Lean is a widespread philosophy in industrial circles which these days is increasingly applied within the service sector as well. Lean comprises 5 main principles:
These days, Western companies face tough competition. They have to rely on effective ways of securing their competitive advantage. Toyota felt the affects of this competitive struggle some time ago but nevertheless succeeded in surpassing established players in the automobile industry by developing and implementing the famous ‘Toyota Production System’, aimed at delivering the best quality at the lowest price in the shortest possible time. Toyota rocketed into the top 3 in the automobile industry and has for years lead the way in price, quality and productivity.
On the basis of a comparative study conducted in the early 1990s, university professors, Womack and Jones realised that the tools and techniques of the Toyota approach were universal and could be applied to increase the competitiveness of other companies. They took it upon themselves to translate the system and called it ‘Lean Thinking’.
Consequently, ‘Lean Thinking’ has experienced a rapid rise as a business strategy with remarkable results in the United States where no less than 55% of production companies use Lean as a guideline for their improvement strategy. Lean also appears to be an important driving force behind the improvement of administrative processes and service provision in terms of customer relations and cost effectiveness.
The Greek letter sigma is an indicator of the relationship between customer desire and the quality of the goods and services provided. The higher the Sigma value, the fewer discrepancies or defects that are produced. 6 Sigma, for instance, is equivalent to a mere 3.4 defects per 1 million possibilities. This very ambitious goal should therefore also be regarded as the symbolic objective of the process improvement programme.
Six Sigma offers a structured approach to process improvement, denoted by DMAIC. DMAIC stands for the five phases followed by project leaders along the project trajectory: Define, Measure, Analyse, Improve and Control. At each stage of this DMAIC cycle, all decisions must be grounded in fact. Because facts are obtained on the basis of data, statistics play an essential role here.
However, Six Sigma is about more than just statistics. At least as important is applying a structured approach to those projects that have a large impact on business results. Alongside DMAIC, ‘Design for Six Sigma’ (DFSS) has also been specifically developed for the design of new products and processes.
The foundations of the Six Sigma method were laid when Motorola recognised the importance of mapping its various processes and measuring the variations in these processes. Motorola’s success in improving its processes was put down to its management philosophy (Eckes, 2003) which was later dubbed the Six Sigma method. Following numerous discussions between Bob Galvin (CEO Motorola) and Lawrence Bossidy (CEO AlliedSignal) the Six Sigma philosophy was shared with AlliedSignal. With Six Sigma, former General Electric (GE) executive and new CEO of AlliedSignal, Lawrence Bossidy was able to steer the company out of spiralling decline and transform it into a successful organisation. Jack Welch, then CEO of GE, was very enthusiastic about his former colleague’s success formula.
In 1995, Six Sigma was applied throughout GE’s entire organisation, and with visible success. The emphasis on managerial involvement, striving for the Six Sigma level and the focus on efficiency and effectiveness lead to cost savings of $320 mil in two years. In the third year, savings of more than $1 bil were reported (Eckes, 2003). More and more organisations became interested thanks to GE’s successes and the Six Sigma method quickly spread throughout the globe.