Sample Essay On Lean Six Sigma Program

BUSINESS OPERATIONS

Introduction

Figure 1. Lean Six Sigma components
Figure 2. Six Sigma statistically visualization

Decrease costs;

Shorter cycle times;
Increase employee productivity;
Raise profit;
Figure 3.Six Sigma variation

Lean Six Sigma success samples

Conclusions and Suggestions
Introduction
The main appointment of this report is to appoint possible ways how to improve management tools of the DIY tools and equipment producing company - The Arrod DIY. Looking for new markets, new technologies, new suppliers of resources as well as new concepts of running the business can be considered as a result of effective management tools implementation.
Market overview shows us that during previous years an access equipment market, the largest product sector, was estimated to account for around 13% of the market, with other key sectors were heating, cooling and drying that gained 10% of the market; power, lighting and welding; gardening and landscaping - 8% accordingly. Overall, this industry grew during the first part of 2013; however, there was a recovery in construction sectors in the next six months. The main challenges the company can face are lack of resources, rapid development of new technologies, long and expensive business cycles.
The Arrod DIY Company (ADC) is being led by its founder Mr Arrod. Currently, after 25 years on the market Arrod DIY Company (ADC) provides its customers with a wide variety of DIY tools and equipment, including the world famous Arrod Drill series. These drills come in 4 types as follows:

A “light” drill for ordinary domestic purposes

A “medium” drill for the more expert DIYer
A “heavy duty” drill for the serious DIYer
A “professional” drill for “trade” users
The annual profit of the company reaches £75 millions.
Being in a position of a manger at The Arrod DIY Company (ADC) I suggest to implement Lean Six Sigma program. This decision was made taking into account successful experience of other companies and main advantages of the Lean and Six Sigma.
Even though both methods – Lean and Six Sigma are very close, there are some differences between them. Thus, Six Sigma is more oriented on improving process rather than problem-solving. Very often statistical tools are used in Six Sigma method. Lean is more oriented on reducing the number of defects and improving flow. Both methods have their principles. For example, in Lean all activities are divided into Value Add, Non Value-Add and Waste. In Six Sigma there are Understand the critical to quality requirements (CTQs), Understand processes, ensuring they reflect these CTQs and Manage by fact.The most effective way to increase profit, decrease costs and make better cooperation is to combine Lean and Six Sigma tools.
Figure 1. Lean Six Sigma.
As it is shown in the figure above, Lean Six Sigma is a management conception called to improve manufacturing processes. Lean scheme was invented to make faster the process of creating cars and other technic products. Six Sigma tools were first implemented in 1986 in Motorola company. The main goal of it was to create the product with no defects. Thus, Lean Six Sigma is a number of options implemented in order to improve efficiency and productivity of the company.
This management tool is called Six Sigma to reflect the concept of a process where only 3.4 defects per million opportunities (DPMO), so corrupted item appears with low variability. This tool can tolerate a ‘shift’ of about 1.5 standard deviations, what is actually a 1.5 sigma shift (Figure 2).
Figure 2. Six Sigma statistically visualization.
Lean Six Sigma consists of five basic phases: Define, Measure, Analyze, Improve, and Control. It is also well known for its ‘Color Belts’ division. So, the highest level is Master Black Belts managers, who should not only run the company and control main processes, but also be trainers and teachers for the rest of the team. The next level is for Black Belts and than Green Belts managers. Black Belt leaders are responsible for analyzing data and making plans accordingly as well as improve the process and control it. Green Belts managers have quite similar responsibilities but they do not work full time. Managers at the lowest level are called Yellow Belts.
Definitely, only big companies can have a wide managers structure. However, the small size of the company does not mean that Six Sigma cannot be implemented. In this case small and mid size organizations have to invent their personal attitude and vision of the situation and abilities how to use Six Sigma tools within the current conditions.
a.Decrease costs
Waste is any activity during the working process that is not required to manufacture specific product or provide a specific service. Lean Six Sigma helps to remove any ‘Wastes’ as well as to solve any issues caused by a process as they can lead to extra expenditures. In this way Lean Six Sigma helps to decrease costs and save company’s resources.
Without a doubt The Arrod DIY as a manufacturing company can face many problems related with the quality of the process or any kind of ‘Wastes’. Therefore, Lean Six Sigma will be very useful to resolve such problems.
b. Shorter cycle time
Produce DIY tools and equipment is rather complicated and long process. Lean Six Sigma is called to maximize company’s efforts toward delivering a high quality product and service to the clients. In this way the Arrod DIY can concentrate its resources and revenue towards developing of the business. By resources here can be mentioned also extra time, as the process will be faster.
c.Increase employee productivity
Lean Six Sigma allows to involve employees in the improvement process. This kind of promotion and delivering of responsibilities is called active participation. As a result, Lean Six Sigma develops effective, engaged accountable team. Further more, it will help to keep transparency on all levels of management. In this way the Arrod DIY Company can build trust with its employees and show how important is each and every person in the company. It will increase their loyalty and effectiveness. An option to give ‘Black belt’ to the current 4 professional trained employees will let the company to teach new stuff and grow faster. Considering the small number of employees in the company, it is a very important step.
d.Raise profit;
Lean Six Sigma increases company’s profit by streamlining processes that later result in fast completed products or services, which are more efficient and of a higher quality. At the same time resources that are used in the process are fewer. For small companies it is extremely important, as any changes in the amount of production can cause extra costs.
Figure 3.Six Sigma variation.
With Six Sigma CRM’s advanced analytic technology and Six Sigma methodology, companies can expect a fast raise of sales. It can help managers to identify defective business processes sooner and resolve it faster. Assuming that there is about 50% waste in customer-facing processes, and about 25% of this waste can be eliminated through improvements, then applying Six Sigma methods would decrease expenditures by approximately 2.15%. Considering that average operating margins for the industry hover around 9.4%, this cost savings would result in a 30% increase in profit margin as a direct result of applying Six Sigma CRM to customer-facing processes.
Lean Six Sigma success samples
In order to improve productivity and profitability Toyota took what it learned from Ford and advanced the concepts to a broader level to invent Lean. Six Sigma was developed by Motorola as an extension of many other tools. Motorola added the component of financial accountability and all in all it resulted in process improvement. Lean is more relevant to manufacturing companies. At many companies Lean projects are in the form of kaizens. The team members are expected to become the specialists and to supply new ideas. According to Randy Kesterson, Lean Six Sigma can be compared with a baseball. If to assume that both baseman and shortstop may cover their correct part of the infield, but if they do not work together, they will not turn many double plays.
One of great successful examples of manufacture company that used Lean Six Sigma since 1999 is Boeing Commercial Airplanes. The company has participated in numerous pilot projects focusing intently on the customer. Six Sigma is a data-driven way to manage variation in manufacturing and managing business processes also is relentlessly focused on business metrics and cultural change.
Another great example can be the Victorian tunnel for modern trains. In order to reduce invert replacement cycle time a Six Sigma was implemented. Thus, the team mitigated quality, schedule and budget risks. This tool allowed the company to shorten the schedule by 13 weeks as well as major risks were mitigated.
Furthermore, LG Electronics already has 60 six sigma projects running in the areas of production, purchase and HR. This company is world known and extremely successful. Some of the achievements gained with a help of Lean Six Sigma are: The communication cost control project slashed the phone bills for the land line from Rs 13 lakh to Rs 5.5 lakh monthly.
However, The Arrod DIY Company is a rather small company with only 127 employees, therefore there can arise some concerns regarding the Lean Six Sigma satisfactory. As in the stories above only big companies are described. Nevertheless, Lean Six Sigma is a unique tool that is suitable for any kind of business, but requires some personal approach.
For example, General Electric’s, which is a 45-person internal startup has developed a new molten salt battery with a called the Durathon when Lean Six Sigma was implemented. The product stores as much energy as batteries twice its size. Thanks to Six Sigma experts decreased defect rates.

Conclusion

Before making any decisions on any new management tools, it is necessary to understand all peculiarities of the business. It is also important to understand main business operations of the manufacturing process. This will help managers to find out key points that have to be corrected, changed or improved.
Among different options and tools that are available for each and every business, I suggest implementing Lean Six Sigma for the The Arrod DIY Company. As it was mentioned before, this method will help the company to increase revenue, decrease costs, improve employee productivity and of course increase the quality of the product and service of the company. All in all, these steps will raise the efficiency of the company’s business.
Lean Six Sigma is considered to be a unique tool, as it can be implemented not only in big companies but also in small and medium sized. Moreover, this management method is one of the most suitable for manufacturing companies.
Every company is unique and different in many ways. From there, creating the right short and long term organizational goals is very responsible and difficult task. Before beginning any process improvement project, it is vital to choose projects that are good for improvement. Such a project should have an obvious problem within the process, the potential to result in increased revenue, reduced cost or improved efficiency and collectable data.
Among the most popular Six Sigma methods tgere is a DMAIC – Define, Measure, Analyze, Improve, Control. Lean Six Sigma tools are mainly focused on do-it-yourself or DYI companies, like the one Mr.Arrod owns. Therefore, these managements options can be easily implemented in the ADC. To summarise, in order to develop his company according to the Lean Six Sigma phases Mr.Arrod should implement the following changes:
-Identify, what type of his product has higher demand on the market and investigate (ex. make a small marketing research) what do his customers expect to receive from the product he deliveres. This will help to concentrate major forces on producing the most profitable items.
- Prepare necessary calculations to measure how much the producing of this item will cost as well as how much resources are required to be involved in this process. This step will help to reduce extra costs.
-By analyzing main tendencies on the market and possible threats, the company will get prepared to deal with its main competitors on equal level.
-Implementation of new technologies will improve the quality of the product andreduce the number of defects. Thus, company’s reputation will become better and more customers will be attracted. Even though that might cause some extra expenditures, in long term prospect ADC will save more as it will shorten cycle times. In the current situation concentration on quality improvement is much more mportant, than costs reducing or profit increasing.
- Promoting the best employees to manager’s level will help to control the producing cycle on a better level as well as will encourage other workers to improve their skills and perform in the best way. According to the current situation there are only 4 trained managers in the company. Definitely, a diversified management structure can monitor and control the process on all stages, the same as urgent decisions can be made immediately and more effective.

Bibliography

Boeing, 2007. Frontiers. [pdf] Available at <http://www.boeing.com/news/frontiers/archive/2006/december/Dec06_Frontiers.pdf> [Accessed 12 February 2015]
Ferrara Consulting Group, 2012. Defining Business Operations Within The Organization. [pdf] Available at <http://www.ferraraconsulting.com/Downloads/Ferrara%20Consulting%20Group%20-%20Defining%20Business%20Operations.pdf> [Accessed 12 February 2015]
Bossert, J. et al., 2002. Are Six Sigma and Lean Manufacturing Really Different? Are They Synergistic or In Conflict? [Online] Available at <http://asq.org/pub/sixsigma/past/vol2_issue1/youropinion.html> [Accessed 12 February 2015]
The New Economy Institute, n.d. Lean Manufacturing and Six Sigma. [pdf] Available at <http://www.utsi.edu/events/thursdayhandouts.pdf> [Accessed 12 February 2015]
AMA Research, 2015. SUMMARY OF REPORT CONTENTS. [Online] Available at <http://www.amaresearch.co.uk/tool_hire14s.html > [Accessed 13 February 2015]
GoLeanSixSigma, 2012. The Basics of Lean Six Sigma. [pdf] Available at <https://goleansixsigma.com/wp-content/uploads/2012/02/The-Basics-of-Lean-Six-Sigma-www.GoLeanSixSigma.com_.pdf> [Accessed 12 February 2015]