Lean Six Sigma Thinking - Literature review Example

A Review of Lean Six Sigma Contents A. Lean Six Sigma Thinking ………………………………………….………….. 3 1. Organizational Benefits …………………………………………………….…… 3 2. Programme Design ………………………………………………………..…….. 4 3. Implementation and Contextualization ……….…………………………………. 6 B. Lean Six Sigma Lockheed Martin UK ………………………………………. 9 1. Organizational Benefits …………………………………………..…………… 10 2. Programme Design ……………………………………………………….…… 11 3. Implementation and Contextualization ……………………………..…………. 12 4. Dynamic Capabilities …………………………………….…………………… 13 References ……………………………………………………………………….. 15 Tables and Figures Tables Table 1 – Six Sigma Key Steps Utilizing DMAIC ………………………………. 5 Table 2 - Six Sigma Tools and Techniques ………………………………..……. 6 Table 3 – Lockheed Martin Dynamic Capabilities ……………………….…….. 14 Figures Figure 1 – Six Sigma Process Improvement Visualization …..…………………. 8 Figure 2 – Lockheed Martin Six Sigma Process Overview ……………………. 12 A. Lean Six Sigma Thinking Six Sigma represents a management approach to business that was developed by the Motorola Corporation that holds the trademark to the phrase and concept (Hayes, 2004). While Motorola developed Six Sigma in terms of improvement regarding the quality of services and products, it was Toyota Corporation that contributed to the facets of productivity and profitability (Lean Six Sigma Institute, 2012). The phrase Six Sigma refers to what is actually a mathematical concept founded around the likelihood of a production run or process varying from its average and thus the understanding of what is needed to correct this imbalance (Kwak and Anbari, 2006). In understanding the organizational benefits attributable to Six Sigma, Naslund (2008) tells us these consist of creating a climate the company’s reputation is built on and thus is improved.   1. Organizational Benefits Through applying Six Sigma, a company’s organizational vision is broadened (Naslund, 2008). This contributes to the aforementioned external and internal building of a reputation due to it being an active process that improves operations (Naslund, 2008). As the application and approach involving Six Sigma inculcate itself into a company’s culture as a result of management and employee involvement, a company develops an edge relative to rival companies that are not so engaged (Jiju et al, 2007). In addition to the above, other organizational benefits achieved as a result of using Six Sigma include a heightening of customer satisfaction throughout all service and product levels due to focus and the use of discernible goal and objectives being set (Jiju et al, 2007).   In terms of effectiveness Anbari (2002) advises Six Sigma represents a more comprehensive approach than Continuous Quality Improvement (CQI) or Total Quality Management (TQM). The difference is Six Sigma includes a means to measure and report financial results along with the use of more sophisticated and advanced methodology and project management tools (Anbari. 2002). In making his point Anbari (2002) provided the following as an example:   Six Sigma equals TQM (or CQI) + Stronger Customer Focus + Additional Data Analysis Tools + Financial Results + Project Management   In the words of Antony et al (2003), Six Sigma represents an approach that is driven by data and utilizes measurement and analysis to define as well as control improvements. Antony et al (2003, p. 96) continues, and explains with regard to Six Sigma, its underlying and fundamental principle represents taking “… an organization to an improved level of sigma capability through the rigorous application of statistical tools and techniques”.   2. Program Design The preceding segment on Organisational Benefits serves to form the foundation for the lead in an explanation of the manner Six Sigma programs are derived and designed. In broaching this area Mader (2002) explains the DMAIC (Define, Measure, Analysis, Improve, Control) process as a closed loop system that is conceived to eliminate steps that are unproductive. He adds it usually focuses on using new measurements to gauge and improve processes that are based on reducing or improving the steps in the foregoing (Mader, 2002). In addition to the above Mader (2002) explains DMAIC is comprised of the following Six Sigma steps:   Table 1 – Six Sigma Key Steps Utilizing DMAIC Six Sigma Steps Processes Define This represents the defining of the expectations and requirements of the project. It is achieved through understanding the boundaries, along with mapping the processes entailed in the operation business flows for all areas. Measure An important component in designing a program is measuring the process in terms of how to it meets and can be improved to satisfy the needs of customers. In this part of the process or steps, a plan for data collection is formulated. This includes and entails the collection as well as a comparison of data as a way to ascertain and determine issues and areas needing attention or that can be improved. Analyze With regard to the analysis of areas, this refers to examining causes representing defects and variations. These aid in identifying issues such as in the quality of consistency, and represent telling signals concerning problems in the process that result in the above. A careful analysis and understanding of variations in quality or consistency is the opportunity to prioritize aspects for future improvement. Improve The preceding (opportunities for improvement) represents a step in the DMAIC that aids in program design. The core or center aspect of seeking out improvements seeks to eliminate or minimize variations in quality or outcomes. In addition, program design with regard to utilizes Six Sigma represents a path of looking at alternatives and creating an enhanced new plan to either eliminate or minimize variations or errors. Control As the word implies, Control is the objective in terms of all of the above steps as the means to set processes at the point where errors and variations are minimized. This is the culmination of the prior steps where uncovering and analyzing areas for improvement leads to changes. The process of control is ongoing, with the stages and steps reviewed for future refinement on a consistent basis.  (Mader, 2002) The method of arriving at these outcomes entails the development and understanding of strategies, tools, principles, and techniques described by Antony et al (2003) as:   Table 2 - Six Sigma Tools and Techniques Strategies and Principles encompassing the use of Six Sigma Six Sigma Tools and techniques Project Management This utilizes as a primary component statistical processes as the means to effect control. Data-based Decision Making This aspect represents an analysis of process capabilities as a foundation and a platform from which to create improvements along with a basis for measuring effectiveness and impacts. Knowledge Discovery A key component in this area represents the measurement of system results using the original as the baseline. Process Control Planning In terms of improvements and assessing processes, this area represents designing controls to test effectiveness and efficiencies. Data Collection Tools and Techniques The input represented by accurate and timely data collection methods, techniques and tools are critical to the information process. Variability Reduction As indicated, the deviation from the standard or norm represents instances of lessened quality or service. Reduction of this variation is a quality control function and an important aspect in achieving consistent performance improvement. Change Management Tools This entails the analysis of means as well as variances, along with the testing of hypothesis concerning what is in place and changes proposed to replace segments needing improvement or modification. Other analysis aspects include root cause along with process mapping.  (Antony et al, 2003) The above areas have been included under Programme Design as the approach taken opted to look at the broader picture of potential applications with regard to program design as opposed to one that had a narrower focus or more limited application parameters. This broader-based approach was deemed to provide a better understanding of the manner program design is inculcated with regard to the utilization of Six Sigma in process improvement.   3. Implementation and Contextualization In assessing whether to utilize Six Sigma, Shah et al (2008) advise management needs to come to an understanding through an internal decision-making process as to why the Six Sigma process improvement methodology is appropriate and suitable for its issues, challenges, and problems. They explain it is important for management to develop a clear understanding of what Six Sigma entails and does, along with the manner it might benefit operations (Shah et al, 2008). In conducting an assessment, Klefsio et al (2001) recommend prior planning that consists of a series of definitive steps to aid in ensuring implementation is successful.   The implementation of Six Sigma is a process that is dependent upon the organization it is considered for, its state of development, organization and allied areas (Jeyaraman and Teo, 2010). In developing an understanding of Six Sigma, it is important to understand the segments represented by organizational benefits, program design along with implementation and contextualization are all interconnected. As such, a common thread exists in terms of foundational underpinnings with regard to method, approach, and context (Jeyaraman and Teo, 2010). Antony and Banuelas (2002) advise Six Sigma is linked conceptually to continuous improvement as a result of its systematic approach to the identification of issues, challenges, and problems. By the ongoing implementation and attention to improving identified areas, processes and projects Six Sigma becomes an operative and inculcated part of a company’s culture and manner of how it approaches and accomplishes tasks (Antony and Banuelas, 2002). The following provides a visual representation of how Six Sigma works and thus indicates insight as to its implementation and underlying concepts:   Figure 1 – Six Sigma Process Improvement Visualization  (Savolainen and Haikonen, 2007) Inherent in any process that seeks to undertake improving operations and outcomes is that is moves through stages of operational transformation (King, 1997: Levy and Merry, 1986). Conceptually, Six Sigma is a change agent that results in benefiting the company, employees, management, and customer as a result of the underlying concept that focuses on and seeks to improve and increase quality and consistency, along with eliminating waste and inefficiencies (Rajarmanoharan and Collier, 2006).   All of the above are important facets of contextualizing the situation. This was explained in a White Paper produced by Oracle (2010) that explains the process of using Six Sigma represents understanding what it is being employed and used to achieve as end results. This ties into the other aspects covered herein that represent understanding and quantifying the organizational benefits, looking into program design, and the factors represented by the implementation. In reading into the context of the word (contextualization), the understanding of the term’s application becomes and is evident as it represents the understanding of how Six Sigma will be employed in a company context (Goncalves and Musetti, 2010). The conceptualization process entails a series of steps Goncalves and Musetti (2010) have organized into a reference base that entails three main components, review, formulation and strategy updating.   The steps indicated in terms of conceptualization are explained as seeking to understand and identify the key aspects that threaten or endanger the company externally as a means to examine weaknesses in its internal performance model (Goncalves and Musetti, 2010). Other considerations and facets are taken into account in the conceptualization stage include an analysis of the firm’s external environment, expectations of stakeholders, strengths, and weaknesses of the firm along with opportunities (Goncalves and Musetti, 2010). Other facets include organizational performance and indicators, strategic goals and areas the company has underperformed in the recognition of what needs to be addressed to improve operations (Goncalves and Musetti, 2010). The above provides an understanding of the analysis and strategies needed to correct and improve operations, along with the key aspects aligned and related (Goncalves and Musetti, 2010).   B. Lean Six Sigma Lockheed Martin UK In looking at the impact of Six Sigma with regard to Lockheed Martin, a key defense contractor, such represents an example of the implementation of Six Sigma under what the company termed as LM21 (George, 2003). In applying the above areas to Lockheed Martin UK, the company has been selected as it represents the European headquarter operation for business procurement (Lockheed Martin UK, 2012). The European and Middle East defense markets are important to the company in terms of growth and opportunities (Lockheed Martin UK, 2012). In terms of results, Lockheed Martin’s SIBA (System Integration Business Area) procurement center (MAC-MAR) credited the use of Six Sigma with reducing costs for procurement by 50% (George, 2003). The most interesting aspect of the above is this division represented one where the personnel used computers and conducted transactions on the telephone for the majority of their activities (George, 2003). The purpose of this example has been brought forth as it reveals the benefits of Six Sigma when a clear understanding and insightful appraisal of company operations have been made in following the design, contextualization, and implementation of the issues and challenges. 1. Organizational Benefits In seeking organizational benefits, Lockheed Martin set the goal of achieving a savings of $3.7 billion in costs through the overall implementation of LM21 (George, 2003). The ambiguousness of this announcement makes more sense when one becomes acquainted with the history of the company prior to this. Lockheed Martin represents an organization that was rapidly built through a series of mergers and acquisitions (Schmidt, 2006). This acquisition and merger background provides insight as to the overall approach and benefits Six Sigma’s promises as it represents “… a means to measure and report financial results” (Anbari. 2002) “… driven by data (that) utilizes measurement and analysis to define as well as control improvements” (Antony et al, 2003). The context of the above was applied to the company to achieve the benefit of reducing operational expenses across the board through the implementation of LM21 (George, 2003).   For edification, LM21 is the name given by the company to its program that identifies best practices aimed at significantly increasing operational efficiencies, along with the improvement of financial performance (Joyce and Schechter, 2004). The conglomeration of 18 different companies that resulted in Lockheed Martin created a massive system of redundancies as well as waste in its operations that LM21 was designated to solve (Joyce and Schechter, 2004). Management selected Six Sigma as the system that offered the means to achieve the elimination of waste as well as to bring consistency to the varied processes under its conglomeration of companies (Joyce and Schechter, 2004). The above served as the Organisational Benefits that permeated every facet of Lockheed Martin operations (Kujawski, 2007). The areas included business development, finance, procurement, human resources, operations, cash management, engineering, contracting and other areas (Kujawski, 2007). 2. Program Design The expanse in terms of the extent of issues and problems facing the company was so all-encompassing that, in reality, it actually simplified the task of program design (Kumar et al, 2008). This statement is made because management at Lockheed Martin understood the core and crux of its problems represented the differing internal operating cultures and procedures of the 18 companies it acquired in its massive growth strategies were working against each other (Augustine, 1997). This meant management had to seek reorganizing and re-framing internal procedures, workflows, assignments and allied areas to mesh these different systems into one that suited the newer and larger Lockheed Martin as opposed to the company before its rash of acquisitions (Augustine, 1997). This reality represented the foundation for management consideration and adoption of Six Sigma. The above also became the core of the program design that took on the name LM 21 Operating Excellence (Joyce and Schechter, 2004). This name change came about after the analysis of the challenges, issues, and areas needing attention (Joyce and Schechter, 2004). The core of the approach represented the development of what the company termed as a consistent series of principles and behaviors crafted to mesh the divergent operations into one cohesive unit (Gregersen and Dyer, 2002).   The above dictated the design of the program as it basically represented creating a new set and series of operating procedures and relationships for all areas in recognition of the new larger company than using the existing Lockheed Martin culture to shape the framework (Gregersen and Dyer, 2002). The framework for program design and assessment followed the following basic guideline:   Figure 2 – Lockheed Martin Six Sigma Process Overview  (Best Manufacturing Practices, 2006) 3. Implementation and Contextualization The above Figure provides a visual representation of the program implemented by Lockheed Martin senior management team of fourteen top tier executives who were put in charge of the overall process in a company-wide initiative (Nightingale, 2004). The program entailed taking employees and management through Six Sigma training courses to establish Master Black Belt, Black, Green and Yellow positions (Hahn et al, 2000). The above represents the order of importance of the Belts from top to bottom with the color designation representing completed training and certification under the Six Sigma system (Hahn et al, 2000).   As the Figure indicates, the design of the program flowed from the understanding of the organizational benefits that represented what needed to be done (organizing diverse units and acquisitions into a singular company) (Klefsjo et al, 2001). The above (Organizational Benefits, and Programme Design) forged the basis for Implementation that as indicated in the analysis of Six Sigma, is an outgrowth of understanding what needed to be done as a result of the assessment of the operations of the company (Klefsjo et al, 2001). In this instance, it included every business function of the company, represented by business development, finance, procurement, human resources, operations, cash management, engineering, contracting and other areas (Kujawski, 2007). In the prior segment, Ozcelik (2010) discusses critical factors that could inhibit success, discussing the uncovering of areas to be addressed by organizations as a result of what is revealed in the conceptualization stage. These steps and stages lead to the development of a strategy borne from conceptualizing (understanding and prioritizing) what needs to be done as a result of the shortfalls and weaknesses of the operation and processes (Ozcelik, 2010). Thirunavukkarasu et al (2008) advise the purpose of conceptualization is it leads to implementation after the strategy has been settled upon. This facet, strategy, is the result emanating from the process of conceptualization.   Linderman et al (2003) tell us strategy development is one of the outcomes of conceptualization that represents uncovering the performance goals and measures. This translates into organizational benefits that form the design of the programs representing action or implementation. As can be seen from the above, the contextualization process is a part of the beginning as well as the end part of the process. 4. Dynamic Capabilities In equating the dynamic capabilities of Lockheed Martin in conjunction with its assessment and implementation of Six Sigma, an understanding of the term is essential. Dynamic Capabilities represent the varied skills, capacities, and attitudes in a company that aid in directing its operations to the desired new outcomes and objectives (Gowen and Tallon, 2005). In equating the dynamic capabilities of Lockheed Martin, one needs to be cognizant the company is a defense contractor. The five principles of LM21 represent the company’s approach to cutting costs and making strides in the improvement of quality, along with customer satisfaction. (Gowen and Tallon, 2005). These are the capabilities that the application of Six Sigma was brought in to enhance: Table 3 – Lockheed Martin Dynamic Capabilities Dynamic Capability Tools Usage ISO 9001-2000 Quality Management System. It represents a series of standards for quality as set by the International Organization for Standardization 1. Cause Mapping to heighten effect diagramming using Root Cause Analysis. 2. Pareto Analysis is used to segment data into groups sized from the largest to smallest for problem identification and validation of results. 3. Run Charting that shows process variations over time, which is useful in identifying problems and validating results. 4. Failure Modes Effects Analysis represents a prioritization, identification and analysis system of potential failure modes in manufactured parts that is an important solution identification component. 5. Mistake Proofing is a capability enhanced approach under Six Sigma where errors are prevented in the designing of processes as opposed to assuming processes are transferable to different applications. 1. Set of procedures covering all key business processes. 2. Processes are monitored to ensure effectiveness. 3. Defects are minimized and check taking appropriate / corrective measures. 4. Individual processes and quality are reviewed on a regular basis 5. Continuous improvement is a hallmark (Penn, 2008): (Joyce and Schechter, 2004) In understanding Dynamic Capabilities as it applies to Lockheed Martin, it needs to be remembered the company designs and builds specialized aircraft and other products for defense purposes. As such, the mission type and solutions these products are designed for vary significantly. The customization of the end product means each has to be crafted to a manufacturing and assembly process that is created specifically for the end application. In understanding the company has to design its airframes and products as a part of a customized process, it needs to minimize defects and errors while maintaining exceptional standards of quality and reliability represents the reasons the Dynamic Capability areas indicated were selected. References Anbari, F. (2002) Six Sigma Method and its Applications in Project Management. San Antonio, Texas. Proceedings of the Project Management Institute Annual Symposium Antony, J., Banuelas, R. (2002) Key ingredients for the effective implementation of Six Sigma program. Measuring Business Excellence. 6(4) Antony, J., Escamilla, J., Caine, P. (2003) Lean Sigma. Manufacturing Engineer. 82(4) Augustine, N. (1997) Reshaping an industry: Lockheed Martin’s Survival Story. Harvard Business Review. May/June Best Manufacturing Practices (2006) Process Overview. Accessed on 30 October 2012 from http://www.bmpcoe.org/bestpractices/internal/lness/grf_lness_04.html George, M. 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