Genpact _ Six Sigma Lean

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<p>QUalityDigestA Practical Approach to Lean Six SigmaBegin your Six Sigma odyssey with a tour of your backyard.by s. Bala</p> <p>I</p> <p>n its optimum form, Six Sigma is anything but simple or practical. Given its considerable upfront cost and ongoing complexity, its best viewed as a results-driven expedition of Homeric scope, one where the final destination is 3.4 defects per million opportunities. Its not a journey for the faint-hearted. You must be seriously committed to pursuing it for the long term, or youll never recoup your sizable upfront investment, let alone enjoy a net return. First and foremost, an effective Six Sigma program creates a high definition data picture where the subtlest defects literally jump out at you. Its all about mapping as-is processes, engineering a depth and richness of picture clarity that lets you draw the most accurate map possible. This meticulous defining of an as-is landscape is an inviolate first step for truly optimizing a process. Such a mapping expedition demands that you collectand put in high-definition focusa staggering amount of statistical pixels. Without this requisite definition, the measurement, analysis, improvement, and control meant to follow are irrevocably compromised. If theres a practical Six Sigma truth, its this: Organizations lacking the determination, patience, and financial wherewithal to painstakingly define the landscape shouldnt bother setting out on the trip. Of course, many skittish managers settle on just that sort of opt out approach. Quality leaders in smaller enterprises (from a few dozen to a few hundred employees) are particularly quick to</p> <p>surrender Six Sigma ambitions without a protracted fight. Typically, theyll run the numbers to roughly budget what their initial investments in traditional Six Sigma programming might be. Soon after, they determine that, relative to their more modest organizational scale, the cost is too steep, and the degree of granular insight delivered is more than they need at that time. Simply put, the enterprise hasnt yet reached a maturation point where the cost/benefit of a full-out Six Sigma effort can be justified. That smaller enterprises should be reflexively risk-averse to investing in big Six Sigma initiatives is wholly understandable. When devoting money and muscle to deep-defining activities, the smaller your organization, the less time it takes to feel like youre in over your head. But thats no reason to give up on Six Sigma entirely. Organizations with less economy of scale and fewer financial resources have a more practicalsome might say more sveltebeginners option. Im talking about lean Six Sigma. Developing a leaner picture Where Six Sigma is all about depth of field, lean Six Sigma is about breadth. Think of the latter as a new 50-inch TV and the former as the HDTV broadcast service that you might eventually pipe through it, if and when finances allow. The widescreen, lean picture neednt deliver depth of clarity to yield early and rapid improvement. It merely needs to be wide enough to deliver a panoramic vision you didnt have before.</p> <p>RepRint</p> <p>Building on this metaphor, a highdefinition picture isnt worth much if the screen on which its displayed isnt wide enough to show all the major process steps. For a smaller enterprise, field of vision is much more important than sharpness of vision, at least to start. Consequently, smaller enterprises that successfully map a low-definition but complete picture on a new and much larger lean screen enjoy vastly improved vision at a relatively small expense. In short, for a smaller company thats never invested in any kind of wholesale quality initiative, lean is a great place to start. However, such companies must acknowledge that the bulk of their lean gains will come early, and theyll see diminishing returns without an eventual deeper commitment to Six Sigma and the granular level of information and insight it can produce. That said, whether youre a smallish regional enterprise or a Global 500 company, it always makes sense to invest in leanthe big screenbefore committing to the high definition of Six Sigma. As a onetime quality leader with GE, Id venture to say that if the company could turn back the clock, it, too, would adopt a lean approach first, followed by Six Sigma. Think of lean as the proof of concept, which, positioned correctly, engenders wholesale confidence in the broader precepts of Six Sigma. Such confidence, in turn, ensures faster enterprisewide buy-in for the deeper dive into Six Sigma efforts when the time comes.</p> <p>lean expert). Your own unaided eyes than 3.4 defects per million opportuniwould, in fact, help more than any geolo- ties. Lean, in contrast, seeks only to gist, provided that they could take in a full, broadly map value- and nonvalue-adding unobstructed view. process steps with the modest goal of Again, the lean goal in redesigning enhancing process performance, not fully the organizational landscape isnt to optimizing it. map terrain for optimal land use; its to To revisit my backyard metaphor, the chart a path through the backyard that optimal solution may well be to go in yields a major improvement in produc- with a backhoe and level the entire lot tivity from the status quo. In this case, (i.e., troubled process). But what if there theres no need to retain an environ- are obstacles lurking beneath the surmental expert to distinguish swamp from face that you didnt know about before solid ground. A thorough and thoughtful walkthrough of the property will do well enough to pinpoint Know &amp; Go soft spots from terra Pure Six Sigma is anything but simple or firma. practical, but when you need to drill down</p> <p>When to go lean</p> <p>Surveying the backyardAlthough lean Six Sigma processmapping tools have significant limits, if the organizational landscape under scrutiny is relatively smalland the surface defects to be identified are comparatively largethese limits are actually an advantage. Say that, metaphorically speaking, you want to survey your backyard (or back office) to identify the major obstacles that limit the amount of usable land (or productivity) that you have. Bringing in a geologist to analyze the composition of the soil and boulders strewn about is not only overkill, its also counterproductive. The geologists services would be less useful to you than those of a professional surveyor (the</p> <p>Having the needed focus to recognize large process obstacles that hide in plain sight is all well and good. But from a practical standpoint, such breadth of vision and keenness of observation is only useful to the extent that you can communicate it to others. This brings us to a crucial step in any practical approach to lean Six Sigma: articulating the business problem. There can be no meaningful improvement unless those materially involved in a problematic process feel a need for change. Ask yourself, Can I illustrate a need so process stakeholders fully comprehend it and feel motivated to act upon it? Then ask, Do I have the data to clearly define the full depth of the problem? If you answer yes to the first question and no to the second, you lack the high-definition picture to leverage traditional Six Sigma and should instead use a lean approach. Bear in mind that full-out Six Sigma strives to remove all process variation until its rendered reliably repeatable without defect, or at least without more</p> <p>and mine information at a granular level, the methodology delivers optimal results that cant be obtained by other means. Smaller enterprises with less economy of scale and financial resources have a more practical option: lean. Full-scale Six Sigma is about depth of field while lean is about breadth. Rather than try to eliminate all defects to optimize a process, lean broadly maps valueadding and nonvalue-adding steps with the more modest end game of improving it. Lean vision is useful only inasmuch as you can communicate the need youve identified and motivate stakeholders to act.</p> <p>starting? Moving ahead with your wholesale reengineering plan without knowing where all the underground gas lines and oil tanks are might lead to costs far exceeding any expected benefit. On the other hand, if you stick to mapping the surfaceand recognizing above-ground performance barriers that dont readily reveal themselves as obstaclesyou can see real and immediate improvement. Good surface mapping will also allow you to identify simple modifications that take advantage of the visible terrains natural contours. Once stakeholder understanding and buy-in is secured for this prag-</p> <p>matic approach, the lean processimprovement facilitator must draw out the previously unvoiced insights of each constituency and then leverage their unique expertise.</p> <p>A practical approachSince joining Genpact Ive seen lean improve transactional processes well outside the manufacturing arena, where Six Sigma got its start. Working with a leading hardware and systems provider</p> <p>to retail banks, for example, we brought various fulfillment-process stakeholders together to identify major breaks in how product was ordered. Because the companys market included everything from community banks to global powerhouses, customer accounts usually ranged from a few hundred dollars to hundreds of millions. Individual customer orders were equally broad and varied. Therein lay the problem. The complexity of completing a seemingly endless stream of highly detailed order requirements of differing size, geographic scope, and technical requirementwhile dealing with myriad internal and external</p> <p>stakeholderssignificantly boosted odds of errors. Competing process goals among stakeholders only made matters worse. Salespeople wanted to satisfy customers needs for speed. However, hastily initiating a less-than-complete order made for a lot of back-and-forth alterations later. This protracted process involved, on average, five change orders per final completed sale. Figuring out how to address routinely complex, frequently incomprehensible (and ever subject to change) orderfulfillment policies created plenty of churn between sales, sales order support, and order administration personnel. To help employees in those three areas appreciate each others frustrations and reconcile them with their own, our facilitators led a series of roundtable exercises where members of each constituency were invited to speak candidly and listen to the others. A technological solution was eventually deployed that allowed mass customization and order reconciliation from any entry point where orders were input or updated. Yet the underlying challengegetting salespeople to feel as accountable for completing full and accurate orders as for signing businessremained. To address it, regional sales managers were armed with metric dashboards that enabled them to track the completion rate on all orders any sales rep generated. A newly revised sales-order-volume credit policy that affected compensation was fine-tuned so that only dollars from completed orders were factored. The result? Even when salespeople rely heavily on support or administration staff to drive orders to conclusion, they remain highly motivated to quickly clarify related information whenever asked. On the back end of fulfillment, lean mapping identified where the highest concentration of change orders were: 30 percent emanated from a single large customer. From there, facilitators organized nine distinct kaizen, or continuous improvement, events. Through such consciousness-raising, all stakeholders came to understand what had to be done, by whom, and why. They also came to understand how theyll be measured and held accountable for delivering, or not.</p> <p>This is but one example of how to spot and motivate others to remove the notso-obvious obstacles that clearly impede process performance in your organizations backyard. You dont need a high-definition TV to see the surface defects, or a backhoe to make the terrain more easily traversable. All you need is widescreen vision that takes in the full breadth of the situation. Assembling a collection of open minds and strong arms doesnt hurt, either. You want people who, after studying a situation, can recognize those big, hidden-in-plain-sight obstacles, blaze simple shortcuts around them at first, and quickly remove them from the landscape later on. Remember, with lean youre not ripping up the backyard overnight but gradually rearranging the major environmental elements over time. You want to recruit process stakeholders who are thoughtful about whats possible in a perfect world, yet honest about your companys cultural tolerance and financial appetite for funding process improvement. Revolutionary process change is nice when you can get it (and get it right), but if youre going to go lean, ultimately you must be ready to adopt a mindset of championing continuous and incremental improvement thats as practical as your actual approach.</p> <p>About the author S.Balaissenior vice president of reengineeringservices at Genpact, an $800-million, India-based spin- off of GE that m a n a g e s bu s i nessprocessesfor companies worldwide. As a GE quality leader from 2002 to 2006, Bala guided 20 growth-oriented Six Sigma projects responsiblefor$2billioninincremental sales volume and $50 million in net income. The 100-person reengineering teamthathecurrentlyleadsisembedded at client locations on every continent exceptAntarctica.QD</p> <p>CommentsSend feedback to s.bala@genpact.com</p> <p>For detailed information on our Lean Six Sigma process improvement capabilities, visit Genpact.com and site search the keyword phrase: Genpacts Global Reengineering Practice</p> <p>Reprinted from QualityDigest, July 2008. 2008 QCI International. For subscription information, call (530) 893-4095, e-mail subscriptions@qualitydigest.com, or visit www.qualitydigest.com.</p>