Lean is a business management approach that focuses on creating products, improving operations, and developing people to deliver customer value and create prosperity, while consuming the fewest possible resources.
Lean isn’t merely about waste reduction, although waste reduction is necessary to meet the “consume the fewest resources” part of the definition. It’s also not just about process design, as offering products that customers want and building highly effective management practices and problem-solving capabilities across the organization is vital.
Building a Lean enterprise requires an organization to rethink how it designs, measures, and manages nearly every aspect of its business.
Lean is a proven improvement methodology that generates more rapid and sustainable results than many previous approaches have yielded. Through a balanced look at both the process and people involved in the process, clients achieve dual benefits – workforce development and bottom-line results.
We are frequently asked about Lean vs. Six Sigma. Questions include: What are the differences? Which approach should I use? Are these simply the flavor-of-the-month? Let’s address the last concern first. Flavor-of-the-month labels are applied when organizations declare that particular improvement approaches “didn’t work.” But for any approach to “work,” organizations must lay lasting foundations for the change process and sustainability.
Lean and Six Sigma both include many of the same improvement tools that were popularized during the periods in which Tot Lean al Quality Management and Business Process Improvement were popular. Basic root cause analysis and process streamlining tools don’t change over time.
But Lean and Six Sigma have key differences from older methodologies. Lean, for example, offers a different perspective on process design and organizational performance improvement. The Lean approach places heavy focus on customer-defined value looking at a process – the value steam – holistically. Lean also emphasizes the role of people in process performance and, when used properly, creates extremely rapid results. These differences are providing “staying power” beyond anything we’ve experienced to date in the world of improvement. Lean is extremely effective at eliminating process “noise” – so you can see what you actually have, rather than jumping to conclusions and implementing suboptimal improvements that don’t generate the outcomes you desire.
Six Sigma relies more heavily on collecting and analyzing performance data than traditional approaches and, therefore, does a better job at reducing variation in processes with narrow performance band requirements. Its methodical and slower paced approach to improvement is best suited for processes that require data-intensive analysis.
Under the guidance of a skilled practitioner, the two approaches can work well together. But it takes a fair amount of expertise to properly determine which tool to use when. Neither tool provides a “cookie cutter” approach to continuous improvement. Similar to knowing when to use a Phillips head screwdriver and when to use a flathead, performance improvement tools must be appropriate for the problem you’re trying to solve.
While they’re often used together Lean and Six Sigma are fairly different approaches to organizational improvement. Six Sigma is a highly effective approach for reducing variation in processes with narrow bands of tolerances, such as those found in engineering, biological, and chemical environments. Examples of relevant applications include ballistics, percent water in oil extracted from the group, level of magnetism for magnetic devices, amount of fluid dispensed through an intravenous line, electrical conductivity, etc. Six Sigma is often a months-long approach to refining a process and many organizations require the guarantee of a significant return on investment before a Six Sigma project can be launched. Six Sigma is best described as a process improvement methodology for specific environments.
Lean is a business management philosophy that applies to organizations of all sizes and types, in all industries. While the basic goal is waste reduction, it is the means by which waste is reduced that moves Lean into the broader category of general business management. Very few U.S. companies have truly embraced Lean the way in which it is intended and the way in which it generates the greatest results. Lean’s premise is that an organization should eliminate all expenditures and effort that its customers do not value. When value stream mapping is used as a strategic improvement planning tool, it typically reveals that 30-80% of an organizations effort is pure waste. Through a structured improvement process that involves the entire workforce, organizations slowly transform themselves into Lean Enterprises, able to thrive during strong economic times and survive economic downturns.
World class Lean organizations have 1 FTE (full time equivalent) dedicated to continuous improvement per 100-200 employees. Experts believe that 10% of the workforce should be solely focused on working ON the business rather than IN the business.
Most organizations can handle 4 Kaizen Events per year per 100 employees. So, an organization with 1,000 employees can typically hold 40 Kaizen Events.
Becoming a Lean is a journey, not a destination. Organizations who have high levels of commitment from senior leadership and remain focused can achieve tremendous results in 3-5 years. While bottom-line impact can be felt more quickly, it takes years for the cultural transformation and leadership development that allows organizations to soar with enterprise-wide Lean activities.