste in the value stream (Rother and Shook, 1999). Other important value-identification tools are market research and Quality Function Deployment.

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Implementation: Principles, Tools & Techniques There are five fundamental principles of lean. These are represented as a five-step process for guiding the implementation of lean (Womack and Jones, 1996; Womack, 2002): 1. Identify and specify the value desired by the customer, 2. Identify and map the value stream and eliminate processes that do not add-value, 3. Ensure product or service flow continuously, 4. Introduce pull-system between all steps in the value stream Design and provide what the customer wants only when the customer wants it. 5. Pursue perfection Systematically and continuously eliminates the root cause of waste, to achieve the ultimate goal of zero defects.

To effectively implement the lean principles, a number of interconnected elements must be in place

(Russell

and

Taylor,

2009;

Hicks,

2012);

these

are

listed

in

Table

2.

Table 2: Elements of Lean Fundamental elements for the implementation of Lean 1. Workplace management (i.e. Gemba Kanri)

7. Quick set-ups (i.e. set-up time reduction)

2. Flexible resources

8. Uniform production levels

3. Cellular layout (or cellular manufacturing)

9. Quality at the source (i.e. getting it right the first time)

4. Pull systems

10. Total preventative maintenance

5. Kanbans

11. Supplier networks

6. Small lot sizes (i.e. small machine concept)

Source: Russell and Taylor (2009), Slack et al. (2010), Hicks (2012)

Lean is a commitment to achieve totally waste-free operations. Therefore, to implement and achieve lean, the firm must depart from traditional thinking, and first implement change amongst the shop-floor workers and the entire organisation workforce through their positive and active support. 3 Atiqah Ismail

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Workplace management is the foundation and the most fundamental element of lean before any of the remaining ten elements can be successfully implemented (Hicks, 2012). It is concerned with managing people, resources and machines to increase efficiency on the shop floor and to standardise management practices. It also involves increasing flexibility of resources towards multi-functional workforce and general-purpose machines. Essentially, it is the management of working environment through techniques and practices such as standardising operations, education, training and skill control, visual management, and measuring and controlling output and performance to enable kaizen. For example, visual management (VM) involves the 5S methodology to workplace organisation through, sorting, setting order, systematic, standardising processes, and sustaining the practice. VM also involves visual control, such as; kanbans, standard operation sheets, andons, process control charts, and tool boards. Essentially, workplace management incorporates quality attitude amongst people, machines and materials. The eleven elements of lean (Slack et al, 2010; Russell and Taylor, 2009) can roughly be categorised into three phases in achieving lean goals (see Table 3). Table 3 also shows the different lean principles, tools and techniques used in different phases of lean. Essentially, lean is achieved through the systematic elimination of waste in four fundamental areas of the value stream; product design, process design, human resources, and organisational elements (Vollman et al., 1989; in Hicks, 2012). For instance, in manufacturing, flexible resources encourage the implementation of cellular layouts. Cellular layout groups dissimilar machines together to produce a family of parts, thus requires flexible, multi-functional workforce on general-purpose machines. These flexible resources and cellular layout remove wastes of underutilised resources and space, while adding value in more efficient layout, shop-floor movement and product flow between machines, and increased speed by balancing takt-time within the cell. Altogether, this promotes streamlined workflow and flexibility. The pull systems use the concept of kanbans. A kanban is a signal to produce. It pulls customer demand, so Products will only be produced when there is actual demand. Thus, production only makes what is required, eliminating wastes of over-production and unnecessary inventory.

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Table 3: Lean Objectives, phases, elements, tools and techniques Lean Objectives and Phases

Key Elements/Concepts of lean

Supporting Tools and Techniques

Goal Eliminate Waste

Value stream mapping Cause and Effect (Fishbone) Diagram

Foundation Workplace Management

Total Quality Management (TQM) Strike zone Motion study Visual management Kaizen 5S Poka-Yoke (failproofing)

Phase 1 Increase Flexibility

Flexible resources Cellular layout

Small machines

Phase 2 Smooth production flow

Pull system Kanbans Small lot sizes Quick set-ups Uniform production levels

Andon SMED (Set-up time reduction)

Phase 3 Continuous Improvement

Quality at the source Statistical Process Total preventative Control Chart (PCC) maintenance The Deming Cycle Supplier networks

Eliminate Waste

Increase Flexibility  

Flexible resources Cellular layout

Smooth the Flow     

Pull systems Kanbans Small lot sizes Quick set-ups Uniform production levels

Continuous Improvement   

Quality at the source Total preventive maintenance Supplier Networks

Lean is sustained by continuous improvements. A technique used in this phase is total preventive maintenance (TPM) defined as „a system of periodic inspection and maintenance designed to keep a machine in operation by preventing a breakdown from occurring‟ (Russell and Taylor, 2009). Another concept is the role of supplier support in Lean‟s success, where supplier reliability is crucial to ensure that their production and services are synchronised with the lean customer. Lean supplier networks can be achieved through precise delivery schedules, and mixed orders and frequent deliveries (Russell and Taylor, 2009; Slack et al., 2010).

SIX SIGMA (6) Six sigma is a business improvement strategy which seeks to identify and eliminate causes of defects (errors) and minimise variability in business processes by focusing on outputs that add5 Atiqah Ismail

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value to customers (Snee, 1999; in Antony, 2004). This strategy employs statistical tools and techniques to remove variability in processes (Coronado and Antony, 2002). A six sigma process is one in which 99.99966% of the products manufactured are statistically expected to be defect-free. Thus, the ultimate goal of Six Sigma is to reduce the number of defects to as low as 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications, while an opportunity is the total quantity of chances for a defect. Generally, most businesses still operate at 3 to 4 level (i.e. 66,810 to 6,210 defects per million) (Henderson and Evans, 2000; Heckl et al., 2010). Meanwhile, nuclear power, healthcare and aerospace industries all demand much higher sigma levels in pursuit of „exceptional quality to prevent catastrophic loss of human life‟ (Arnheiter and Maleyeff, 2005). While, most service processes operate at less than 3.5 level (i.e. a defect rate of 22,700 parts per million) (Heckl et al., 2010). Table 4 shows the corresponding defects per million and sigma levels.

Table 4: Defects per million and sigma levels Number of defects per million opportunities 66, 810 22, 750 6, 210 1, 350 233 32 3.4

Associated sigma level 3.0 3.5 4.0 4.5 5.0 5.5 6.0 Source: Behara et al. (1995)

The focus of Six Sigma is to control all process at the source (Murdock 1998; in Henderson and Evans, 2000). It is a comprehensive data-driven and statistics-based approach which demands the effective use of data through rigorous data collection and statistical analysis to identify sources of errors and to find ways to eliminate them (Paul, 1999; Henderson and Evans, 2000). Six Sigma was originally defined by its application to, and focus on, manufacturing processes at Motorola, who pioneered the formal Six Sigma methodologies in the 1980s (Henderson and 6 Atiqah Ismail

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Evans, 2000). Later, other companies such as General Electric (GE), Allied Signal and Eastman Kodak followed suit. Six Sigma has then evolved over time, to also include the service sectors and other business functions like, distribution, marketing, and customer orderprocessing functions in pursuit of Six Sigma quality standards (Smith, 1993; in Henderson and Evans, 2000). This strategy is a measurement-based strategy, which emphasises on customer-driven objectives, use of evidence, structured improvement cycle, process capability and control, process design, and structured training and organisation of improvement (Slack et al., 2010). It emphasises on the achievement of measurable and quantifiable financial returns. According to Antony (2004), a Six Sigma project will not be approved unless a clear measurable and quantifiable financial impact is identified. Furthermore, Murphy (1998; in Henderson and Evans, 2000) adds that Six Sigma strives to eliminate defects by forcing an organisation to quantify its quality. The prerequisite of Six Sigma to quantify quality enables improvement to be charted on a factual basis. The benefits and objectivity of Six Sigma attract many organisations towards its implementation. Other reasons organisations implement Six Sigma are, to improve product and service performance by reducing defects, and to improve financial performance and business profitability. Six Sigma can be a powerful tool for companies competing on the basis of product quality (Henderson and Evans, 2000).

Implementation: Fundamental Concepts Many Six Sigma practitioners and researches agree that the most critical success factor in Six Sigma success is top management involvement (Minahan, 1997; Paul, 1999; Henderson and Evans, 2000; Coronado and Antony, 2002; Antony, 2004; Kwak and Anbari, 2006). For example at GE, top management support has significantly influenced and enabled organisational restructuring and cultural changes of individual employees towards quality its Six Sigma implementation (Hendericks and Kelbaugh, 1998). Another critical factor is organisational infrastructure. Implementing Six Sigma relies on total commitment and active participation of every department and employee (Henderson and Evans, 2000). Successful deployment and implementation is achieved through a structured and 7 Atiqah Ismail

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disciplined team-based project approach based on the Martial Arts analogy (Antony, 2004; Slack et al., 2010). The team typically consists of five distinct roles and expertise: Executive Leadership, Champions, Master Black Belts, Black Belts, and Green Belts. This is outlined in Table 5.

Table 5: Six Sigma Project Roles Title

Executive leader

Implementation Roles Members of top management (e.g. CEO) involved in advocating organisational cultureattitude change, and committed in dedicating time, money and resources for the successful implementation and progress of Six Sigma projects.

Champions

Intensively trained and highly skilled project leaders who promote and lead the deployment of Six Sigma across an organisation.

Master black belts (MBB)

Teachers who guides improvement projects. Coach and mentor Black Belts. Responsible for Six Sigma strategies, coaching, training, mentoring deployment and results.

Black belts (BB)

Lead improvement strategies in a limited number of specific, individual project and teams. Mentors to Green Belts.

Green belts (GB)

Employees working improvement teams.

within

Six

Sigma

Source: Henderson and Evans (2000), Kwak and Anbari (2006), Slack et al. (2010), McGeeney (2013)

Furthermore, GE and Microsoft advocated that training is the cornerstone of quality and productivity improvement through employee empowerment (Henderson and Evans, 2000). Moreover, Hendericks and Kelbaugh (1998) emphasises the importance of communicating “the how and why” of Six Sigma to employees as early as possible to reduce scepticism and encourage change. Essentially, Six Sigma management approach is a collaboration of project management, customer focus, data analysis and measurement tools and techniques and measured financial results, which success relies on the unprecedented support of strong and influential leadership (Antony, 2004; Kwak and Anbari, 2006). 8 Atiqah Ismail

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DMAIC Process Six Sigma methodologies seek incremental process improvement and variation reduction through the DMAIC process (Antony, 2004; Kwak and Anbari, 2006). DMAIC is deduced from the five phases of Six Sigma process: Define, Measure, Analyse, Improve, and Control. This process strives to identify and resolve problems, or eliminate defects in business processes in a sequential and disciplined fashion (Kwak and Anbari, 2006). This process is outlined in Figure 1.

Figure 1: DMAIC Process Phase 1: Initiation 



Define (D) Define the problem or improvement requirement from the customers‟ perspective, Identify customers and their needs and priorities

Phase 5: Control 



Phase 2: Planning

Control (C) Monitor the results of the improved process, Control process variations to meet customer requirements

Measure (M) Measurement of the problem,  Measure the current extent of the problem,  Gauge customer satisfaction and perceptions by attribute,  Establish performance baseline

Phase 4: Conclusion 

Improve (I) Identify and implement solutions to the problems identified in the previous phase.

Phase 3: Execution 



Analyse (A) Analyse the causes of defects and identify the sources of variations, Confirm the causes using the appropriate data analysis

Adapted from: McClusky (2000), Henderson and Evans (2000), Starbird (2002), Kwak and Anbari (2006), Rodrigues (2006)

Tools and Techniques Each tools and technique applied in the Six Sigma has a role to play, and when, where, why and how it is applied will determine the success and failure of Six Sigma (Antony, 2004). Some of the tools and techniques commonly employed in Six Sigma strategy are process 9 Atiqah Ismail

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mapping, process measurement and analysis, benchmarking, hypotheses testing, statistical process control, process capability analysis, design of experiments (DOE), quality function deployment (QFD), failure mode and effects analysis (FMEA), SIPOC and simulation software. According to Henderson and Evans (2000), these tools can be traced to belong to either team tools, process tools, or statistical tools. To facilitate explanation, Table 6 will entail some of the aforementioned Six Sigma tools and techniques.

Table 6: Six Sigma Tools and Techniques Tools & Techniques Team tool Brainstorming

Process tool Process Mapping

Description

DMAIC Phase

This is a systematic way to generate ideas by encouraging free-thing from project teams or a group of people, commonly undertaken in challenging or complex situations.

Define, Analyse, Improve

This tool involves identifying „process steps, hands-offs, critical factors of quality, and non-value-adding operations. It is facilitated by a graphical tool displaying detailed steps, events, and operations in their time sequence. Key Performance Indicator Numerical measures or metrics used to (KPI) measure performance. For example, financial measures (e.g. sales figures or returns on investments), or inventory (e.g. cycle time). Successful implementation of Six Sigma requires well-defined KPI. Benchmarking Involves comparing a product, process or service against the best-in-class. Statistical tool DOE A statistical tool which systematically determines the relationships between factors (Xs) influencing a process and its output (Y). SPC Is a statistical procedure used to monitor a process for any process variations, and if the variation is a chance- or assignable-cause. This is done using graphs which shows if a process is within or outside statistical control limits.

Define

Measure, Control

Analyse, Measure

Improve

Control

Source: Russell and Taylor (2009), Henderson and Evans (2000) 10 Atiqah Ismail

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However, the application of these tools and methodologies all depends on an organisation‟s particular objective and strategies of implementing Six Sigma. For example, these tools and techniques used in Six Sigma for process variability reduction may differ from those used in project management.

LEAN & SIX-SIGMA: APPLICATION Originally, lean had been implemented exclusively in the manufacturing sector (e.g. Toyota and Canon) (Russell and Taylor, 2009). Today, the Lean principles have evolved, and are applied in the service sectors of various industries (e.g. high-technology, automotive, fashion, and finance) and organisations in streamlining their service operations; for example, lean retailing (e.g. Tesco, Zara, and Blockbuster), banking (e.g. Citibank and ING), and healthcare. Lean retailing, similar to lean production, involves smaller and more frequent orders. Thus, implies rapid replenishment of stock (Russell and Taylor, 2009). This is often achieved through a high level of accuracy in fulfilling orders and meeting delivery standards. Due to the importance of customer service quality as a basis of competition, successful lean retailing emphasises reliable buyer-suppliers relationships, with cost-effective selling and distribution (Chuang et al., 2011). Consequently, the ultimate focus of lean retailing is zero-waste in terms of delays (i.e. customer waiting) and inaccurate orders (i.e. service defect). According to Chuang et al. (2011), an effective lean-retailing ensures responsiveness and flexibility to changes in market conditions and ensures a cost-leadership position, „...which when effective, captures a substantial market share and positions the firm to exercise networkdomination‟. This has been evident in the oft-cited lean retailers such as Zara and Tesco. For instance, Lean philosophy in Tesco efficiently ‘delivers exactly what customers really want, exactly when they want it, and exactly where they want it’, resulting in maximised productflow with minimal inventory, reduction in the number of times a product is handled by 88% and reduced turnaround time from 60 days to 5 days (Lean Enterprise Institute, 2006; Womack and Jones, 2005). Similarly, Six Sigma had been predominantly implemented in manufacturing processes. Service organisations and functional support areas such as finance, accounting, marketing, 11 Atiqah Ismail

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human resources, and retail have only recently started implementing Six Sigma programs. Most researchers (e.g. Harrison, 2006, Pyzdek, 2003, Watson, 2004; in Ansari et al., nd) believe this was due to the rigorous statistical requirements that were considered too complex to be applied within service organisations and predominantly service functions. The healthcare sector has documented success in the implementation of Six Sigma. Six Sigma in healthcare was pioneered by the Commonwealth Health Corporation (CHC) in 1998. The organisation reported a 33% improvement in radiology department throughput and 21.5%reduction in cost per procedure, with financial savings of more than $2.5 million (Nassab et al., 2011). Some common and successful healthcare Six Sigma projects include improving patient flow and cycle-time, accuracy of surgical procedure, reduction in surgical equipments inventory, reducing patients‟ length-of-stay, and streamlining surgical delivery processes (Kwak and Anbari, 2006). For example, Anderson Cancer Center (ACC) had successfully reduced CT-scan patient preparation time from 45 minutes to less than 5 minutes (Elsberry, 2000; in Kwak and Anbari, 2006). Increasing number of healthcare providers are adopting Six Sigma mainly due to the fit between Six Sigma principles and the healthcare sectors‟ zero tolerance for mistakes and its potential for reducing medical errors (Kwak and Anbari, 2006). In the finance sector, to remain competitive, organisations have been pressured „to reduce cash collection cycle-time and variations in collection performance‟ (Kwak and Anbari, 2006). Common Six Sigma projects in the finance sector aim to reduce defects in cheque collection, and increase accuracy of cash allocations to lower bank charges and variations in collectors‟ performance (Kwak and Anbari, 2006). For example, Bank of America (BoA) began its Six Sigma project in 2001, aiming to streamline operations, attract and retain customers, and create competitiveness over credit unions by reducing costly errors in key business processes through improving accuracy of reporting and reducing documentary credit defects (Roberts, 2004; Marx, 2005a). In four years, BoA reported „a 10.4% increase in customer satisfaction and 24% decrease in customer complaints‟ while earning $2 billion in financial gains and cost savings from the Six Sigma project (Kwak and Anbari, 2006; Marx, 2005b). It is difficult to generalise the success rate of different business sectors, as despite within the same sector, different organisations implement improvement strategies to achieve their own unique goals using various combinations of tools, measurement and metrics. Additionally, it is unrealistic to compare whether Lean or Six Sigma is more successful, as each seek to solve

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quality issues from two different perspectives. Both have been documented to be successful, however provides more invaluable complementary advantages when implemented together. Moreover, the number of organisations implementing only one of these strategies seems to pace-down, as organisations are increasingly adopting the integration of both strategies, the Lean Six Sigma (LSS), such as Amazon.com (e-retailing) and Kodak Eastman (manufacturing).

LEAN & SIX-SIGMA: SHELF-LIFE Lean and Six Sigma both focus on continuous quality improvement processes. Both strategies seem to have the potential to outlive other quality management programs, such as TQM, which has declined in popularity and excitement after over 25 years of practice (Slack et al., 2010). Additionally, both strategies have broad scopes of application to every business process and sector. The future seems optimistic for both, especially Six Sigma‟s growing awareness in SMEs about the potential benefits that can be derived from implementing such programs (Harrison, 2006). Moreover, companies today are realising the significant impact from the synergy of applying both strategies simultaneously and are increasingly incorporating the two strategies together rather than employing either one as a stand-alone improvement strategy. The shelf-life for both strategies may depend on variables such as types of organisation, business sector or economic health. For example, lean manufacturing or strategy has been said to be very effective in mitigating business bankruptcy and assuring business survival during economic downturns with the recessionary pressure to cut costs (Davidson, 2009). With the reported effectiveness of the Lean Six Sigma (LSS) (O‟Rourke, 2005; Slack et al., 2010) as opposed to implementation of each of the strategy alone, it can be predicted that as implementation of LSS raises, the implementation of each strategy alone to slowly decline and eventually stagnate, perhaps in the next 5 to 10 years, but will unlikely to disappear completely.

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LEAN & SIX-SIGMA: SIMILARITIES AND DIFFERENCES Although both methodologies are management and continuous quality improvement initiatives, the two methodologies are different in the way they approach problems or improvement opportunities. For instance, Lean is based on theory of constraints, focusing on „eliminating barriers to a smooth continuous process flow‟ by analysing the linkages between individual process steps with overall process (Nave, 2002), while Six-Sigma is focused on eliminating variations by analysing the relationship between process variations to the variation in the process output – to achieve a common goal (Windsor, nd). Essentially, each strategy and tools fit different, specific types of business management problem. Furthermore, subject experts are trained and deployed differently. A Six-Sigma project commonly starts with a well-defined problem and mission statement, executed by an infrastructure of people (i.e. black belts, green belts) using data and statistical software (Grayson, nd). These projects are defined in a clear-cut sequence, with specified measurement systems, systematic analysis, quantifiable improvements and controls, and they often take a relatively longer period (i.e. weeks, months, years) to complete successfully (Grayson, nd). Conversely, lean projects are based on kaizens, continuous incremental improvements, which are completed relatively briefly (Grayson, nd). Team leaders often act as facilitators whilst team members are recognised as specialists, and expected to provide improvement ideas to resolve the issue at hand (Hicks, 2012). Relative to Six Sigma, project structure in lean is less defined and the use of data is less common, whereby Six-Sigma training is formal, with various levels of competencies (i.e. GB, BB) and based on standard programmes (e.g. written assessment, certification). Moreover, Six Sigma often deals with problems where variations are complex and unclear, requiring data to arrive at effective solutions. Lean manufacturing often deals with problems that are relatively visible, such as excessive inventory or motion, where data is less vital (Russell and Taylor, 2009). Despite their differences, both strategies begin with the customer, control quality at the source, and are based on continuous improvement cycle (Hicks, 2012; Slack et al., 2010), and thus, also share some similar tools and techniques, such as process mapping, and uses cause-andeffect diagram for problem analysis. Additionally, both require top management support and

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emphasise the importance of human variables and organisational readiness to change for success (Grayson, nd).

Table 7: Differences between Lean and Six-Sigma Objectives/Focus Focuses on customer value stream Focuses on creating a visual workplace Creates standard worksheets Attacks work-in-progress inventory Focuses on good house keeping Process control planning and monitoring Focuses on reducing variation and achieve uniform process outputs Focuses heavily on the application of statistical tools and techniques Employs a structured, rigorous and well planned problem-solving methodology Attacks waste due to waiting, over processing, motion, over production, etc.

Lean

Six Sigma

     

     

















Adapted from: O‟Rourke (2005)

Lean Six Sigma (LSS) Lean and Six Sigma methodologies have complementary effects. O‟Rourke (2005) and Nave (2002) pointed, the secondary effects of each methodology mirror the primary focus of the other method (see Table 8), highlighting the complementary fit between the two strategies. The different improvement goals, reduction in waste and process variation, complements each other (O‟Rourke, 2005), and „together they accelerate the rate of process improvement and help sustain the results‟ (Russell and Taylor, 2009). The successful synergy of these methodologies has led to their integration into a single methodology, commonly called Lean Six Sigma (LSS) (O‟Rourke, 2005).

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Table 8: Complementary fit: Lean and Six Sigma Lean Theory Focus of Improvement

Primary effect Secondary effects

Criticisms

Six Sigma

Remove waste

Reduce variation

Flow-focused  Waste, non-value added  Speed, cycle time  Inventory performance  Logistics cost reduction  Variance reduction

Problem-focused  Variation reduction  Process capability  Defect prevention  Stability and predictability

Reduced flow time (lean Uniform process output enterprise) Less variation Less waste Uniform output Fast throughput Less inventory Less inventory New accounting system Fluctuation – KPI measured for Synchronised flow – KPI managers measure for managers Improved quality Improved quality Statistical or system analysis System interaction not not valued considered. Process improved independently Adapted from: Nave (2002); Burton (2010)

CASE STUDIES LEAN SIX SIGMA (LSS) IN MANUFACTURING: EASTMAN KODAK Kodak‟s Graphic Communications Group (GCG) is a subsidiary of Eastman Kodak which manufactures digital lithographic plates (DLP) for the printing industry (Moore, 2008; JMP, 2009). Its factory is located in Leeds, England. The manufacturer began its LSS improvement strategy in 2002. Kodak‟s LSS strategy was initiated to assure product movements through the plant, from raw materials to finished product with optimal efficiency. The project was called the Four Day Factory, later known as the Kodak Operating System (KOS).

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LSS Project Earlier in the process in defining the aforementioned project objective, value stream mapping (VSM) was employed to identify value-adding and non-value adding (waste) activities in the value stream of the DLP production. VSM had uncovered that four days were value-added time, whilst any additional day is waste. They had also uncovered that their shortest lead time was twenty-three days, whilst 100 days were common. Accordingly, the key measure within Kodak‟s Leeds factory was: the total time it takes for a product to move through the plant, in its transformation from raw materials to finished product (JMP, 2009). The focus of the project was cycle time reduction.

Project Implementation The implementation of the project involves an integration of Lean and Six Sigma tools and approaches such as workplace management, top management involvement, and employee training and development.

Belt System Belt system was used to implementation the KOS. The project had as much as thirty-four Green Belts to undertake several projects across the factory, with six Black Belts to implement the project across the factory of three hundred people. Trainings of Black Belts were intensively implemented by R&S Management Consultants.

Workplace Management Moore (2008) explained WM in KOS precisely, „bright yellow lines clearly de-lineate workspaces; tools are neatly arranged next to machines, their outlines painted so it is immediately visible if one is missing; everything is clean and tidy, there is no clutter, no waste materials; even the workers themselves are neatly turned out in matching safety gear. The whole place exudes calm efficiency‟ (Moore, 2008).

Top Management Involvement Organisational culture change towards LSS success requires strong management commitment. At the factory, top management commitment ranged from „weekly management reports to real17 Atiqah Ismail

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time management‟ involving senior management spending 15 minutes daily to inspect report progress, process issues, and ensuring kanbans ensure product flow and to ensure action to be taken as problems arise (Moore, 2008).

People and Training In building the foundation for a strong and durable KOS, Kodak encourages its employees to share their knowledge and expertise. The company had also implemented a rigorous Green Belt training programme for every employee. This was supported by coaching and mentoring by Black Belts.

Measurement and Results Vital to the success of the KOS, Kodak incorporates Lean assessment tool and metric system to enable the effectiveness of each LSS tools in the project to be measureable. This was using a spider diagram, visualises different competencies and how well they are achieving them. The project had resulted in £2 million financial saving, with approximately 60% reduction in cycle time, and 25% reduction in inventory volume, estimating 60% reduction in inventory cost. Other main improvements achieved from the KOS are listed in Table 9.

Table 9: Main Improvements KPI Headcount Inventory Productivity Quality Safety Service Utilisation Volume Yield

Measure/Metric Full time equivalents Average annual inventory Square metres per man Complaints Lost Time Accidents On Time In Full (OTIF) % available time Square Metres % of good

Improvement rate (%) 15% 33% 85% 50% Record 2 years without an accident 89% 24% 63% 7%

Adapted from: Meisel et al. (2007) and Moore (2008)

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Continuous Improvement The Leeds factory now concentrates their effort on process variability and further improvements in quality, productivity, and levelling product flow.

LEAN IN LOGISTICS: DHL, WESTFIELD DHL is a global company operating in the logistics industry, offering logistics, express, and mail services to organisations and individuals. DHL Westfield is the Regional Distribution Centre (RDC) for Marks and Spencer (M&S) stores in Northeast England and Scotland. This case study is derived from Accelerate (2006).

Lean Project During non-peak time, approximately 6,000 boxes are received at the Westfield RDC, which rises to about 26,000 during peak time. The Boxed Receiving area (BRA) operates 16 workstations throughout the process, with an average of 120 boxes per person per hour. The project objective was to analyse activities aimed at streamlining operations and reducing waste in the Boxed Receiving area. Key lean tools and techniques applied in the project include process mapping, fishbone diagram, quality circles, current-future state analysis and flow diagrams.

Measuring Current Activities First, the team measured the current activity, where process mapping was utilised to capture and measure the current state of processes and activities. With the help of flow diagrams, the project team calculated that each operator walked 9,600 metres a day (i.e. 6 miles). Using the fishbone diagram, it was discovered that the layout and flow through the conveyor loop was poor, mainly due to the inefficient use of the grid system for received stock. This resulted in excessive walking (waste) by operators. The overall flow inefficiency resulted in underutilised operators from time wasted in walking, leading to inefficiencies in loading 19 Atiqah Ismail

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processing and sorting boxes to drop-zones. Accordingly, the project aimed to increase the overall activity by 3% by: 

Redeveloping the conveyor system



Repairing all sensors to improve stock flow



Reducing the walking time (non-value adding)



Improving the efficiency of loading process and sorting stock to drop zone

Quality Circles and Brain storming The Lean project team (LPT) consisted of four members of Accelerate Ltd chosen to initiate the LPT at the RDC, and all DHL staff at Westfield. The LPT was called the M&S One Team. Small meetings were conducted, consisting of DHL employees, to brainstorm, share and to trial new improvement ideas. These meetings acts as a catalyst that further motivates team building across the distribution centre.

Current-Future State Analysis Using process mapping and flow diagrams, the LPT created a new layout within the Boxed Receiving area. They then analysed and compared the old and new layouts which demonstrated a potential for improvement in value-added activity from 15% to 35%. Additionally, this has lead to an improvement in loading processes and box sorting activities. Pre-lean activities were compared to the proposed new processes, revealing a potential reduction in labour hours of 6 hours per week with an annual financial saving of £2,523. Conveyor system was also found to have outdated motors and sensors, resulting in frequent breakdowns. Additionally, sleeper-mode was installed in the system to reduce energy-usage. The layout change exposed that conveyor belt length was unnecessarily long, causing unnecessary movement and time of boxes on the conveyor belt. Accordingly, the belt length was shortened.

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Environmental Impact The LPT analysed the impact of the new conveyor system on energy-usage and uncovered a potential reduction from 131,040kw/h to 87,048kw/h per year, which is a 34% reduction and an annual financial saving of £3,284. Reportedly, this saving is comparable to the running of seven homes per year, and equivalent to 24 tonnes reduction inCO2 emission.

Overall Results & Future Essentially, the new layout will result in substantial reduction in walking time, improved loading and sorting activities, efficient and energy-saving conveyor system. Pre-lean productivity within the Boxed Receiving area was 3,000 pack labels per hour, it is predicted to improve by 3.3% resulting in financial saving of £9,500. The Westfield site is now incorporating the „One Team‟ lean philosophy into daily activities in pursuit of continuous improvement in service delivery, cost and efficiency and customer satisfaction.

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