Six sigma and lean thinking analysis

They are two different but popular and powerful tools for improving quality. Motorola provided the basis for Six Sigma which aims to reduce the variation in processes. On the other hand, Toyota Motor Corporation created lean thinking with an objective of eliminating waste (non value adding activity). However, rather than being contradictory, these two concepts are complementary. As George (2002) stated, it does not matter how you start, if an organisation wants to achieve high quality and speed and, low cost, it must learn the other half, this is because lean is unable to make statistical control of a process and six sigma cannot improve speed of the process or reduce the invested capital. As a result, both lean and six sigma organisations have some sort of improvements by implementing the other half. Lean Six Sigma (LSS) may also create some disadvantages which is due to changing the culture towards continuous improvement.

This paper is going to describe each system with their advantages and criticisms. Then, some examples from different industries will be introduced. Discussion will follow with an analysis of advantages and disadvantages that may gained with the implementation of LSS. Finally, a suggestion will be made for further research.

2. Review of literature

2. 1 Six Sigma Overview

Motorola was the inventor of the Six Sigma concept since the company wanted improvements in key processes’ performances, productivity, quality and simultaneous reductions in costs ( Bhote and Bhote, 1991).

Motorola is producing complex products with large number of parts which lead to high defect rates for the end product, so continuous improvement is a need in the manufacturing process to decrease the amount of defects. Dale et al.( 2007) claimed that this complexity is the main reason for the invention of the six sigma concept and there is also external reasons such as the voice of customer.

Sigma is a term representing the variation from process average and described as having less than 3.4 defects per million opportunities which is equal to 99.9997% success rate from the statisticians’ point of view ( Antony and Banuelas, 2002).

Traditionally, operations was operating at three sigma level which has a success rate of 93% or 66,800 defects per million opportunities. Since higher sigma values decrease the amount of defects and also the costs of rework and scrap ( Dale et al., 2007), Six Sigma is a more rigorous concept than the traditional one (McClusky,2000). From a business point of view, six sigma is a strategy that enables businesses to create improvements in profitability and, operations’ efficiency and effectiveness in order to satisfy or delight customers’ needs and expectations ( Antony and Banuelas, 2001).

2.1.a. The Advantages

With the implementation of six sigma, organisations can achieve significant benefits. Those benefits may turn into competitive advantages for organisations because six sigma integrates the process knowledge with statistics, engineering and project management ( Kwak and Anbari, 2006). Besides, with six sigma, organisations learn to change their problem solving approach from reactive to proactive. According to The Six Sigma Group, the advantages of six sigma can be seen from two different sides (SeeTable1).

table 1

2.1.b. The Criticism

Based on the various literature research, it is possible to gather the criticisms into four headings.

The first criticism about six sigma is that “it is the new flavour of the month” (Dale et al, 2007). It is a rename for Total Quality Management (TQM). Six sigma and TQM have similarities such as focus on customer. However, Arnheiter and Maleyeff (2005) argued that Six sigma is a state-of-the-art because it adds new feature such as a comprehensive training structure and a broad definition of value which includes quality, service and delivery.

The second criticism is that it hinders creativity and innovation in processes because it has a structured and controlled process. However, according to respondents of a survey undertaken by van Iwaarden et al. (2008), six sigma is also beneficial for innovation.

Another criticism is six sigma is more suitable for manufacturing companies. Common idea is there are no defects to measure since service organisations are labour-intensive. However, experts stated it is a wrong point of view since six sigma advances both service efficiency and effectiveness ( Antony , 2004).

The last criticism is the requirement of investment and training. To implement six sigma, employees face an immense training to become Black or Green Belts. For instance, Black belts have a training session of minimum 20-25 days. This has a cost in terms of both time and effort which is a considerable investment especially for SMEs.

2.2 Lean Thinking Overview

The origins of the concept can be found in a Japanese Company: Toyota Motor Corporation. The lean thinking highlights the elimination of waste (“muda” in Japanese) , continuous improvement, efficient use of resources, good communication and teamwork as principles ( Womack et al., 1990). Therefore, it is represented as an alternative for mass production which can be characterized with large batch sizes and “hidden wastes” (Hines et al., 2004). Here, waste means any non-value adding activity and according to Toyota Production System, there are seven of them : overproduction, defects, unnecessary motion, inappropriate processing, transporting, waiting, unnecessary inventory. In order to identify and eliminate those wastes, lean thinking has five key issues (Dale et al., 2007):

Identifying Value

Mapping the Value Stream

Creating a seamless Flow

Establishing a Pull strategy

Continuously seeking Perfection

2.2.a. The Advantages

As Kilpatrick (2003) stated the improvements coming with lean implementation can be seen in three areas : operational improvements such as reduction in lead time, inventory ; improvements of administrative operations; and strategic improvement such as reduced costs.

2.2.b. The Criticism

The common criticism of lean is that it cannot deal with dynamic conditions. Lean needs a stable environment in order to maximize scale efficiency ( Andersson et al., 2006).

Other criticism is about the human aspect. Lean systems can be seen as exploitative and the reason for high pressure on the shop floor employees ( Hines et al., 2004). The continuous changes on processes can be challenging and employees may want to change the things as how they were before.

As a summary, it is possible to say lean and six sigma has both advantages and disadvantages which also create some similarities and differences between two philosophies (See Table 2).

Table 2

table 2

2.3 The Integration of Lean and Six Sigma

As it is mentioned earlier, lean has a focus on product flow and elimination of waste, while six sigma aims to reduce variability. Using either one of the philosophies in isolation may create diminishing returns at some point, when the combination may bring improvements in productivity( Arnheiter and Maleyeff, 2005) since Lean Six Sigma (LSS) aims to capitalize the strengths of the two philosophies and avoid the weaknesses of them (See Figure 1 ).

When six sigma is used in isolation, the focus is reducing the variation which may be the reason for losing the customer-oriented approach. On the other hand, being too lean may force organisations to lose the producers’ point of view. Therefore, the balance should be creating adequate customer value, while simultaneously having reduced the variation to acceptable levels( Pepper and Spedding, 2010).

Figure 1

Source: Arnheiter and Maleyeff (2005).

Although the literature about the subject is limited, there are some criticisms. Bendell (2006) is perhaps the most critical one due to his statement : ” this alleged combination is no more than a philosophical or near-religious argument about professed compatibility of approaches”(p.255).

Another view argued by Pepper and Spedding (2010) was , according to the solutions of the case studies conducted by Smith (2003), one approach became dominant in the process. Bendell (2006) was supporting the idea and saying that one of the approaches is the ‘dominate’ one which is usually six sigma , and the other is taken as the ‘subordinate’ one.

Another criticism is about not being suitable for service sector. All types of work whether in service or a manufacturing organisation consists processes. Since service is intangible in nature, this increases the difficulty of defining processes. However, as Snee and Hoerl (2009) stated the important thing is to identify the key elements of a process, then any type of processes will be seen as similar.

3. Findings

Although there are opposite views, most of the authors ( Byrne et al., 2007 ; Snee and Hoerl, 2009) believe that LSS is for both manufacturing and service organisations.

Xerox is one of the manufacturing companies that uses LSS. For Xerox DocuColor 8000AP, engineers used LSS techniques which resulted with rapid time to market and the tools made the company achieve improvements in quality, the number of satisfied customers, cost, speed of process and the capital that is invested ( Burgess, 2009). Burgess (2009, p.45) also claimed that ” ….when properly used over time, a source of sustainable competitive advantage. It creates consistent and efficient ways of performing tasks, riding processes of errors and redundancies”.

Furthermore, Caterpillar is one of the companies that receives the innovation advantage with LSS. Byrne et al. (2007) analyzed that Caterpillar’s goal is having ongoing, customer oriented innovation that’s why it started with a strategic vision leading a way for change, which also ended with product innovations such as low-emissions diesel engine with higher fuel efficiency. Moreover, with the redesign in production schedules, Caterpillar reduced lead times by more than 50% (Byrne et al. , 2007).

After LSS’s success in manufacturing companies, service organisations (public or private) such as finance, health care and logistics also wanted to achieve the same benefits. For instance, US Department of Defense (DoD) has implemented LSS in its services such as transportation in order to reduce lifecycle costs and improve readiness. US Army has changed its processes of repair line which resulted in a reduction of one machine’s repair cost by $41,000 (Apte and Kang, 2006).

Floyd Medical Center is another service that interested in LSS. They firstly started with benchmarking and educating staff, then created seven workouts resulted with 678 validated changes with a cost saving of $11.8 million and created lessons to learn from Floyd (Stuenkel and Faulkner, 2009) :

The approach must be top-down

Knowledge and training of methodology is crucial for all levels of organization

Although there are many examples of successful implementations of LSS, there are ones which are failed. One of them is National Health Service (NHS) in UK. Proudlove et al.(2008) stated that although the ideas about using LSS may be similar, the implementation which must be the focus of attention is a more significant issue. Furthermore, Montero (2010) said identification of processes are one of the lessons that must be learned from that case and as a result of the literature review, he listed some of the reasons why ,in general, LSS implementation fails (See Table 3). As a result, organizations need to be careful about those points if they want to implement LSS successfully.

table3

4. Discussion

In this section, the advantages and disadvantages of integration Lean and Six Sigma will be analysed by addressing how the two concepts can complement or contradict each other.

As Arnheiter and Maleyeff (2005) stated, the integration can teach lean organisations how to use a more scientific methodology towards quality and Six Sigma organisations can also increase their dependability and profitability by reducing lead times and increasing inventory turnover rate with the integration of lean philosophy.

Furthermore, George (2003) said there are three different areas that six sigma and lean complementing each other ( See Table 4).

table 4 son.jpg

As a result, by integration lean and six sigma, organisations find the tools for continuous business improvement ( Smith, 2003) and by adopting LSS, organisations reach improvements in their short-term financial performance and customer satisfaction and, also save money by decreasing costs ( Montero, 2010).

Another outcome of integrating lean and six sigma is a drive to innovation because LSS is forcing organisations to do things better by also focusing on growth ,not just on efficiency or effectiveness ( Byrne et al., 2007).

LSS aims to improve the processes which in turn improves the productivity. However, it has also disadvantages. One of the most common ones is that LSS needs high skills in order to implement the required tools and techniques (Montero, 2010). This drawback can also be related with one of the criticisms which is not being suitable to service organisations. In manufacturing organisations, engineers are selected as the backbones of the process due to their statistical and mathematical background (Snee and Hoerl, 2009). However, in service organisations, there are no engineers to make that calculations. Therefore, as Carreira and Trudell (2006) stated the crucial thing is having someone with certain skills.

Organisations may face with resistance to change or opposition which may be internal or external (competitors). For instance, lean requires a more breakthrough implementation when six sigma has its hierarchical levels in the organisational structure, therefore a culture clash is inevitable in the integration process (Smith, 2003).

Final criticism is claiming that LSS stifles innovation and creativity because it puts more work on employees and turn them into robots (Burgess, 2009).

5. Conclusion

Separately, Lean and Six Sigma have proved that they are powerful tools. As mentioned before, when six sigma is used in isolation, organisations may lose the customer viewpoint. Likewise if lean is used by itself, producer viewpoint might be lost. When they are integrated, they create a balance which result with acceptable variation levels and adequate customer value ( Pepper and Spedding, 2010). The question answered was the advantages and disadvantages that can be gained by the implementation. LSS aims to improve processes by eliminating waste and reducing the variation. These result in decreased costs, superior customer satisfaction which leads to higher productivity and financial performance. Many companies, regardless of the sector, had successful implementations and experienced the benefits of LSS. However, LSS has also its drawbacks such as requirement of high skills and culture clash. These disadvantages are obstacles to the success of LSS. To overcome these obstacles and achieve the benefits of LSS, organisations need to fulfill some prerequisites such as well defined processes and the adequate level of readiness.

For a successful implementation of LSS, literature review shows possible routes, however there is not a unique one that leads to success ( Montero, 2010). For further research, authors might analyze the organisations using LSS and how they implement it. This may help them find some correlations between a route or framework and successful implementations.