 The average Lean Six Sigma (LSS) project team delivers over $200,000 impact to the bottom-line, where a LSS rollout involves multiple teams. Based on 2005 Houston job postings and our research, Lean Six Sigma companies are receiving $500,000 to one million dollars in annual return for each full-time Black Belt. The only reason to implement Lean Six Sigma (LSS) is to achieve strategic goals such as improve profitability or reduce operating costs. LSS based process improvement dramatically reduces costs.
Lean Six Sigma contributes profits in two ways. First, it reduces operating costs by eliminating non-value activities including the resources associated with them, and also by reducing the cost of quality, the cost of identifying and fixing defects. The second and most important way LSS enhances revenue is by increasing sales. Companies with effective Lean Six Sigma programs, such as Caterpillar, GE and Honeywell (formerly AlliedSignal), consistently deliver their products or services reliably, responsively and with high quality. This makes them preferred suppliers.
Companies undergoing massive expansion experience “growing pains”. The root causes of most of those growing pains are avoidable, since most arise from not managing a product or service from a process perspective. A process perspective means looking at the consistent manner by which a series of tasks occur to produce a product or service. Looking across an organization at processes instead of focusing on functional silos improves understanding of operational issues, teamwork, and efficiency.
 As a process improvement system, Lean Six Sigma can address this root cause and become the foundation of your company’s growth strategy. By managing by process instead of function, processes are designed to be easily scaled up during periods of growth. Processes do not need to be complicated to be effective and efficient. For instance, during Vince Lombardi’s coaching career with the Green Bay Packers, he focused the team, not on fancy plays, but just on simple consistently well executed plays or processes. This approach was considered a key to their success.
Lean Six Sigma provides the framework, DMAIC, and tools required to enable people to improve their own processes. It is intended to tap into the talent, expertise and knowledge an organization already possesses. The primary roles of the LSS consultant are to help an organization get started and prepare employees to continue the effort on their own.
Data shows that lean six sigma-based process improvement increases profitability for all kinds of organizations. One assumption frequently is made that lean six sigma is only for a manufacturing organization. Data shows otherwise. A Quality Progress study, conducted by the American Society for Quality, reported that low capital intensity (i.e.: service) companies with effective six sigma type systems demonstrated almost three times the improvement in operating income as high capital intensive (i.e.: manufacturing) companies with similar lean six sigma systems achieved over the same period of time. Service companies also experienced nearly three times the growth in return on assets and return on sales. In fact, many manufacturing companies who have implemented Lean Six Sigma on the production side of their business are missing the opportunity of applying these tools and techniques to their transactional processes and achieving more impact to their bottom-line.
A second assumption about Lean Six Sigma is that it is just for large organizations, the General Electrics of the world. However, data shows this is not the case. The Quality Progress article mentioned above reported that among firms with lean six sigma type programs; smaller firms had almost three times the improvement in operating income as the larger ones and more than twice the growth in return on assets and return on sales as the larger ones.
Smaller organizations do have special problems they have to work around, but they also have advantages. For instance, they are much more adroit at changing direction. Research on diffusion of innovation shows that, once a belief or practice is adopted by 25% of a population; it becomes a permanent part of the culture. It’s obviously much easier to get to 25% of the population in a small organization than it is in a large one. It’s also much easier for top management to influence a large proportion of the people in a smaller organization than a larger one. Furthermore, people in smaller organizations are more used to working with a relatively wide range of people and tasks than those in larger organizations are, and this facilitates adopting the process oriented approach to work associated with lean six sigma.
Lean Six Sigma is a rigorous and systematic approach to process improvement and problem solving. It is appropriate for any organization. The implementation plan simply has to be tailored to meet the specific needs and conditions of each organization. It can be implemented in a way that makes it self-sustaining while it provides short and long term strategic and operational advantages.
Lean Six Sigma has a long track record of success in every industry imaginable. The Greater Houston ASQ (1405) is sponsoring a local class because, as the Chair, Ginger Truan, states, “The reason we are sponsoring this course is to give the Greater Houston area a chance to learn about this method.”
Come find out about how to make your organization more effective and efficient by attending Consensus Strategies’ introductory course titled “Successful Lean Six Sigma Yellow Belt” November 13-14th in The Woodlands, Texas. Register now for seating is limited.
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Mona Draper is the only GE certified Six Sigma trainer in the Houston area and holds an MS in statistics. She has published papers in regression analysis, forecasting, facilitation, and Six Sigma-based process improvement. For comprehensive information on Six Sigma, go to the Consensus Strategy website at http://www.consensusstrategies.com/ . On the about us page are a number of Ms. Draper’s published papers.
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Bob Brooks has worked over thirty years in consulting addressing issues of organization change, quality, productivity, and strategic planning. Over the past ten years, he has focused primarily on helping organizations implement process improvement systems, including lean thinking, and Six Sigma.
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