The Value Lean Six Sigma Brings

After I wrote my article on Lean Six Sigma benefits for Small to Medium Businesses, I thought it would be beneficial to write about the hard facts with Lean Six Sigma. It is essential to understand the ROI and value  Lean Six Sigma brings, regardless if you hire a consultant or implement a program within your own company. 

Lean Six Sigma Benefits and Values

 

 

Before diving into the numbers, we should recap some of the benefits of Lean Six Sigma.

Hard Benefits

The hard benefits are generally tangible things, for example:

  • Reducing processing cost
  • Increasing revenue
  • Improving cash flow
  • Eliminating the need for capital expenditure
  • Faster quote to cash
  • Reduce the need to hire additional employees
  • Reducing operating costs
  • Reduce the need for extra inventory
  • Reducing machine operating time
  • Reducing overtime hours
  • Reducing cycle time to deliver the service or creating the product

Soft Benefits

LSS soft benefits do not have the same tangible effect as hard benefits.  However, these soft benefits are beneficial for the business.  Examples of soft benefits are:

  • Customer focus
    • The focal point becomes the customer instead of the company
    • Happy customers usually lead to more revenue
    • A good and bad review can make or break a business
  • Improved employee morale
    • Happy employees enjoy coming to work every day
    • Happy employees treat customers and other employees with respect
    • Unhappy employees can result in high turnover and loss of talent
  • Improved employee effectiveness
    • Employees perform better when they are happy
    • Better performance means satisfied customers
  • Leading by fact and alignment
    • LSS provides a way for owners, leaders, and managers to manage the company based on facts
    • LSS eliminates the need for guessing
    • LSS provides critical measurements for a business to define success

What is the value of Lean Six Sigma?

So what does all of this mean in the terms ROI and the bottom line?  Let’s dive into the numbers I compiled from some research and my success.

The numbers below I gathered through my research:

  • Allied Signal – Over the past 12 years, cost savings over $800 M
  • US Army – Cost savings around $2B in 2019
  • UCSD Medical Center – $ 4M in savings
  • Ford Motor Company – $300M in savings
  • Agilent Technologies – $ 2B in streamlining their Supply Chain

Sources: https://educhapter.com/2019/01/09/financial-benefits-of-lean-six-sigma/ and https://goleansixsigma.com/success/ and https://www.achieveprocessexcellence.com/support-files/continuous-improvement-success-stories-by-industry.pdf

Within my 12-year career in Lean Six Sigma, I have saved companies ~$14 M + in revenue and savings. Some individual examples of my successes are:

  • Reduce the time and improve the quality to post a job for external recruiting from 1 month to 4 days –
    • ~$800K in savings
    • Improved employee morale
  • Improved quality of client reports and services
    • $ 2M in revenue
    • Enhanced client relationships and employee morale
  • Improvement of two products cycle time and quality
    • $3.5 M in operating cost savings and revenue retention
    • Improved employee morale and customer satisfaction
  • Improvement in delivery cycle time for an international product
    • Improved employee morale and customer satisfaction
    • $5M in increased revenue and operating cost savings
  • Improved sales cycle time and quality
    • ~$1.5 M in revenue
    • Improved Sales employee morale
    • Improved communication with potential and new clients

What does this all mean?

Lean Six Sigma is beneficial to any business, no matter the size or industry.  The numbers above are only scratching the surface.  Just based on these numbers, it is easy to see the ROI on Lean Six Sigma and how it affects a business’ bottom line. 

If we look past the hard numbers, we can also see how Lean Six Sigma does have soft benefits.  Just the increase in customer satisfaction, customer loyalty, and employee satisfaction provides better brand awareness and improved market share.  These soft savings contribute to the overall bottom line.

Everything adds up to help create a successful business.  Any type of business, regardless of size or industry, can benefit from Lean Six Sigma to help them grow and become successful.

Have you or your company utilized Lean Six Sigma?  What are some of the benefits that you have seen from using Lean Six Sigma?

If you want o use Lean Six Sigma within your business, Contact Me.

A Simple Latte and Business Processes

Simple Latee

 

 

This morning I realized that I’m able to have a latte at home by merely using my Nutribullet to froth my soy milk and heat it in the microwave.

While it’s not as fancy as a coffee house latte, I can still enjoy the latte in my home without a fancy coffee machine or milk frother.

This simple concept can be applied to business. As I grow my own business, I try not to listen to all the fancy new things out there or stories about how people became overnight successes. What I do know what works are the concepts I learned a long time ago through Lean Six Sigma. The simple tools to improve or create business processes with my own business do work. After my processes become standard, then I can apply the automation.

If your business is struggling or you do not know how to grow, think about your business process. Business processes range from marketing to sales, all the way to operations. Are these processes serving your customers or clients? Are these processes providing a great customer experience? Without your customers and clients being happy, you will not be able to become successful.

What are some ways you can improve your business to help your customers and clients?

Let me know if you need help.

Lean Six Sigma for Small to Medium Businesses

Helping your Business Grow to the next level

Over the past few weeks, I had the pleasure of working with a unique small business that has seen tremendous growth in the past few years.  This business has an exciting niche that needs their expertise.  What was even more interesting about this business is that they had some excellent core values and exceptional people that work there.  The business owners recognized that they are growing faster than they anticipated and are experiencing growing pains. They knew they needed help in order to get to the NEXT LEVEL! This is one of the many reasons why this business realized that they can use Lean Six Sigma (LSS) to help get them to the next level.

This business is a perfect example of how small to medium businesses (SMB) do need some type of Lean Six Sigma (LSS) to help them through the growing pains so they can progress to the next level.  However, these SMBs may feel overwhelmed, alone, and they are on a downward spiral.  But how can LSS help?  There are several different things that these businesses can do that doesn’t require a separate LSS, Quality Improvement, or Business Process Improvement organization. 

Business Process

Business Process

Let’s first talk about business processes. Most SMBs do have processes, but these processes are not scalable for them to grow correctly.  By not having the right processes in place, the following problems start to appear:

  • Business owners and leadership are unsure how the business is genuinely performing
  • The client is starting to complain, especially the more prominent clients
  • While revenue grows, so does cost
  • Confusion or lack of transparency between all groups within the business
  • Different types of work are not in the right place
    • People’s talents are underutilized, or they are not performing because they are in the wrong position
    • Everything has become inefficient through the organization
  • Business owners or leadership are lacking direction and leadership growth

How to apply Lean Six Sigma 

Lean Six Sigma can help your business grow.

 

There are several different things that these businesses can do that does not require a separate LSS organization.  Below are a few small and quick ways to implement this into the company.  Remember the key is to start small and then build upon these steps.

  1. Culture and mindset

    • Setup a culture and mindset of growth and positive mindset
    • Encourage people at all levels to be a part of the culture
    • Encourage continuous improvement through growth, learning, and process improvement
  2. Measurements

    • Create the right sizes or Key Performance Indicators (KPI)
    • A business needs to measure the right things to ensure that the company is moving forward and not backward.
    • The Lean Startup is a great book that touches upon this and the Lean mindset from a business start-up.
    • Examples of the right KPIs are:
      • Revenue
      • Operating Costs
      • Waste counts
      • Rework counts
      • Number of customer complaints
      • Number Service or products errors or defects
      • Cycle time
      • Accounts receivable – are customer paying their pays on time
  •  
  1. Map out all of the current “as is” processes

    • Include everyone within the company to map the processes.
      • Do not map the processes by yourself!
    • You do not need to use anything fancy to map out the processes.
    • Examples of software to use:
      • Powerpoint
      • Paper and pencil
      • Lucid Chart
    • Ensure everyone has access to see the processes
  1.  
  1. Train your people on Lean Six Sigma Concepts

    1. This training does not have to be a full Green Belt or Black Belt Training
    2. Yellow Belt Training or Lean Training is usually enough to get things started.
    3. Chick-Fila is a great company that uses Lean throughout their organization.
      1. David Reid from Chick-fil-a spoke on the Lean Blog Podcast how Lean is used throughout the company
      2. By teaching Lean to the Store Operators, this allows Chick-Fila employees to incorporate the different aspects to Lean throughout the entire organization
  2. Identify the processes that need improvement

    • Two ways to identify the problem processes:
      • Use the KPS that was created to determine what parts of the businesses are doing poorly
      • Use the Lean Wastes to identify the areas that need to improve

  3. Use basic tools to improve the processes:

    • 5S
    • Visual Factories
    • Kanban
    • Pull systems
    • Poke Yoke or mistake-proof
    • Continuous Flow
    • Stanard Work
    • Reducing Change over time
  4. Involve everyone within the entire company along this journey

    • This requires the buy-in on all levels to ensure success
    • Once everyone starts to be involved, I’ve seen businesses and organizations move beyond using the simple tools to becoming a successful business that grows year after year

Do you find the ideas listed in this article helpful? What are some of your ideas to implement the ideas from this article within your business?

If you would like to learn how I can help you grow with Contact me to see how we can work together.

 

Lean Six Sigma Benefits for Small to Medium Businesses

During several discussions over the past few weeks, I get asked: “how can Lean Six Sigma (LSS) be applied to various industries and sizes of businesses.” Through these discussions, I hear several different arguments about how to use or not to use LSS to small to medium companies or governmental sectors. After much thought, I decided to develop a series of articles on the benefits and application of LSS within small to medium companies and governmental agencies.

Let’s first start with what is the definition of small to medium businesses and the Lean Six Sigma benefits for small to medium businesses.

 

Small to Medium Business
Photo credit: https://www.123rf.com/photo_56499319_smb-small-and-medium-sized-business-acronym-business-concept.html

What is small to medium business?

Through my research, I did not find one single definition for small or medium businesses.  Depending on whom you talk to or article, there are several definitions. It depends on the industry and type of business that you have. There is not one single metric that defines what a small to medium business is.  However, I was able to great the following list of what a small to medium business might mean:

  • Privately own in either of the following capacities:
    • Corporations
    • Partnerships
    • Sole proprietorships
  • Employee size
    • Small business – fewer than 100 employees
    • Medium business – 100 to 999 employees
  • Annual revenue
    • Small business – less than $50 M in annual
    • Medium business – more $50 M to less than $1 B

I gathered these factors from the following websites:

After reading the article, Think Small with Six Sigma from SPIE, I learned that roughly 2/3 of all employees in Europe and nearly half of all US Employees work for small to medium businesses.  That is a vast workforce population. Larger companies are using small to medium businesses more and more.  These businesses are representing up to as much as 75% to 80% off the entire business processes.   More substantial corporations that use Lean Six Sigma, Lean, or Six Sigma are asking their small to medium business partners to implement some quality program to ensure that their end customers experience is top-notch regardless of who is serving them. 

Small to Medium Business Processes

Regardless of what type of business or industry that, you are in, there is a business process for anything. Irrespective of the business process has been formally mapped out, or if SOPs (Standard Operating Procedures) exists or not. Each business and employee follow some type of process.  Examples of  high-level business processes are:

  • Customer Service- regardless in a call center or receptionist
  • Payroll
  • Billing customers for services or products
  • Accounting processes
  • Sales processes irrespective the size of the company
  • Human Resources processes
  • Delivering the service
  • Data Analytics
  • Creating reports
  • Finance processes
  • IT processes
  • Product development process or Lifecycle process

However, one of the biggest things that I’ve seen within any business is that leaders and employees are unsure what the process is.  One employee may know what they need to do, but they are unsure what the upstream or downstream employee is doing. They are unaware that mistakes or issues are occurring. Edwards Demming put it best “ If you can’t describe what you are doing as a process, you don’t know what you’re doing.” 

When I hear business leaders or owners talk about the issues within their business, I immediately know that they do not understand what their business processes are. They are unsure how to fix them.  The following are the common complaints that keep business leaders and owners up at night :

  • My customers are complaining about the quality of the service
  • We do not seem to move fast enough to satisfy our customers
  • Our products are not meeting customer specifications
  • We are unable to keep up with customer demand
  • We are losing our customers to our competitors
  • We are losing revenue even though we have tried to fixed things
  • My employees are always complaining
  • My employees are always complaining about one another
  • Our business is growing, but we can’t keep up with the growth

Lean Six Sigma Benefits for Small to Medium Businesses

 

Before diving into how to apply LSS within small to medium businesses, we need to touch upon what are the benefits of using it. LSS has soft and hard benefits.  The hard benefits are generally tangible things, for example:

  • Reducing processing cost
  • Increasing revenue
  • Improving cash flow
  • Eliminating the need for capital expenditure
  • Faster quote to cash
  • Reduce the need to hire additional employees
  • Reducing operating costs
  • Reduce the need for extra inventory
  • Reducing machine operating time
  • Reducing overtime hours
  • Reducing cycle time to deliver the service or creating the product

LSS soft benefits do not have the same tangible effect as hard benefits.  However, these soft benefits are beneficial for the business.  Examples of soft benefits are:

  • Customer focus
    • The focal point becomes the customer instead of the company
    • Happy customers usually lead to more revenue
    • A good and bad review can make or break a business
  • Improved employee morale
    • Happy employees enjoy coming to work every day
    • Happy employees treat customers and other employees with respect
    • Unhappy employees can result in high turnover and loss of talent
  • Improved employee effectiveness
    • Employees perform better when they are happy
    • Better performance means satisfied customers
  • Leading by fact and alignment
    • LSS provides a way for owners, leaders, and managers to manage the company based on facts
    • LSS eliminates the need for guessing
    • LSS provides critical measurements for a business to define success

Can you think of any other benefits? What are your thoughts on applying LSS to small to medium businesses?

In my next article, I’ll go over how to apply Lean Six Sigma within small to medium businesses.

If you want to learn how to use Lean Six Sigma within your business, Contact Me

 

Lean Six Sigma Tool Series – How to use 5S

Have you ever used 5S?

If you ever organized your laptop, workspace, bedroom, closet, laundry, or garage, you utilized Lean Six Sigma 5S without realizing it.  5S is a well-known Lean organizational method used throughout all industries.  5S can be used in the workplace and within your everyday life. 

Examples of 5S

Lean Six Sigma 5S in the workplace

Lean Six Sigma 5S

5S is an organzaitonal method that uses a list of five Japanese words: 

  • Seiri – Sort
  • Seiton – Set in Order
  • Seiso – Shine
  • Seiketsu – Standarize
  • Shitsuke – Sustain

 

Lean Six Sigma 5S in the laundry room

What is 5S?

  • 5S = Sort, Set in Order, Shine, Standardize, Sustain
  • Originated and developed from Japan – Toyota Management System
  • A structured approach to establishing and maintaining a well-organized workplace
  • It can be used at home to organize kitchens, closets, garages, etc.

Why use it?

Work
  • Stops the causes of errors and defects
  • Prevents Problems
  • Provides a clean and organized work area
Home
  • Clean and tidy house (no clutter)
  • No wasted energy on searching and retrieving things
  • No money spent on extra storage

How to use 5S 

Step 1 – Sort

Eliminate everything that is not necessary

Lean Six Sigma 5S - Sort

  • Get rid of :
    • Unused appliances, tools, books, & medications
    • Broken things
  • Separate files into necessary and unnecessary
  • Create categories to put the required data and things into

Step 2 – Straighten/Set in order

Find items easier

Lean Six Sigma 5S - Set in Order

  • Arrange things in a manner that is easy to find things
    • Put files into file folders
    • Put items in the same location in the refrigerator
    • Put labels onto containers
  • Keep an organized closet

Step 3- Shine/Sanitize

Clean, tidy, organize

Lean Six Sigma 5S - Shine

  • Tidy up at the end of each day and week
  • After a DIY project, always leave the workplace tidy
  • Fold and put laundry away right away
  • Clean the kitchen as you cook

Step 4 – Standardize 

Define repeatable routines

Lean Six Sigma 5S - Standardize

  • Always clean your house in the same room order
  • Create a checklist that helps place everything in the right place
  • Establish a standard daily/weekly schedule for home & work
  • Use the same type of hangers for your clothing

Step 5 – Sustain

Maintain and review your routines 

Lean Six Sigma 5S - Sustain

  • Review your to-do lists
    • Did you accomplish everything in time and with the expected results?
  • Monthly e-mail habits review
    • Do you have your inbox under control?
  • Monthly review at home and work?
    • Is everything still where it belongs?

What is Lean Six Sigma?

Lean Six Sigma is a practice that combines two popular methodologies of Lean and Six Sigma. As a result of combining Lean and Six Sigma Tools, you get strong results that improve business profits, operating efficiency, and most importantly customer satisfaction.

Before we dig into Lean Six Sigma, we must first answer the questions:

  • What is Lean?
  • What is Six Sigma?

Then we can answer the question, what is Lean Six Sigma?

What is Lean?

When you think about Toyota vehicles, what comes to mind?

You might have come up with:

  • Long-lasting
  • Affordable
  • Reliable
  • High quality for the money

When I was a kid, you would buy a Toyota car over an American car if you wanted something that was going to last a long time.  As a result, you were buying the Toyota Production System – a Lean concept.   Lean has come together after many years of study and theories from Henry Ford, Toyota Production System, Just-In-Time, Eli Whitney, Edward Demming, and other great thinkers. 

Lean is a methodology the reduces or eliminates waste out of a process.  As a result of removing waste, the only thing that is left is the value add (VA) steps. You now have a high-quality process that produces higher customer satisfaction rates. In simple terms, waste is anything that does not add value to a product or service.  As a customer, you do not want to pay for the waste. It raises costs!   In addition to higher customer satisfaction rates, Lean helps with:

  • Reducing cycle time (the amount of time takes to produce a product or service)
  • Creating a high-quality product with little to no defects
  • Reducing overhead or inventory

While Lean wants to remove the waste, I always felt that the customer was another critical aspect.  The customer is vital in any industry and should still be the forefront of what we do.

The “customer” is throughout the five principles of Lean:

  1. Identify your customers and what they value
  2. Map the Value Stream 
  3. Create the flow to the customer
  4. Establish pull based on customer demand
  5. Seek continuous improvement

 

5-principles of Lean

Photo Credit:  https://blogs.mtu.edu/improvement/files/2014/01/5-principles1.png

 If you want to learn more about Lean, I recommend the article – What is Lean? also, the book Lean Thinking: Banish Waste and Create Wealth in Your Corporation.

What is Six Sigma?

My first introduction to Six Sigma methodology was during my MBA. I knew it was a systematic data-driven methodology. However, I never saw Six Sigma in action, until I went through AT&T’s Six Sigma program.

 Did you know that Motorola used Six Sigma back in the 1980s?  

Back in 1984, Bill Smith introduced Six Sigma within Motorola to compete with Lean. For example, throughout the 1980s and into the 1990s, Six Sigma was heavily used in manufacturing. Jack Welch, Larry Bossidy, and other great thinkers developed Six Sigma.

Six Sigma is a disciplined, data-driven approach to process improvement.  Six Sigma makes things better, faster, and at a lower cost.  Therefore, it cuts process variation and enhances process control.

There are two main frameworks for Six Sigma:

  • DMAIC – Fix broken processes and products
  • DMADV – Create new methods and products
DMAIC 

DMAIC is an acronym for Define, Measure, Analyze, Improve, and Control.  It provides a roadmap to improve and give stability to existing services, products, or processes.

DMAIC road map

Photo Credit:  https://www.greycampus.com/blog/quality-management/a-brief-introduction-to-lean-and-six-sigma-and-lean-six-sigma

DMADV

DMADV is an acronym for Define, Measure, Analyze, and Design.  By using this roadmap, you can create a new service, product, or process. Sometimes things are too broken; it’s better to start fresh.

DMADV roadmap

Photo Credit:  https://www.sixsigmaconcept.com/six-sigma-design

To learn more about Six Sigma, I recommend the article – What is Six Sigma?  also the book – What is Six Sigma

What is Lean Six Sigma?

What happens when you combine Lean and Six Sigma?

You get a powerful method that combines powerful tools that produce quality products, services, or processes. Therefore you get highly satisfied customers, impactful savings, and higher revenue.

When I started down my journey into the Lean Six Sigma world as a Black Belt, I  only used Six Sigma.  As my career grew, I began to learn Lean and began to join both in my projects and programs. After that, I started to see more significant results.

Lean-six-sigma-elements

Photo Credit: https://www.goskills.com/Lean-Six-Sigma

Lean Six Sigma is a newer concept introduced in 2001 by the book – Leaning into Six: The Path to Integration of Lean Enterprise and Six  Sigma. Many different organizations use the idea like Nielsen, AT&T, Amazon, Caterpillar, Dell, Bank of America, US Marine Corp, and US Army.

Overall Lean and Six Sigma do have the same goal, but each discipline identifies roots causes of waste differently.  For example, Lean thinks waste comes from the non-value added steps while Six Sigma thinks waste comes from variation.  While both methodologies are right, when you combine them you get something even more powerful!

When I practice Lean Six Sigma, I review what is going on to find the approach that I’m going to take. Consequently, there are always two sides to every story.  In other words, never judge a book by its cover. 

Lean Six Sigma Examples

The Lean Six Sigma Examples I usually come across are the following:

  • If detailed data does not exist, I’ll take a Lean approach to makes things effective and efficient. With waste eliminated, I’ll put a data system into place. Then I’ll use the observations to take a Six Sigma statistical approach to enhance things further.
  • If detailed data is present, I start with a Six Sigma approach and then bring in Lean. This approach is unique because I can use Lean Six Sigma right away instead of using each method separately.
  • With the creation of something new, I approach this by using DMADV and Lean together. Both approaches generate creativity and innovation.
Lean Sigma produces successful exciting outcomes!

How can you use Lean Six Sigma?

Can you think of ways to use it within your business?

In the coming weeks, there will be blog posts about Lean Six Sigma in more detail and how to use it.  If you don’t have time to wait, Contact Me to see how I can help you now.