Operational Governance Knowledge Flashcards No. 13/19

Lean + Six Sigma

From the Operational Governance flashcard deck; today this discipline goes by BizOps. The original card is republished here as a field note.

01 What is it

A combination of two famous frameworks to: eliminate WASTE (Lean) and eliminate ERRORS (Six Sigma).

Lean is a set of techniques and principles to focus on value creation with minimal waste (remove unnecessary steps, resources, etc.). Six Sigma is a set of techniques to guarantee consistent output quality (total errors < 6σ — six “standard deviations” from the mean).

02 When is it useful

When you need to improve processes in order to cut costs or improve quality consistently.
When you need to professionalize process execution to make it more resilient to organizational changes.

03 How to use it

Carefully select which processes will get the Lean Six Sigma treatment, and which will not.
Carefully select what to implement from a battery of well-known tools and best practices, according to your needs. Train the personnel to use them (or hire expert “black belt” consultants) and start using them.
Have change management elements in place, because there will be organizational inertia against the changes.

04 The two toolboxes

Six Sigma

Concepts: sigma = standard deviation = σ = dispersion from the mean. Achieving 6σ implies that 99.99966% of process outcomes are error-free.

Methodologies: DMAIC (Define, Measure, Analyze, Improve, Control) and DMADV.

Tools commonly associated with Six Sigma (and Lean):

[Define] SIPOC analysis — Suppliers, Inputs, Process, Outputs, Customers
[Define] CTQ tree — “critical to quality” (voice of customer VOC → CTQs)
[Define/Measure] Business process mapping / check sheet
[Measure σ] Control chart / control plan (a swimlane map) / run charts
[Analyze] Root cause analysis
[Analyze] Cause-and-effect diagram (fishbone or Ishikawa)
[Analyze] 5 Whys — ask “Why?” five times
[Analyze] Histograms / Pareto chart — 80% of effects come from 20% of causes
[Control] Design of experiments / stratification
Statistical and fitting tools: analysis of variance, general linear model, ANOVA Gauge R&R, regression analysis, correlation, scatter diagram, chi-squared test
Axiomatic design
Cost–benefit analysis
PICK chart, process capability, rolled throughput yield
Quality Function Deployment (QFD)
Quantitative marketing research through Enterprise Feedback Management (EFM) systems
COPIS analysis — the customer-centric perspective of SIPOC
Taguchi methods / Taguchi loss function

Lean

Concepts: Muda = waste = 7 (+1): defects, overproduction, waiting, transportation, inventory, motion, over-processing — plus non-utilized talent.

Tools commonly associated with Lean (and Six Sigma):

Kaizen — a paradigm of continual improvement: “Plan → Do → Check → Act” (also known as the Shewhart cycle, Deming cycle, or PDCA)
Value stream process mapping — document, analyze, and improve the flow of information or materials that produce a product or service
5S — a workplace organization method to standardize identification, storage, use, and maintenance (seiri, seiton, seisō, seiketsu, shitsuke — sort, set in order, shine, standardize, sustain)
Kanban — a demand-driven scheduling system that limits inventory buildup through “cards” that signal the need for more inventory
Gemba — walk the production floor and see directly
Poka-yoke — error proofing (originally baka-yoke, “idiot-proofing”)
Productive maintenance
Set-up time reduction
Reduce lot sizes
Line balancing
Schedule leveling
Standardized work
Visual management — put key information visible to everyone
Value stream mapping — a map or flowchart of what adds value to an outcome

05 Common pitfalls

Expecting results from a mediocre implementation (using only some tools, sometimes, but not rigorously nor consistently).
Not knowing how to translate these best practices from the last century (manufacturing-oriented and tangible) to the current, more service-oriented and intangible business environment.
Thinking these are project management tools in general — use them for process management projects.

The original slide closed on this trap with a Dilbert strip: a manager announces he'll "fuse Six Sigma with Lean methods to eliminate the gap between strategy and objectives" — and settles for calling it "waste of time." Scott Adams, dilbert.com, January 2007. Not reproduced here for copyright reasons.