Lean Six Sigma projects are identified, planned, executed, reviewed and verified to achieve a predetermined benefit for the sponsoring organization and its customers. To this end, a Lean Six Sigma project must first be properly chartered and initialized. Next, it must flow smoothly through each step of the DMAIC problem solving process.
This means that a project must pass through the Define, Measure, Analyze, Improve and Control (DMAIC) phases of improvement in order to realize a comprehensive, lasting solution. In short, Lean Six Sigma projects are formal investigations guided by the hand of scientific knowledge, not a collection of loosely organized ad-hoc activities with an indeterminate outcome or a “let’s see what falls out” type of focus.
Where Lean Six Sigma projects are concerned, success is the result of a thoughtfully designed outcome, not a chance or circumstantial set of events. This is what makes Lean Six Sigma projects so effective and efficient. Given this, it is easy to understand why Lean Six Sigma projects must be carefully planned, resourced, managed and judiciously reviewed.
Naturally, upon completion of such a project, the accounting function must verify its derived benefits and then management must officially sanction its closure.
In today’s world, corporations are questing for top line growth and constantly seek to reduce their total cost structure. The business leaders of such organizations want to increase capability and capacity without capital investment.
They also know that customer satisfaction must be continually monitored and improved. At the same time, they recognize the need to enhance investor relations. And the interconnected list of imperatives continues in a seemingly endless way.
Some of these business professionals have not been exposed to the huge gains made by companies such as General Electric, Honeywell, Sony, Ford Motor Company, and DuPont, just to mention a few. As many now know, these fine organizations found the “magic formula” in the chemistry of Lean Six Sigma. They discovered the power of highly focused, benefit-centric lean sigma projects.
Since its inception in the 80’s as a quality initiative at Motorola, Six Sigma has evolved into a world-class business management system. Over time, Six Sigma has been intelligently blended with many of the best practices commonly associated with Lean Manufacturing.
Thus, Lean Six Sigma provides a viable means for industrial and commercial organizations (through focused projects) to reach the control function of the business and positively alter the genetic code of its leadership. The combination of Lean Six Sigma thinking and the DMAIC problem solving methodology offers the capacity and capability to rewire all of the critical processes of a business – in every corner and in everything it does.
In so many ways, Lean Six Sigma forces an organization to reexamine the way in which it gets the work done and not simply modify or augment the existing system to realize some marginally acceptable level of improvement. In this context, Lean Six Sigma projects can drive innovation.
While the practice of Lean Methods targets process efficiency (i.e., waste reduction), Six Sigma targets process effectiveness (i.e., variation reduction). Taken together, the duo represents the proverbial one-two punch for waste and variation. Of course, this translates to an improvement in overall process efficacy.
Owing to this, Lean Six Sigma is more than a simple quality improvement or cost reduction initiative – it is a system of management that produces quantum change in everything it decides to focus on.
It’s a way to identify, execute and manage many simultaneous improvement projects that are linked to a common set of unified business objectives. Of course, when such projects are deployed and implemented, their collective power suddenly and dramatically blips the radar screen of business.
In this sense, Lean Six Sigma is a strategic and tactical system for managing the total business enterprise. From this perspective, it is easy to see why Lean Six Sigma projects are so widely used to create business process improvements. In other words, the practice of Lean Six Sigma enables a business enterprise to breakthrough to new levels of performance. Figure 1.0 presents a few of the many reasons for deploying and implementing Lean Sigma Projects.
Several years ago, iSixSigma Magazine conducted a benchmarking study to uncover the median value of Black Belts projects. Their survey based research revealed that the median savings per Six Sigma project is about US$188,000. That figure represents the “hard savings” delivered per project, regardless of industry or company size.
Figure 2.0 displays the Six Sigma savings for a selected number of industries. Companies with revenue of more than US$1.0 billion reported median results of US$335,000, whereas companies with revenue of less than US$100 million experienced median results of US$117,000.
The range of results was similar when segmented by the number of employees in an organization (i.e., less than 1,000, 1,000 to 10,000 and greater than 10,000). Fewer companies track the “soft” financial savings (no direct impact to a company’s financial statement), but for those that do, the median value of soft savings was US$107,500.
Michael Cyger, publisher and founder of iSixSigma Magazine and iSixSigma.com, said, “This study validates that companies of all sizes can reap significant financial benefits from Six Sigma. Enormous positive results from Six Sigma at companies like GE, Motorola, Allied Signal and DuPont are well documented. Now we have the data across all company sizes (by both revenue and employee count) and industry, and it’s significant enough that CEOs cannot afford to ignore Six Sigma. It would be a disservice to their shareholders and customers.”
“Given that most Black Belts complete at least three Lean Six Sigma projects per year,” Cyger continued, “the cumulative benefit of all projects is over US$500,000 per Black Belt per year — just measuring the ‘hard’ savings that can be directly tied to the company’s top and/or bottom lines on the financial statement.”
Erin Ducceschi, editor of iSixSigma Magazine, also indicated that, “Significant financial results can be achieved at any stage of a Six Sigma initiative. There is no statistical difference in financial benefits based on the number of years a company has been using Six Sigma, meaning that a return on a company’s investment can be achieved within a short timeframe.”
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