How great would it be to tap into the successful operating procedures of multinational organisations, and apply them to your own small business?
The good news is that you can adapt the Lean Six Sigma continuous improvement methodologies used by the likes of Toyota, Motorola, Amazon, Dell, Ford and Nike, in order to upgrade processes, boost employee morale and increase customer satisfaction – and ultimately enhance the bottom line – of a business of any size, in any industry.
Origins of Lean Six Sigma
Lean refers to lean manufacturing, a management approach first developed in Japan by Toyota. It aims to reduce waste of materials, resources and time found in business processes, without lowering productivity.
Six Sigma, introduced at Motorola in the 1980s, concentrates on continuous process improvement and optimisation, using data measurement and analysis to eliminate defects and reduce variations in the end product or service.
Sigma is the name of the Greek letter σ, used as a shorthand term for standard deviation from specifications or optimum standards. Six Sigma high-calibre output is expected to produce a process defect level below 3.4 per million events – in other words, an overall quality level greater than 99.9% of maximum.
Lean Six Sigma is a more recent blending of the two complementary techniques, to create a business methodology aimed at removing waste and improving quality in order to to promote operational excellence.
Key principles of Lean Six Sigma
1. Concentrate on the customer experience
Customer satisfaction and loyalty depends on delivering products and services that are consistently of the highest quality for the price paid. Therefore any implementation of Lean Six Sigma procedures must begin by an examination of customer expectations and feedback. Aim to collect data via customer surveys, phone or face-to-face interviews, focus groups, and observations by your employees.
2. Analyse processes to pinpoint problems
Once customer pain points are identified, it’s time to take a deep dive into individual processes to find out what is causing the problems, and then fix them. This involves a structured 5-step procedure designated by the acronym DMAIC. The D, M and A steps cover process analysis.
Define problems from the customer’s perspective taking into account their needs and goals. Detail which areas of the business they affect and the processes to be improved. Appoint a project leader.
E.g. Your customers are receiving damaged products, adding to their admin costs and lead time, and to your own admin costs and declining employee morale. Areas affected are warehousing, packing and delivery. Appoint Logistics Manager as project leader.
Collect data about the process.
E.g. Which products arrive damaged? How many? Where in your warehouse are they stored? How are they retrieved for delivery? How are they packed? Who delivers them?
Analyse the data collected in order to identify which parts of the process are causing the problem.
E.g. Product F is the main problem, arriving in customers’ hands damaged 23% of the time. It is stored in warehouse location G37A, retrieved by forklift, packed for delivery in cardboard box size 3, protected by foam void fill, delivered by ABC Delivery Company.
3. Eliminate any variations
The I and C phase of the DMAIC procedure will allow you to eliminate the variations from the norm which are leading to customer dissatisfaction and also demoralising your customer-facing employees.
Change processes to fix the problem.
E.g. Data analysis revealed packing material as the source of the problem. Change the process so that product F is packed in smaller box size 4, using bubble wrap, eliminating waste and saving time and money.
Ensure that the changes have fixed the problem, and that they can be sustained.
E.g. Continue to collect data on delivery of product F and compare with previous results. Document the procedural changes required and train staff. Look for further ways to improve.
Reduce waste, improve quality, save money
Lean Six Sigma is a highly-developed business methodology, and only the outline and basic examples are provided here. Waste, for example, can take many forms – not just material, but also time, space, and human resources such as a high rate of employee turnover. Quality improvement standards can apply to both products and internal and external services. Adapt the procedures to suit your own business, and seek help from Lean Six Sigma professional experts if necessary.