Improvement methodologies

Learn how to do the right things to fuel you business by avoiding waste, boosting your financial performance, managing the flow of goods and services and focusing on what really needs to be done.

Lean is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, “value” is defined as any action or process that a customer would be willing to pay for. Basically, lean is centered on preserving value with less work.

It derived mostly from the Toyota Production System (TPS) and it has been identified as “Lean” only in the 1990s. It is a management philosophy renowned for its focus on reduction of the original Toyota seven wastes (Muda, in Japanese) to improve overall customer value.

Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization (“Black Belts”, “Green Belts”, “Yellow Belts”) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps – which constitute a roadmap for project execution – and has quantified financial targets (cost reduction or profit increase).

Lean Six Sigma is a business improvement methodology which combines tools from both Lean and Six Sigma. Traditionally, Lean focuses on speed, through the elimination of unnecessary process elements, and Six Sigma focuses on quality, through the pursuit of process control.

However, Lean alone can’t typically achieve process control, and Six Sigma alone can’t significantly reduce lead times. Whenever “Quality only” Six Sigma is applied to reducing variation in a single process step or to processes which are not value-added to the customer one runs the risk of “sub-optimizing the total” in order to “optimize the local.”

Conversely, whenever a value stream is mapped according to traditional Lean/Just-in-Time practices – especially in service organizations – the lead-time (or work-in-process) estimates do not typically incorporate the natural variation that can occur throughout a period of time, i.e., they do not reflect the range of values that would be characterized by collecting a representative sample of value stream maps. This could in turn, lead to the under – or over – estimation of certain inefficiencies.

Ultimately, by combining Lean and Six Sigma, the result is better quality and reduced lead times. System effectiveness integrates with the control of critical points in the value chain.

Managing the flow of goods and services – including the movement and storage of raw materials, of work-in-process inventory from point of origin to point of consumption – is not an easy task. The increasing importance of Supply Chain Management in our global economy is driving the need for professionals with skills that can help them promote the flow of value to the customers with efficiency and reliability.

A chain is not stronger than its weakest link. Similarly, according to TOC supply chains, processes, organizations, and manageable systems in general are vulnerable because one or a few elements (the constraints) may limit their ability to achieve their maximum potential. Focusing on constraints first just makes sense!

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