Applying Lean Manufacturing To Six Sigma

The relationship between Lean Manufacturing and Six Sigma has been questioned. This
case study of a digitizing document process clearly demonstrates that Lean Manufacturing and
Six Sigma can be combined for optimal results.

There are continuing questions about the relationship between Lean Manufacturing and Six
Sigma techniques. This relationship has been expressed as follows:

 Stretch the process applying Lean techniques

 Solve the problems of deviation from the standards
 Ensure maintenance of the improved status using Six Sigma techniques
 However, if the system and processes are too poor, stretching it could break it. In this
case Six Sigma techniques should be applied to solve some of the top line problems
before stretching it.

The case presented clearly demonstrates this relationship.

This work was carried out in a large company based in the US and India in the business of
converting printed paper from customers into electronic copies. It is a continuation of the earlier
case study entitled "Six Sigma Case Study: Converting Paper to Electronic Documents." The
paper material is quite heterogeneous in nature -- consisting of assorted magazines and legal
papers.

The results obtained have obvious applicability to the back rooms of industries processing large
amounts of data -- IT enabled services, banks, insurance companies, hospitals, and computer
based office processes. They are also applicable to most organizational processes.

As emphasized in the earlier work, in the author's opinion and experience, success is a function
of techniques and more importantly a mindset change in the organisation. The narrative unfolds
in the same sequence as the project did pointing out the critical stages where results were
achieved and where mindset changes occurred.

1. Define And Measure The Problem

1.1) Selection of the problem: A meeting of the senior management of the company was held and
a brainstorming session produced a list of over 30 problems. These were affinitized into two
categories:

 "End result" problems faced by the external customers

 Internal problems that were causes of customer problems rather than basic problems
themselves

The realization that the first category of problems was the one to be attacked (customer focus)
came spontaneously.
Then prioritization was done to select the most important problem using the weighted voting
system followed by a quick discussion to produce a consensus. The theme (CTQs) selected was
"Consistency of Quality and Timeliness."

The Consistency of Product Quality was resolved first and a 98% error reduction was achieved.

The project described here was born out of a chance remark by one of the participants in the
group: "We are going to add new capacity." To my casual query, "Why?", came the answer: "We
need to improve the turnaround." Immediately I intervened stating that turnaround is not
dependent on capacity. The disbelief that stared back at me was but a reflection of the mindset
prevailing and the task at hand to change it.

A cross-functional team including the planning personnel, and the key representatives of the
operations from each stage of the process was formed to test the principles of Lean
Manufacturing in practice.

1.2) Definition of the problem: A second level of brainstorming generated a list of problems
which were affinitized into customer problems and internal problems. The customer problems
were expressed:

1. Delayed delivery -- frequent customer complaints

2. Peaking of incoming loads aggravates delays.

The other problems were set aside as they were causes of the customer problems rather than
intrinsic problems themselves.

The Project Charter was then set out as follows:

Problem = Customer desire - Current state

1.3) Measure the problem: A suitable data collection check sheet was designed and data was
collected two weeks on the turnaround time of documents to define the problem quantitatively.
The following results were obtained:

Customer Requirement Of Turnaround Time: <5 days

Current State Average Turnaround: 5 days
sigma: 1 day
3-sigma (99.7%) Delivery To Standard: <8 days

The interpretation of consistency of delivery (turnaround) using sigma created disbelief at first as
the group struggled to understand the concept. Gradually however it was grasped -- the problem
was not the average turnaround, which was within the customer limit but the variability. This
was the second major mindset change and led to the definition of the goal: Reduce Turnaround
time by 50% so that its (average + 3 sigma) < 4 days.

2. Analysis of the Problem

A flowchart was prepared outlining each activity in the process. Many gaps were revealed that
had to be filled up and thought through. Standard times of each process per batch of 50 pages
were tabulated in a specially designed check sheet. The team was amazed when the time for the
value adding steps added up to only 31 hours. The most important mindset change had begun,
asking, "Why do we take 5-8 days?"

The principles of Lean Manufacturing and turnaround time reduction were then introduced:

 Zero waiting time

 Zero Inventory
 Scheduling -- internal customer pull instead of push system
 Batch to Flow -- cut batch sizes
 Line Balancing
 Cut actual process times

Finding the vital causes: Data was collected for three batches clocking the timing at each stage
and comparing it to the standard timings to find where time was being lost on a specially
designed data sheet.

With the data it took the group only a few minutes to draw a Pareto Diagram of delays and
conclude three vital reasons causing 70% of the delay was non-processing (waiting) time due to:

 Lack of awareness -- large waiting times for small items falling between departments
 Inventory
 Unscheduled work patterns and therefore unavailability of personnel at the right time

3. Idea Generation
The old mindsets were shattered but the group was struggling to understand the concepts
confidently enough to start applying them in regular production. An experiential simulation
classroom exercise in which the group members participated was designed and carried out to
experience the concepts first hand. Armed with this conviction, the team proceeded to the next
step to design a pilot test.

Planning the Pilot: A step-by-step implementation plan was drawn up. It was estimated that
cutting inventory and scheduling the production cycle to flow in the current batch sizes would
lead to the achievement of the goal. The whole chain was briefed about the new method and
agreed on a schedule. The team was ready to run the pilot.

4. Idea Modification
A pilot batch was run to test the scheme: It took 36 hours. Amazed jubilation followed by an
enthusiastic buy-in of the concepts -- demonstrating my belief that nothing works better than
results in accomplishing mindset change. From then on it was difficult to restrain the group from
pushing ahead too fast.

5. Implementing The Change

5.1) Scheduling: Production was carried out in a number of parallel lines in a 1-2-1-7-1
configuration. Careful scheduling and planning of the set up was done to convert each stage to
the new mode of running. Training was carried out, and the conversion begun with data
acquisition for further problem solving.

5.2) Implement the change: After eight weeks of a step-by-step introduction the new schedule
was running and estabilised at all stages. Everyone was pleasantly surprised at the ease of
implementation and learned that involvement of all functions and effective countermeasure
design using data makes implementation of dramatic improvement easy and quick.

6. Checking The Result

The turnaround achieved was as follows:
Average Turnaround Time: 3 days
sigma: 0.4 days
Average + 3 sigma: 4.2 days (i.e. < 5 days)

The goal had been achieved!

The Production line personnel reported tremendous benefits:

 Ease of tracking production batches

 Increased productivity (over 50%) and therefore reduced costs
 Better quality
 Ability to handle peaks of input data of up to 75% for 2 days per week within customer
specified turnaround limits

7. Standardization Of Control
Control charts were introduced and a special presentation on how to draw and interpret
them was made to the line personnel. A Standard Operating Procedure with a concise
reporting format was developed for regular review, management control and killing of
any new causes of variability. The team was left with the mindset of continuous
improvement -- "If you do not improve, you deteriorate".

Future Action: At the end of the project when asked what could be achieved in terms of
turnaround the team confidently asserted that they could cut it by half to a 3 sigma
performance of <1.5 days, or more than a six sigma performance for the customer. This
was estimated to yield a further 40% increase in productivity. The mindset change from
the pre project stage was an intangible gain but perhaps the most important one.

This Project is now in progress.

Conclusion -- Selling Quality

The combined effect of Lean Manufacturing and Six Sigma has led to improvements in
product quality (98% reduction in errors) and turnaround time (50% reduction). These
improvements have resulted not only in cost reduction, but also the possibility of
presenting these improvement stories to the customer, building the reputation of the
company as a leading supplier of quality, and thereby increasing the probability of getting
higher volumes of business.