The Six Sigma strategy and the Lean Six Sigma strategy

3.1 Introduction
In this chapter Lean Manufacturing and Six Sigma are discussed in order to properly assess Lean Six Sigma. Tools, advantages and disadvantages of Lean Manufacturing and Six Sigma are described as well as combinations of chosen tools employed in Lean Six Sigma.
3.2 Background and History of Lean Six Sigma
Quality and productivity play an important role in manufacturing and construction. The success of any organization depends on its ability to ensure the highest quality at the lowest cost (Taghizadegan, 2006).
Productivity is associated with “the capability of a process to transform inputs into outputs in an effective and efficient manner”. Quality and productivity enable organizations reach global market by considering customer expectation and satisfaction i.e. high quality, low cost and on-time delivery (Ehrlich, 2002).
Quality
Control charts and statistical process control (SPC) are two concepts associated with quality that were developed in the 1920s by Walter Shewhart at Western Electric. SPC became popular in U.S. businesses in the 1970s following its success in Japanese manufacturing applied by Dr. W. Edwards Deming; a statistician at Bell Labs Engineer (Taylor, 2009).
Subsequently, Total Quality Management (TQM) and Business Process Re-engineering (BPR) were developed in the 1980s. TQM gained global popularity following the achievement of Malcolm Baldridge Quality Award and Demming Quality Award (Basu, 2009). It was a natural outgrowth from SPC, which focused on a less structured approach, and consisted of principles of quality and process improvement methodologies. BPR on the other hand, encouraged starting over, and completely discarding the old process.
In the early 1980s, TQM and SPC evolved into Six Sigma; first introduced by Mikel Harry, at the Motorola Corporation. Consequently, Motorola Corporation won the Malcolm Baldrige National Quality Award in 1986, based on its success of Six Sigma (El-Haik, 2006).
By late 1990s, Six Sigma was established by the former CEO, Jack Welch, of General Electric Corporation. Six Sigma employs many quality problem-solving tools such as Define, Measure, Analyze, Improve, and Control (DMAIC). These tools assist, by eliminating waste, as well as organizing and simplifying work processes (George, 2003).
Productivity
In the 1920s, the Ford production system of cars was developed on the basis of Toyota production system (TPS) of Toyota Motor Corporation (El-Haik, 2006). Prior to that, car manufacturing was “job shop”, meaning they were assembled one at a time by hand (Taylor, 2009). The concept of TPS expanded to Japan by the Toyota family in 1950s (Meisel et. al., 2007).
Later on, TPS bonded with Just-in-time (JIT) production philosophies and developed into Lean, which was popularized after 1973. The purpose of Lean is to reduce waste and cycle time of the process (George, 2003). “Lean enterprise” is a broad term given to Lean program indicating its vast scope of application, ranging from manufacturing to embracing the entire organization (Alukal, 2003).
Figure 3- the evaluation of the combined methods of Lean and Six Sigma (George, 2003)

In the 1980s, Motorola believed that producing better quality products decreases the cost, because it results in greater customer satisfaction and thus higher profitability (Taghizadegan, 2006).
Hence, towards the end of 1990s, a combination of Lean and Six Sigma was developed and subsequently implemented in many manufacturing companies (as shown in figure 1). Integrating both disciplines result in reduction of time and waste due to Lean principles, and decrease in process variability, by using Six Sigma (Meisel et. al., 2007). This business strategy was mainly designed to eliminate waste, minimize process variation, increase velocity and increase customer satisfaction (Tennant, 2001).
3.3 Lean Manufacturing
Definition: According to Taghizadegan (2006), Lean is a technique “used to accelerate and minimize the cost of any process by eliminating the waste in either manufacturing or service.” The waste may be “non-value added cost or unneeded wait time within the process caused by defects, excess production, and other processes.”
Lean Manufacturing, also called Lean Production, is a business philosophy that was originally developed by the Toyota Motor Company, and was referred to as the Toyota Production System or TPS.
Ehrlich (2002) states that basic goals of Lean are “high quality, low cost, short cycle times, flexibility, relentless efforts to drive waste out of the organization, and all value being defined by the customer.” The result is faster cycle time, less waste, and more efficiency. It also provides tools for reducing variability (Epply, 2000).
According to Carreira et. al. (2006), the six main Lean Manufacturing principles are: value, value stream, waste elimination, flow, pull and perfection.
Principle 1: Value. A given activity can add or deduct value to a specific product or service, based on the customers’ point of view. In other words, an activity can alter the product or the service to a more desirable one and thus generate revenue by adding to the profit line, or it can unnecessarily add cost, subtracting from the profit line, in which case it is referred to as non-value added task. These tasks may involve more time, labour, materials, or space but do not improve the product or enhance its value.
Principle 2: Value stream. This is “the total cycle of activity to provide a product or service, from initial customer contact to receipt of payment” (Carreira et. al., 2006). Improving individual areas of a process and analyzing their impact across the whole process, can improve the entire process. It can also provide an overall view of the activities, inputs, outputs, and disconnects, to allow for leveraging maximum financial improvement; system-wide and bottom line.
Principle 3: Waste elimination. Waste is defined as anything the customer is not willing to pay for, or, which does not add value to the process (Epply, 2000). There are seven types of waste in Lean Manufacturing, as shown in figure 3.

Figure 3- seven type of waste in Lean Manufacturing
(http://wongwowai.blogspot.com/2008/09/7-wastes-introduction.html)

1. Overproduction: indicates high productivity to demand ratio, which results from utilizing production equipment and machines faster than required. This can result in “dumping” the products at reduced price or selling them with difficulty (Epply, 2000).
2. Inventory: includes unprocessed components, finished product and work-in-progress. Any unnecessary work, excess inventory, and stockpiling inventory between processes, are wasteful and increase the cost (Ehrlich, 2002).
3. Waiting: waiting for the next stage of production can result in delays in the project. However, it is acceptable for the machine to wait for available operator but an operator should not wait on the machine (Ehrlich, 2002).
4. Motion: unnecessary operator motions and moving material can cause waste and affect process performance (Epply, 2000).
5. Transportation (Conveyance): refers to excessive movement of people or equipment during the production process; more than that required for performing the tasks in the process. This can create wasteful rework and damage to the parts (Epply, 2000).
6. Rework (Correction): refers to inspection and fixing any errors or flaws. This is wasteful, but it can be eliminated by error proofing (Epply, 2000).
7. Over processing: means process waste resulting from poor equipment, duplication of effort, inspections, and no value-adding activities, and inadequate product design. This can lead to failure and increase in cost (Epply, 2000).
Waste elimination reduces the production cycle time (time from receipt of order to receipt of payment) and results in higher quality, short delivery times and lower costs (Ehrlich, 2002).
Principle 4: Flow. It is necessary to ensure that all value creating steps can flow smoothly; by focusing on the customers’ viewpoints, ignoring boundaries and limitations of job descriptions, eliminating or handling bottlenecks, and synchronizing all activities (Caldwell et. al., 2009). Bottleneck or constraints are the slowest steps in the process, which are identified in order to be eliminated, so to increase the output of the whole process (Ehrlich, 2002).
Principle 5: Pull. It is “a technique where downstream customer triggers the need for the product or service” (Meisel et. al., 2007). Let customers pull value from the next upstream activity.
Principle 6: Perfection. Once the above steps are implemented, the last task is to achieve perfection by continuously reviewing the steps until a state of perfection is reached. In this stage no errors are made or defects generated (Meisel et. al., 2007).
Lean Manufacturing can also be divided into nine basic principles that assist and generate solutions to manufacturing problems. These are: Continuous Flow, Lean Machines, Workplace Organization, Parts Presentation, Reconfigurability, Product Quality, Maintainability, Ease of Access, and Ergonomics (cited from Bosch Rexroth Corporation (2007)). The nine principles are shown in appendix A, figure 7 in a typical U-shaped cell.