Lean/Six Sigma Roadmap for Small Companies
By
Jack Reardon
Small companies or even medium sized companies can follow this plan. There is
no magic in the process, it is relatively simple, but you need to determine
that the company needs improvement of some kind. Once you decide that we need
to improve our process, products and people. Once this is done then you need to
determine the best approach. In some cases, Lean may be all that is needed. We
need to reduce our lead times to remain competitive, then Lean is the strategy
to implement. Variation, defects, scrap and rework are the major issues, then
Six Sigma would be the best. If you need to improve speed and variation, then a
strategy of Lean & Six Sigma is the way to go. You may also decide to implement
only part of Six Sigma and not use the Design of Experiments part of the
strategy. You may design a strategy that fits your budget, however you really
need a Black Belt to help you design a strategy that fits your problems. Hiring
a Black Belt or training an employee to become a Black Belt is the preferred
method. For someone to design a strategy for or with you, they need to start
with a full toolbox of tricks. Then be able to pick and choose the right
methods or tools that need to be used in solving your problems. Anyone can pick
the low hanging fruit; however, after you have picked all the easy fixes, most
people run out of tools. You can do wonders using a Pareto chart to find the
biggest or most common defects; however, after solving the easy problems, it
becomes more and more difficult to resolve the harder, less frequent issues.
The Black Belt has about 60 problem solving tools in their back pocket. The
Lean Expert has another 60 tools to play with in their pockets. This training
is important and most Black Belts should save at least their salary each year,
in many cases they save much more money in addition to the intangible savings.
How much can a small company save using Lean and/or Six Sigma? Sometimes it’s
not always measured in direct savings, but in becoming more competitive. With
so much work going to China, how does one compete? The only option is lower
costs, faster and more efficient processes and the best Quality products or
services.
Some things we can improve (no matter what the business): reduced set up times,
less inventory, faster more efficient production, eliminating waste in the
process, eliminating scrap, defects, rework from the process, shorter more
competitive lead times. All these are cost related, but not always easy to put
a number on the possible savings.
Let’s just look at set up time reduction; I have taken this from and average of
4 hours to less than 10 minutes. What does this do for a company? If they did
10 set ups a month, that is 40 hours a month of lost production time, by
reducing to minutes, we just added almost a whole week of production capacity
with no additional cost. What are the savings associated with this improvement?
Pretty hard to pin down, because we also opened up an opportunity to become
more flexible in our scheduling, reducing overtime, and we improved our ability
to ship more product, on time. Many possibilities are now available to us, that
we used to waste with such long set up times.
How about eliminating scrap? This is a little easier to put a savings figure on
and one thing we need to remember, that a dollar saved here goes directly to
the bottom line. To make a dollar in sales we need to sell about 10 times that
amount. In other words if we have a 10% margin (pretty generous today) we need
to sell 10 dollars to make a dollar. Money saved by eliminating a cost, goes
directly to our bottom line. All defects have a cost associated with each and
every defect. In most small companies this can be very hard to actually
measure, because we don’t have good measurement systems in place. If we can
save the defect with rework, guess what, we just added more cost to the part.
Rework is not a competitive strategy. Maybe we can’t eliminate scrap, but we
can reduce it by 50%, easily.
Six Sigma and Lean have been developed to address these issues and always with
the concept of saving money or time and in most cases both. Is it worth it for
a small company to implement Lean & Six Sigma? Absolutely! Look at it this way,
others are implementing these strategies and if you don’t, others will be doing
what you used to do.
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