Problems With Six Sigma

While Six Sigma is a powerful tool, it does have some drawbacks and it is not suitable for every situation.

Six Sigma is a statistics-based measurement and analytical process that is intended to reduce defects to 3.4 per million opportunities. However, not everything in a business can be reduced to numbers. For example, improving customer experience would be very difficult with Six Sigma. It would also be difficult to use in capital goods sales, in which building relationships is important. Six Sigma would typically not be appropriate in marketing, consulting and service organizations in which people skills are valuable. Six Sigma is process focused, it is not customer focused.

There is also the opportunity for the numbers to be fudged in Six Sigma. With a target of 3.4 defects per million opportunities we first have to ask, "What is an opportunity?" We also need to ask, "What is a defect?" For example, a part of the process may be causing defects, but that part of the process is beyond the control of the Six Sigma team. The answer might be to set the definition of "defect" such that it does not include defects resulting from things that can not be controlled. The problem is, the customer still sees these as defects.

Plus there are two Six Sigma calculations - long term and short term. The long-term Six Sigma calculation includes a fudge factor that accounts for changes that occur over time, such as tool wear. However, not all processes change over time.

Another potential problem is that Six Sigma requires significant training. You can not move ahead with Six Sigma without having a staff trained in Six Sigma. Those with the highest level of training are called Six Sigma Black Belts. However, the training does not ensure the ability to apply Six Sigma in a practical way. And the training does not ensure the holder of a Black Belt has successful, practical experience applying Six Sigma. In other words the head knowledge may not translate into doing.

The bottom line is that Six Sigma is a powerful tool. But it is a tool that needs to be used correctly and applied to the right problems.

What Is Six Sigma?

I've been talking about Japanese lean manufacturing methods such as Kaizem, Kanban and 5S, but what about Six Sigma? What is Six Sigma?

Six Sigma is a method of improving quality that was developed by Motorola in the 1980's. The term "sigma" is used to indicate variation, and Six Sigma is based on identifying and reducing variation. This can be variation in quality, in process time, in inventory levels, or in costs. Six Sigma uses statistical analysis to identify and correct variations.

There are five parts to Six Sigma represented by the acronym DMAIC:

Define (Identify Projects): Six Sigma starts by identifying a suitable project. Not all businesses and projects are suitable for Six Sigma. Since it is based on statistical analysis, the project must include quantifiable parameters.

Measure (Quantify Current Variation): Look at all aspects of the process to be improved, included related and subprocesses, to identify and quantify all variations.

Analyze: Determine the cause of variations.

Improve: Quantifies the effects of the causes of variations, and identify the maximum allowable range of variation. Establish a calibrated system for measuring deviations of the variables. Once variations can be measured, modify the process to reduce variations to within the acceptable range.

Control (Sustain): Standards, proceedures, training and other tools are used to ensure the modified processs remains within the acceptable range of variance.

Lean Manufacturing and Kaizen

What is Kaizen and how is it related to lean manufacturing?

Kaizen is a way of running a business such that there is continual improvement, and the improvements are sustained throughthe use of standards.

Kaizen is based on the suggestions made by those who best know what needs to be done to improve--your employees. All employees are encouraged to make suggestions on a regularlay basis. It is not unusual to see an average of 20-25 suggestions per year per employee, and for 90% of those to be actionable.

Suggestions need not be for big changes. The idea behind Kaizen is to use a continual stream of suggestions for small changes to make the product and company better every day. Yes, suggestions for big changes are welcome, but the large number of daily small improvements are what make Kaizen so effective.

When using Kaizen it is important that suggestions be acted on immediately--preferably within 24 hours of when the suggestion is submitted. Remember, you want to be improving every day, so that means suggestions need to be acted on every day.

To see how two companies, Fleetwood and Sony, have implemented Kaizen, visit this library of online magazine articles.

Lean Manufacturing - TPS

This month I've been talking about ways to improve production and lower costs using techniques such as 5S, Kaizen and Kanban. These were all originally part of the Toyota Production System (TPS), which has since become known as "lean manufacturing".

Lean Manufacturing can be defined as: "A systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection." (NIST)

The term "lean manufacturing" has been adopted because TPS methods use less human effort, they lower inventories, use less capital investment, require less floor space, use fewer materials, and fewer manhours are used produce the same or greater amount of product.

Some of the benefits of Lean Manufacturing include:
<> Greater Flexibility
<> Reduced Inventory
<> Reduced Work-in-Process
<> Quicker Identification of Problems
<> Increased Production Capacity
<> Reduced Lead Times
<> Better Quality
<> Improved Safety
<> Higher Profits

The way to see these benefits is through a process of continual improvement. Implementing lean manufacturing is not a one-time event--it continues into the future forever. Tomorrow I'll introduce Kaizen, which is a system of continual improvement.

The Lean Office

We usually think of applying lean techniques to manufacturing. A good article about the lean office was just placed on the web. It describes what a lean office is and how Kata Engineering implemented lean office.

Communicating With Kanban

Kanban is another component of Kaizen.

Kanban is a system that improves the flow of materials through a facility, while reducing waste, reducing inventory costs and improving quality. A Kanban is a "card" with information about a component or item used to make a product. Here's how it works:

Let's say you are making left-handed widgets. One of the components is a turnbull. Turnbulls are delivered on pallets, with 100 turnbulls on a pallet. There is a Kanban (card) attached to each pallet. When a pallet is empty, you send the card back to the turnbull assembler. This tells him you need 100 more turnbulls, which he them makes, loads on a pallet and sends to you.

Kanban is a system that is based on demand. Components and products are not made until there is a demand for them, as indicated by a Kanban (card). For this reason it is called a "pull" system, because material is pulled ahead by demand.

Kanban provides a number of benefits. For example, it allows for continual product improvement. Since there is not a large amount of material held in inventory, product upgrades do not result in unuseable, obsolete parts. Kanban also provides a high degree of flexibility, allowing production to vary to meet demand, for example. It reduces inventory costs, removes administrative blockages, and allows production problems to be quickly identified and fixed.

However, Kanban is not a good option in all situations. It provides the greatest benefit when applied to high volume production lines.

Obviously there is more to Kanban than this very simplistic overview. If you'd like more information, a short online introductory Kanban tutorial is available.

Using the 5S System

Kaizen is about communication and an essential part of communicating are your actions. We all know that actions speak louder than words.

5S is a subset of Kaizen that puts your words into action.

5S is a systematic approach to cleaning, organizing and maintaining a work environment. Through 5S employees are better able to identify equipment problems before they become a problem that hinders production. Through 5S safety is improved and hazards are eliminated. Through 5S the work environment is improved, resulting in employees who enjoy their work more and who are more motivated to make further improvements.

5S usually does not require major capital projects, so the cost to implement 5S is low--while the benefits are great.

An online tutorial about 5S is available on the Graphic Products' web site. They also offer a free booklet that provides a quick introduction to 5S.

Kaizen in Schools

Kaizen has obvious applications in business, but what about schools?

Business applies Kaizen because it is a proven, powerful method of increasing profits, productivity, safety and quality, while decreasing waste and employee turnover. While the term "profit" generally does not apply to schools, they still have budgets to meet and they should be concerned about all of the other points from improving quality to decreasing waste.

Kaizen, at its most fundamental level, is a method of improving communications, and recognizing the value and contribution each employee makes. It approaches this by encouraging all employees to make continual suggestions, and the organization then acts quickly on those suggestions. This results in a continual stream of small improvements.

Any organization that is interested in improving how they operate -- whether a school, business, nonprofit or church -- can use Kaizen as a framework that supports the submittal, implementation, and inclusion in standards of employee suggestions and ideas.

Free, Online Kaizen Tutorial

Free online Kaizen tutorial. Read about how Kaizen helped Fleetwood and Sony increase production significantly, without capital expenditures. For example, Sony, in Terra Haute, Indiana used Kaizen to increase production from 369 products per manhour to 2,715 products per manhour in just over a year.

This tutorial has three sections, plus two case studies (magazine article reprints). It provides an introduction to Kaizen; a description ofthe benefits of Kaizen; and an overview of how to get started with Kaizen.

Free Kaizen Booklet

Just ask for it and its yours. A labeling machine dealer is offering free copies of a booklet that introduces the Kaizen system of continual improvement for getting an edge on your compeditors.

Free Kaizen Booklet

This booklet starts by introducing Kaizen and sproviding a quick summary. It them gets into topics such as: constant improvement, problem solving, standardization, the suggestion system, process oriented thinking, and Kaizen vs. innovation.

Using Kaizen to identify and make small improvements on a continuing basis, you can move out ahead of your competition.