Lean, Six Sigma, or Strategy?

Why not bundle all together?

Published: Sunday, December 5, 2010 - 20:23

A friend recently returned from a visit to China; his company had been acquired by a Chinese organization and he had gone there as part of the mutual due diligence. Not only did he come back impressed by their lower manufacturing costs but also with their technological advancements. While we in the United States hear of low quality standards of Chinese products, he was awed by the their adoption of current lean measures and Six Sigma, or a combination of the two as lean Six Sigma.

Most organizations that have adopted these methodologies will attest to the savings they have achieved via maximized productivity, improved product quality, reduced defect levels, and shortened cycle times. However, if we were to ask them about any competitive advantages these initiatives might have provided, we would get mixed responses. Ever wonder why that is so? How is it that despite the adoption of these approaches, many organizations are still unable to compete in world markets. Perhaps the world is coming to a new equilibrium.

A manufacturer in Southern California decided to move their operations to Mexico to reduce costs. Unfortunately, this was not enough to meet ever-increasing customer demands. The owner then decided to address the business challenges by eagerly adopting lean methodologies. The organization trained its work force in the use of lean tools and techniques, conducted kaizen events, and took on other projects to help reduce defects and increase productivity. Eventually though, this organization had to start outsourcing to manufacturers in China. Perhaps it is because lean Six Sigma has been misrepresented as simply a means for cost reduction, rather than a strategy for achieving business goals.

Organizations have been teaching and implementing lean Six Sigma for more than a decade, however, we seldom hear about its place in organizational strategy. Rarely do those who teach and facilitate implementing lean Six Sigma stress the need for an organization to develop a lean Six Sigma strategy that fits their operations and deals with key issues that can strengthen their business and eliminate or mitigate business risks.

Organizations thus fail to reap the full competitive benefits of a lean Six Sigma initiative. Rather than focusing just on activities or quick hits, try to understand its role in the larger strategic picture:

• Does it provide a framework that fits with organizational strategy?
• How does it align with other quality initiatives or standards such as ISO 9000, information technology infrastructure library (ITIL,) or  capability maturity model integration (CMMI)?
• Will it be applied to those value-added processes (from a customer’s perspective) or will it have a coordinated approach across all departments?
• How will the results be measured: bottom-line savings or other critical metrics that reinforce individual, departmental, and organizational performance?
• How will improvements at one location be leveraged to attain breakthrough results at other locations of the organization?
• What role will kaizen events play in the whole process?
• If looking at an organization’s balanced scorecard, would this approach touch all quadrants (financial, customer, internal business processes, learning, and growth)?

To reap the full benefits of a lean Six Sigma initiative or culture, look at it strategically rather than as a project or a series of projects. The traditional approach certainly leads to cost savings. But if an organization wishes to gain competitive advantage through the use of lean or Six Sigma, it needs to go beyond the tools and the quick hits and start with strategy.

How is lean Six Sigma treated at your organization? Is it a program to achieve some cost savings or does it have a strategic place? Have you ever heard it discussed in that light?

About The Author

Akhilesh Gulati

Akhilesh Gulati has 25 years of experience in operational excellence, process redesign, lean, Six Sigma, strategic planning, and TRIZ (structured innovation) training and consulting in a variety of industries. Gulati is the Principal consultant at PIVOT Management Consultants and the CEO of the analytics firm Pivot Adapt Inc. in S. California. Akhilesh holds an MS from the University of Michigan, Ann Arbor, and MBA from UCLA, is a Six Sigma Master Black Belt and a Balanced Scorecard Professional.