Six Sigma and Lean Thinking

Lean Thinking
What is Lean Thinking? As the name implies, it is a mindset -- a way of viewing the world. Lean is about focus, removing waste, and increasing customer value. Lean is about smooth process flows, doing only those activities that add customer value and eliminating all other activities that dont. Adding value is another way of saying generating revenue. If it doesnt generate revenue then it must add cost, not value. Sounds easy doesnt it, after all, this is what we do every day or is it? Lets see.

Lean Thinking
Lean Thinking is about smooth process flows, doing only the things that add customer value and eliminating other activities that dont (Waste). There are five basic steps in assessing lean operations: 1. Identify the activities that create value

2. Determine the sequence of activities (also called the value stream)

3. Eliminate activities that do not add value 4. Allow the customer to pull products/services 5. Improve the process (start over)

Lean Thinking
Lean Thinking is ideal for mature (energy), slow growth (automotive), low transaction industries (small business) or an organization where mathematical tools are not common. Lean begins to use systems thinking and considers all of the process interactions But lean is still a reductionism approach focused on eliminating waste (cutting costs). What is needed is to balance the resources released through Lean or Six Sigma improvement programs with an increase in throughput and need for resources. Otherwise you enter a cost cutting, job losing cycle and your process improvement program will grind to a halt.

Six Sigma Vs Lean Thinking

Program View of Waste Application Six Sigma
Variation is waste
1.Define 2.Measure 3.Analyze 4.Improve 5.Control

Lean Thinking
Non-value add is waste
1.Identify Value 2.Define Value Stream 3.Determine Flow 4.Define Pull 5.Improve Process

Tools Focus

Math-Statistics Problem focused

Visualization Process flow focused

Six Sigma Vs Lean Thinking

Six Sigma is problem focused with a view that process variation is waste. Lean Thinking, on the other hand, is focused on process flow and views any activity that does not add value as waste.

Six sigma uses statistics to understand variation.

Lean uses visuals: process mapping, flowcharting, and value stream mapping, to understand the process flow.

Lean Thinking

If you are in a mature, slow growth, low transaction, or non-math business then Lean Thinking will work real well for your organization.

Six Sigma and Lean use two different approaches to get the same end result process improvement.
The Theory of Constraints (throughput improvement) takes the concepts of Lean Thinking to another level of systems thinking

Lean Thinking
There are five basic steps in assessing lean operations:

1. Identify the activities that create value

2. Determine the sequence of activities (also called the value stream)

3. Eliminate activities that do not add value

4. Allow the customer to pull products/services 5. Improve the process (start over)

Lean Thinking -Example

For example, lets take a look at the most fundamental cycle within a lean operation, the order-to-delivery cycle. The top level activities, in sequence, are taking an order, building the order, and delivering the order. The activities that do not add value are such things as: order entry, backlog, inventory, and shipping delays In a lean operation we could have the customer enter their own orders; products made on demand, so we would have no backlog or inventory, and then product could be shipped overnight for minimal shipping delay

Lean Thinking -Example

Companies with very short order-to-delivery cycles (and not using inventory as a buffer) are lean operations. Lean operations have a strong cash cycle. In general, the shorter the cycle the leaner the operation.

Lean Thinking

Lean uses systems thinking and considers all of the process

interactions, while utilizing the 5S system of organization.

Unlike Six Sigma, it does not require a lot of mathematical

analysis and works well for mature, slow growth or low

Transaction business.

Six Sigma
Six sigma is all about variance reduction. By variance, we are referring to the amount of control you have over your processes. Another way to look at it is how good you are at or forecasting the future outcomes of a given process. Six Sigma uses a scientific approach called DMAIC to analyze a specific problem. DMAIC stands for Define, Measure, Analyze, Improve and Control, which is also known as the learning loop or PDCA.

Scientific and numbers-based organizations can benefit the most from Six Sigma. If you are in a high technology, high transaction, or expensive error environment then Six Sigma could work very well for your organization.