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An Overview of Lean and Six Sigma

A Framework for Organisational Development"
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Danilo De Rossi
July 2012!
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About the Author"
I have over twenty years of business experience, of which over ten at
senior level working in multinational/multicultural environments. My
focus is to achieve growth by developing value chain positioning
strategies and improving profitability through process, competitiveness
and organisational alignment/development. This paper is part of a set
of researches that were initially prepared for my MBA. !
For my full profile, or to discuss opportunities to contribute to business
research, please visit uk.linkedin.com/in/daniloderossi/


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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 1
Table of Contents"
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1. Introduction" 4"
2. Six Sigma Overview" 5"
2.1 Origins of Six Sigma! 5!
2.2 Meaning of Six Sigma! 5!
2.3 Core Methodology! 6!
2.4 Six Sigma and Total Quality Management! 6!
2.5 Six Sigma as Management Strategy! 8!
2.6 Six Sigma Business Impact and Industry Benchmark! 9!
2.7 Six Sigma as a Customer Focused Strategy! 9!
2.8 Understanding Impact of Process Accuracy on Real World Applications! 10!
2.9 Six Sigma Development Roadmap and Business Benefits! 11!
2.10 Notes on Six Sigma Infrastructure! 11!
2.11 Critical to Implementation of Six Sigma as a Business Strategy! 12!
2.12 Information Systems and Six Sigma! 12!
2.13 Six Sigma Criticisms! 13!
2.14 Sustainability of Six Sigma! 14!
2.15 Design For Six Sigma! 14!
3. Lean Overview" 15"
3.1 Origins and Applications of Lean! 15!
3.2 Pull Vs Push ! 15!
3.3 Value Stream Mapping! 16!
3.4 Process Waste! 17!
3.5 Understanding and Reducing the Impact of Complexity! 18!
3.6 Lean Organisation! 19!
3.7 Supply Chain Resilience and Finding the Optimum Degree of Leanness! 19!
3.8 Lean and Sustainable Operation Improvement! 20!
4. Lean and Six Sigma Benefits in Combined Application" 21"
4.1 Accelerating Lean and Six Sigma Results! 21!
5. Conclusions" 22"

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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 2
 6. References and Bibliography" 23"
7. Websites " 25"
8. Appendix 1: Traditional and Customer Driven Organisations" 26

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List of Exhibits"
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1 - Six Sigma and Normal Distribution ! ! ! ! ! ! ! ! 5!
2 - DMAIC Methodology! ! ! ! ! ! ! ! ! ! 6!
3 - TQM Compared with Six Sigma! ! ! ! ! ! ! ! 7!
4 - Six Sigma Benefits Versus Investments at General Electric! ! ! ! 8!
5 - Six Sigma Cost of Quality Industry Benchmark! ! ! ! ! ! 9!
6 - Real World Meaning of Six Sigma! ! ! ! ! ! ! ! 10!
7 - Deployment Trajectories of Six Sigma! ! ! ! ! ! ! 12!
8 - Six Triumphs and Six Tragedies of Six Sigma! ! ! ! ! ! 13!
9 - PRAND Model for Sustainable Six Sigma Deployment! ! ! ! ! 14!
10 - Push Versus Pull Methodologies! ! ! ! ! ! ! ! 15!
11 - An Example of Value Stream Mapping! ! ! ! ! ! ! 16!
12 - Seven Forms of Service Process Waste! ! ! ! ! ! ! 17!
13 - Relationship Between Number of Steps and Process Accuracy! ! ! 18!
14 - Mass and Lean Organisation Paradigms! ! ! ! ! ! ! 19!
15 - Optimum Degree of Leanness! ! ! ! ! ! ! ! 20!
16 - Accelerating Lean and Six Sigma Results! ! ! ! ! ! ! 21!
17 - Six Sigma and Lean Comparison! ! ! ! ! ! ! ! 22!

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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " " p. 3
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“Do not seek to follow in the footsteps of the old masters,
seek instead what these masters sought”
Matsu Basho (1644-1694)
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1. Introduction"
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Lean and Six Sigma are business improvement methodologies that have been applied
successfully in many industrial contexts, at first in manufacturing environment and more
recently in service and transactional applications. The aim of this paper is to provide an
overview of the Lean and Six Sigma framework in the context of organisational
development. The objective is to review how the application of concepts like Critical To
Quality and Data Driven Management can improve organisational performance. The main
emphasis is not on the methodology itself but on its philosophy, and how a company can
benefit from a Lean and Six Sigma approach in the development of an organisational
ecosystem allowing the company strategy to be consistently executed. 

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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 4
2. Six Sigma Overview"
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2.1 Origins of Six Sigma

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The core of Six Sigma was “born” at Motorola in the 1970s out of senior executive Art
Sundry's criticism of Motorola’s poor quality. As a result of this criticism, the company
discovered a connection between increases in quality and decreases in costs of
production. At that time the common industry view was that in order to increase quality a
company needed to increase control costs. Linderman defined Six Sigma as an organised
and systematic method for strategic process improvement and new product and service
development, that relies on statistical and scientific methods, to make dramatic reductions
in customer defined defect rates (Linderman et Al, p. 195).!
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2.2 Meaning of Six Sigma"


The first definition of Six Sigma is that of a defect rate metric. Specifically it means 3.4
Defects Per Million Opportunities (DPMO) or 99.99966% accuracy. Sigma (σ) is the Greek
letter that in statistics represents standard deviation. Therefore Six Sigma indicates six
standard deviations. What it truly means is that a process is so highly capable that
customer specifications are actually six standard deviations away from the process centre
(Exhibit 1) (Zhang et Al, 2009). Six Sigma is, essentially, a methodology concerned with
assessment and development of process capabilities.!
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Exhibit 1 - Six Sigma and Normal Distribution"

(Source: adapted from Zhang et Al, 2009)!

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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 5
!
2.3 Core Methodology"
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The core Six Sigma methodology consists of 5 different phases that are: Define, Measure,
Analyse, Improve and Control (DMAIC). Brook (2006) proposes an effective overview of
the DMAIC approach defining it: “a logical flow to problem solving”. Exhibit 2 proposes an
overview of the phase definitions and the expected outcome adapted by the same author. !
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Define To develop a clear project charter based on a real problem that
is relevant to the customer, and that will provide significant
benefits to the business.

Measure To understand and baseline the current performance of the

process, through a set of relevant and robust measures (Key
Performance Indicators).

Analyse To find the root causes of the problem, and understand/quantify

their effect on process performance.

Improve To develop, select and implement the best solutions with

controlled risks.

Control To ensure the solutions are ‘embedded’, the process has robust
controls, and the project has a clear closure.

Exhibit 2 - DMAIC Methodology"

(Source: Brook, 2006)!
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Other key ingredients of Six Sigma are defined by Pande et Al (2002) as: “genuine focus
on the customer; data and fact driven management; process focus management and
improvement; proactive management; boundary-less collaboration; drive for perfection -
tolerate failure”. !

2.4 Six Sigma and Total Quality Management"

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Six Sigma was heavily inspired by the quality improvement methodologies of the six
preceding decades, such as Quality Control, Total Quality Management (TQM) and Zero
Defects, based on the work of pioneers such as Shewhart, Deming, Juran, Crosby,
Ishikawa, Taguchi, and others. However, Harry and Schroeder (2000) argue that, in the
traditional TQM techniques, the cost of control is increased as the defect rate decreases,
with an optimum point found at the level of 4 Sigma; with the Six Sigma approach, instead,
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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 6
the process is designed to reduce defect opportunities, increasing quality and lowering
control costs at the same time (Exhibit 3). !
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Exhibit 3 - TQM Compared with Six Sigma"

(Source: Adapted from Harry and Schroeder, 2000)!

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Goh et Al (2006) emphasises: “Some have mistaken Six Sigma for another name for Total
Quality Management (TQM). In TQM, the emphasis is on involvement of those closest to
the process, resulting in the formation of ad hoc and self-directed improvement teams. Its
execution is owned by the quality department, making it difficult to integrate throughout the
business. In contrast, Six Sigma is a business strategy supported by a quality
improvement strategy. While TQM, in general, sets vague goals of customer satisfaction
and highest quality at the lowest price, Six Sigma focuses on bottom line expense
reduction with measurable and documented results. Six Sigma is a strategic business
improvement approach that seeks to increase both customer satisfaction and a company’s
financial health”.!
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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 7
2.5 Six Sigma as Management Strategy"
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From the literature reviewed, Six Sigma is widely adopted across industries as a
management framework, which enables data-driven strategy within a company. Data-
driven management provides a means of achieving organisational objectives by
quantifying needs or wants of stakeholder groups relative to the current level and acting
upon the data, to reduce critical gaps in performance (Crisan et Al, 2010). One of the
companies that adopted Six Sigma as a management strategy, achieving significant
results, is General Electric (GE). Former CEO of GE, Jack Welch, summarises in an
interview what a Six Sigma company is: “..a Six Sigma company is a company who is
manageable, understands that variation is evil, and that serving customers with what they
want, when they want it, is the key. […] You have it in your bones to drive outside your
internal focus to your external focus and everything you do internally will be thought as
how it is going to impact a customer. Six Sigma really drives you in a methodology that
allows a customer centric view, and where the understanding is deep and broad in the
organisation.” (Six Sigma Interview with Jack Welch, Youtube). Exhibit 4 shows the
significant benefits reported by GE during the first four years of Six Sigma implementation. !
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Exhibit 4 - Six Sigma Benefits Versus Investments at General Electric"

(Source: Alsagheer and Mohammed, 2011)!

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Brady and Allen, in their research, suggest that Six Sigma has been popular and
widespread as a management strategy as at its core every improvement project is defined
with a concrete quantification of the bottom line impact. The authors’ findings confirm that
only a small fraction of Six Sigma literature has been devoted to theory and research,
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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 8
suggesting that the main applications of Six Sigma are linked to the introduction of a data-
driven management framework, that can deliver concrete results at bottom line level, in
comparison with studies of theoretical models, more relevant for researchers.!
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2.6 Six Sigma Business Impact and Industry Benchmark"
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Harry and Schroeder (2000) provide an industry benchmark of the cost of quality,
associated with any of the Sigma levels, which is presented in Exhibit 5. !
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Exhibit 5 - Six Sigma Cost of Quality Industry Benchmark "

Sigma Level Defects Per Million Opportunities Cost of Quality

2 308,537 Not applicable

(non competitive companies)

3 66,807 25-40% of sales

4 6,210 (industry average) 15-25% of sales

5 233 5-15% of sales

6 3.4 (world class) <1% of sales

Each Sigma shifts provides a 10% net income improvement

(Source: Harry and Schroeder, 2000)!

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It is important to underline that the Sigma level is a performance target based only on
Critical To Quality (CTQ) characteristics and not on the total product. A more specific view
of the CTQ requirement is provided from Blackslee et Al (2002), as the intersection of a
company’s core process outputs with critical customer requirements. This ultimately
defines process Sigma as well as long term business success for a company. Being able
to examine and close the gap between what a business produces and what customers
demand is the essence of Six Sigma. The width of the gap (or the process Sigma value)
can be used to prioritise improvement efforts. !
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2.7 Six Sigma as a Customer Focused Strategy"
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Why is there the need to understand exactly critical customer requirements? According to
Tennant (2001), mid-sized organisations have become distanced from customer ethics,
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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 9
and globalisation and mass marketing will only continue this trend and drive a wedge
between customers and organisations. The customer is hence becoming a means to an
end (financial profits) and not an end itself. Pyzdek (2009) also suggests that the Critical
To Quality elements can be defined by three main “voices” in every organisation: End
Customer, Shareholders and Employees. Any company should ensure that the voice of
these three parties is central to the strategy. In addition the author provides a comparison
between traditional organisations and customer driven organisations, which is provided in
Appendix 1.!
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2.8 Understanding Impact of Process Accuracy on Real World Applications"
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In practical terms one could argue about the real need to reach Six Sigma level in many
applications. Exhibit 6 provides a good synopsis of how the process accuracy difference
between 3.8 and 6 Sigma relate in practical terms to some of the “real world” (MIT Lean
Academy).!
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Exhibit 6 - Real World Meaning of Six Sigma"
99% GOOD (3.8 Sigma) 99.99966% GOOD (6 Sigma)

  20,000 lost articles of mail •  7 articles of mail lost per

per hour hour
  Unsafe drinking water almost •  One unsafe minute every
15 minutes per day seven months
  5,000 incorrect surgical •  1.7 incorrect operations per
operations per week week
  Two short or long landings at •  One short or long landing
most airports each day every five years
  200,000 wrong drug •  68 wrong prescriptions each
prescription each year year
  No electricity for almost 7 •  One hour without electricity
hrs each week every 34 years
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(Source: MIT Lean Academy)!

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From this comparison, it seems clear that a non Six Sigma level of process accuracy
would be unacceptable in many everyday activities.!
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An Overview of Lean and Six Sigma: A Framework for Organisational Development" " " " " " p. 10
2.9 Six Sigma Development Roadmap and Business Benefits"
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According to Harry and Schroeder (2000), from the implementation of a company-wide Six
Sigma strategy, a company operating at Three Sigma level can expect to make one Sigma
shift every year and drive towards: 20% margin improvement, 12 to 18% capacity
improvement, 12% reduction in the number of employees and a 10 to 30% capital
reduction. A company implementing Six Sigma can expect to make one Sigma shift
improvement per year up to 4.7 Sigma. It will then take another year to move from 4.7 to 5
Sigma and one additional year to move from 5 to 5.1 Sigma. The closer the companies
come to achieve Six Sigma, the more demanding the improvements become. At 4.8 Sigma
companies hit a “wall” that requires a redesigning of processes known as Design For Six
Sigma (Harry and Schroeder, 2000).!
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2.10 Notes on Six Sigma Infrastructure"
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The infrastructure generally adopted for the implementation of Six Sigma is inspired by the
martial arts. Master Black Belts, Black Belts and Green Belts are, in fact, project managers
and champions with different levels of seniority and experience. Pyzdek and Keller (2009)
suggest that an organisation with one Master Black Belt and ten Black Belts can achieve
from $9 to $14.6 million in savings per year.!
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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 11
2.11 Critical to Implementation of Six Sigma as a Business Strategy"
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Many of the authors reviewed for this research agree that the key element for successful
implementation of Six Sigma is leadership and senior management commitment. In Exhibit
7, Smith and Blakeslee (2002) propose a graphical representation of the Six Sigma
deployment trajectories. !
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Exhibit 7 - Deployment Trajectories of Six Sigma"

I! II! III! IV!

Initial ! Building ! Building a! Strategic !
Deployment! Commitment! Six Sigma! Six Sigma!
$ Culture!

Critical !
Leadership!
Commitment!
Six Sigma !
Net !
Business !
Benefit!

1 2 3 4 Years

(Source: Smith and Blakeslee, 2002)!

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The authors suggest that the end game is to achieve dynamic, customer-coupled process
performance. It takes a sustained commitment to stay on the top trajectory, and the zone
of critical commitment begins around the end of year 1 and has no ending. On top of the
leadership commitment, the same authors provide six key success factors for a strategic
implementation of Six Sigma: business and process framework; customer and market
focus; strategy integration; full-time Six Sigma team leaders; incentives and accountability;
quantifiable measures and results. !
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2.12 Information Systems and Six Sigma"
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According to Pyzdek (2009) the demands on Information Systems (IS) increase
significantly when Six Sigma is deployed. The author reports that successful
implementation of Six Sigma requires an IS able to provide data to many users, with

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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " " p. 12
comprehensive drill-down capabilities. In this light if the existing IS do not allow data
disaggregation into components, they could create a significant barrier to effective Six
Sigma deployment. !
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2.13 Six Sigma Criticisms"
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In his article “Six Triumphs and Six Tragedies of Six Sigma”, Goh (2010) summarises pros
and cons from observations of Six Sigma implementations in several companies, which
are illustrated in Exhibit 8.!
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Triumphs Tragedies

Use of a common, realistic metric for quality The belief that Six Sigma (as typical black
assessment and improvement belts know it) is universally applicable

Clear assignment of roles and responsibilities Obsession with personal attainments

in performance improvement efforts

Logical alignment of statistical tools - The idea that professional statisticians are no
alignment and integration of statistical tools longer needed

Recognition of the time effects on processes Irresponsible hype of Six Sigma

Unprecedented synergy with modern A bigoted “in data we trust” mentality

information technology

Capabilities to grow for larger roles for Ignorance or neglect of what is important
business competitiveness behind DMAIC

Exhibit 8 - Six Triumphs and Six Tragedies of Six Sigma"

(Source: Goh, 2010)!
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Interestingly, many of the widely reported strengths of the methodology (e.g. data driven
approach) seem to have the opportunity to become an issue. In a recent management
survey of 184 companies, also Guarraia et Al (2009) report that a full 80% of executives
indicated that their Lean-Six Sigma efforts are failing to drive the anticipated value.
Moreover, 74% say they are not gaining the expected competitive edge because they
haven’t achieved their savings targets. Although the authors are not disputing the
effectiveness of the Six Sigma framework, they suggest that a preliminary step called
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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 13
“Business X-Ray” should be added to any Six Sigma initiative, to ensure that the company
will be able to focus and deliver.!
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2.14 Sustainability of Six Sigma"
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AlSagheer and Mohammed (2011) propose that: “sustainability is not a method or tool, it is
a state of a company in which efficiency of resources is maximised, customers are
satisfied to a great extent, an improved condition is long-lasted, success is maintained and
competitive advantage is sustained”.!
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Exhibit 9 - PRAND Model for Sustainable Six Sigma Deployment"

Six Sigma Project

Pipeline

Define Measure Analyze Improve Control

Document Benchmark Audit

Organizational Learning

(Source: AlSagheer and Mohammed, 2011)!

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The authors propose a PRAND model (Exhibit 9) to embed learning in the organisation,
ensuring that the improvement achieved with Six Sigma can be sustained. Here the focus
is clearly on the Control phase of the DMAIC process. !
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2.15 Design For Six Sigma"
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To reduce the flaw opportunities, one of the key methodologies of the Six Sigma
framework is Design For Six Sigma (DFSS). Smith et Al (2002) define DFSS as a robust
and systematic improvement methodology that uses specific Six Sigma tools and metrics
to design products, services and processes that meet customer requirements from the
outset, and that can be produced and delivered at Six Sigma quality levels.!
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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 14
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3. Lean Overview"
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Almost all the implementations of Six Sigma are currently deployed together with Lean,
hence the definition of Lean-Six Sigma. The following part of this work will review the
definition of Lean and its applications.!
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3.1 Origins and Applications of Lean"
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Lean Manufacturing is a management philosophy derived mostly from the Toyota
Production System (Ohno, 2009) and identified as Lean only in the 1990s. Lean
Manufacturing, or Lean Enterprise - often simply Lean - is a production practice that
considers expenditure of resources for any goal other than the creation of value for the
end customer to be wasteful, and thus a target for elimination. Working from the
perspective of the customer who consumes a product or service, "value" is defined as any
action or process that a customer would be willing to pay for. (Wikipedia)!
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3.2 Pull Vs Push "
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A foundation of the Lean methodology is the concept of Pull. Exhibit 10 (Sezen and
Erdogan, 2009) shows that while the traditional manufacturing approach is based on
pushing goods or services through the chain, in the Pull methodology it is the customer
that pulls products or services through the supply chain. !
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Exhibit 10 - Push Versus Pull Methodologies"

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(Source: Sezen and Erdogan, 2009)!

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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 15
The conclusion is that in the Pull approach the roles of Manufacturing and Buyer are
effectively reversed.!
3.3 Value Stream Mapping"
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Another key tool of the Lean methodology is Value Stream Mapping (VSM). Rother and
Shook (2003) define Value Stream as all the actions (both value added and non value
added) currently required to bring a product through the main flows essential to every
product: (1) the production flow from raw material into the arms of the customer, and (2)
the design flow from concept to launch. Whereas in this definition the authors are focusing
on product, it is important to underline that the same methodologies can also be applied to
services. An example of VSM is provided in Exhibit 11. !
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Exhibit 11 - An Example of Value Stream Mapping"

(Source: Rother and Shook, 2003)!

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Here the key elements are all the activities that are involved in the process, the time that
every phase takes and the value added time compared to the overall waiting time, and the
information flow presented with the arrows going from the project management to the
individual activities (Chen et Al, 2010). One of the pillars for continuous improvement of the

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“Toyota Way” is “Genchi Genbutsu” or “Go and See for Yourself”. Here the aim is to ensure

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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 16
that everybody understands the value stream, going to the source and finding the facts to
make the correct decisions. (Stewart, Raman, 2007). Another key assumption of Lean is
that the composition of the workers’ time is made of 3 key factors: Muda (Japanese word
for waste), incidental work and value added work. Through VSM and direct observations
on the field, Lean aims to maximise value added work.!
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3.4 Process Waste"
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One of the biggest challenges for a successful implementation of Lean is how to recognise
waste. The methodology acknowledges 7 key forms of waste and many of the available
definitions are based on the manufacturing applications. Here the definition provided by
George (2003) is presented, as the author re-elaborates the seven forms of waste to
include also definitions that can be adopted in the service environment. These more
inclusive definitions are presented in Exhibit 12.!
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Exhibit 12 - Seven Forms of Service Process Waste"

Form of Waste Meaning

Over-processing Try to add more value to a service/product than what your

customers want or will pay for.

Transportation Unnecessary movement of materials, products or information.

Motion Needless movement of people.

Inventory Any work in progress that is in excess of what is required to

produce for the customer.

Waiting time Any work in progress that is in excess of what is required to

produce for the customer.

Defect Any aspect of the service that does not conform to customer
needs.

Over-production Production of service outputs or products beyond what is

needed for immediate use.

(Source: George, 2003)!

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The author also suggests that as a general rule the better an organisation is in recognising
waste the more effective the improvement efforts will be.

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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 17
3.5 Understanding and Reducing the Impact of Complexity"
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With nearly 70% of managers admitting that excessive complexity is raising their costs and
hindering their profit growth (Gottfredson and Aspinall, 2003), the widespread adoption of
Lean tools and techniques is not surprising. In Exhibit 13 the Six Sigma Institute quantifies
the link between the number of steps in a generic process and the yield to be expected. !
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Exhibit 13 - Relationship Between Number of Steps and Process Accuracy"

(Source: Six Sigma Institute, 2012)!

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A process with a higher number of steps is statistically unlikely to produce good output
quality. This introduces how Lean and Six Sigma methodologies could be integrated
effectively. With Lean supporting the removal of unnecessary process steps, and Six
Sigma minimising variation and increasing the quality of the outcome, the two
methodologies seem to work with effective synergy.!
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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 18
3.6 Lean Organisation"
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The application of Lean requires also additional thinking in terms of organisation. MIT Lean
Academy provides a side by side comparison between a traditional and a Lean
organisation in Exhibit 14.!
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Exhibit 14 - Mass and Lean Organisation Paradigms"

Mass Organisation LEAN Organisation

Organised by Function Organised by value stream

Department - Silos Teams - Multifunctional

Many job categories Few job categories

Vertical structure Horizontal structure

Bosses give directions Bosses facilitate

“Up and down” communication Pervasive and rapid communication

Focus on product Focus on customer

Suppliers at arms length Suppliers as partners

Bureaucratic, sluggish Flexible, agile

(Source: MIT Lean Academy)!

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Key differences are the organisation of resources for Value Stream and the focus on
customers.!
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3.7 Supply Chain Resilience and Finding the Optimum Degree of Leanness"
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Christopher and Rutherford (2004) propose a view on how too much Lean can potentially
harm an organisation. In essence they suggest that in finding the right level of leanness, it
is important to also take into account the cost to recover from an unexpected disturbance
from the environment (Exhibit 15).!
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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 19
!
Exhibit 15 - Optimum Degree of Leanness"

Fat, Slow and Lean, Mean

Vulnerable Vulnerable
Total Cost Incl. Expected
cost of Recovery)

Resilient

Degree of Leanness Optimum

Leanness

(Source: Christopher and Rutherford, 2004)!

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According to the authors, in case of disturbances in the business environment, whereas a
robust supply chain could be overly Lean and readjust to the challenges with difficulty and
significant recovery costs, a resilient supply chain is one that is optimally lean and can
readjust quickly to the environment. !
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3.8 Lean and Sustainable Operation Improvement"
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Drew et Al (2004) proposes that, in order to ensure that Lean changes are sustainable in
every company, there are three key aspects to consider: 1) Operating system or the way
in which assets and resources are configured to deliver value to the customer with
minimum losses; 2) Management infrastructure or the management organisation,
processes and systems required to support and sustain the operating system; 3) Mindset
and behaviours or the ways of thinking and acting at all levels of the organisation that are
required to underpin the formal systems and structures. The view of the author is to embed
Lean in the organisational culture and systems. !
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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 20
4. Lean and Six Sigma Benefits in Combined Application

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According to George (2003), the fusion of Lean and Six Sigma improvement methods is
required because: Lean cannot bring a process under statistical control; Six Sigma alone
cannot dramatically improve process speed or reduce invested capital; however, both
enable the reduction of the cost of complexity. Also Sharma (2003) suggests that: “Lean
Manufacturing can produce startlingly good results, but implementing them can be costly
in time and other resources. When Lean principles are integrated with Six Sigma practices,
however, their success rate grows and most importantly, improvements become
embedded in daily work life on a continuing basis”.!
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4.1 Accelerating Lean and Six Sigma Results"


In his article ”Improve how you improve”, Burton (2011) proposes an improvement
excellence framework which is based on 10-step accelerators for Lean and Six Sigma
results (Exhibit 16).!
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Exhibit 16 - Accelerating Lean and Six Sigma Results"

(Source: Burton, 2011)!

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In the author’s summary, following the leadership, the focus goes to deployment planning
and execution. He also suggests that technology and strategic improvement are highly

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An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 21
integrated concepts and that technology should be the backbone of the next level of Lean
and Six Sigma improvement programmes.!
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5. Conclusions"
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Lean and Six Sigma are methodologies to solve specific problems that can be adopted
also as business management strategies. A summary of how Lean and Six Sigma
methodologies are different and complementary is provided by the MIT Lean Academy and
proposed in Exhibit 17. !
!
Exhibit 17 - Six Sigma and Lean Comparison"

Six Sigma! Lean!

Objective! Deliver Value to the Deliver Value to the
Customer Customer
Theory! Reduce Variation Remove Waste
Focus! Problem focused Flow focused
Assumptions! • A Problem exists • Waste removal will
• Figures and numbers improve business
are valued performance
• System output • Many small improvements
improves if variation in are better than system
all processes inputs is analysis
reduced

(Source: MIT Lean Academy)!

!
While both methodologies have the objective of delivering value to the customer, the
methods used to achieve this target are significantly different. There is general agreement
from the literature reviewed that the application of Lean and Six Sigma methodologies can
provide significant improvement to the business performance. The biggest potential is
identified from their use as a management strategy through the definition of Critical To
Quality requirements and the deployment of a sharply focused organisational strategy
which is focused on their achievement. Where these practices are embedded in the
organisational culture, they promote a data-driven operational language which orients all
employees towards the fulfilment of Customer, Shareholder and Employee needs.
!
"
An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 22
However several authors also highlight how the adoption of these methodologies as
business strategy, requires a significant commitment from top management and a
dedicated infrastructure with resources and investments. !
!
6. References and Bibliography"
!
AlSagheer, A., Mohammed, H. B., 2011, Applying Six Sigma To Achieve Enterprise
Sustainability: Preparations And Aftermath Of Six Sigma Projects, Journal of Business &
Economics Research, April, Vol. 9, No. 4. !
!
!
Brady, E. J., Allen, T. T., Six Sigma Literature: A Review and Agenda For Future Research,
2010.!
!
Brook, Q., 2006, Six Sigma and Minitab - A Complete Toolbox Guide for all Six Sigma
Practitioners, QSB Consulting Ltd.!
!
Burton, T. T., 2011, Improve How You Improve, Industrial Engineer, August.!
!
Chen, J. C., Li, Y., Shady, B. D., 2010, From Value Stream Mapping Toward a Lean/Sigma
Continuos Improvement Process: An Industrial Case Study, International Journal of
Production Research, Vol. 48, No. 4, 15 February, 1069-1086.!
!
Christopher, M., Rutherford, C., 2004, Creating Supply Chain Resilience Through Agile Six
Sigma, Critical Eye Publications Ltd, June-August. !
!
Crisan, E., Ilies, L., Muresan, I., 2010, Six Sigma: A Metric, A Methodology and a
Management System, Annals of the University of Oradea. !
!
Drew, J., McCallum, B., Roggenhofer, S., 2004, Journey to Lean: Making Operational
Change Stick, Palgrave-Macmillan.!
!
George, M. L., 2003, Lean Six Sigma for Service: How to use Lean Speed and Six Sigma
Quality to Improve Services and Transactions, McGraw-Hill.!
!
"
An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 23
!
Goh T. N., Tang L.C., Yam H. S., Yoap T., 2006, Six Sigma: Advanced Tools for Black Belts
and Master Black Belts, Wiley.!
!
Goh T. N., 2010, Six Triumphs and Six Tragedies of Six Sigma, Quality Engineering, 22:
299-305.!
!
Gottfredson M., Aspinall K., 2005, Innovation vs Complexity: What is Too Much of a Good
Thing?, Harvard Business Review, November.!
!
Guarraia, P., Carey, G., Corbett, A., Neuhaus, K., 2009, Six Sigma at Your Service,
Business Strategy Review, London Business School. !
!
Harry, M. Ph.D., Schroeder, R., 2000, Six Sigma The Breakthrough Management Strategy
Revolutionising the World’s Top Corporations, Currency Doubleday.!
!
Ishikawa, K., What is Total Quality Control? The Japanese Way, Prentice All, 1985,
Translated from Japanese by David J., Lu.!
!
Linderman, K.,Schroeder, R., Zaheer, S., Choo, A., 2003, Six Sigma: A goal-theoretic
perspective, Journal of Operations Management, vol. 21, num. 2 , Mar., p.193-203.!
!
Pande, P., Neuman, R., Cavanagh, R., The Six Sigma Way Team Field-book: An
Implementation Guide for Process Improvement Teams, McGraw Hill.!
!
Ohno, T., Workplace Management, McGraw Hill, 2009.!
!
Pyzdek, T., The Six Sigma Handbook, Third Edition, McGraw-Hill Professional, 2009.!
!
Rother, M., Shook, J., 2003, Learning to See: Value-Stream Mapping to Create Value and
Eliminate Muda, The Lean Enterprise Institute, Brookline, Massachusetts, USA.!
!
Smith, D., Blakeslee, J., Koonce, R., 2002, Strategic Six Sigma: Best Practices from the
Executive Suite, John Wiley & Sons.!
!
"
An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 24
!
Sezen, B., Erdogan, S., 2009, Lean Philosophy in Strategic Supply Chain Management
and Value Creating, Journal of Global Strategic Management, 05, June.!
!
Sharma, U., 2003, Implementing Lean Principles with Six Sigma Advantage: How a
Battery Company realised a significant improvements, Journal of Organisational
Excellence, Summer.!
!
Stewart, T. A., Raman, A. P., 2007, Lessons from Toyota Long Drive, Harvard Business
Review, July-August.!
!
Tennant, G., 2001, Six Sigma: SPC and TQM in Manufacturing and Services, Gower
Publishing Ltd.!
!
Zhang, W., Hill, A. V., Gilbreath, G. H., 2009, Six Sigma: A Retrospective and Prospective
Study, POMS 20th Annual Conference, May 1-4 !
!
7. Websites "
!
MIT LEAN Academy: http://lean.mit.edu, Accessed 8 Jan 2012!


Six Sigma Interview with Jack Welch, http://www.youtube.com/watch?v=aNMULFcLuIM,
Accessed 18 March 2012.!
!
Six Sigma Institute: http://www.sixsigmainstitute.com/leansigma/index_leansigma.shtml,
Accessed 23 February 2012!
!
Wikipedia: Lean definition: http://en.wikipedia.org/wiki/Lean_manufacturing, Accessed 10
February 2012!
!
Wikipedia: Six Sigma definition: http://en.wikipedia.org/wiki/Six_Sigma, Accessed 12
January 2012


!
"
An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 25
8. Appendix 1: Traditional and Customer Driven Organisations"
!
Traditional Organisations Customer Driven Organisations

Product and - Short term focus - Long term focus

service planning - Reactionary management - Prevention-based management
- Management by objectives planning process - Customer driven strategic planning process

Measures of - Bottom-line financial results - Customer satisfaction

performance - Quick return on investment - Market share
- Long term profitability
- Quality orientation
- Total productivity

Attitude towards - Customers are irrational and a pain - Voice of the customer is important
customers - Customers are a bottleneck to profitability - Professional treatment and attention to
- Hostile and careless customers is required
- “Take it or leave it” attitude - Courteous and responsive
- Empathy and respectful attitude

Quality of - Provided according to organisational - Provided according to customer

products and requirements requirements and needs
services

Marketing focus - Seller’s market - Increased market share and financial

- Careless about lost customers due to poor growth achieved
customer satisfaction

Process - Focus on error and defect detection - Focus on error and defect prevention
management
approach

Product and - It is OK for customers to wait for products and - It is best to provide fast time to market
service delivery services products and services
attitude

People - People are the source of problems and are - People are the organisation’s greatest
orientation burdens on the organisation resource

Basis for - Product driven - Customer driven

decision-making - Management by opinion - Management by data

Improvement - Crisis management - Continuous process improvement

strategy - Management by fear and intimidation - Total process management

Mode of - Career driven and independent work - Management supported improvement

operation - Customers, suppliers, and process owners - Teamwork between suppliers, process
have nothing in common owners, and customers practiced.

!
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"
An Overview of Lean and Six Sigma: A Framework for Organisational Development " " " " " p. 26