“WASTE & VARIATION” inherent in all processes.

slide62Productivity usually makes all the difference to a company’s bottom line, but “WASTE & VARIATION” are inherent in all processes. High-performing companies excel in part because they execute day-to-day business processes better than their competitors. Creating and defending operational advantage is both more important and more difficult to achieve than ever. It requires mastering repetitive processes that deliver value to customers, the organization itself and shareholders.

Leanis about changing culture in the organisation,

  • it is a systematic approach to identify & eliminate waste through continuous improvement, creating flow at the pull of the customer in pursuit of perfection.”
  • It is a Philosophy of continuous improvement that is learned by doing.
  • Lean is about “Tacit” knowledge, not explicit procedural knowledge,

Six Sigma is a disciplined methodology to eliminate ‘Variation’ from  any  process based on statistical thinking of Defining, Measuring, Analyzing, Improving and Controlling the quality of products, processes with the goal of eliminating virtually all Defects.

Lean Six Sigma” is an approach for Business Performance Improvement that blends the benefits of both Lean mfg. and Six Sigma. Lean focuses on eliminating waste from a process, reducing mfg. lead times adds value to the customer. Six Sigma’s strength is to streamline processes by reducing variation. The goal is to make ‘Zero Defect’ parts. Lean concepts six sigma tools are simple yet very powerful requires high commitment to practice & work towards common GOAL. Lean and Six Sigma complement each other, as Lean accelerates Six Sigma, delivering greater results than what would typically be achieved by Lean or Six Sigma individually.

Lean + 6s = Reliable Quality@ High Speed

 Implementing lean & six sigma can really help because it pushes lean down to everyone involved,” lean concepts have significance for everyone from the management team to machine operators in the Gemba. It allows everyone to demo their skills, requires clear and enough understanding in the lean systems & six sigma tools before going ahead with implementation.

In today’s highly competitive world where organizations facing rising costs every day, Lean Six Sigma allows to combat problems in a systematic manner and grow. It requires high commitment from Top management because the organization experiences a Paradigm shift in fixing products & Processes, so they produce the Quality as coveted by the customer.

The Most Important Questions!

lean“LEAN” is nothing but following simplified processes to perform and to get desired output.
But …..
Does in real everyday manufacturing this concept really works and yield expected results??!!!!

Is it much easier to follow the specified techniques of Lean and The organization will achieve expected results by just following Lean concepts??!! Does Lean manufacturing implies only to people who works in production lines?? Lean manufacturing results in reduction of resources [Especially Man]?? How an automated manufacturing unit can implement lean manufacturing method??

When we use the word Lean manufacturing thousands of such questions will arises in receiver’s mind. Does as stated Lean Manufacturing is really simple?? No, the question will lead to the history and origin of Lean concept. Lean manufacturing derived from the concept of “Toyota Production System [TPS] “, during period of World War II. TPS was framed on the basis of two elements Standardized work and Kaizen [Continuous improvement] and supported by two pillars JIT [Just In Time] & JIDOKA [Self Reliance]. From this stage to today many improvements were made in lean manufacturing and at present days lean is not only considered just as a method, but it is considered as a Philosophy.

The primary purpose Lean manufacturing is to satisfy and exceed customer expectation. What does customer expects?? It is very tough question to answer. But many philosophers, Guru’s considered concept “Customer is King”. Customer problems can be co-related with ICE BERG [We can only look at the surface level problems but there’ll be several submerged or hidden problems which exists]. Lean manufacturing tries to answer actual customer problems.

Second purpose is to attain Quality of the product, any product which we produce should be free of defects and Lean manufacturing focuses on defect free production system to achieve continuous high level Quality as specified by customer. Third purpose is to reduce lead time of the process, it results in increase in cash flows and increases flexibility to respond varied customer demands.

Last but not least, Lean encompasses on saving on resources, it aides to differentiate between “Values” and “Non Values” in process. For E.g.: Think of collecting print out paper from the printer. Our main purpose is to collect paper [Value], but the process involves getting out of the seat, move to printer, collect required paper and return to seat [Non Value]. Lean manufacturing helps us to reduce/eliminate these Non value added activities and increases the output of the process.

Key elements of Lean Manufacturing include, PDCA technique [Plan – Do – Check – Act], Empowering people [No need to reduce people], Eliminate waste [Consider working smart than working hard], Make process as simple and as visible as possible [easy to understand and identify problems], focus on built in quality [Defects should be identified at base & must not go to next process] and finally follow one piece flow and Pull System [Customer focused].

Lean manufacturing is not an individual activity, it is the activity which is performed by complete organization. From company head to company employees everybody will be involved in the process to achieve defined objective of the organization. It is not employee driven or management driven activity but it is organization driven activity. Lean manufacturing utilizes special tools and techniques during implementation. Most of these techniques are derived from Japanese terms, which got very simple meaning [E.g. Kaizen- Change for Better, Kanban – Signal Card]. Some of tools such as 5S [Sort, Straighten, Shine, Standardize and Sustain], 5 Why’s, SMED, Takt Time, Value Stream Mapping[VSM], Hoshin Kanri[Policy Deployment], Poka-Yoke, Andon, Visual Control and Visual Management, Gemba etc.

During lean implementation, small focus groups (Called as Kaizen groups) are formed and they are trained to identify the wastes in the production line [Wastes include T: Transportation, I: Inventory, M: Motion, W: Waiting, O: Over production, O: Over Processing, D: Defects (TIMWOOD)]. This group flows through the process line Called as Gemba Activity, Later the group will analyze root cause for these wastes and develop action plan [Time line] for continuous improvement. These activities require continuous support and motivation from management. Lean manufacturing do not bring drastic changes in the production line but over the period one can look for better results. It is also depends on continuous involvement of people. In Lean process defects or mistakes are considered as golden opportunities for continuous improvement. This lean process is a continuous PDCA activity.

Lean manufacturing also have many road blocks. As stated earlier it required involvement of complete organization and co-ordination between several departments. Sometimes process is too busy, resources are not available, no budget for special activities, poor management policies, not our job we’ll outsource to others etc. But a strong understanding of lean processes and driven by values will always yield better results.

Can Six Sigma Kill Innovation ?

Innovation_WideIn today’s competitive business environment, innovation has become the biggest source of competitive advantage for many companies. Innovation means coming out with a completely new product or product feature or service that was not seen before. Innovation can also be in the area of processes too where a business creates a completely new process of doing things.

Companies like Google and Apple have gained their competitive advantage through innovation. Google came out with a highly sophisticated search engine for the first time (it was not the first to come with a search engine though) while Apple came up with a smartphone that had features not seen before.

In order for a company to become innovative, the first step is to define what the business means by innovation. Once innovation has been defined from the perspective of the business and its needs, the resources required for supporting innovation should be provided to employees. These resources include investments in research & development capabilities. For instance Google provides its employees with sophisticated research laboratories and other tools required for research in the area of information technology.

The leadership of the business should show complete support for employees who have a creative outlook. If new ideas fail on implementation then such failure should be treated as a learning experience and not as a failure. Innovative organizations tend to have a very positive attitude towards failure.If a business wants to become innovative then it should not be too control-oriented. It should give freedom of thought and expression to employees. Employees should not be afraid in expressing their ideas to their superiors and seniors. Therefore businesses having a democratic style of leadership are more successful at innovation while those having an authoritarian style are less successful.

Practices like mapping of all the new ideas that are generated in the organization can go a long way in increasing the rate of innovation. Too much emphasis on bureaucracy and formal plans about proposed new ideas can have the effect of stifling innovation.Some empirical evidence suggests that organizations that are too much about Six Sigma and lean manufacturing may find their innovation rate slowing down.

Six sigma and other process improvement tools are to be applied on existing processes. Their principles cannot be applied in the area of innovation. So businesses will do well if they do not try to apply the established principles of Six Sigma on new ideas and concepts. When a new product or service idea comes up and the idea looks feasible enough to be implemented then it should be implemented. If it succeeds the business will prosper; if it fails then the business would become wiser.

Why do Six Sigma initiatives sometimes fail?

 

six-sigmaImprovement projects like Six Sigma and Lean manufacturing aim at improving the efficiency and effectiveness of processes used in an organization. These initiatives have brought tremendous gains for a large number of companies, like say GE for instance. But a study published in Wall Street Journal claims that 60% of corporate six sigma initiatives fail in achieving the desired results.

 

There are a number of reasons why many six sigma initiatives fail in achieving the desired results. An important reason is that after the initial enthusiasm, employees lose their motivation and go back to old ways of doing things. They do well as long as the six sigma expert assigned to them is there. Once the six sigma expert leaves them to their own, the team members tend to lose their motivation to continue with the six sigma ways.Therefore it is necessary that six sigma experts should continue working with a team for an extended period of team, say one year or two years. If small businesses find the cost of having full time six sigma experts too much they can use part-time services of these experts. There are a number of six sigma consultancies in India which offer part-time services of six sigma experts. Also, before a six sigma expert leaves the team permanently, adequate training should be provided to managers so that they are able to continuously motivate team members to keep implementing the six sigma ways.

 

Another reason is that performance appraisal of improvement team members is often not tied to goals of the improvement project. Performance appraisal should be tied to the goals of improvement projects like six sigma and lean manufacturing. When employees get rewarded continuously for achieving the improvement project goals, then they are likely to keep striving continuously for achieving those goals.Improvement teams should be small; they should not have too many members. When there are too many members in an improvement team then the probability of conflict of interest increases. The ideal size of a process improvement team should be between six and eight members.

 

Last, but not the least, the key executives of the company should actively participate in the improvement projects rather than simply supporting them. This way they would be able to continuously monitor the implementation of the improvement principles over a long period of time.The goal of Six Sigma, Lean manufacturing and other such improvement initiatives is to bring a long lasting improvement in the processes of the organization. If they are able to bring only short-term, temporary changes then they would be deemed a failure and nothing else!

 

Process Improvement in BPO companies

quality Business Process Outsourcing (BPO) means letting an outside company perform a process of the business. Outsourcing is done mainly with the objective of achieving cost savings. The outside vendor is able to do the same process at lower costs than what it would have cost the company to do it in-house.

 

The outside vendor is able to do the process at lower costs because of lower labor costs and its core competency in doing that process. Outsourcing contracts nowadays are mainly awarded to vendor companies located in developing and least developed countries. The labor costs in these countries are much lower than that in developed countries. It is due to this reason that a number of large American corporations have outsourced their business processes (like calling processes) to outsourcing companies in India. An Indian, sitting in Gurgaon, India, can do the job of receiving customer calls at much lower wages than an American sitting in New York or New Jersey.

 

Companies specializing in taking BPO work need to focus more on the processes outsourced so that they can be made more efficient and effective. By focusing on process improvement they would be able to create more satisfaction for the client company. This in turn will ensure a long term strategic relationship with the client. Indian BPO businesses are facing tough challenge from BPO businesses in countries like Philippines. These countries have comparable labor costs as India. Bangladesh and Vietnam boast of even lower labor costs than India. In such a scenario, Indian BPO companies will be able to sustain their competitive advantage by creating more value for client companies. This value can be created by trying to improve the processes outsourced so that drastic efficiency and effectiveness gains can be achieved for the client.

 

Most BPO companies focus only on following the key performance metrics given in the service level agreement (SLA) between them and the client company. They do not try to create any extra value for the client company. The objective is simply to perform on the key performance parameters and fulfill the outsourcing contract.BPO companies should focus on maximizing the satisfaction of client companies.

 

They should try to create delighted customers and not just satisfied ones. Delighted customers are those whose expectations have been surpassed by the actual service delivered. By creating delighted customers Indian BPO companies will be able to retain clients. It should not be forgotten that it is three times easier to retain an existing customer than to recruit a new one. This is even truer in the BPO business.

 

Reuse, Recycle and Reduce

quality In order to cut down wastage in manufacturing and production, it is important to identify the value-creating activities and non-value creating activities.The non-value creating activities need to be eliminated in order to reduce wastage and control costs. Tools like value-chain mapping can be helpful in identifying the non-value creating activities.

 

The contemporary business scenario is a highly competitive one. By reducing wastage, businesses can save costs. They can then pass on the cost savings to customers in the form of lower prices. The lower pricing can give a competitive advantage to a business over its rivals.Reuse and recycling can help manufacturing companies control wastage and cut down costs. Recycling also helps them in cutting down their carbon footprint and become environmentally more sustainable.

 

They can then market themselves as environmentally responsible companies. Increasing number of customers are becoming sensitive towards the environment. They want to purchase products of those companies which they perceive are environmentally responsible.When we talk of reuse & recycling of waste generated in manufacturing, we cannot ignore Henry Ford. Ford was the founder of the Ford Motor Company. It was he who first conceived assembly line manufacturing. Ford was almost obsessed with reuse and recycling. For example, the wood that was wasted in the car manufacturing process at Ford Motor Company was distilled by the company to extract chemicals. These chemicals were then sold in the outside market. At one point of time the sale of these chemicals brought more than $10000 a day to the company.

 

These days many manufacturing companies are breaking new technological grounds for achieving efficiency. For instance one manufacturing company creates very low temperature conditions by using liquid nitrogen. It then gets the metals cut in these conditions because the metal cutting speed of tools is five times faster in these conditions than in normal conditions.Businesses should not hesitate in using state-of-the-art technology for achieving higher efficiency and lower wastage.The investments made in these technologies are more than recovered in the medium and long term because of efficiency and productivity gains.

 

In a more developed world, the value of every resource will go up. Efficient utilization of resources is therefore very important. This cannot be achieved without a continuous focus on cutting down the wastages in the value chain. Business leaders of today and tomorrow would do well by emulating the likes of Henry Ford.

 

Total Quality Management

quality-management

Total quality management can be summarized as a management system for a customer-focused organization that involves all employees in continual improvement. It uses strategy, data, and effective communications to integrate the quality discipline into the culture and activities of the organization.Customer-focused. The customer ultimately determines the level of quality. No matter what an organization does to foster quality improvement—training employees, integrating quality into the design process, upgrading computers or software, or buying new measuring tools—the customer determines whether the efforts were worthwhile.Total employee involvement. All employees participate in working toward common goals. Total employee commitment can only be obtained after fear has been driven from the workplace, when empowerment has occurred, and management has provided the proper environment. High-performance work systems integrate continuous improvement efforts with normal business operations. Self-managed work teams are one form of empowerment.

Process-centered. A fundamental part of TQM is a focus on process thinking. A process is a series of steps that take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to customers (again, either internal or external). The steps required to carry out the process are defined, and performance measures are continuously monitored in order to detect unexpected variation.

Integrated system. Although an organization may consist of many different functional specialties often organized into vertically structured departments, it is the horizontal processes interconnecting these functions that are the focus of TQM.

Micro-processes add up to larger processes, and all processes aggregate into the business processes required for defining and implementing strategy. Everyone must understand the vision, mission, and guiding principles as well as the quality policies, objectives, and critical processes of the organization. Business performance must be monitored and communicated continuously.

An integrated business system may be modeled after the Baldrige National Quality Program criteria and/or incorporate the ISO 9000 standards. Every organization has a unique work culture, and it is virtually impossible to achieve excellence in its products and services unless a good quality culture has been fostered. Thus, an integrated system connects business improvement elements in an attempt to continually improve and exceed the expectations of customers, employees, and other stakeholders.

Strategic and systematic approach. A critical part of the management of quality is the strategic and systematic approach to achieving an organization’s vision, mission, and goals. This process, called strategic planning or strategic management, includes the formulation of a strategic plan that integrates quality as a core component.

 

Continual improvement. A major thrust of TQM is continual process improvement. Continual improvement drives an organization to be both analytical and creative in finding ways to become more competitive and more effective at meeting stakeholder expectations.

Fact-based decision making. In order to know how well an organization is performing, data on performance measures are necessary. TQM requires that an organization continually collect and analyze data in order to improve decision making accuracy, achieve consensus, and allow prediction based on past history.

Communications. During times of organizational change, as well as part of day-to-day operation, effective communications plays a large part in maintaining morale and in motivating employees at all levels. Communications involve strategies, method, and timeliness.

These elements are considered so essential to TQM that many organizations define them, in some format, as a set of core values and principles on which the organization is to operate.