Why would you want to consider lean six sigma as an employer?
Why should any company undertake Lean Six Sigma? Lots of companies ask us this question as do people who want to be trained as Green or Black belts and want to explain the benefits to their managers. If you are a company who are thinking of deploying Lean Six Sigma also known as Business Improvements and in terms of the standards ‘IMPROVEMENTS’ then there are distinct advantages but there are also some potential issues you should consider.
The benefits of Lean Six Sigma fall in to 7 key categories
- Financial benefits
- Strategic benefits
- People development benefits
- Customer benefits
- Competitive position
- Stakeholder benefits
- Standardisation benefits
If you are going to develop a full deployment for your company then you should see the benefits outlined here. If you are going to use this information to get training signed off for only one person then you should pick the benefits which are most appropriate and use them to help influence your board. Consider how each of these elements would impact your business, company or organisation.
The financial benefits associated with Lean Six Sigma and Six Sigma are well documented. Companies such as GE, Motorola and Honeywell have been posting amazing numbers for decades based on Lean Six Sigma projects. Typically we see projects which on average save around £50k. Projects which save less than £50k either have not had the right support or they were not chosen correctly in the first place. We frequently see projects which save well over £100k.
Financially if you put a person onto Lean Six Sigma – Improvement training and they successfully complete a project then you would typically expect then to save around £50k. This does depend upon the project. The typical Green Belt (Improvement Practitioner) or Black Belt (Improvement Specialist) will also complete around 3 projects in a year as well as doing their day job. Which means that on average a typical Green Belt will save their company around £150k if they are given the projects and support to complete them. This is why the improvement apprenticeship is the right way to deploy this type of training with a 20% of the job requirement to support employee to complete their projects.
Companies can also be confident that the savings are real. This is a result of a key structural element of Lean Six Sigma. The finance department sign off any savings, they say if the saving are real or not. It is no longer just enough for an employee or manager to run a project and say we saved X, Y or Z. In Lean Six Sigma it is only a saving when finance can see it. A major benefit of Lean Six Sigma is therefore that the saving are real. This gives companies the confidence to say we saved X amount and is why companies like Rolls-Royce, Toyota can publish their savings with confidence.
The average savings per project also mean that most delegates will pay for their training many times over just by completing one project a fantastic return on investment even if this is being off-set against your apprenticeship levy.
Companies who deploy Lean Six Sigma also see benefits of a strategic nature. This is achieved by taking your trained Yellow, Green or Black Belt and asking them to complete projects which are of a strategic importance – solving major problems in the business. The skill set that a Yellow, Green or Black belt will obtain through their Lean Six Sigma training will enable them to solve complex problems for good. They will not just put out fires but they will remove the root causes stopping the fires from starting again. How much time and money have you spend fire-fighting over the last year? Lean Six Sigma is about putting out major fires permanently.
As Lean Six Sigma ‘Improvements’ are trained to analyse data they can also assist you in understanding where your current problems are, how large they are and develop solutions to solve them. You can then reassess or develop a strategy for the business based on fact.
People development benefits
The trained improvement apprentice also start to understand the need for change in the organisation. They understand and can not only identify but eliminate waste they start to explain this to other members of the organisation and the business improves without formal projects.
These apprentice also become very enthusiastic about applying the tools and spending time solving problems. They will in fact start to use the Lean Six Sigma methodologies and tools in all aspects of their jobs, meetings and interactions. Your people will have a whole new set of skills to apply in all aspects of their jobs. You therefore see that your people change to become more focused, data driven and have more energy.
An issue however becomes the expectations which are set in the ‘Improvement Apprentices’. They want to change the business and many become frustrated if the business will not embrace this change. The result therefore can be a highly fired up individual who becomes frustrated which can lead to many negative consequences for the business.
The benefits to your customers normally take the form of better service, better delivery and even better quality. As a result many customers are now asking their suppliers if they use Lean Six Sigma in their business. We have clients who have started their programs as a direct result of a request from their customers. So you can start to advertise the fact that you are using state of the art process improvement and problem solving methodologies to further enhance your offering to your customers. You can also at that point ask them to get involved and as a result become closer to your customer.
The immediate benefit to your customers would of course be the result of your Yellow, Green and Black Belt projects. If you have customer issues then having a project in that area will dramatically improve the situation. So if you have delivery issues or quality issues then your customer will see the difference meaning at worst secured continual sales and at best improved sales.
As you improve your performance you will start to see a difference between yourselves and your competitors. On the other hand if you don’t start to implement Lean Six Sigma you can bet your bottom dollar that your competition either are or will implement Lean Six Sigma. That will leave you trailing them and will ultimately cost the business.
The key benefit in this area is the engagement of your workforce in transforming your business. Companies who have deployed Lean Six Sigma successfully see this engagement and reap the benefits – the whole workforce identifying and solving problems how much power would that give you.
It also means you can engage with suppliers and customers to jointly solve problems. Even the shareholders can benefit as many city analysts are now asking why if you are not deploying Lean Six Sigma.
Every company’s processes would benefit from standardisation. If you implement Lean Six Sigma a major benefit would be that all projects would be run in a standardised same way following the same process – DMAIC. This means that as managers you can be confident that the problem is being solved properly with data to back up any decision. It means that you can monitor progress of projects easily as you can see which stage each project is in. If you have to change the person running a project then it is easier for others to pick up where they left off. It also means that your decisions will be based on accurate data, analysis and processes giving improved solutions.