Within the world of modern business, and especially in the situations where products, tangible and intangible are provided to a customer, the ability to provide products of the highest quality, free of defects, in a way that allows the producer to generate a sufficient return on investment is essential, as it has been for as long as the concept of exchanging something of value for something else of value has existed.
As technology and business intelligence has improved, there have emerged processes for the improvement of both products and the processes used to create them; chief among these are the concepts of Six Sigma and Lean. This paper will describe both of these concepts and explain how they are used as effective process, profitability, and product improvement tools. Upon conclusion of the paper, the reader will have a much better understanding of these concepts and their real world applications.Six SigmaWhen this paper was introduced, the statement was made that the improvement of products and the assurance of quality are basically ancient standards in the making of any good; with this being said, it is generally accepted that the pioneers of the modern practice of mass production, such as Henry Ford, quickly came to the realization that the process used to make something is not what added value to the product in and of itself, but rather the end result of a quality product that was cost effective to make was the real goal of the manufacturer (Eckes, 2001); therefore, there had to be a way to prevent, or at least reduce, the costly mistakes and inefficiencies that exist in the production process and still be able to provide the level of quality that the customer would pay for and the producer could realize a profit in furnishing. This brought about the concept of quality management, which is the ancestor of Six Sigma in that they both aim to reduce defects and boost quality while reducing wastes.
To loosely define Six Sigma, it could accurately be said that it is a highly precise way to statistically analyze production data in an effort to reduce defects; the data could vary, depending upon the industry and product (Eckes, 2001). The popularity of Six Sigma was greatly increased, starting in the 1960s, based upon the impressive results that General Electric was able to achieve through the usage of Six Sigma. Before Six Sigma was “born”, however, earlier methods of defect reduction and quality enhancement existed, such as Total Quality Management, for instance.Through the use of Six Sigma, there exists a highly reliable and valuable statistical tool; with this in mind, one of the more “hands on” methods of process improvement is Lean.Lean ExplainedThe organizations that learned from the experience and best practices of Henry Ford set themselves apart from their competition if for no other reason than due to their ability to reduce cost and waste from production processes, while still being able to maintain or even increase quality levels; admittedly, this is an ongoing process that must be constantly revisited and refined for long term results (Repenning and Sterman, 2002). Ironically, after Ford, one of the pioneers in this way of thinking was another automobile manufacturer, Toyota of Japan.
Toyota was intuitive enough to also realize that the elimination of wastes in production has the ability to add value to a product while reducing the expenses associated with making that product, and one of the best ways to do this is to literally break down the entire manufacturing process and refine it through the removal of the wasteful activities that add no value to the product. This process would come to be known as Lean (Delbridge, 1998). In the terminology of the Toyota personnel who created many of the Lean methods in use today, Muda, or waste, can be found in process, people and production. These areas need additional explanation, lest they be misunderstood.Process waste typically consists of extra steps that do not need to exist, such as searching for tools or parts that are scattered about and must be searched for time after time, which of course wastes time. Waste in people does not necessarily mean that people are being lazy, but more likely they are not being as productive as they could be if their duties are wasteful by nature or the person has to waste a lot of time doing a cumbersome process. The process itself could be loaded with waste, such as unneeded steps that provide no real results. When all of the areas of Muda are combined, every conceivable form of resource is needlessly wasted.
Lean looks at all of the areas of Muda and reduces or eliminates them altogether, with the net result of less cost, higher quality and more output from the same people, equipment, and other resources.Putting it All TogetherThe bottom line in Six Sigma, as well as Lean is the ability to make more with less, and to do so with the highest quality in mind. Reality is that throwing resources such as money, fancy equipment, or additional personnel into the production process is unlikely to improve anything if no consideration is given to the best way to perform necessary tasks and reduce mistakes in those tasks. Therefore, Six Sigma and Lean are without a doubt effective practices and methods. In fact, the success of Six Sigma and Lean in manufacturing led to their adaptation in Information Technology, Accounting, Customer Service, and many other areas to improve outcomes and cut waste.SummaryA combination of technology, innovation and ambition has given rise to Six Sigma and Lean, not to mention many other advances in productivity and cost control. In closing, it is accurate to assume that the value of these tools will only increase as the need to do more with less becomes more acute in all areas of industry and business.