Lean Six Sigma inSMEs

Fundamental of Lean Six SigmaRodriques Johnpeter

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Table of ContentsAbstract:..........................................................31. Origin of Lean Six sigma.......................................4

2. Describing Six sigma concept...................................53. Describing Lean concept........................................7

4. Integration of Six Sigma and lean..............................85. Researches on SMEs.............................................9

6. Analysis of Lean six sigma methodology in SMEs based on five casestudies...........................................................10

7. Analysis of Post Implementation of Lean six sigma.............118. Results Discussion............................................12

9. Critical Success Factors......................................159.1. Executive Engagement..................................15

9.2. Communications.............................................169.3. Projects...................................................16

10. Conclusion...................................................17Bibliography......................................................18

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List of Figures

Figure 1 Origin of Lean Six sigma..................................5Figure 2 Six Sigma at Motorola.....................................6Figure 3 five stage cycle of Six sigma.............................7Figure 4 Basic five lean approaches................................8Figure 5 Nature of improvement.....................................9Figure 6 Define (DMAIC)...........................................12Figure 7 Measure(DMAIC)...........................................14Figure 8 Analyse (DMAIC)..........................................14Figure 9 Improve(DMAIC)...........................................15Figure 10 control(DMAIC)..........................................15Figure 11 Lean tool...............................................16Figure 12 Lean and six sigma tool based on case studies...........18

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Abstract

Purpose: The purpose of this study is to find out Common Lean

Six Sigma tools applied in Small/medium Company.

Design/Methodology/approach: Intense Literature review was

carried out in Lean Six Sigma and an investigation was carried

out by looking at the five case studies in SME.

Findings: The common tools which is used in the SME were

analysed: VOC, SPC, Project plan, Data collection plan, cause

and effect, Basic statistics, control plan, and in Lean tools

root causes analysis, value stream map, Which are the common

tools that been used to meet their goal.

Research limitations/Implications: the number of case studies

considered to be small, as only case five studies are to be

considered. Some of the case studies did not reveal that

applied Lean Six Sigma tools in SMEs. Further research will

increase the number of case studies to find out the common

lean six sigma tools applied in SMEs.

Practical Implications: The final research output will help

the beginners to initiate lean six sigma in the area of SME

Keywords: Lean, six sigma, lean six sigma,

Paper type: Research paper

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1.Origin of Lean Six sigma

The Increased level of globalization and continuous

technological development, the organizations have to

accelerate the speed of change to adjust to new situations.

This situation presents opportunities and threats for company

to innovate and

attempt for operational excellence in order to stay

competitive in the industries. Origin of Six sigma can be

traced back when organisation like GE, Ford, General Motors,

and Xerox etc started to implement to decrease variation, in

products and process, to attain high quality (Sankar, 2009).

The figure 1 represents the origin of lean six sigma.

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Figure 1 Origin of Lean Six sigma

Six sigma is the result of many years of quality development

efforts by Great guru. Dr. W. Edward Deming,has been regarded

as “Father of modern Quality movement” (Sankar, 2009). The

term six sigma was coined by Bill Smith (1929 - 1993) in

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Motorola(Figure 2) .

Figure 2 Six Sigma at Motorola

2.Describing Six sigma concept

The purpose of six sigma is to reduce cost by reducing the

variability in the processes

which leads to decreased defects (Naslund, 2008). The term

“Six Sigma” refers to a statistical measure of defect rate

within a system. Six sigma presents a structured and

methodical approach to process development (Pepper and

Spedding, 2010).

By using statistical methods, administrations are able to

recognize variations in

a process, which helps to identify the cause of the problem.

Process improvement can be improved by eliminating root

causes, and sufficient measure to control the process

variation in the future (Naslund, 2008). Over a period of time

six sigma has been used in all area of business including

designing, improving and monitoring business process. Deming’s

plan-do-check-act cycle guides initiative process through a

five stage cycle of define-measure-analyse-improve-control7

(DMAIC) figure 3. Each cycle has its own tools and techniques

in order to system/process under control.

Figure 3 five stage cycle of Six sigma

Six Sigma is a quality management tool , regardless of type of

business or field, can bring success in the context of

continuous improvement. To have a positive application in the

aspect of continuous improvement factors like commitment of

management and clear open communication are essential. Pros

and cons of six sigma has been discussed below:

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Define Measure

Analyse

Improve

Control

Process excellence

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ProsSix sigma strategy focuees on achieving measurable and quantifiable financial returns to the bottom-line of an organisation (Antony,2004). Six sigma strategy places an unprecedented importance on strong and passionate leadership and the support required for its successful deployment (Antony,kumar and Madu,C.2005).ConsThe challenge of data availbility(Antony,2004).The right selection and prioritisation of the projects is considered one of the big challenge for cricitcal success(Antony,2004).

3.Describing Lean concept

Lean is defined “as the methodical removal of waste by every

members of the organization from all areas of the values

stream (Womack, 1994).Lean helps organisation to increase

efficiency, decrease cost by eliminating all unwanted steps

and inefficiencies in the process. The main aim of lean is to

reduce waste and adding value to production systems so that

organization does more than less (Andrew, 2009). Lean

manufacturing system is way beyond the scope of the Toyota

production system. There are seven kinds of muda (waste) that

are addressed in the Toyota Production System which are

described below:

1. Defective products

2. Excess Motions

3. Work-In-Process

4. Inappropriate Processing

5. Transportation

6. Waiting

7. Overproduction

Lean helps to eliminate waste in all area of business startingfrom production, customer relation, product design and management by using basic five lean approaches (figure 4).

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Figure 4 Basic five lean approaches

Lean system identifies and reduces unwanted variation by

creating uniform activity pattern. Lean production system

helps to practice MTO production by decreasing lead time and

still providing on time deliveries.

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IdentifyMeasure the value stream

Pull on customer demand

Create flow

Achieve perfecti

on

Process Efficien

cy

4.Integration of Six Sigma and lean

Lean six sigma is a method that aims to increase shareholder

value by achieving progress in customer satisfaction, cost,

quality, process speed and flexibility. Interaction of Six

Sigma and lean management is considered as the state-of-the

art, as each system gives priority to each part of business.

Each system gives priority to certain facets of organizational

performance. A detailed analysis of the two programs provides

some obvious reasons why the programs alone may fail to

achieve absolute perfection (Arnheiter and Maleyeff, 2005).

Arnheiter and Maleyeff (2005) explain the nature of

improvements which are possible in the initiative figure 5.

Figure 5 Nature of improvement

The vertical axis represents the cost from producer viewpoint

and horizontal axis represents customer view point of value,12

which includes on time delivery and quality. Under either

system, improvements will be made, but these improvements will

begin to level

off at a certain point in time. With Six Sigma and lean

management, improvement extends to certain level and then it

drops, but whereas with both lean and six sigma the

perspective of customer and producer increase as it drives

significant results.

5.Researches on SMEs

SMEs are the source of enhancing competiveness and they

contribute major to the economics of any country.SMEs are the

suppliers to large organisation and hence they are considered

as the “footprint”. Due to the fast growing of the supply

chain management, it is therefore SMEs responsibility to cater

product with high quality at low price as they are the

footprint of the large organisation. Let us understand

Deficient characteristics of SMEs so that the beginners can

understand the challenges in running a small or medium

enterprise which was summarized by Prasanna and Vinodh

( 2013).

Lack of management skills

Lack of knowledge of employee

Poor quality and logistics

Lack of proper management commitment

Poor communication

Low degree of standardisation

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Insufficient infrastructure for any change

Fear of new initiatives and technologies

The main reason for SMEs to fall back behind the target is

the adaptability of embracing new technologies and

initiative. The top management team need to be noticeably

supportive of every phase of six sigma initiative and they

must reveal by their lively participation, participation and

by their actions that such support is more than lip service.

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6.Analysis of Lean six sigma methodology in SMEs based on five case studies

CaseStudies Define Measure Analyse Improve Contr

ol Lean tool

Lean sixsigma in

SMEs

Brainstorming ,ProjectPlan,ProjectCharterVOC(voic

e ofCustomer), CTQ,SIPOC

VSM,GAGE,repeatabilityand

reproducibility ,data

collection plan

Paretodiagram,causeand

effect.Brainstorming

QFDwith

VSM,5S,Faulttree

analysis

FMEAValuestreammap

ApplyingLean sixsigmain asmall

engineering

company-a model

forchange

ParetoAnalysis NA

Causeand

effect

Designof

experiment

Anova

Statistica

lProcess

control

5SImplement

ation

Implementing theLean sixSigma

framework in anIndianSME: acasestudy

Brainstorming VOC(voic

e ofCustomer

),Projectcharter

Gaugerepeatabilityand

reproducibility

Paretodiagram

andBrainstorming

Designof

experiment

Totalproduct

ivemaintenance

Establishing5S

system

FMEAValuestreammap

A LeanSix-

VOCSIPOC

processanalysis

cause–result

Paretoanalysi

statistica

Rootcause

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Sigmaapproachto touchpanelqualityimprovem

ent

,Gauge

repeatabilityand

reproducibility

relationshipmatrix

s

lprocess

control

analysis

Lean SixSigma

methodology andapplicat

ion

valueflow map

Paretoanalysis

Causeand

effectNA

process

adequacy

analysis

Valuestreammap

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7.Analysis of Post Implementation of Lean six sigma

Case Studies-Journals Problem Results Benefits Author

Lean six sigma

in SMEs: an exploration through

literaturereview

1)To improve the first time right (FTR) percentagePoor quality and on time delivery

Decrease inProduction

lead time from412 mins to242 mins

NA

(Prasannaand

Vinodh,

2013)

Applying Leansix sigma in

a smallengineeringcompany-amodel forchange

1)Responsiveness and

flexibility toreact

effectively toa more erraticdemand profile

2)machinebreakdownproblems

Led to poordelivery

Hours downtimebefore LSS ¼100 hours ¼ 5per cent.

Hours downtimeafter LSS ¼ 40hours ¼ 2 per

cent.

Cost ofrejectsbeforeLSS ¼

£69,000,cost ofrejectsafter LSS

¼£36,000.

(Thomas,

Bartonand

Chuke-Okafor

,2008)

Implementingthe Lean six

Sigmaframework inan Indian SME:a case study

1)Reduce thedefects whichoccur in thefinal product-

crackpropagation inthe automobileaccessories

manufactured bythe companyCustomer

dissatisfaction& customerloyalty at

risk.

Reduction indefects

occurring ateach stage ofproduction

Thesavingsgenerateddue to

reductionin

defectswas

estimatedaround$46 500per year

(Kumar etal.,2006)

A Lean Six-Sigma approachto touch panel

1)To increaseproduct qualityin touch panel

Accuracy,reaction time,touch life,

NA(ChenandLyu,

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qualityimprovement

as there wasfunctionality

issuepoor quality

and lowcustomer

satisfaction

high-temperatureoperation,anti-UV andstrength.

Key efficiencyfactor,

enterpriserevenue andcustomer

satisfactionincreasedmarkedly.

2009)

Lean Six Sigmamethodology

andapplication

1)Inflexiblefor designchanges formanufacturingdishwasher

High scrap rateand increasedproduct cost

led to customerdissatisfaction

Increase firstpass yield ,

less scrap andreduction incycle time

20%reduction

inproductcost

(Atmaca andGirene

s,2013)

8.Results Discussion

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Brainstorming

project plan VO

CCTQ

SIPOC

Project charter

Value flow map

01234

Define process-Six Sigma

Figure 6 Define (DMAIC)

The above figure 6, different types of tools used in Define

phase based on the five case studies in SME. By observing the

graph we can say that VOC , Project charter, SIPOC and

brainstorming are the most common tool which is used in define

stage in SME. The “voice of the customer” is a process used

to capture the requirements/feedback from the customer

(internal or external) to provide the customers with the best

in class service/product quality. This procedure is all about

being preemptive and continuously innovative to capture the

shifting requirements of the customers with time. This data is

used to classify the quality attributes needed for a delivered

component or material to incorporate in the process or product

(Isixsigma.com, 2014). The Project Charter is an official,

basic document that outlines a process improvement project and

it will be periodically updated based on the scope of the

project. This plays important role in SME as it include

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Business Case, Problem Statement, Goal Statement, Team

Members/Roles, and Constraints/Boundaries.

VSM Gage R&R Data collection

plan

Process analysis

Pareto analysis

0

1

2

3

4Measure -Six sigma

Figure 7 Measure (DMAIC)

The above graph represents the different types of tools which

is used in Measure phase in Six sigma in SME. Gage R&R is a

tool which is used widely in measure phase to measure the

amount of variation from the system. The variation obtained

from one gage and one operator when measuring the same part

several times. This tool is commonly used in most of the

manufacturing company as it related to individual operator.

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Pareto analysis cause and effect. Brainstorming 0

1

2

3

4

5

Analyse- Six sigma

Figure 8 Analyse (DMAIC)

The distribution of the different tools which is used in Analyse phase in six sigma is shown in the figure 8 . Cause and effect is the most common method used in SME as per the five case studies.

QFD VSM Fault Tree

DOE Anova TPM 5S Pareto analysis

0

1

2

3Improve-Six sigma

Figure 9 Improve (DMAIC)

In figure 9, improve stage in six sigma is described where

Design of experiment is the most common tool used in SME based

on the Five case studies.

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FMEA Statistical Process control

process adequacy analysis

0

1

2

3Control-Six sigma

Figure 10 Control (DMAIC)

From the figure 10 we can understand FMEA and Statistical

Process control is most commonly used in Control stage of

sigma in SME based on the five case studies.

VSM 5S Root cause analysis0

1

2

3

4

Lean Tools

Figure 11 Lean Tools

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The above graph shows (figure 11), the Lean tools used based

on five case studies in SME. By looking at the graph can tell

that Value stream map is the common tool used in Lean.

9.Critical Success Factors

After understanding the different types of tools used in SME

for both Lean and six sigma, now it is important to discuss

the critical success factor to implement in SME. Unless the

beginner understands the major requirement for successfully

implementing lean six sigma, the study and analysis of the

different tools based on five case studies will be unfruitful.

The main Critical success factors have been discussed below

(Isixsigma.com, 2014):

9.1. Executive EngagementTrustworthy support and dynamic role in communication Corporate strategies have to be linked with lean six

sigma. Clear prioritization of projects. Fact driven supports at all levels of decision-making. Creating accountabilities, expectations, roles and

responsibilities for the organization. Frequent follow-up meetings.

9.2. Communications Six Sigma roles should be supported with proper creation

and communication of a Human resource plan. Frequent written communications on Six Sigma update and

successes.

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Development and dissemination of communication aids to management.

Creating a “common language” based on Six Sigma.

9.3. Projects Assure linkage of Six Sigma projects to critical business

and customer needs. Establish projects of appropriate scope and size

(significant savings & achievable). Assign a Champion and Black Belt to each project (and

hold them accountable). Implement a project tracking system to facilitate

replication and reuse.

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10. Conclusion

VSM

Gage R&R

Data collection plan

Process analysis

Pareto analysis

Brainstorming

Project Plan

Project Charter

VOCSIPOC

cause and effect QF

D 5S

Fault tree analysis

DOEAnova

TPMFMEA

statistical process control

Root cause analysis

0

2

4

6

Lean six sigma tool based on case studies

Figure 12 Lean six sigma tool based on case studies

The figure above summarises overall tools is been applied in

SME based on 5 case studies. By looking at the graph we can

see the VSM,Gage R&R, Pareto anlaysis,brainstorming,VOC,Cause

and effect,5S are the common tools that been used to meet

their goal.

Both approaches, Lean and six sigma require a process focus,

and both include customer drivers, either to define what needs

to be improved or to define value (which then drive process

improvement). Six Sigma focuses primarily on reducing

variation, whilst Lean focuses on improving flow in the value

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stream and eliminating waste, although both may have similar

secondary effects.

The full benefits of Lean Six Sigma will only be realised when

applied at both strategic and operational levels, with

universal application only at the strategic level. Application

at the operational level results only in cost reduction,

whereas application at the strategic level results in wider

benefits for the organisation.

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