In the intensely competitive manufacturing world, absolute production reliability and optimum resource utilization are crucial. Lean and six-sigma are the two most successful approaches for improving process reliability and efficiency. However, the debate on which approach is more relevant to manufacturing in the 21st century rages on.
So which of the two methodologies should a manufacturing company wanting to drive business process efficiencies, invest in?
Lean vs Six-Sigma? They are actually complementary approaches
To begin with it is important to understand the core differences between the two business process improvement methodologies.
If you are looking to eliminate wastage and focus on processes that add true customer value, then Lean manufacturing is the way to go. But if you want to reduce variance in standards of production then a Six-Sigma project approach is more apt.
Lean initiatives are identified over short periods and are often referred to as kaizen or small continuous improvements. On the other hand Six-Sigma projects are driven by detailed statistical analysis and a step-by-step DMAIC (design, measure, analyze, improve and control) approach.
However, quality improvement experts will agree that Lean and Six-Sigma though distinctly different, are immensely synergetic in driving organizational improvements. Manufacturing, as well as non-manufacturing companies have adopted both methodologies for achieving substantial financial gains.
Some manufacturing businesses are adopting Lean Six-Sigma (LSS)
In fact over the last decade, the term Lean Six Sigma (LSS) has evolved signifying the marrying of the two approaches. Today’s competitive marketplace is forcing businesses to not just improve but also innovate.
Lean Six Sigma combines the best of both approaches and focuses on finding opportunities for significant innovation across all aspects of the business (sales, operations, R&D and service). LSS focuses on customer input, data analysis and eliminating variations in the value stream.
GE, with its diverse businesses and an early adopter of the Six-Sigma approach, has also in recent years turned to the hybrid approach of Lean Six Sigma. Another company that has successfully adopted LSS is the Korean steel maker POSCO.
POSCO – Quick Study
Post privatization in the year 2000, POSCO faced declining domestic demand and steep competition from producers in China. As a first major initiative it sent engineers, instead of sales staff, to understand client requirements. Based on the engineering team’s inputs the company decided to focus steel production on two core sectors – shipping and automotive.
This led to 21 major product innovations in the variety of steel manufactured and elimination of processes that did not add value to the new business focus. LSS analysis also led the company to identify the need to establish a major manufacturing presence in China.
The company invested $780 million in China across 14 joint ventures. Within 5 years of adopting LSS, POSCO went from being a local steel manufacturer to becoming the third-largest manufacturer of steel.
Lean on the rise, but Six-Sigma still relevant for manufacturing
The 8th Annual Study by The Avery Point Group of more than 7000 job postings in 2012 for Lean and Six-Sigma talent revealed that the overall demand for these skills has more than doubled over the last two years. Significantly, the more practical approach of lean appears to have gained favor with companies. In 2005 Six-Sigma talent demand exceeded Lean by 50 percent. The trend was reversed in 2012, with Lean talent demand exceeding Six-Sigma by 68 percent.
There many factors responsible for the shift towards lean. Driven by need for controlling costs in the tough competitive environment, businesses have moved to a fire-fighting mode focusing on waste initiatives to reduce cost rather than making elaborate changes in processes or product design.
Lean methodology in comparison to Six-Sigma is also relatively easier to implement. The growing pressure on businesses to ‘go green’ and reduce wastage of natural resources has further boosted the adoption of Lean manufacturing.
Nonetheless, Six-Sigma with its focus on identifying root-causes, minimizing defects, lowering costs and increasing customer satisfaction, still holds great relevance for businesses involved in product manufacturing. It is important to point out that the success of Six-Sigma rests heavily on leadership support for identified initiatives.
RediSource offers process improvement expertise in both Six-Sigma and Lean manufacturing. We can help you simplify internal operations as well streamline vendor processes that are critical to your value-chain. To know more of our Business Process Improvement (BPI) simply complete and submit our contact form.