Integration of Six Sigma With Other Strategic Initiatives

Over the past 10-15 years many companies have implemented an ISO 9000 quality management system, used the Baldrige Criteria for Performance Excellence (Baldrige National Quality Program [2002]) to assess and improve the performance of their organization, or adopted lean manufacturing concepts. The popularity of these and other strategic initiatives raises the question: “How does Six Sigma fit with ISO 9000 (or Baldrige, Lean, etc.)?” The short answer is that there is a very good fit between Six Sigma and modern quality management systems, as shown in Figure 7-2 (Snee [1999b]). We will discuss Lean manufacturing later in this chapter.

Each quality initiative in Figure 7-2 adds something different to an organization's management system. The key to their smooth integration is the recognition that all three (ISO, Baldrige, Six Sigma) are process-focused, data-based, and management led. We have found anecdotal evidence that organizations working aggressively on the Baldrige criteria, becoming ISO certified, or practicing lean manufacturing principles, are able to implement Six Sigma faster and more effectively than organizations new to formal process management and improvement systems. We next discuss the linkages between Six Sigma and these other strategic initiatives.

Six Sigma and ISO 9000

ISO 9000 is widely used by many different companies (ISO 9000 Standards, 2000). Many customers, particularly in the European Community, require ISO certification as a condition of doing business. Six Sigma supports ISO 9000 and helps an organization satisfy the ISO 9000 requirements. Further, ISO 9000 is an excellent vehicle for documenting and maintaining the process management systems involving Six Sigma. In other words, ISO 9000 can help make Six Sigma the way you work. Keep in mind from the outset that ISO 9000 and Six Sigma serve two different purposes. ISO 9000 is a quality management system, while Six Sigma is a strategy and methodology for business performance improvement. Both purposes are important and required.

ISO 9000 requires that you have a continuous improvement process in place (see Figure 7-3), but doesn't tell you what the process should look like. Six Sigma can provide the needed improvement process. ISO 9000-2000 requires that you measure (M), analyze (A), and improve (I). MAI are 3 phases of the Six Sigma DMAIC process improvement methodology. ISO 9000 helps create the process mindset that is required for Six Sigma to be successful. Both ISO 9000 and Six Sigma contribute to improving business performance. When expanded to working with suppliers, Six Sigma also supports each of the ISO 9000-2000 quality management principles:

• Customer focus

• Leadership

• Involvement of people

• Process approach

• System approach to management

• Continual improvement

• Factual approach to decision making

• Mutually beneficial supplier relationships

Implementing Six Sigma partially fulfills many of the elements required by ISO 9000-2000 in the following key areas: quality management system; management responsibility; resource management; product realization; and measurement, analysis, and improvement.

These five areas are the heart of the ISO 9000-2000 standard. Table 7-3 provides details on some of the specific ways Six Sigma supports the ISO 9000-2000 Standard. ISO can also provide valuable support to the Six Sigma initiative. ISO audits can be expanded to include monitoring the performance of processes improved via Six Sigma, and monitoring the use of the Six Sigma process control plans. In short, use Six Sigma to change the way you work, and use ISO audits to check on whether the changes are still in use and effective.

Table 7-3. Ways That Six Sigma Supports ISO 9000-2000

Quality Management System Six Sigma: Identifies processes and their interrelationships Develops control plans to monitor and control processes Provides resources (people, hardware and software) to measure, improve and sustain processes Provides a method for continual improvement Documents how processes should be operated in process control plans Maintains records of process improvement projects in project data bases and project tracking systems Management Responsibility Management commitment demonstrated by: Annual Six Sigma plans Weekly, monthly and quarterly Six Sigma reviews Providing Champion, Black Belt, and Green Belt resources Providing training resources Communication of purpose and progress using a variety of media Resource Management Six Sigma resource management includes: Training of Executives, Champions, Black Belts, Green Belts, and others as needed Certification of Master Black Belts (MBBs), Black Belts, and Green Belts Maintaining focus by identifying and monitoring of critical few process inputs Work environment improvement by identifying critical noise variables via multi-vari studies Product Realization Planning—annual Six Sigma improvement plan Review of customer requirements through cause and effect and process capability studies Product and process design and development using Design for Six Sigma (DFSS) techniques Improvement of purchased materials through supply chain Six Sigma studies and encouraging suppliers to use Six Sigma Creation and use of process control plans which include process maps, targets, specs, measurement methods, measurement system performance data, sampling methods, reaction plans, etc. Measurement, Analysis and Improvement Six Sigma process improvement strategy, and its roadmap and tools provide the methods and tools to measure, analyze and improve processes Improvement phases—define, measure, analyze, improve, and control Key tools–maps, metrics, cause and effect analysis, measurement system analysis, capability studies, failure modes and effects analysis, multi-vari studies, design of experiments, statistical process control, and control plans

Six Sigma and the Malcolm Baldrige Criteria

The Baldrige criteria for performance excellence form a widely used tool for improving corporate performance, as well as identifying outstanding companies through the Baldrige National Quality Program (2002) and its annual awards. The Baldrige criteria have also been used in whole or in part to establish various state awards for performance excellence. Table 7-4 summarizes how Six Sigma supports the core concepts and values of Baldrige. A quick review of this list leads us to conclude that Six Sigma supports each of the core values and concepts very nicely.

Baldrige Criteria have seven categories of performance excellence:

You can easily see that Six Sigma supports all the categories of the Baldrige criteria. In addition, the use of Six Sigma can significantly enhance the performance of the organization so that it will better satisfy the Baldrige criteria.

Many companies use the Baldrige Criteria as a means to identify their best opportunities for improvement. Leadership typically charters an assessment team to perform an organizational assessment; identify, categorize, and prioritize the opportunities; and assign them to improvement teams for solution. These improvement teams generally have annual goals, and report on progress monthly to leadership.

Sometimes leadership provides organizational incentive compensation to support the improvement process. Some common problems that these improvement teams encounter include projects with too broad a scope, no measurements, poor project management processes, and infrequent management reviews. The need to address these problems provides an opportunity to further enhance the synergy between Baldrige and Six Sigma.

Table 7-4. Ways That Six Sigma Supports the Baldridge Core Values

Visionary Leadership Six Sigma strategy and goals are set by top management. Projects are linked directly to strategic direction Customer-Driven Excellence Projects are selected to increase customer satisfaction and to enhance the bottom line Organizational and Personal Learning Extensive training is part of the process. Key learnings are shared across the organization Valuing Employees and Partners Black Belts typically come from the top talent in the organization and get extensive training. Many employees are Green Belts and team members. Many companies see Six Sigma as their key employee development process Agility Six Sigma focuses on rapid improvement with projects scheduled to be completed in 4–6 months. Projects are focused where the greatest need is Focus on the Future Six Sigma is focused on improvement; making the organization better for future customers, employees, and the community Managing for Innovation Design for Six Sigma (DFSS) is focused on improving new product development and the R&D process Management by Fact Six Sigma is data-based. A project is not worked on unless it has data to measure its important variables. All decisions are guided by data Public Responsibility and Citizenship Six Sigma addresses these issues through the projects it pursues. Health, safety, and environmental issues are candidates for projects just as are other business performance issues Focus on Results and Creating Value Six Sigma is about getting business results and growth Systems Perspective Six Sigma is focused on process improvement and the recognition that all processes are part of an overall system

Six Sigma is a natural methodology for addressing the issues noted earlier, and can produce huge benefits to Baldrige-based improvement initiatives. As shown in Figure 7-4, Six Sigma methods including project selection, DMAIC process improvement projects, and project reviews and reporting, can be very effective in turning the opportunities identified by the Baldrige assessment into projects that produce high impact, lasting organizational improvements (Snee [1999b]). Baldrige assessments are typically done every 18–24 months, as organizations tend to change slowly. When an organization uses such assessments, their outputs should be given high priority for Six Sigma improvement projects.

A word of caution: the most difficult aspect of using Six Sigma to capture the opportunities identified in a Baldrige assessment will be properly defining the projects. The opportunities identified by the Baldrige criteria are frequently areas of opportunity that have a broad scope, making project definition challenging. Performing an affinity analysis (Hoerl and Snee [2002]) to first group the areas of opportunity into logical categories, and then putting the resulting categories through a project screening process to identify good candidate Six Sigma projects, helps considerably.

Six Sigma and Lean Manufacturing

Lean manufacturing principles (Womack and Jones 1996) have their roots in the Toyota Production System (Monden 1983). As we will see in the following paragraphs, the fit with Six Sigma is again very good. Both approaches have unique strengths, and they integrate well because they are both focused on improving results through improving processes. Forward thinking organizations are taking Lean manufacturing principles from manufacturing to other processes, resulting in Lean operations.

Lean can be defined in many different ways. A key focus in any definition is the elimination of waste of all types: excess floor space, excess inventories, scrap, rework, excess raw materials, wasted capital, wasted labor, and wasted time. Womack and Jones (1996) comment that Lean thinking can “help managers clearly specify value, to line up all the value-creating activities for a specific product along a value stream, and to make value flow smoothly at the pull of the customer in pursuit of perfection.”

This view leads Womack and Jones (1996) to identify five key principles:

• Specify value by specific product

• Identify the value stream for each product

• Make value flow without interruptions

• Let the customer pull value from the producer

• Pursue perfection

Note that value, value stream, flow, and perfection are part of the focus of Six Sigma, quickly revealing the synergy between Six Sigma and Lean.

Lean is well-suited for achieving the following objectives:

• Factory and line layout

• Work station design

• Waste reduction

• Cycle time reduction

• Work in progress (WIP) and inventory reduction

• One piece flow

Some of the tools used by Lean manufacturing to accomplish these objectives include:

• Process mapping

• 5S method (sort, store, shine, standardize, sustain)

• Standard work

• Line balancing

• Spaghetti maps

• Videotaping

• U-shaped work cells

• Single-minute exchange of dies (SMED)

• Poka-yoke (mistake-proofing)

• Kanban (just in time)

Womack and Jones (1996) provide a description of these tools. Many of the Lean manufacturing objectives (waste, cycle time, WIP, and inventory reduction) are also the subject of Six Sigma projects, particularly when the solution to the problem is unknown. Further, some of the Lean tools are used in Six Sigma projects when they are needed, such as process mapping, spaghetti maps, and mistake-proofing.

Another key tool of Lean is the Kaizen event in which over a short time period (typically three days) a process is torn apart and reassembled. Kaizen events are useful when the goal is to reduce waste, streamline the process, eliminate wasted floor space, and standardize the workflow, and you know how to solve the problem using common sense approaches.

In a similar situation you may want to reduce process variation and process waste, and increase process capability, but don't know how to do it. When the solution to the problem is unknown, we recommend use of Six Sigma and the scientific method. Such a project will take four to six months versus the three days of the Kaizen event, but of course the effort over the longer period will be nowhere near as intense. While we are certainly proponents of Lean, we believe that Six Sigma provides a richer infrastructure and toolset for problems with unknown solutions.

The critical question, however, is not whether to use Lean or Six Sigma exclusively, but rather how to take advantage of the strengths of both approaches depending on the nature of the problem. Experience has shown that there are some useful strategies for doing just this. For example, when the objective is process design, factory layout, waste reduction, and the other objectives that come under the Lean umbrella, and the way to accomplish these objectives is known, Lean tools and approaches are recommended.

Conversely, for design or improvement problems with unknown solutions, Six Sigma is recommended. In addition, it is often found in doing Lean projects that problems arise that have no known solution. These issues can naturally be addressed through one or more Six Sigma projects. Since the overall improvement system discussed earlier will include both solution known and solution unknown projects, there is room for both Six Sigma and Lean in the system.

Another strategy that is widely used is to include the Lean philosophy, objectives, and tools in the training of Six Sigma MBBs and Black Belts. The tools taught typically include the common-sense methods listed earlier, including cycle time reduction, Kaizen events, Kanban, poka-yoke, and 5S. Table 7-5 shows one way to integrate the Lean tools with the DMAIC improvement process identified by Ficalora (2001).

The Black Belts thus have the Lean methodologies and tools at their disposal to be used as needed on their projects. In those organizations using Six Sigma and Lean approaches it is important that the Six Sigma MBBs be skilled in Lean methods and tools so that they can assist the Black Belts or Green Belts when needed, and deliver the appropriate training.

Table 7-5. Integration of Lean Tools with DMAIC

Define Define value and waste Measure Measure value and waste Videotape processes Observe product and employee movements Analyze Analyze videotapes, value and waste measurements, process space utilization Improve Identify and implement ways to reduce waste of all types Control Standard work procedures, poka-yoke, 5S, SMED

Adapted from Ficalora (2001)

There are two significant limitations of the Lean approach. First, Lean tools are not statistical in nature, and as a result they are not effective in dealing with variation. Variation is present in all processes and must be addressed if the process is to be improved, or operated in an effective manner over time. As an example, Ficalora (2002) notes that some Lean proponents argue that all excess inventory, excess floor space, and capital equipment are waste. That would be true if there were no variation in demand, no variation in supply, and no variation in production yields. In reality, however, variation is always present in each of these; hence the inventory, capital, and floor space that are currently excess may be needed to buffer variation in the future. Finding the right balance of such resources is a classic problem in the field of operations research.

A company that was using Six Sigma to reduce inventory found that variability was the root cause of the excess inventory, and then applied the Six Sigma tools to reduce the variability (Ficalora [2002]). For example, when there was excessive raw materials inventory, the company explored the variation in forecasting, delivery quantities, supplier yields, and so on. Black Belt teams were successful in each case, and the raw material, work in progress, and finished goods inventories were all significantly reduced once the variability that caused excess inventory was reduced. The approach taken by this company views excess inventory of any kind as a process output (Y), and then looks for the process variables (Xs) producing the excess inventory. Once these causal variables are identified, analyzed, and controlled, the excess inventory will naturally decrease.

The second limitation is that the Lean methodology is most useful in manufacturing environments, although it has applications elsewhere. Our experience has been that Six Sigma is much more effective for creating a common language and methodology usable across the whole organization, not only for improving processes but for empowering employees, developing employees, and creating leaders of tomorrow. We believe the effectiveness of the Lean methods is greatly enhanced when used in the Six Sigma framework. We acknowledge that many Lean proponents feel the opposite—that Six Sigma methods are enhanced when used in a Lean context. Each organization should decide at the beginning of its Six Sigma deployment, whether, how, and where it will use Lean, and how the two approaches will be integrated.