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Six Sigma and Lean Thinking

Lean Thinking
 What is Lean Thinking?
 As the name implies, it is a mindset -- a way of
viewing the world.
 Lean is about focus, removing waste, and increasing
customer value.
 Lean is about smooth process flows, doing only those
activities that add customer value and eliminating all
other activities that don’t.
 Adding value is another way of saying generating
revenue.
 If it doesn’t generate revenue then it must add cost,
not value.
 Sounds easy doesn’t it, after all, this is what we do
every day… or is it? Let’s see.
Lean Thinking

Lean Thinking is about smooth process flows, doing


only the things that add customer value and
eliminating other activities that don’t (Waste). There
are five basic steps in assessing lean operations:

3. Identify the activities that create value


4. Determine the sequence of activities (also called
the value stream)
5. Eliminate activities that do not add value
6. Allow the customer to “pull” products/services
7. Improve the process (start over)
Lean Thinking
 Lean Thinking is ideal for mature (energy), slow growth
(automotive), low transaction industries (small business)
or an organization where mathematical tools are not
common.

 Lean begins to use systems thinking and considers all of


the process interactions

 But lean is still a reductionism approach focused on


eliminating waste (cutting costs).

 What is needed is to balance the resources released


through Lean or Six Sigma improvement programs with
an increase in throughput and need for resources.
Otherwise you enter a cost cutting, job losing cycle and
your process improvement program will grind to a halt.
Six Sigma Vs Lean Thinking

Program Six Sigma Lean Thinking


View of Variation is waste Non-value add is
Waste waste
Application 1.Define 1.Identify Value
2.Measure 2.Define Value
3.Analyze Stream
4.Improve 3.Determine Flow
5.Control 4.Define Pull
Math-Statistics 5.Improve Process
Visualization
Tools
Focus Problem focused Process flow
focused
Six Sigma Vs Lean Thinking

Six Sigma is problem focused with a view that


process variation is waste.

Lean Thinking, on the other hand, is focused on


process flow and views any activity that does not
add value as waste.

Six sigma uses statistics to understand variation.

Lean uses visuals: process mapping, flowcharting,


and value stream mapping, to understand the
process flow.
Lean Thinking

 If you are in a mature, slow growth, low transaction, or


non-math business then Lean Thinking will work real well
for your organization.

 Six Sigma and Lean use two different approaches to get


the same end result – process improvement.

 The Theory of Constraints (throughput improvement)


takes the concepts of Lean Thinking to another level of
systems thinking
Lean Thinking

There are five basic steps in assessing lean operations:

1. Identify the activities that create value

3. Determine the sequence of activities (also called


the value stream)

5. Eliminate activities that do not add value

7. Allow the customer to “pull” products/services

9. Improve the process (start over)


Lean Thinking -Example

 For example, let’s take a look at the most fundamental


cycle within a lean operation, the order-to-delivery
cycle.

 The top level activities, in sequence, are taking an order,


building the order, and delivering the order.

 The activities that do not add value are such things as:
order entry, backlog, inventory, and shipping delays
 In a lean operation we could have the customer enter
their own orders; products made on demand, so we would
have no backlog or inventory, and then product could be
shipped overnight for minimal shipping delay
Lean Thinking -Example

 Companies with very short order-to-delivery cycles (and


not using inventory as a buffer) are lean operations. Lean
operations have a strong cash cycle.

 In general, the shorter the cycle the leaner the


operation.
Lean Thinking

Lean uses systems thinking and considers all of the


process
interactions, while utilizing the 5S system of
organization.

Unlike Six Sigma, it does not require a lot of


mathematical
analysis and works well for mature, slow growth or
low
Transaction business.
Six Sigma

Six sigma is all about variance reduction. By variance,


we are referring to the amount of control you have
over your processes. Another way to look at it is how
good you are at or forecasting the future outcomes of
a given process. Six Sigma uses a scientific approach
called DMAIC to analyze a specific problem. DMAIC
stands for Define, Measure, Analyze, Improve and
Control, which is also known as the learning loop or
PDCA.

Scientific and numbers-based organizations can


benefit the most from Six Sigma. If you are in a high
technology, high transaction, or expensive error
environment then Six Sigma could work very well for
your organization.