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Applying Lean Manufacturing To Six Sigma - A CaseStudy

By Niraj Goyal

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 caseSix Sigma techniques should be applied to solve some of the top line problems beforestretching 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 studyentitled "Six Sigma Case Study: Converting Paper to Electronic Documents." The paper material isquite heterogeneous in nature -- consisting of assorted magazines and legal papers.

The results obtained have obvious applicability to the back rooms of industries processing largeamounts of data -- IT enabled services, banks, insurance companies, hospitals, and computer basedoffice 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 thesame sequence as the project did pointing out the critical stages where results were achieved andwhere mindset changes occurred.

1. Define And Measure The Problem1.1) Selection of the problem: A meeting of the senior management of the company was held and abrainstorming 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 problemsthemselves

The realization that the first category of problems was the one to be attacked (customer focus) camespontaneously.

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 toimprove the turnaround." Immediately I intervened stating that turnaround is not dependent on

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capacity. The disbelief that stared back at me was but a reflection of the mindset prevailing and thetask at hand to change it.

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

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

1. Delayed delivery -- frequent customer complaints2. Peaking of incoming loads aggravates delays.

The other problems were set aside as they were causes of the customer problems rather thanintrinsic 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 wascollected two weeks on the turnaround time of documents to define the problem quantitatively. Thefollowing results were obtained:

Customer Requirement Of Turnaround Time: <5 daysCurrent State Average Turnaround: 5 dayssigma: 1 day3-sigma (99.7%) Delivery To Standard: <8 days

The interpretation of consistency of delivery (turnaround) using sigma created disbelief at first as thegroup struggled to understand the concept. Gradually however it was grasped -- the problem was notthe average turnaround, which was within the customer limit but the variability. This was the secondmajor mindset change and led to the definition of the goal: Reduce Turnaround time by 50% so thatits (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 tobe filled up and thought through. Standard times of each process per batch of 50 pages weretabulated in a specially designed check sheet. The team was amazed when the time for the valueadding 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 andcomparing it to the standard timings to find where time was being lost on a specially designed datasheet.

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With the data it took the group only a few minutes to draw a Pareto Diagram of delays and concludethree 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 GenerationThe old mindsets were shattered but the group was struggling to understand the concepts confidentlyenough to start applying them in regular production. An experiential simulation classroom exercise inwhich the group members participated was designed and carried out to experience the concepts firsthand. 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 cuttinginventory and scheduling the production cycle to flow in the current batch sizes would lead to theachievement of the goal. The whole chain was briefed about the new method and agreed on aschedule. 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 anenthusiastic buy-in of the concepts -- demonstrating my belief that nothing works better than results inaccomplishing mindset change. From then on it was difficult to restrain the group from pushing aheadtoo fast.

5. Implementing The Change5.1) 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 problemsolving.

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

6. Checking The ResultThe turnaround achieved was as follows:

 Average Turnaround Time: 3 dayssigma: 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 limits7. Standardization Of ControlControl charts were introduced and a special presentation on how to draw and interpret them wasmade to the line personnel. A Standard Operating Procedure with a concise reporting format was

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developed for regular review, management control and killing of any new causes of variability. Theteam 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 turnaroundthe 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 gainbut perhaps the most important one.

This Project is now in progress.

Conclusion -- Selling QualityThe 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 resultednot only in cost reduction, but also the possibility of presenting these improvement stories to thecustomer, building the reputation of the company as a leading supplier of quality, and therebyincreasing the probability of getting higher volumes of business.

About The Author 

Niraj Goyal has 25 years of rich and varied working experience in multinationals in various operatingroles, among them Operations Director, Cadbury India Limited, where he was exposed to and wasamong the leading implementers of the TQM movement. A few years back he set up his ownconsultancy, Cynergy Creators Private Limited. Mr. Goyal consults in India and US with a diversity of industries - training them and facilitating the implementation of the techniques of TQM and Six Sigmauntil the culture of continuous change is internalized. Further details about this article and assistancefor similar change initiation and implementation through training and facilitation can be obtained fromMr. Goyal at nirajgoyal@vsnl.in.