Lean and the Six Sigma business strategies have proven in the past two decades that it is possible to achieve significant improvements in terms quality, cost efficiency and time by focusing and upgrading performance of various in-house processes. Whereas Six Sigma is focused on reducing process fluctuations and improving process output by following a problem-solving approach using statistical metrics, Lean is primarily concerned with elimination of wastes and improving the in-house workflow.
Manufacturing giants like General Electric, Motorola, and Toyota have attained successful results as implementation of Lean Six Sigma as business strategy. However, it must be remembered using one of them alone has several acute limitations: Six Sigma can eliminate defects but it will not address the issue of optimizing process flow; whereas the Lean principles exclude the use of advanced statistical metrics required to estimate and compress the process capabilities so that they become ‘lean’ in the true sense. Therefore, Six Sigma and Lean are often two sides of the same coin. And as each approach can result in dramatic improvement, utilizing both methodologies simultaneously can promise identification and rectification of the problems at the root level using most appropriate toolkits. For example, attaining a goal of zero inventory not only requires reduction in batch sizes and inter-linking of various operations by using Lean, it also implies minimizing process fluctuation by utilizing Six Sigma tools.
However, it would be better for us to have a little insight into very basic differences between Lean and Six Sigma. The differences arise at the goal level themselves: Six Sigma aims at improving process capability and eliminating process variations whereas
Lean aims at particularly reducing wastes. Lean approach is often ad-hoc with little or no training but Six Sigma aims at creating ‘Black Belts’; in short it requires highly dedicated infrastructure. Both approaches use ‘Learn by doing’ training method; Lean is applicable typically to the manufacturing sector whereas Six Sigma is applicable to any business process. Six Sigma makes use of statistical metrics but Lean is based on comparison of best practices and the current.
Lean Six Sigma works great if efficiency alone as an issue. However, it’s loophole lies in the fact that it requires the management to spend a great deal of efforts and time training their individuals and having full-time LSS experts at hand round-the-clock. It is assumed that the efficiencies they attain will repay the efforts. That’s where the pitfall occurs.
An organization that uses Lean Six Sigma typically prioritizes the candidate projects for the approach based on their ‘Return on Investment’ (ROI). As a result, the ones with the best ROI are tackled in first place. As the time passes and since the experts are on duty, the cost of implementation remains unchanged. A point comes wherein the projects will have an ROI lesser than recurring Lean Six Sigma implementation costs. After that point, this business strategy is a loser. Lean Six Sigma helps organization reduce its expenses by making the processes more efficient. However, expenses do have a minimum level. For e.g. for manufacturer of drive shafts, steel or machinery cannot be made available for free. Lean Six Sigma will help you approach the lowest possible cost. But if you’re already near to that minimum cost, then you need to think twice before approaching Lean Six Sigma.
Lean Six Sigma is definitely the best approach as far as efficiency is concerned. But in the way that there’s no one cure for all ailments, the same it’s no solution for problems such as corporate branding, lack of strategic vision or internal company politics. Lean Six Sigma is bound to be worn out model with lowering return-on-investment.
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