The article below introduces the Lean Six Sigma methodology and was written by my colleague Michael Skinner, Principal Pre-Sales Consultant and working on Analytics at Axway.
Lean Six Sigma is a business and process continuous improvement and management methodology combining two separate approaches: “Lean Thinking” and “Six Sigma”. Both methodologies originated in manufacturing industries, and came to prominence in the mid to late 1990s. Over the last 15 years both methodologies, individually and in combination, have been successfully extended to and adapted for service and other industries, including banking, insurance, telecommunications, healthcare and the public sector.
Although the focus of each methodology is different, with (at a very broad level) Lean Thinking focusing on speed of delivery and Six Sigma on accuracy, they are highly complementary and often used together as a combined approach to drive increased value and reduce costs. Both approaches use outside-in thinking and analysis of process data, especially type and frequency patterns, to:
- understand the current situation and identify existing problems
- identify root causes and changes needed, avoiding targeting improvement efforts on exceptions or one-off events
- confirm successful implementation of changes.
Originating in the Japanese motor car manufacturing industry, Lean Thinking is both a management philosophy and a set of improvement tools aimed at achieving excellence in customer service. Lean is built on five core principles:
- focusing on the customer and what they value (would be willing to pay for)
- removing non-value adding or “waste” activities (or “muda”)
- optimizing the speed (“flow”) of customer value through the process by removing constraints and bottlenecks, which can be either organizational or technical. In case of technical constraints, often due to integration issues, APIs play a significant role.
- simplifying and removing unnecessary complexity, and standardizing processes
- continuous improvement to create a “right first time” mindset and strive for perfection. On the IT sides, continuous improvement means ability to change rapidly and adapt to ever changing requirements, hence the need for a multi-speed IT organization.
Many Lean projects use a PDCA or PDSA (Plan-Do-Check/Study-Act) cycle for continuous improvement. Also known as the Deming or Shewhart cycle, after its originators.
There is a huge and growing array of Lean tools for finding waste and optimizing flow, and a major part of any Lean initiative is involving the frontline staff who actually do the process in finding the problems and implementing the changes needed.
Six Sigma is a quantitative, data-driven methodology, based on statistics, process understanding and process control, for delivering performance improvements and cost reduction by finding and eliminating errors (“defects” in Six Sigma terminology), and minimizing variation in process outputs to greatly improve process accuracy.
Six Sigma uses a 5-phase iterative approach known by its acronym, DMAIC, for identifying, implementing and managing process improvements. Six Sigma also has a methodology for developing new processes, called Design for Six Sigma (DFSS), and which uses a variant of the DMAIC approach called DMADV.
Six Sigma projects are run by trained teams whose members are ranked in colored belts based on their training and experience, ranging from Green to Black to Master Black Belt. This belt ranking system has been adopted by and extended within the combined Lean Six Sigma approach, with additional junior White and Yellow belts below the existing Six Sigma belts.
Six Sigma’s approach to improvement is to identify non-random or “special cause” variation in a process and remove it to improve the predictability of the process, before reducing the dispersion of (magnitude of variation in) key process measures, and then centering (aligning with expected values) those measures.
Extensive use is made of statistical analysis on samples of work flowing through the process, with a number of process performance and process capability measures (indices) calculated to measure values that may fall outside of required ranges. Performance measures how well the process works, capability measures how closely the process meets customer expectations.
In the next article, we will explain how combining real time analytics and Operational intelligence tools with Lean Six Sigma initiatives allows organizations to facilitates continuous improvement for new and existing processes, and enables identification of issues and business problems that would otherwise be difficult if not impossible to address.