Applying Lean Manufacturing To Six Sigma - A Case Study

Applying Lean Manufacturing To Six Sigma - A Case Study
By Niraj Goyal

There are continuing questions about the relationship between Lean Manufacturing and Six Sigma techniques. This relationship has been expressed as follows:

Stretch the process applying Lean techniques
Solve the problems of deviation from the standards
Ensure maintenance of the improved status using Six Sigma techniques
However, if the system and processes are too poor, stretching it could break it. In this case Six Sigma techniques should be applied to solve some of the top line problems before stretching it.
The case presented clearly demonstrates this relationship.

This work was carried out in a large company based in the US and India in the business of converting printed paper from customers into electronic copies. It is a continuation of the earlier case study entitled "Six Sigma Case Study: Converting Paper to Electronic Documents." The paper material is quite heterogeneous in nature -- consisting of assorted magazines and legal papers.

The results obtained have obvious applicability to the back rooms of industries processing large amounts of data -- IT enabled services, banks, insurance companies, hospitals, and computer based office processes. They are also applicable to most organizational processes.

As emphasized in the earlier work, in the author's opinion and experience, success is a function of techniques and more importantly a mindset change in the organisation. The narrative unfolds in the same sequence as the project did pointing out the critical stages where results were achieved and where mindset changes occurred.

1. Define And Measure The Problem
1.1) Selection of the problem: A meeting of the senior management of the company was held and a brainstorming session produced a list of over 30 problems. These were affinitized into two categories:

"End result" problems faced by the external customers
Internal problems that were causes of customer problems rather than basic problems themselves

The realization that the first category of problems was the one to be attacked (customer focus) came spontaneously.

Then prioritization was done to select the most important problem using the weighted voting system followed by a quick discussion to produce a consensus. The theme (CTQs) selected was "Consistency of Quality and Timeliness."

The Consistency of Product Quality was resolved first and a 98% error reduction was achieved.

The project described here was born out of a chance remark by one of the participants in the group: "We are going to add new capacity." To my casual query, "Why?", came the answer: "We need to improve the turnaround." Immediately I intervened stating that turnaround is not dependent on capacity. The disbelief that stared back at me was but a reflection of the mindset prevailing and the task at hand to change it.

A cross-functional team including the planning personnel, and the key representatives of the operations from each stage of the process was formed to test the principles of Lean Manufacturing in practice.

1.2) Definition of the problem: A second level of brainstorming generated a list of problems which were affinitized into customer problems and internal problems. The customer problems were expressed:

Delayed delivery -- frequent customer complaints
Peaking of incoming loads aggravates delays.
The other problems were set aside as they were causes of the customer problems rather than intrinsic problems themselves.

The Project Charter was then set out as follows:
Problem = Customer desire - Current state

1.3) Measure the problem: A suitable data collection check sheet was designed and data was collected two weeks on the turnaround time of documents to define the problem quantitatively. The following results were obtained:

Customer Requirement Of Turnaround Time: <5 days
Current State Average Turnaround: 5 days
sigma: 1 day
3-sigma (99.7%) Delivery To Standard: <8 days

The interpretation of consistency of delivery (turnaround) using sigma created disbelief at first as the group struggled to understand the concept. Gradually however it was grasped -- the problem was not the average turnaround, which was within the customer limit but the variability. This was the second major mindset change and led to the definition of the goal: Reduce Turnaround time by 50% so that its (average + 3 sigma) < 4 days.

2. Analysis of the Problem
A flowchart was prepared outlining each activity in the process. Many gaps were revealed that had to be filled up and thought through. Standard times of each process per batch of 50 pages were tabulated in a specially designed check sheet. The team was amazed when the time for the value adding steps added up to only 31 hours. The most important mindset change had begun, asking, "Why do we take 5-8 days?"

The principles of Lean Manufacturing and turnaround time reduction were then introduced:

Zero waiting time
Zero Inventory
Scheduling -- internal customer pull instead of push system
Batch to Flow -- cut batch sizes
Line Balancing
Cut actual process times

Finding the vital causes: Data was collected for three batches clocking the timing at each stage and comparing it to the standard timings to find where time was being lost on a specially designed data sheet.

With the data it took the group only a few minutes to draw a Pareto Diagram of delays and conclude three vital reasons causing 70% of the delay was non-processing (waiting) time due to:

Lack of awareness -- large waiting times for small items falling between departments
Inventory
Unscheduled work patterns and therefore unavailability of personnel at the right time

3. Idea Generation
The old mindsets were shattered but the group was struggling to understand the concepts confidently enough to start applying them in regular production. An experiential simulation classroom exercise in which the group members participated was designed and carried out to experience the concepts first hand. Armed with this conviction, the team proceeded to the next step to design a pilot test.

Planning the Pilot: A step-by-step implementation plan was drawn up. It was estimated that cutting inventory and scheduling the production cycle to flow in the current batch sizes would lead to the achievement of the goal. The whole chain was briefed about the new method and agreed on a schedule. The team was ready to run the pilot.

4. Idea Modification
A pilot batch was run to test the scheme: It took 36 hours. Amazed jubilation followed by an enthusiastic buy-in of the concepts -- demonstrating my belief that nothing works better than results in accomplishing mindset change. From then on it was difficult to restrain the group from pushing ahead too fast.

5. Implementing The Change
5.1) Scheduling: Production was carried out in a number of parallel lines in a 1-2-1-7-1 configuration. Careful scheduling and planning of the set up was done to convert each stage to the new mode of running. Training was carried out, and the conversion begun with data acquisition for further problem solving.

5.2) Implement the change: After eight weeks of a step-by-step introduction the new schedule was running and estabilised at all stages. Everyone was pleasantly surprised at the ease of implementation and learned that involvement of all functions and effective countermeasure design using data makes implementation of dramatic improvement easy and quick.

6. Checking The Result
The turnaround achieved was as follows:
Average Turnaround Time: 3 days
sigma: 0.4 days
Average + 3 sigma: 4.2 days (i.e. < 5 days)

The goal had been achieved!

The Production line personnel reported tremendous benefits:


Ease of tracking production batches

Increased productivity (over 50%) and therefore reduced costs
Better quality
Ability to handle peaks of input data of up to 75% for 2 days per week within customer specified turnaround limits

7. Standardization Of Control
Control charts were introduced and a special presentation on how to draw and interpret them was made to the line personnel. A Standard Operating Procedure with a concise reporting format was developed for regular review, management control and killing of any new causes of variability. The team was left with the mindset of continuous improvement -- "If you do not improve, you deteriorate".

Future Action: At the end of the project when asked what could be achieved in terms of turnaround the team confidently asserted that they could cut it by half to a 3 sigma performance of <1.5 days, or more than a six sigma performance for the customer. This was estimated to yield a further 40% increase in productivity. The mindset change from the pre project stage was an intangible gain but perhaps the most important one.

This Project is now in progress.

Conclusion -- Selling Quality
The combined effect of Lean Manufacturing and Six Sigma has led to improvements in product quality (98% reduction in errors) and turnaround time (50% reduction). These improvements have resulted not only in cost reduction, but also the possibility of presenting these improvement stories to the customer, building the reputation of the company as a leading supplier of quality, and thereby increasing the probability of getting higher volumes of business.

About The Author
Niraj Goyal has 25 years of rich and varied working experience in multinationals in various operating roles, among them Operations Director, Cadbury India Limited, where he was exposed to and was among the leading implementers of the TQM movement. A few years back he set up his own consultancy, Cynergy Creators Private Limited. Mr. Goyal consults in India and US with a diversity of industries - training them and facilitating the implementation of the techniques of TQM and Six Sigma until the culture of continuous change is internalized. Further details about this article and assistance for similar change initiation and implementation through training and facilitation can be obtained from Mr. Goyal at nirajgoyal@vsnl.in.



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