You Got Your Six Sigma in My Lean

Melding both ideas into one can give your business sweet new life.

Nothing forces people to get religion more than a brush with death, and companies are no exception. Look at Hoffman, of Anoka, Minn. When the telecom bust of 2001 and the aftermath of 9/11 hit, it forced the manufacturer of electrical enclosures to change its ways. Its management had to turn to Lean and Six Sigma manufacturing philosophies to keep the company profitable and able to continue doing business as a Minnesota-based manufacturer.

Like other companies in similar circumstances, Hoffman came to develop a strategy that blended the two philosophies into a kind of Lean Six Sigma tailored to its business. It joined the ranks of companies that have adopted Lean Manufacturing as a base operating philosophy, but have adjusted it with Six Sigma to suit their situations. As a consequence, these companies not only weathered their storms but also emerged from their crises stronger.

In Hoffman’s case, this blending occurred over time. The company had been dabbling in Lean Manufacturing for a few years before the recession and had seen some encouraging results in the few places that it had experimented with it. But it wasn’t until President Del Nickel had committed the company to the philosophy and worked to ingrain it thoroughly into its culture that the results became significant enough to make a difference.

He began by initiating a number of small projects that would pay big dividends and by keeping the employees apprised of the situation. Seeing how these projects were making a difference, the employees rallied behind Nickel. “You hear horror stories about resistance to change among the workforce,” says Michele Massimino, a Six Sigma Black Belt and director of Lean Enterprise. “It didn’t happen here.”

Besides the series of successes and the continual stream of communication, there is another important reason that the employees supported the effort. “We’ve never fired somebody because of a Lean event,” notes Massimino. “We’ve always reassigned them.” This was important because the Lean philosophy’s kaizen problem-solving technique uncovered several over-manned operations during the study of bottlenecks. Not only did moving the extra employees to the bottlenecks and redistributing the workload improve morale, but it also reaped huge productivity gains.

The Six Sigma philosophy traveled a rougher road toward acceptance than Lean did. “People in upper management were concerned about taking our focus off the rapid improvement that Lean had been showing,” explains Massimino. “So we packaged it as a tool in the Lean toolbox. Once we eliminated the idea that we were converting to Six Sigma, there was much more acceptance of it.”

So Massimino counts all continuous-improvement activities as Lean events, even if the employees are really using Six Sigma tools. A good example is a kaizen event in a paint booth. The employees had already devised ways to reduce the time to change from one powder to another, but the coats of paint were occasionally too light in some places and required touch ups. So a week-long kaizen event was organized to solve the problem. “We called it a kaizen event, but actually applied Six Sigma tools, like design of experiments,” says Massimino.

The accumulation of successes in the paint booths, welding lines, and elsewhere not only cut operating costs dramatically but also improved other performance metrics. From 2001 to 2006, for example, productivity rose by about 40 percent, and inventory turns were about 40 percent faster. Customer warranty claims fell by almost 50 percent. Safety metrics improved by 22 percent. And all of these contributed to the most important improvement of all, a 30 percent increase in sales.

Philosophies intertwined

Experts are not surprised that Hoffman would build its continuous-improvement process around Lean principles. “It’s meaningless to talk about Lean Manufacturing without talking about Six Sigma and total quality management,” says Jay Jeffreys, at Wonderware, a Lake Forest, Calif.-based unit of Invensys Systems Inc. “You can talk about a car separately from talking about the engine. But a car without an engine doesn’t make sense.”

In a similar way, the Lean Manufacturing and Six Sigma philosophies are parts of a healthy continuous-improvement program. Yet, because Lean Manufacturing streamlines flow within a process and Six Sigma reduces variation, Lean Manufacturing provides a kind of superstructure and hence, usually precedes Six Sigma. “Lean is typically the best starting point for dropping the waterline so that the true landscape of projects is clear to all,” explains Dave Gleditsch, dean of the Demand Flow Institute run by DemandPoint Inc., a consulting and training firm based in Englewood, Colo. 

To illustrate his point, he points to Allied-Signal’s experience with implementing the two philosophies. Its management had begun using Six Sigma before committing to Lean Manufacturing. Although the Six Sigma methods were successful, the benefits didn’t affect the bottom line much, a fact that disappointed Pete D’Loia, the company’s chief financial officer at the time. Bottlenecks were keeping them dammed up in the process.

Because of its focus on flow, Lean Manufacturing unleashed all of those benefits trapped in the process. The key leaders in the company’s Six Sigma movement also credited the Lean mentality with generating the data necessary to identify points in the process with the greatest variation.

The situation, however, was different at American Standard Companies Inc., the $7 billion conglomerate built around air-conditioning, automotive and plumbing products. The company implemented Lean first and Six Sigma second. “In hindsight, this was a great way to do things,” says Gleditsch. “Lean allows you to reap the ‘low-hanging fruit’ by changing old bad habits. And by aligning processes better to shorten cycle times dramatically, it creates a culture of making decisions ‘by the numbers.’ ”

Initially, the Lean program was driven by a need to manage the company’s limited working capital, which was in short supply because of a substantial leveraged-buyout debt. Management freed capital trapped inside its factories by streamlining the flow of their processes with software developed by DemandPoint, deploying Six Sigma tools and training the employees. It also devised incentives for management, tying them to inventory turns. The strategy paid handsome dividends. Not only did inventory turns triple, which had the side effects of improving delivery schedules and customer satisfaction, but Wall Street analysts also estimate that the programs generated an extra $120 million dollars a year on the bottom line.

TRW Automotive’s Occupant Safety Systems plant in Mesa, Ariz., blends the Lean and Six Sigma philosophies in a different way. It views them as separate but complementary tools in a larger effort that it calls operational excellence. “It’s an integrated approach,” says Ted Hansen, Continuous Improvement Manager at the airbag manufacturer’s Mesa Operations. “We use Lean Manufacturing techniques on the floor: visual management, TPM [total productive maintenance], and so on. But for problem solving, we use the Six Sigma DMAIC method.”

In fact, DMAIC (for design, measure, analyze, improve, control) is the basic plan for running the plant’s continuous-improvement projects. During the measure and analyze phases, the team determines the scope and root cause of whatever problem it is working on. “At the implementation phase, we use the appropriate tools to solve it,” says Hansen. “We may use statistical tools, which would lean more toward the Six Sigma approach. Or we may use Lean tools, such as line balancing.”

TRW deviates from Lean principles by deploying software from Activplant Corp., of London, Ontario, Canada, to extract the data from the process to conduct its continuous-improvement analyses. Because the software is Web-based, various users can reach into the programmable logic controllers (PLCs) connected to the network from their personal computers (PCs) and extract production data from the plant’s machinery. By installing this software, TRW is committing a kind of heresy among Lean purists, who advocate posting simple paper control charts at the line, instead of complicating things with software.

TRW’s rationale for using the software is to make the Lean philosophy even leaner. “The software is instantaneous,” explains Hansen. “It polls every cycle at each station in the line. It would take forever for someone to stand out there and watch every cycle at every station and capture the same level of detail.”

Consider the advantages that it gave a Six Sigma team assigned the task of boosting the productivity and reducing the scrap rates of one of the plant’s manufacturing lines. The team used Activplant to study the downtime and production rates at each station and to analyze the flow through the line. Engineers were able to determine whether the low rates were due to downtime at the station or to starvation caused by a process flow problem.

“We found that both were the case,” reports Hansen. “Using the theory of constraints, we found that one station was a bottleneck and couldn’t keep up with the others.” The team’s solution was to split the automated station into two manual processes, a move that decreased the complexity of the station and created capacity. The 85 percent uptime rose to 97 percent, and the 90-piece/hour production rate increased to 119 pieces/hour.

As the experience of TRW and the other companies shows, a good continuous improvement plan combines both philosophies, not either Lean or Six Sigma. “We’ve seen organizations get stuck in unproductive discussions about whether they should do Lean or Six Sigma,” says Jamie Flinchbaugh, of the Lean Learning Center, a Novi, Mich.-based training and consulting firm. “One company’s board of directors spent a year making that decision.”

In some organizations that use both philosophies, he also has witnessed debates over whether to categorize a particular project as either Lean or Six Sigma. “What really matters is that the plant gets the improvements it needs,” says Flinchbaugh. “So there has to be one plan, not a Lean plan, a Six Sigma plan, and a business plan.”

This single plan will vary from company to company, but it should contain some similar elements. “Six Sigma provides a structured method for solving problems, but Lean is really about running the business, about everything from planning your strategy to planning your day,” explains Flinchbaugh.

All for one

Whatever the plan looks like, one of its elements should be incentives that support the overall goal, not just one part of the organization. Tying the incentives to the overall goals avoids situations in which one group’s success comes at the expense of another’s. The purchasing czar for an automaker, for example, might be able to reduce a program’s cost by picking suppliers solely because they are the lowest cost, but not necessarily the highest quality. “He will meet his objectives and walk away with a bonus, but manufacturing will be slammed,” notes Laurie Felax, managing director of Stout Risius Ross Inc., a financial and operations advisory firm in Farmington Hills, Mich.

Rather than getting rid of people, Lean and Six Sigma events should concentrate on eliminating wasted effort and increasing the employees’ contribution to value-added activities. These philosophies stabilize the job demand and optimize the process. Lean improves efficiency by eliminating wasteful motions and activities, and Six Sigma reduces variability by eliminating the unexpected and abnormal. ”  

For more information, search keywords “Lean Six Sigma,” “Lean Manufacturing” and “Six Sigma” at www.automationworld.com}.

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