Generic Application and Effectiveness of Lean Six Sigma Practices Across Diverse Industry Types

Quality Management System and Continuous Improvement

Six Sigma Strategy for Continuous Improvement

Implementing Six Sigma

Lean Strategy for Continuous Improvement

Lean and Sig Sigma Interrelated

Industrial application of lean / six sigma

Lean / Six Sigma in Service Industry

Lean / Six Sigma in Manufacturing Industry

Lean / Six Sigma in Construction Industry

Lean / Six Sigma in Mining Industry

Effectiveness of the Lean / Six Sigma in the Industry

Population and Sampling

In the business management strategy, quality plays a major role for global organizations that seeks market competitive position through achieving customer satisfaction more successfully, advancing on internal business processes and reducing cost. The process of globalization is shrinking the market place, creating new avenues for business and confronting them with more challenges and international competition. Under such scenario customer expectations are growing as they can find variety and easy substitute of product and service whereas the products are getting complex day by day. Companies who doesn't prepare themselves for the upcoming challenges and doesn't meet the industry requirement will then be over taken by the companies who are performing quite well in this respect. Maintaining high quality standards through customer satisfaction is thus considered the most important parameter in climbing up the ladder of success and reaping economic benefits.

Quality was thus considered to be of fundamental importance to many organizations. Almost all of the firms have started adopting a strategy of differentiation based on high quality. In the initial phases quality was not measured as an output target. Quality was considered to be something added to the product rather than an integral part of it. In the early day's quality control was only applied to manufacturing which was limited to inspection or identification of defects in items being manufactured. Many problems were then identified with this approach like:

a) If the production process guarantees zero defect items to be produced than inspection process was useless and was not adding any value to the business.

b) The production of substandard products is waste of raw materials, machine time, human effort and over head cost.

c) Large expensive land and warehousing space was been taken up by the inspection department.

d) The production defects not compatible with the latest production technique like just in time where there is no time for inspection.

e) Working capital is tied up in inventories that cannot be sold.

To sum this up, the inspection process was adding waste into the production process, which is not acceptable as the resources it consumes can be better put in use. If an organization is committed to deliver product and services of the necessary level of quality, it must actively manage all the factors that have an impact on quality. A quality management system is the answer to this issue.

1.1. Problem Statement:

The issue or topic which is being taken for research study is about the identification and evaluation of the continuous improvement methods and practices which are being widely used across different industries and to identify that which practices is best for different types of industries. The problem statement or title of the research is:

"Identification and evaluation of general application and effectiveness of lean / six sigma practices across diverse industry types"

1.2. Purpose and Research Objectives:

This research paper will be focused on the implementation of the Lean / Six Sigma strategy for the continuous improvement and will evaluate its effectiveness in the diverse industry type ranging in the categories of:

i. Manufacturing Industry

ii. Services Industry iii. Construction Industry

iv. Mining Industry

2. Literature Review:

The organizations to deliver high quality products and services to its customer and have increased level of profitability with minimum cost it need to implement a system of continuous improvement. This system of continuous improvement is achieved through rigorous quality control measures, mechanism and processes (Bernett & Nentl, 2010). Quality management system is likely to address all these issues though it's various tools and programs to which Six Sigma / lean is part. Six Sigma / lean is a quality management program that is aimed to achieve high level of quality through customer satisfaction. The overall aim is very high and consistent level of quality output and customer satisfaction. With its varying degree of qualification ranging from black belt to green belt, experts in this field are making their full commitment towards the achievement of Six Sigma / Lean objective. The two terminologies are however different in their definitions but their conceptual context is quite similar therefore organizations are applying them simultaneously or one of the other's substitutes.

The implementation of the two philosophies have been observed in the diverse industry groups including manufacturing, service, mining and construction to evaluate its system procedures and effectiveness in the wide range of industry type. It is observed that the concept of Six Sigma / Lean which was initially developed by the manufacturing concern was not limited to it and it's equally beneficial in the service industry. The financial institutions, educational institutions, Healthcare, hospitals and clinics have been found applying it and reaping its benefits (Kwak, & Anbari, 2006). The implementation of the system requires commitment from top to bottom in an organization with participation for all the employees. Everyone in an organization is being educated and trained with the system so that they can run the process within their capacity at the optimum level.

For the system to be effective it's important to scrutinize whether it's adding value to the business or not. For this purpose organization need to analyze that the system is genuinely customer focused, data and facts utilized in the statistical application for results, having proactive means towards system improvement and perfection is combined with tolerance of failure. When the organizations have adopted the process of Six Sigma / Lean it undergoes process improvement, process reengineering and process redesign. This process is thus adding value to the system in a way that it is designed to decrease wastage, improve product quality and leading to greater customer satisfaction and lower cost. Companies that have been implementing Six Sigma / Lean approaches have been reporting high level of savings in their projects. Six Sigma / Lean is applicable to every level of the operation process by optimizing the performance, decreasing the wastage and cost associated with the process and maximizing the profit. If the dedication and full commitment of the senior managers is gained and employees are committed in bringing about a turnaround plan within the organization then the success of Six Sigma / Lean is apparent (Harry & Schroeder, 2000).

2.1. Quality Management System and Continuous Improvement:

Generally all quality management system is designed around eight quality management principles provided in ISO 9001:2000.

i. Customer focus

ii. Leadership iii. Involvement of people

iv. Process approach

v. Systems approach to management

vi. Continual improvement vii. Factual approach to decision making viii. Mutual beneficial supplier relationships.

On the way to maintain high quality standards, organizations are moving towards the business philosophy of 'continuous improvement' in their business processes. The continuous improvement in processes is actually a way of improving products, services or operation processes which is not limited to time and space rather it's an ongoing process of achieving high quality and increased level of customer satisfaction. The process of continuous improvement enables companies to fulfill the objectives of improving quality proactively, reduction in the waste, high level of employee involvement and increasing customer satisfaction. These all collectively forms the goals of quality management system.

2.2. Six Sigma Strategy for Continuous Improvement

Six Sigma is a quality management system whose overall aim is a very high and consistent standard of quality output. Six Sigma shapes itself in the form of specific improvement projects which follows a standards five phase pattern (Henderson, & Evans, 2000).

i. Define requirements

ii. Measure performance iii. Analyze the process

iv. Improve the process

v. Control the new process.

Therefore many of the quality management tools were applied in the organizations which generally were insufficient in its ability to provide simple, proven and convenient way of measuring and maintaining quality until Motorola came up with the concept of Six Sigma in business quality management strategy.

Six Sigma has been successfully applied by many of the small, medium sized organization and also by the big companies listed in the fortune 500 (Linderman, Schroeder, Zaheer, & Choo, 2003). The broad objective of Six Sigma is improving upon the business processes at the heart of an organization's mission therefore its equally beneficial for the profit and non-profit organizations (Antony, & Banuelas, 2002). Originally, Six Sigma was based of statistical techniques used by managers to assess manufacturing process performance. With the gradual advancement in the process, Six Sigma has metaphor itself into widely applicable system of improvement that involves process improvement, process reengineering and process redesign. The objective of Six Sigma is to improve a process to the extent that there is only negligible probability that it will produce unsatisfactory outputs.

Six Sigma, in the implementation phase was inspired by the project methodologies of Deming-W Edwards Deming is one of the founding fathers of the quality movement. He was the one who had used statistical process control to raise productivity in U.S. factories during World War II. The two project methodologies are (Coronado, & Antony, 2002):

i. DMAIC- for improving an existing business process: The five phase pattern of the DMAIC are:

Define customer requirement: the basic requirement are limited to customer acceptance. The quality to improve on is based on customer experience and organizations have to be prepared for the unexpected from the customer.

Measure existing performance: Black belt experience is used here to apply the statistical tools. The three main areas of measurement are input measurement which includes raw materials and production specifications; measurement of the process flow which includes cost associated, time, skills and training required; and finally the measurement of output and level of customer satisfaction.

Analyze the existing process: The analysis involves evaluating whether the system is adding value to the process, providing necessary support required or is it adding no value to the system.

Improve the process: It requires a creative thought and rational view of the system. Cost benefit analysis is also being done to see what changes need to be brought about in the efficient utilization of resources.

Control the new process: it requires the routine and continual contribution of the management in the continuous improvement mechanism.

ii. DMADV-for creation of new projects or system design.

Define system goals that are parallel to customer demands and the corporate strategy.

Measure and identify factors critical to quality, product capabilities, manufacturing process capacity, and risk associated.

Analyze in developing and designing alternatives, creating and evaluating design and choosing best among the alternatives.

Design details, optimize the design, and plan for design verification. This phase is run simultaneously.

Verify the design, set up pilot projects and implement the production process

2.3. Implementing Six Sigma

Six Sigma for effective implementation needs overall implementation leader and required forming a steering committee at a senior level to provide a vision for the process and to oversee it. The principal responsibility of this committee will be to nominate process areas for improvement (Antony, 2004). Each area of improvement will constitute a separate project and will have its own Six Sigma project team and champion. The project team comprises of staff experiences in the process under observation. When the projects are of small scale, they will be the operational staff themselves. Staff involved in the leadership of projects may possess varying grades of qualification in Six Sigma which can be categorized as under (Calcutt, 2001):

a) Master Black Belt: these are in-house consultants in Six Sigma and dedicate all their time to it. Especially skilled in the statistical techniques and can work on several projects simultaneously.

b) Black Belts: they also dedicate all their time in Six Sigma and lead specific projects.

c) Green Belts: they also lead projects but they are managers who hold on to other job responsibilities together with Six Sigma.

Six Sigma projects requires large amount of training in both the capacity, for leaders and for process operating staff who builds up the project teams. Empowerment is the feature of the system in which improvements are expected to flow from the bottom to upwards. Team members are likely to entrust in bringing about the improvement work under review. During the implementation phase the project management techniques are applied while using Six Sigma.

2.4. Lean Strategy for Continuous Improvement:

Lean strategy to continuous improvement focuses on reducing waste and making operation process more efficient. Lean encourages value addition to the business through elimination of waste from the production process. Lean enables companies to get competitive edge on quality, delivery and price (Bhasin, & Burcher, 2006). Lean manufacturing is derived from the Toyota Production system-TPS and was named Lean in 1990s. It has been adopted by the industry for is popularity in reducing waste and improving customer satisfaction (Sahoo, Singh, Shankar, & Tiwari, 2007).

Since its origin was from the manufacturing background there is a misconception in the industry that Lean work well only for the manufacturing businesses. However the fact is it can do wonders for production and service both. Lean can be applied in any business and any type of processes. Lean principles are commonly applied in healthcare and government departments, banking services and hotel industry. For its effective implementation it requires a complete transformation of the prevailing business operations. Lean approach takes a long-term view of the process under review (Womack & Jones, 1994).

2.5. Lean and Sig Sigma Interrelated

The tool to continuous improvement and a way of quality management system through Lean and Six Sigma is often used inter-changeably. As they both focus on the core values of improving upon the process quality though optimum utilization of the resources and maintaining high level of customer satisfaction. Both these methods when applied together give a maximum output. Six Sigma is useful in applying statistical methods for controlling variation and output quality through the probability of eliminating the defects which increases waste and customer dissatisfaction. Whereas Lean manufacturing possess the capacity to improve speed of the process and reduce cost of wastage and unnecessary inventory pile up. Both these processes are committed to add value to the business processes, increasing the product and service quality and enabling companies to survive and improve in the highly competitive market place.

2.6. Industrial application of lean / six sigma

In the research paper the industrial application of Lean / Six Sigma will be on the following four sectors of the economy:

1) Service Industry

2) Manufacturing Industry

3) Construction Industry

4) Mining Industry

2.6.1 Lean / Six Sigma in Service Industry

Lean Six Sigma originally developed to improve quality by eliminating waste and building strong customer satisfaction. Many of the service firms are also now adopting this technique to make the business process more effective and efficient. Banks have been using this tool as their strategy towards growth, lowering operating cost and improving customer satisfaction through stringent customer complaints resolution mechanism. To look at how Six Sigma works for banks this research proposal has analyzed the Six Sigma strategy used by Citibank.

Citibank has set up the corporate goal of becoming a 'premier financial company'. To achieve this target it has decided to implement quality management tool that satisfies customer in real time without any fault wherever in the globe the bank is operating with its client. Citibank took up the challenge of implementing the Six Sigma strategy to its financial organization. It started off by identifying well-known manufacturing management theories and implements these to their non-manufacturing environment.

They had adopted methodologies like cycle time reduction-CTR, along with the defect detection by applying Six Sigma methods and implement internationally through empowered teams which have resulted in considerable improvements in the process time line, cash management and customer allegiance and satisfaction. Identification of defects by using Six Sigma is done by the employees identifying fundamental hurdles in achieving customer satisfaction at Private Bank then they use Six Sigma program to correct the problem. Citibank had targeted itself in reducing the defects and cycle time by 10 times and this will get doubled after every two years. Solution of the problem through Six Sigma was made by using a simple tool known as Pareto chart. The chart highlights the most occurring problem or the problem that covers most of the cost. This chart provides confirmation on which problem to be rectified first. The implementing team constituted bankers and operations staff that observe the whole process and tabularize the defects analyzing them on the Pareto chart. Citibank has also implemented this system of metric in their Global cash management group and account opening department. Thus all the business functions of the Citibank operations had undergone transformation with the Six Sigma approach.

The results of Six Sigma process through CTR was quiet appreciating. CTR has faced the challenges of many of the Citibank group which also includes reduced internal call backs by 80%, external call backs by 85% and credit processing time by 50% in the private bank- Western Hemisphere and global equipment finance has decreased the credit decision cycle from 3 days to 1 day. The success credit also goes to the level of commitment shown by the team members that had freedom to make decisions and the involvement of senior sponsors in the continuous improvement process. The quality director for Citibank in Czech Republic Peter Klimes had said:

"Our senior country operations officer and our corporate bank head were our most active supporters of our CFPM projects. Their commitment helps balance back- and front-office aspects of the projects."

Hospitals and clinics have been found with the problem of patient waiting time. Due to the tight schedule many of the patients are not willing to have long waiting time because of which they are reluctant to take appointments or in many cases go for the clinics which have long patients list despite of the high quality of service provided by these clinics. Therefore, Hospitals and clinics have adopted Six Sigma process to improve the patients waiting times (Berwick, 1989). On investigation from patient the major concern for them was that they do not want to be called before their appointment time as they don't want to be at hospital early for their appointment and the maximum length of the time they are willing to wait after the appointment time is 30 minutes. Keeping this into consideration the clinic has set 30 minutes as the specific limit for the wait and the Six Sigma program aims to ensure that no more than 3.4 waits in every million occurrences exceed 30 minutes. The normal distribution pattern developed by the hospital and clinic in this regard was as under (Kritchevsky, & Simmons, 1991):

Specification limit

30 mints

Target

0 mints

Length of wait after appointment time

6?

Fig 1: Six Sigma approach in hospital

2.6.2. Lean / Six Sigma in Manufacturing Industry

Six Sigma, a statistical tool has committed itself for the 3.4 defects per million. Six Sigma started off with its implementation in the Motorola which was going through serious problem of quality control and management. Manufacturing industry has found Six Sigma a mechanism for quality control that has produces products nearest to perfection. The production problem in the industry was a financial threat to the companies on the cost of their clients' satisfaction. Initiated with the Motorola, almost all of the manufacturing concerns like Johnson & Johnson, General Electric, and 3M nearly all the giants listed in the fortune 500 had formed special teams of experts who were dedicated for identifying the defects in the manufacturing process and eliminating it to its lowest level. The team members were black belts who were trained in quality control and assembly line. The teams constituted diverse group of people that include green belts and yellow belts also trained in the quality control measures to some degree. Empowerment, strong team building and collective approach are the success factor in this program. Six Sigma / Lean principal implementation in the manufacturing industry can be visualized in the generic form as illustrated below.

Manufacturing firms for the solution of their problems have been using the model of DMAIC-define, measure, analyze, control. The five step technique that helped team specialist and team members in identifying the problem and coping with it. For the new product development Six Sigma designed model of DFSS-design for Six Sigma was implemented in the new product development phase. Companies have started giving training to almost all of their employees on the level of green-belt and yellow-belt. Employees were encouraged to participate in the transformation process and were made familiarized with the DMAIC and DFSS system. They were trained to use statistics, data tracking, creating charts and tables on computer programs and make efficient use of the information extracted in producing results. Black belt specialist was responsible to oversee the bigger picture of the manufacturing concern that includes increasing the production speed, reducing variations and eliminating waste from the production process. They were also responsible to supervise the team of green-belt and in some cases were also involved in the fulfillment of their duties besides controlling the bigger task simultaneously.

Six Sigma have also made a remarkable contribution towards the new product development process. Integrating Six Sigma in the new product development phase had saved companies decent amount of money. As it has been identified by the quality control specialist and industry practitioner that maximum amount of quality related problems have been originated in the design phase rather than manufacturing. Lean Sigma Technologies, LLC, an international consultancy has identified that "70 to 80% of all quality problems are design related and not manufacturing caused." Therefore when the quality concern are addressed at the designing stage of the new product development then companies can save on lot of money in the costly quality rectification mechanism in the later phases. The author of the book "Design for Sigma: The Revolutionary Process for Achieving Extraordinary Profits" have emphasized the importance of Six Sigma in new product development and have commented on the role of Six Sigma as: "Companies that correctly employ Design for Six Sigma will do less and less Six Sigma because the product is designed right the first time" (Jusko, 2002).

2.6.3. Lean / Six Sigma in Construction Industry

Six sigma has been equally successful in its application in the manufacturing and service industries, it is however new concept in the building and construction industry but the industry practitioner have been applying it successfully in the construction industry (Laugen, Acur, Boer, & Frick, 2005). In the following text the relevance and importance of Six Sigma in the construction industry will be discussed along with its successful implementation and training requirement for its set will be gauged. The research on the successful implementation of the Six Sigma in construction industry have suggested that its critical success lies in the same factors applied to other industry like positive attitude by the management in initiating the process, relevant training to the staff members, suitable selection of the pilot project and most importantly commitment of the team members in the transformation process.

The objective behind the implementation of Six Sigma generally by any company in the construction industry is to improve the quality of products and services to the public if it's a public organization or to the client if it's a private construction firm and to help resolve some of its ongoing problems and concerns (Hahn, Hill, Hoerl, & Zinkgraf, 1999). Task force is developed under the supervision of the divisional head as the coordinator comprising of the peer team members who are then trained for the implementation of the tool. In the construction industry selection of the pilot project is critical. The criteria on which the pilot projects have been selected are based on the diverse operational areas of the construction operations and from the customer feedbacks that gets most unsatisfactory remarks. In the implementation phase the pilot projects selected were generally based on the quality of the construction product, reliability measurement of the construction material and mechanical system and reducing the time required for the services provided. For the purpose of measurement of the quality control to each of the construction phase the percentage is assigned for the assessment. The major areas identified during the construction phase for the assessment are

a) Structural work,

b) Architectural work and c) Mechanical work.

Under these broad categories that are subsets for the quality assurance parameters who are then assigned measuring number or percentages for its evaluation. The subcategories include:

i. Internal finishes which makes up roof, walls, ceilings, windows, doors and other material components.

ii. Functional and quality of material test which includes windows water-tightening, ceilings flexibility, external walls resistance power and internal flooring and tiles.

iii. The prime location of the building like halls and bedrooms, circulation locations like corridors and stair case and service locations like balconies, toilets, rooms.

The percentage value assigned to these categories and sub-categories are then formulated in the mathematical and statistical tools for the measurement of their quality standards and are then improved and adjusted as per the highest quality requirement. Regular inspection is being conducted by the black belt supervisors in ensuring the proper implementation of the Six Sigma in the operation and the accuracy of its measurement. It is depends upon the construction industry that what level of sophistication they require in the implementation of the Six Sigma in their business operation and then they can formulate a plan accordingly.

2.6.4 Lean / Six Sigma in Mining Industry

Lean / Six Sigma have been equally successful in its implementation in the mining industry. The positive outcomes from the successful implementation of the project were seen from the reduced cost of production and increased profitability and operating procedure of the business. The implementation process in the mining industry can be summed in the following points:

i. The implementation of the Six Sigma provides a workable plan in solving the difficulties and obstacle in the fulfillment of order. It provides a solution to deliver in the least possible days.

ii. The process allows organization to setup the meeting and follow up session with the team members and the employees in reviewing the system.

iii. Value stream mapping has been in evaluating the activities involved by the company, identifying the sources of high cost areas and looking for the performance gaps existing in the operational process.

iv. Benchmarking the performance standard enable company in knowing how much performance improvement is required and what level of quality control to be implemented to have highest output with minimum cost and maximum return.

v. The black belts are involved in sequence of organizational changes and standardizations and prioritizing the work and scheduling the task to the taskforce. The tools here used by the organizations are:

a) Fishbone diagram

b) Process mapping tools

c) SWOT analysis

d) Pareto analysis.

One of the solutions to Six Sigma in mining industry is the Six Sigma Qualtec that is designed specifically to work for the mining and construction firm. It helps the company in streamlining the extraction of resources, processing resources to its effective level and providing efficient customer delivery system. It assists organization in developing project teams, evaluating performance for its improvement and ensuring productivity through operating cost reduction.

2.7. Effectiveness of the Lean / Six Sigma in the Industry

Lean / Six Sigma tool is effective achieving organization's objective of reduction in variation and number of faults that go beyond an accepted tolerance limit. The ultimate process aim is to reduce the variation in the process output and get 6? level of performance. Performance measures are based on customer requirements. The targets may seem high but it's important to note that once defect can lead to a loss of customer (Fine, Hansen, & Roggenhofer, 2009). The fact that Six Sigma / Lean is different and is more effective measure of the quality management and continuous improvement is because it provides an in-depth analysis of the problem and its solution in the statistical measurement form which can be easily valued and focused for it removal (Naslund, 2008).

. It provides both quantitative and qualitative approach to continuous improvement. The distinguishing features of this approach have been identified as:

i. Genuine focus on the customer

ii. Data -- and Fact driven management iii. Processes as the key to success

iv. Boundary less management

v. Perfectionism combined with tolerance of failure.

Total quality management and Six Sigma are often considered to be one of the same things by the industry practitioner. But in actual they are two different components of the quality management system that works on the principle of continuous improvement. However, Six Sigma quality management tool to achieve 'Six Sigma-6?' level of quality is derived from total quality management approach of quality management system. The basic difference between the two is that Six Sigma is more of a mathematical process of performance improvement where quality standards can be easily measured. Six Sigma would be a vacant concept without the application of practical tools that have been identified by the TQM approach in the quality management system. Quality management characteristics in the Six Sigma derived from the TQM process include: