Is Lean Six Sigma effective or harmful for a firm? Part 3
As the global economy goes south, a record number of companies are trying to improve their business performance. To help their bottom line, they are implementing Lean Six Sigma. Is it throwing good money into a bad idea? Will it help?
In the 1970's, the predecessor to what we call "Six Sigma" was used by a company manufacturing T.V sets as a quality improvement tool. This company impressed Motorola in their ability to produce their TV sets with a 5% defect rate. Bob Galvin was the Motorola CEO and he wanted to implement the same process throughout the company. He asked Bill Smith and Mikel Harry get involved and they developed a roadmap for Six Sigma implementation, which was MAIC (Measure, Analyze, Improve and Control). The focus of Six Sigma is reducing process variation in business systems. Six Sigma quality is measured in the number of defects per million opportunities (DPMO). The standard for achieving Six Sigma quality is 3.4 DPMO. This will return a yield of 99.99966%.
Later, such companies as Unisys Corp, GE, Honeywell and Allied Signal developed and improved Six Sigma from a quality improvement tool to become an integrated management system using the DMAIC model (Define, Measure, Analyze, Improve and Control). These organizations trained key employees to become Six Sigma practitioners known as Green and Black belts. Teaching employees about the application of lean principles is much less expensive and complex than Six Sigma training programs. A disadvantage of Six Sigma projects is they will often require months to complete over days or weeks to complete a Lean events. The cost versus benefits between implementing a Lean or Six Sigma program will be very much influenced by the type of results needed. An organization can reap huge rewards over the long term if they can support the more expensive Six Sigma training costs. However, if it trains people and does not use their newly acquired skills effectively, it is a waste of time and money.
The late 1990's Lean principles and Six Sigma were merged together to create what is branded as Lean Six Sigma (LSS). It is a blending of the Six Sigma DMAIC model with Lean principles from the Toyota Production System (TPS). Organizations who developed the training procedures for attaining a Lean Six Sigma certification adopted the Six Sigma belt system. Several of the Lean training and certification institutions have also implemented a Six Sigma type of belt classification. Training employees to become certified Lean practitioners is much less expensive than Lean Six Sigma training and certification. An organization would need to do a cost-benefit analysis to determine if the payback for the Lean Six Sigma training is a more viable choice over the Lean training. The ultimate test is to determine which of the two training programs can be converted into a direct improvement to their bottom line. Now, we can ask the question in the article heading. Is Lean Six Sigma healthy or harmful for a business?
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