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What Comes After the Low Hanging Fruit?

Making smart choices about lean Six Sigma applications

There are four major approaches for organisation wide improvement efforts that fall under the label “lean Six Sigma,”
as evidenced by current practices at many industrial organisations, service organisations and consulting firms:

1. Traditional Six Sigma (TSS)
2. Lean Six Sigma plus (LSS+)
3. Lean Six Sigma light (LSSL)
4. Traditional lean (TL)

Each has its own strengths, but how do you determine which deployment model to use?

The first thing you need to understand is what a typical lean Six Sigma deployment involves. There are many permutations that have been practiced, but they all involve these four high level steps:

1. As a result of the strategic planning exercise, organisational gaps are typically identified. If the gaps and associated potential financial gains reside primarily in operations oriented functions, then the leadership team likely will opt to deploy lean Six Sigma.

2. The leadership team will set financial targets for the corporation and cascade the financial targets down to the business units so each business unit, function and department will have its own financial target.

3. Middle management will determine the resources required to
achieve the local financial targets, for example, in terms of number of lean Six Sigma belts and the number of projects.

4. The lean Six Sigma Champions will employ a structured process to identify potential lean Six Sigma projects, rank
them, select the best projects based on return on investment, organize the required resources and support, and launch the projects.

5. The Champions and Master Black Belts (MBB) will assist Black Belts (BB) and Green Belts (GB) to carry out their projects by managing them using the define, measure, analyze, improve and control (DMAIC) improvement strategy, which can be based on the LSS+ or LSSL model.

6. As a natural course of events, the organisation initially will gravitate toward easy, high return projects, which most people refer to as the low hanging fruit (LHF) projects. As time passes and LHF projects are completed, several things happen. Projects start to take longer because they are more complex relative to the initial projects. Project savings begin to decline relative to the initial projects because the higher return projects have already been completed. Project failure rates begin to rise along with the complexity of the projects.

Problematic perceptions

The cumulative results of lean Six Sigma deployment are directly proportional to the size of the LHF projects in the organisation before it started the lean Six Sigma deployment. Many of the early adopters of Six Sigma and lean Six Sigma in the mid 1990s had abundant opportunities in the organisation and therefore saw huge financial returns. It is perhaps natural for management to expect a very successful deployment of lean Six Sigma based on what other companies have done.

Many of the early adopters, however, pursued lean Six Sigma deployment vigorously for no other reason than because they had such abundant opportunities. Many of the organisations just starting lean Six Sigma deployments today perhaps do not suffer from the same acute need as their predecessors. This means that forecasts of monumental savings based on the early adopters’ results might prove to be less than accurate. This also means that as an organisation begins lean Six Sigma deployment, it will use up LHF projects faster and, in turn, see reduced savings per project sooner. Perhaps some uninformed managers then will begin to question the merits of the lean Six Sigma deployment.

When an organisation has reaped the benefits of LHF projects and even the more difficult, high priority projects, what remains are projects that are generally smaller in scope and require only simple tools to be executed to realize certain levels of improvement. As a result, there’s a natural tendency for some lean Six Sigma managers to gravitate toward simpler tools and methods to be used in the DMAIC process when projects start to become simpler.

The problem is that this mentality seems to appeal to some leadership teams and managers who simply don’t want to build a strong lean Six Sigma competency in the organisation. The perception seems to be that simple, non quantitative lean tools are sufficient and that more rigorous statistical tools traditionally components of Six Sigma are not necessary. As you would expect, the consulting industry will follow a client’s desire, and we now have multiple organisations pushing that LSSL model.

A problem becoming more apparent is that teams and deployment managers seem to think they can skip the core Six Sigma tools and proceed to focus exclusively on lean tools. This means only certain types of problems can be thoroughly addressed, and any problem that does not directly pertain to the flow of materials, information or transactions will simply be addressed via guesswork.

Potential solutions

The first thing to do to resolve some of the issues mentioned is to recognize that every lean Six Sigma deployment follows a similar lifecycle. In the early stages, more resources are expended, LHF projects are addressed, and return on investment
should be proportionately high.

For most organisations, LHF projects will become very difficult to find after 24 months or so, and the average savings
per project will be cut by a factor of four. While this could cause a leadership team to think lean Six Sigma has run its course and a method change is warranted, perhaps there is a more mature viewpoint.

At that time, a prudent leadership team will do four things: expand the GB effort, implement design for Six Sigma (DFSS), implement structured improvement in markting and expand lean Six Sigma into non operations business functions. Expand the GB effort: It is perfectly acceptable for an organisation to decide to focus on simpler lean tools as a lean Six Sigma deployment matures.

This allows people to use methods that are appropriate for common issues such as cycle time, substandard work procedures or inefficiencies due to process design. As project opportunities become scarce, what some organisations have
done very successfully, however, is convert existing BBs to coaches for GBs. The operative thought here is that many smaller projects can yield significant savings when fewer big projects are possible. The GBs are individuals who generally receive eight days of training in LSS+ tools and methods, but they will remain in their jobs and focus on lean Six Sigma improvement only on a part time basis. This means that many more GBs can be trained, and improvement can branch out into all areas of the organisation while using BBs as project facilitators and coaches on technical methods.

Implement DFSS: By definition, the DMAIC process is an inherently reactive problem solving process. We identify an
opportunity for improvement (because it exists), define the problem and assign resources to correct the issue. You then might argue that it is inherently obvious that an organisation should shift some of its BB resources to more proactive pursuits when the lean Six Sigma results become more difficult to obtain.

DFSS is meant to be a method that can be plugged into any existing design process; it does not replace the design process. Having MBBs and BBs who can play leadership roles in the use of quantitative tools, probabilistic design or statistical tolerancing, for example, is critical to the prevention of problems in the design of new products and processes.

Implement structured improvement in marketing: For many organisations, the marketing function is carried out based on qualitative guesswork more than quantitative research. Having core competencies in statistical analysis can greatly bolster an organisation’s ability to define new markets, define market segments, better position products and confirm market performance. Core Six Sigma skills can then be leveraged to support structured improvement in marketing where customer, market and product research would be the main objectives rather than cutting expenses using the DMAIC method.

Expand lean Six Sigma to nonoperations business functions: DFSS deployment is one example of leveraging lean Six Sigma principles outside of operations. It only makes sense to try to accomplish the same thing in marketing supply chain, administration and support functions. The lean Six Sigma DMAIC process will be more applicable in supply chain, administration and support, but the quantitative tools and methods involved in LSS+ can make significant improvements in marketing research, product planning and portfolio management.

As a result of the deployment of the LSS+ model, we have seen exceptional financial and operational improvement from
many organisations since the late 1980s. As LHF opportunities have become more scarce, there is a tendency to question the utility and effectiveness of the LSS+ model and more toward the LSSL model.

While simpler tools that focus on cycle time and flow problems are certainly warranted, they cannot be the only means by which organisations improve. Perhaps a balanced approach that includes the TL model, GB deployment, DFSS deployment, marketing improvement and expansion of improvement activities outside of operations is a better way to move forward.

Author Biography

DOUGLAS P. MADER is the CEO of SigmaPro Inc., a consulting firm in Fort Collins, CO, that specializes in deployment of lean Six Sigma and design for Six Sigma. Mader earned a doctorate in mechanical/industrial engineering from Colorado State University and is a senior member of ASQ and the Institute for Industrial Engineers.

How to Identify and Select Lean Six Sigma Projects

Lean Six Sigma is a powerful method for improving existing products, processes and services. Six Sigma was developed by Motorola in 1987. Motorola’s Six Sigma yielded significant financial results and became popular with many other companies, even though Six Sigma was practiced without the benefit of the define, measure, analyze, improve and control (DMAIC) strategy, Black Belts (BBs), or a defined project selection process.

In the mid-1990s, consultants introduced the method to Allied Signal and General Electric (GE), tying improvement to bottom-line financial performance. GE and other organizations refined the Six Sigma method and focused on identifying and selecting key projects, as well as adapting operations-based Six Sigma to service and transactional processes. One way to improve the deployment of lean Six Sigma is to improve how lean Six Sigma projects are identified and selected. The typical approach to lean Six Sigma project identification and selection is heavy on selection techniques but light on identification techniques. There are four prerequisites to a
well executed lean Six Sigma project identification and selection process.

Prerequisite One: Understand The Strategic Plan

The first step in understanding how to identify and select lean Six Sigma projects is to ensure you are completely familiar with your organization’s strategic plan. A typical strategic planning process will involve the following steps:

• Planning to plan: Create a roadmap to accomplish the strategic plan.
• Values scan: Assess the interests of the stakeholders
• Mission formulation: Use the stakeholders’ input to formulate a mission statement.
• Business modeling: Create a viable business model, including cultural considerations and funding related to the restructuring or divestiture of existing business lines, as well as the addition of new business lines.
• Performance audit: Perform an assessment of the organization in terms of capabilities and financial strength. Success is often based on completing four prerequisites.
• Gap analysis: Compare the current performance with the desired state to create a list of gaps.
• Integrating action plans: Create and implement a detailed plan to accomplish the strategies of the organization and close any gaps.
• Contingency planning: Develop contingency plans to account for potential market changes, competitive pressures and other scenarios that might affect the strategic plan and the organization’s ability to execute it.
• Implementation: Deploy the plan throughout the organization via cascaded goals, quantifiable performance measures and clearly identified owners and timeframes. As part of action planning, organizations should launch strategic thrusts to close perceived gaps. Typically, strategic thrusts are initiatives with clear charters and budgets, led by senior executives and involve clear account-
  ability. Strategic thrusts might be broad or specific, depending on the perceived gaps. Lean Six Sigma, Six Sigma, design for Six Sigma and their various permutations are all strategic thrusts.

Prerequisite Two: Align, Improve Efforts With Strategy

The second step is to understand how improvement activities should be aligned with the action plans found in the strategic plan. As part of business modeling in the strategic planning step, an analysis likely will have identified where the line of business (LOB) falls with respect to market growth and competitive position. The intent is to determine an effective strategy for a particular LOB based on the rate of market growth and the competitive position for the LOB. For example, if a particular LOB has a strong competitive position in a fast growing market, the management team for the LOB might emphasize product development over operations
improvement. On the other hand, a particular LOB with a weak competitive position in a slow market might require extensive focus on improving the cost structure through lean Six Sigma. For other scenarios, the improvement strategy should be suited to the optimization of each specific LOB relative to its strategic goals.

Prerequisite Three: Understand The Policy Deployment System

The third step is to integrate the action plans into the policy deployment system. Policy deployment is a general reference to goal based plans cascaded throughout the various levels of the organization. Hoshin planning, management by objective and
other terms are varied implementations of policy deployment. Successful implementation of policy deployment involves:

• Setting high-level goals, targets, timeframes and owners based on the action plans from the strategic plan.
• Setting functional and departmental goals, targets, timeframes and owners based on cascading the high-level goals to the local level.
• Integrating the local goals into performance plans for individuals and teams.
• Doing regular performance reviews for high-level and local goal achievement.
• Integrating performance to goals in the bonus structure for management.

Prerequisite Four: Understand Core Business Processes

Every organization operates in some form as a system that converts inputs (transactions, information or raw materials) into outputs desired by customers (a product or service). The organization will attempt to define processes to create the desired out-
come for customers and ostensibly document those processes. To clarify how to look at process performance for opportunities for improvement, the following terms apply:

• Level one (L1) process: A core business process that corresponds to a business function and has accounting traceability.
• Level two (L2) process: A subprocess of an L1 process that involves a distinctly related sequence of process steps.
• Work steps: A logical work unit of an L2 process that involves a sequence of work tasks and is performed by a person or a small team.
• Figure 1 shows an example of the use of the terms. The typical approach to identifying opportunities for improvement is to first understand what the key L1 processes are within the organization.

Then the key L1 processes will be broken down so key L2 processes can be identified. A typical lean Six Sigma
project then will address a sequence of work steps within one or more L2 processes. Project Identification and Selection Process
Champions, Master Black Belts (MBBs) and Black Belts can and should follow a structured method for identifying, prioritizing and selecting lean Six Sigma projects. Initially, the responsibility of a Champion in the project identification and selection process is to assist a trained MBB to execute the following steps:

• Review the strategic plan.
• Understand the high-level goals and targets for the organization.
• Compare desired performance with actual performance for the organization.
• Understand the local or depart mental goals and targets for all business functions.
• Compare the desired performance with the actual performance for each business function.
• Identify key L1 processes based on risk/return/goal analysis.
• Understand key L2 processes based on risk/return/goal analysis.
• Brainstorm all potential improvement opportunities.
• Rank and prioritize all potential improvement opportunities based on risk/return/goals.
• Communicate the results of the ranking activity and seek consensus.
• Launch lean Six Sigma projects based on the priorities. After becoming familiar with the process, the Champion is expected to lead these steps for the organization on a regular basis. Champion’s Role Is Integral. The role of a lean Six Sigma Cham-
  pion is varied and diverse depending on the size of the organization and the scope of the lean Six Sigma deployment. The DMAIC method does not come without the risk of failure, but it is a very successful and proven approach to solving problems and optimizing process performance. The success of lean Six Sigma projects often hinges on the Champion’s ability to resolve organizational issues and manage risks to the project, including:
• Funding
• Time.
• Staffing.
• Customer relations
• Project size and complexity
• Overall structure 
• External factors
• Dependencies among projects

Most of these risks can be addressedand possibly alleviated—by having a well-run project identification process,
communicating the priorities of the organization, communicating the potential lean Six Sigma projects, and building consensus among the key stakeholders

Champion responsibilities do not end after projects have been selected. The Champion is also responsible for ensuring that each lean Six Sigma project has a solid plan, buy-in for the required resources, and effective management. The Champion is also responsible for running effective project reviews at the end of each phase of the DMAIC process. Project reviews should not only look back at preceding activities, but also look ahead for the successful execution of upcoming phases. A well-trained MBB should assist the
Champion before and during the project reviews. The BB will be well versed in the technical tools, but it is the responsibility of the Champion to enable sufficient resources and remove organizational roadblocks that might stall the project.

Author Bigraphy

DOUGLAS P. MADER is an international speaker, seminar leader and certified master instructor for Six Sigma and design for Six Sigma. He is the founder and president of SigmaPro Inc., a consulting firm in Fort Collins, CO, that specializes in integrated deployment of Six Sigma, design for Six Sigma and lean systems. Mader earned a doctorate in mechanical engineering from Colorado State University and is a senior member of ASQ and the Institute for Industrial Engineers.