There is an ongoing debate in some organizations regarding the difference between lean and six sigma, and whether they are mutually exclusive. Toyota, in particular, is credited with making lean a well-known approach as embodied in the Toyota Production System (TPS). Lean is about eliminating wastes, taking time out of processes, and create better flow. Taiichi Ohno summarized the essence of lean (TPS) as “All we’re trying to do is shorten the timeline from order receipt to collecting the cash for the goods or services provided.”
Six Sigma has been defined in a variety of ways. One definition states, “Six Sigma is a business strategy and philosophy built around the concept that companies can gain a competitive edge by reducing defects in their industrial and commercial processes.” There are some explanations from the points of view of lean and six sigma purists. From Improvement perspective, Six Sigma reduces variation and Lean reduces waste. Six Sigma aims at a process performance of 3.4 Defects per Million opportunity and Lean focuses on improving speed.
Six Sigma has a flare to improve the cost of poor quality and Lean improves Operating costs. Six Sigma has a longer learning curve and lean has a shorter one. Six Sigma uses various approaches to process improvements whereas lean mainly use value stream mapping. The project length for a six sigma project is 2 to 6 months and for a lean is 1 week to 3 months.
Data is the main driver in a six sigma project while demand is the main driver for lean. Six Sigma projects are of higher complexities while Lean projects are of moderate complexities.
Should six sigma and lean coexist in any organization?
The answer to this question is self-evident and it is “Yes”. Lean approaches should precede and coexist with the application of six sigma methods. Lean provides stability and repeatability in many basic processes. Once stability has taken hold, much of the variation due to human processes go away. The data collected to support six sigma activities thereby become much more reliable and accurate. Lean and six sigma tools can be depicted on a linear continuum with lean six sigma in the middle.
Major business problems fall into the following categories:
There seems to be a lot of waste
There is a need to minimize inventories and redundancies
There is a need to improve workflows
There is a need to speed up processes
There are human mistakes
If so, then lean tools should be utilized to:
1. Simplify processes:
If processes are more complex, we would require a highly trained task force to execute the activities of those processes. Hence, processes should be simplified as much as possible and Lean tools could be used to do that.
2. Increase speeds:
Speed is a very important factor for the customer. If a speed component is improved, it has a direct correlation with customer satisfaction.
3. Improve flows:
If the flow of product is not streamlined during the production phase, it could lead to bottlenecks, increase in idle time and much more. Hence, wherever possible, Lean tools should be used to improve flows within our processes.
4. Minimize inventories:
Inventories are critical aspects of a given process. Larger inventories lead to higher costs of real estate, it also leads to raw material wear and tear and much more. Similarly, smaller levels of inventories lead to a halt in production due to non-availability of raw materials when required.
Lean is effectively used to reduce or eliminate mistakes in given processes. However, if organizational challenges exhibit the following attributes:
There are quality issues
There is an excessive variation
There are complex problems
There are challenging root cause identifications
There are numerous technical considerations
In these cases, six sigma tools should be utilized to:
Apply scientific problem-solving
Utilize robust project chartering
Focus on quality issues
Employ technical methodologies
Most executives recognize that they have a combination of both sets of issues. Placing lean six sigma in the middle of this continuum reflects a more holistic and synergistic approach. If a specific problem requires only lean or six sigma tools, then that is perfectly okay. Lean six sigma is a relatively new paradigm providing a broader selection of approaches.
An increasing number of organizations (manufacturing, service, hospitals, municipalities, military, insurance, etc.) have been unifying their efforts into a lean six sigma approach. The mechanisms of these combinations vary widely. The most effective approaches include management direction and involvement, a cadre of trained specialists, the use of teamwork, the use of project management, team member training, the humane treatment of people, an understandable problem-solving methodology, and some mechanism to apply the appropriate tools.