Operational Governance Knowledge Flashcards No. 13/19
Lean + Six Sigma
From the Operational Governance flashcard deck; today this discipline goes by BizOps. The original card is republished here as a field note.
01 What is it
A combination of two famous frameworks to: eliminate WASTE (Lean) and eliminate ERRORS (Six Sigma).
Lean is a set of techniques and principles to focus on value creation with minimal waste (remove unnecessary steps, resources, etc.). Six Sigma is a set of techniques to guarantee consistent output quality (total errors < 6σ — six “standard deviations” from the mean).
02 When is it useful
- When you need to improve processes in order to cut costs or improve quality consistently.
- When you need to professionalize process execution to make it more resilient to organizational changes.
03 How to use it
- Carefully select which processes will get the Lean Six Sigma treatment, and which will not.
- Carefully select what to implement from a battery of well-known tools and best practices, according to your needs. Train the personnel to use them (or hire expert “black belt” consultants) and start using them.
- Have change management elements in place, because there will be organizational inertia against the changes.
04 The two toolboxes
Six Sigma
Concepts: sigma = standard deviation = σ = dispersion from the mean. Achieving 6σ implies that 99.99966% of process outcomes are error-free.
Methodologies: DMAIC (Define, Measure, Analyze, Improve, Control) and DMADV.
Tools commonly associated with Six Sigma (and Lean):
- [Define] SIPOC analysis — Suppliers, Inputs, Process, Outputs, Customers
- [Define] CTQ tree — “critical to quality” (voice of customer VOC → CTQs)
- [Define/Measure] Business process mapping / check sheet
- [Measure σ] Control chart / control plan (a swimlane map) / run charts
- [Analyze] Root cause analysis
- [Analyze] Cause-and-effect diagram (fishbone or Ishikawa)
- [Analyze] 5 Whys — ask “Why?” five times
- [Analyze] Histograms / Pareto chart — 80% of effects come from 20% of causes
- [Control] Design of experiments / stratification
- Statistical and fitting tools: analysis of variance, general linear model, ANOVA Gauge R&R, regression analysis, correlation, scatter diagram, chi-squared test
- Axiomatic design
- Cost–benefit analysis
- PICK chart, process capability, rolled throughput yield
- Quality Function Deployment (QFD)
- Quantitative marketing research through Enterprise Feedback Management (EFM) systems
- COPIS analysis — the customer-centric perspective of SIPOC
- Taguchi methods / Taguchi loss function
Lean
Concepts: Muda = waste = 7 (+1): defects, overproduction, waiting, transportation, inventory, motion, over-processing — plus non-utilized talent.
Tools commonly associated with Lean (and Six Sigma):
- Kaizen — a paradigm of continual improvement: “Plan → Do → Check → Act” (also known as the Shewhart cycle, Deming cycle, or PDCA)
- Value stream process mapping — document, analyze, and improve the flow of information or materials that produce a product or service
- 5S — a workplace organization method to standardize identification, storage, use, and maintenance (seiri, seiton, seisō, seiketsu, shitsuke — sort, set in order, shine, standardize, sustain)
- Kanban — a demand-driven scheduling system that limits inventory buildup through “cards” that signal the need for more inventory
- Gemba — walk the production floor and see directly
- Poka-yoke — error proofing (originally baka-yoke, “idiot-proofing”)
- Productive maintenance
- Set-up time reduction
- Reduce lot sizes
- Line balancing
- Schedule leveling
- Standardized work
- Visual management — put key information visible to everyone
- Value stream mapping — a map or flowchart of what adds value to an outcome
05 Common pitfalls
- Expecting results from a mediocre implementation (using only some tools, sometimes, but not rigorously nor consistently).
- Not knowing how to translate these best practices from the last century (manufacturing-oriented and tangible) to the current, more service-oriented and intangible business environment.
- Thinking these are project management tools in general — use them for process management projects.
The original slide closed on this trap with a Dilbert strip: a manager announces he'll "fuse Six Sigma with Lean methods to eliminate the gap between strategy and objectives" — and settles for calling it "waste of time." Scott Adams, dilbert.com, January 2007. Not reproduced here for copyright reasons.
06 References and resources
- Muda — the seven forms of waste, Wikipedia#The_seven_forms_of_waste)
- Kaizen
- Value stream mapping — Wikipedia
- 5S — Wikipedia)
- Kanban — Wikipedia
- Gemba — Wikipedia
- Poka-yoke — Wikipedia
- Visual management — AllAboutLean
- List of Six Sigma certification organizations — Wikipedia
- Standard deviation — Wikipedia
- SIPOC — What is Six Sigma
- CTQ tree — What is Six Sigma
- Control chart — Wikipedia
- Ishikawa diagram — Investopedia
- Pareto chart in Excel — Excel Easy