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Costs And Efficiencies In Lean Six Sigma

Costs And Efficiencies In Lean Six Sigma

Along with playing an essential role in manufacturing industries, Lean Six Sigma promises to enhance your business efficiency multifold. The business improvement modules linked with Lean Six Sigma reduces waste from operations and has a lot to offer in terms of efficiency.

Lean is a systematic approach that first identifies and then eliminates all forms of wastes for achieving efficient production flow by the value stream. Six Sigma is a methodology that is driven by data consisting of different phases. And, Lean Six Sigma refers to team based efforts that continuously strives to promote effective business growth/improvement. 

Well, it would be wrong to signify Six Sigma as a quality program because it is actually an overall business strategy that can be applied to all business processes – whether they pertain to manufacturing concerns, retail, banking transactions, anything!

Lean Six Sigma Efficiently Reduces Costs

Are you seeking better ways of reducing costs? Are you tired of implementing short term way-outs that ultimately harms customer satisfaction? Go for efficient implementation of Lean Six Sigma modules – the inherent processes will evaluate your companies’ processes systematically for producing real and sustainable results. Also, the elimination of wastes, and overall improvement of efficiency around all operational areas, can significantly reduce costs with the proper safeguarding of customer satisfaction. 

Let’s See How! 

Lean Six Sigma’s improvement methodologies are efficient enough in reducing the number of defects.

  • We all are aware of the fact that defects result in enhancement of costs.
  • Beyond the factor of defects, companies suffer from losses due to the costs associated with poor quality. 
  • Some experts even believe that the average firm loses around 5% to 30% of gross sales due to the costs linked with poor quality. 

Yes, a Fortune 500 firm, in recent times, has calculated the figure at 8.6% of sales and has set an objective to reduce it to 5.4% - all with the help of Lean Six Sigma!

Eliminate these Costs with Six Sigma!

Given under are few costs that are associated with poor quality; they can be eliminated through Lean:

  • Scrape or salvage
  • Loss of customer loyalty
  • Lost sales figures
  • Higher risk of operation
  • Increased costs of administration
  • Returns and allowances
  • Lower morale of the employees
  • Warranty restores and replacement
  • Service calls; and more!

The Evolution of the “Lean” Concept 

The evolution of the concept “Lean” started with Henry Ford’s Model “T” assembly line. In this attempt, vehicles were moved to the assembler rather than assemblers moving to the vehicles. This attempt had helped the company attain higher volumes of manufacturing activities that got accomplished by moderately low-skilled workers; thereby heightening its profitability par imagination!

The concept of “lean” was taken to the next level by Toyota during the 1950s and 1960s. In this period, Ford’s mass production assembly line was made to adapt to a leaner process of automobile production. For enabling more customization to the process, small work groups or cells, as well as labor possessing multi-functional skills and components of Just-in-time (JIT) were incorporated by Toyota.

A Case Study! 

Since the year 2005, the US Army has utilized the standards of Lean Six Sigma with an aim of reducing costs. At the same time, it strives towards improving the effectiveness of its processes and meeting customer expectations. Here, the proven skills of Lean Six Sigma professionals were used for the logistics involved in moving forces, equipment, and support supplies out of Iraq and into Afghanistan. These professionals were brought in to analyze the objectives and constraints, and accordingly suggest the most prominent processes for ensuring greater efficiency. These experts noticeably enhanced the flow with an aim of eliminating delivery failures, and thus reducing the costs. 

The results! As a result of this awesome lookout of the US Army, in the year 2009, a surprising $3.8 billion savings in costs was reported. As per studies, most of the savings were due to the successful implementation of Lean Six Sigma methodologies.

Equation of Lean Six Sigma and Organizational Efficiencies

Literally, the equation signifies that Lean Six Sigma is aimed at improving the efficiency of your organization; this may be acquired by:

  • Optimizing the efforts of your organization towards delivering satisfactory products or service to all esteemed customers
  • Letting your organization allocate the resources or revenues generated from your recently enhanced processes for ensuring the growth of your business

In a nutshell, Lean Six Sigma is the improvement process that enables you to generate efficient processes. It is aimed at making your organization capable of delivering more products or services, with more number of satisfied customers than ever before. 

Potential Efficiencies of Lean Six Sigma

The aim of “Lean” is to achieve more with less - be it less human efforts, less machines, less time, or less space. The following are the latent benefits of Lean that pave the path for organizational efficiencies:

  • Decrease in lead time
  • Enhanced throughput
  • Lower requirement for inventory or idle stock
  • Reduction of wastages, thus cost
  • Improved engagement of employee
  • Enhanced level of customer satisfaction
  • Lower cost of implementation  

Are you ready to bring in more changes with Lean Six Sigma? Go for it!

 

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