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A Whitepaper from Juran
Lean Six Sigma
The Source for Breakthrough
5 Unexpected Ways Continuous Improvement With Lean Six Sigma Can Improve Your Company
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enabling global leaders to achieve measurable, breakthrough results. We provide best-in-class servicesdesigned to improve our clients organizational performance and business results. Improvement is our business,
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2 5 Unexpected Ways Continuous Improvement With Lean Six Sigma Can Improve Your Company
For most organizations, the terms Leanand Six Sigma mean measures andmethods of quality that strive for near-perfection. Lean focuses on minimizingwaste in processes, products, andservices, while Six Sigma focuses onreducing the variability and causes ofdefects. They are both highlydisciplined continuous improvementprocesses that help companies createand sustain competitive advantages.
The essence of Lean is that anyexpenditure of resources for any goalother than the creation of value for theend consumer is wasteful and, thus,should be eliminated. Value isanything the customer would bewilling to pay for. The ultimate goal ofLean is to provide perfect value to thecustomer through a perfect valuecreation process that has zero waste.Accomplishing this requires thatorganizations whether service,manufacturing, or healthcare optimize the flow of products andservices through entire value streamsthat flow across technologies, assets,and departments to customers. Theresult is the ability to respond tochanging customer demands whilemaintaining high quality, low cost, highvariety, and enhanced throughputtimes.
About Six Sigma
While Six Sigma also enablesorganizations to pursue perfection, thefocus is not on removing waste, butrather on using statistical and qualitymanagement methods to identifydefects and errors andminimizing variability in manufacturingand service business processes. SixSigma projects follow a series ofprescribed steps to achieve specificquantified targets, such as reducingbilling errors, manufacturing defects,or increasing customer satisfaction. Toachieve Six Sigma quality, a processmust produce no more than 3.4defects per million opportunities. Anopportunity is defined as a chancefor nonconformance, or not meetingthe required customer specifications.This means that for a process to reachSix Sigma, it has to be nearly flawless.
Six Sigma uses two sub-methodologies: DMAIC, which standsfor Define, Measure, Analyze, Improve,and Control, is used for existingprocesses; DMADV, which stands forDefine, Measure, Analyze, Design, andVerify, is used for new processes.
5 Unexpected Ways Continuous ImprovementWith Lean Six Sigma Can Improve Your Company
3 5 Unexpected Ways Continuous Improvement With Lean Six Sigma Can Improve Your Company
Together, Lean and Six Sigma orLean Six Sigma provide acomprehensive set of methods andtools that enable organizations toimprove quality and reduce costs allfor the ultimate goal of continuousvalue creation for the customer.Certainly, these are strategicadvantages for any company.However, there are five additionalbenefits that Lean Six Sigmacompanies enjoy.
#1: Strategic Planning
Strategic planning is driven by anorganizations mission and visionstatements, with the mission statementfocused on why the organization existsand the vision statement articulatingwhat the organization hopes toachieve. The very best strategic planstranslate the vision statement toquantifiable and measurableobjectives, such as increasing marketshare or reducing employee turnover.Lean Six Sigma can accelerate thepace at which those objectives areachieved.
For instance, if a company objective isto increase market share, one strategymight be to lower prices by reducingcosts, another strategy might be toreduce product or service complaints,and a third strategy might be to addproduct or service features andbenefits that will hold the price level.
Whatever the strategy happens to be,Lean Six Sigma can help make yourcompany the best at what it does.
As organizations reduce waste andvariation from their processes, thenoticeable effect is that it increasesemployee productivity. This happensfor several reasons. First, with lesswaste and less variation, there is lessrework. When you get it right the firsttime, you dont spend time fixingerrors. Imagine if your billingdepartment operated at Six Sigmalevels, meaning that a billing erroroccurred just once every couple ofmonths (depending on how many billsyour company processes and thenumber of line items on each invoice).The number of hours required tocorrect erroneous bills would drop tonear-zero, which means you wouldeither need fewer billers or couldprocess more bills without addingstaff.
Second, Lean Six Sigma forcesorganizations to rethink how work getsdone, which creates naturalefficiencies. Departments that oftenwork collaboratively are moved closertogether, supply rooms are eliminatedas inventory moves to just-in-time-models, paper processes areeliminated for more efficient electronicmethods, and more. Every time wasteor variation is removed from a process,
4 5 Unexpected Ways Continuous Improvement With Lean Six Sigma Can Improve Your Company
it makes those who interact with theprocess not only more effective, butalso more efficient and greaterefficiency leads to higher productivity,which allows organizations to growwithout adding employees, oreliminate vacant positions that are nolonger needed.
#3: Employee Satisfaction
With increased employee productivitycomes increased employee motivation,as well as higher employeesatisfaction. Employees who donthave to fight through poorly designedprocesses, devise work-arounds to getthings done, or spend time on non-value-adding steps are moremotivated and happier. But this isntthe only employee benefit. Asorganizations imbed Lean Six Sigmainto the fabric of their companies,employees naturally become moreattuned to identifying waste andvariation, as well as seekingopportunities to improve quality andcreate additional customer value.
For organizations that have taken amethodical approach to implementingLean Six Sigma, the result is usually thetransformation of employees intoimprovement experts. When all ofyour employees are actively involved increating customer value by seekingopportunities to remove waste andvariation in processes, the sustainablecompetitive advantage is enhanceddramatically. Not only that, employees
see their roles within the organizationas more than just the duties defined bytheir job descriptions; their jobs arenow aligned with the mission andvision of the organization. When thathappens, employee motivation andsatisfaction rise, too.
#4: Customer Loyalty
Imagine a company that was adept atcreating customer value, reducingdefects, reducing variation in itsproducts and services, increasingfeatures and benefits, offering a highvariety of options at little to noadditional cost, and increasing thespeed at which the products andservices were delivered. That companywould certainly enjoy high customersatisfaction, which translates to equallyhigh customer loyalty and retention.
Thats not all. Organizations that areskilled at Lean Six Sigma also discoverthat their customers become powerfulreferral sources. Customers not onlymaintain a loyalty to the organizationsproducts and services, but they alsooften become raving fans, tellingcolleagues, family, and friends abouttheir experiences.
#5: Supply Chain Management
What mature Lean Six Sigmacompanies usually discover is that tocontinuously improve processes,suppliers must eventually becomeintegrated into their qualityimprovement initiatives. To fully
Organizations that areskilled at Lean Six
Sigma also discover thattheir customers become
5 5 Unexpected Ways Continuous Improvement With Lean Six Sigma Can Improve Your Company
reduce waste and variation in yourprocesses, your suppliers must reducethe waste and variation in theirprocesses, too. For instance, if 25% ofone suppliers product is regularlyreturned because it doesnt meet yourspecifications, this increases yourcosts, decreases cycle time, reducesemployee efficiency, and more. Evenworse, there is a greater likelihood thatone of your suppliers defective partsmakes it into your inventory and iseventually passed on to a customer.
Involving every aspect of the supplychain beginning with your suppliers becomes a tremendous competitiveadvantage. Whether your suppliersimprove their processes, or you drivedown the number of your suppliers or both the ripple effect it hasthroughout your organization cannotbe overstated. This is why the mostsuccessful Lean Six Sigma companiesmove as far up the supply chain aspossible sometimes even having asupplier move its facilities next door because ineffective supply chainmanagement can cause theorganization to become infected bywaste and variation.
The Organization Health Check
Juran Globals Organization HealthCheck analyzes internal andenvironmental factors critical to yoursuccess in todays volatile marketplaceand compares them to performanceexcellence industry standards. You getmeaningful data on your organizationsstrengths and weaknesses that canhelp you close the gaps and achievesuperior quality and sustainableresults. With more than 1,000assessments completed, we have theexperience and insight that