white paper
the Benefits Of lean six Sigma
AUGUST 2013
white paper the benefits of lean six sigma
THE BENEFITS OF LEAN SIX SIGMA The benefits of Lean Six Sigma implementation are numerous and profound for both the organization undertaking it and the individuals involved. Often, individuals who want to be trained as Yellow, Green, Black or Master Black belts have a need to explain the benefits to their leadership. If you are an individual with a desire to become a certified belt or if you represent a company thinking of deploying Lean Six Sigma, there are distinct advantages and potential issues to consider. Here, we will explain the benefits and obstacles that you will need to overcome when undertaking Lean Six Sigma.
LEAN SIX SIGMA CREATES ORGANIZATIONAL AND INDIVIDUAL VALUE: Value for the organization is created in at least six ways: 4. Competitive Value 1. Customer Value 5. Improved Workforce 2. Financial Value (Individuals and Stakeholders) 3. Strategic Value 6. Standardization
Value for the individual is created in at least three ways: 1. New skills 2. Self Confidence 3. Differentiation
LEAN SIX SIGMA CREATES ORGANIZATIONAL VALUE Customer Value Customer benefits come in the form of improved service, delivery and quality resultant of successful Yellow, Green, or Black Belt projects. Launching projects in areas where there are customer issues often dramatically improve the situation. Many organizations start Lean Six Sigma because their customers are requesting it. Others have successfully involved their suppliers in Green or Black Belt projects. One company involved a supplier in a Green Belt project which achieved a greater than 30% yield improvement. The client and its supplier shared in the cost reduction which resulted in several hundred thousands of savings to both. Financial Value The financial benefits associated with Lean Six Sigma are well documented. Companies such as GE, U.S. Army, Honeywell, Caterpillar and Allied Signal have
been posting amazing numbers for decades based on Lean Six Sigma projects. At Motorola, we typically see projects ranging from $50k to $250k. Many Lean “Quick Win” projects achieve annualized financial benefits of $2k-$10k. • Allied Signal - Cost savings exceeding $800 million since1995. • General Electric - Most admired company three years running, and consistently increasing growth and profit - cost saving exceeding $2 billion. • U.S. Army - Lean Six Sigma techniques implemented throughout the Army continue to prove successful and leaders anticipate reaching $2 billion-savings. Depending on the project and size of the company, we typically see Green Belt project savings range from $25k-$75k per project. The typical Green Belt will also
complete at least one project but sometimes two projects in a year while doing their normal job. Therefore a range of savings can be expected from $25k-$150k per year from one training investment. We believe this to be a huge advantage to nearly any organization. A key structural element of Lean Six Sigma governance is the expectation that finance departments will validate the authencity of savings. It is no longer just enough for an employee or manager to run a project and say we saved a certain amount. In Lean Six Sigma it is only a saving when finance can see it. Therefore a major benefit of Lean Six Sigma is that the saving is real. This gives companies the confidence to say we saved X amount and is why GE and others have published their savings with confidence.
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white paper the benefits of lean six sigma
Additionally, the average savings per project is good evidence that most delegates will pay for their training many times over just by completing one project and is therefore a substantial return on training investment. Strategic Value Some companies who deploy Lean Six Sigma see benefits of a strategic nature. They achieve strategic benefits by picking projects that have strategic importance and focusing their trained belts on these initiatives. The work skills obtained through Lean Six Sigma training enable teams to identify the root causes to complex problems and identify and implement permanent solutions that sustain the gains. One of our clients used our services to help identify and improve its supplier qualification process.
Competitive Value As organizations improve from using Lean Six Sigma their performance starts to positively differentiate them from competitors. Customers often see the difference. This differentia can be used in sales and marketing collateral and to win business from competitors. Workforce Value The key benefit in this area is the engagement of the workforce in transforming the business. Companies who have deployed Lean Six Sigma successfully see this workforce engagement and reap what they have sewn – the whole workforce identifying and solving problems. The energy often spills over into the supply base and enables organizations to better engage with
suppliers and customers to jointly solve problems. Standardization Value In addition to the benefits of reduced variation through business process standardization, following the DMAIC process for all projects as a standardized approach provides a number of benefits. Managers can be confident that problems are being solved properly with data to back up any decision. Monitoring progress of projects is simplified because the project follows a gated process – DMAIC. 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.
LEAN SIX SIGMA CREATES INDIVIDUAL VALUE A large majority of individuals that are trained as Lean Six Sigma Yellow, Green and Black Belts provide gain individual value with new skills, new knowledge, and more self confidence which in turn creates softer benefits for their organizations. •
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They obtain an amazing amount of self confidence from new skills Ability to speak with data, which enables them to challenge the norm, suggest new ideas and solve problems. B etter understand the need for change Understand how to identify and eliminate waste Several salary surveys suggest that certified belts earn higher salaries
The result of this confidence and knowledge normally means that Yellow, Green and Black Belts want to see things in the organization change and as such become change agents for the business. If they have influence in the business in any way then they start to affect those around them to change as well. The result is an organization that can implement change, develop and grow. The trained Yellow, Green and Black Belts begin to understand the need for change in the organization. They understand how to identify and eliminate waste and then start to explain this to other members of the organization. Now the business improves without formal projects. Yellow, Green and Black Belts 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. People will have a whole new set of skills to apply in all aspects of their jobs. People change to become more focused, data driven and have more energy. An issue becomes with the expectations which are set in the Yellow, Green or Black Belt. They want to change the business. Many become frustrated if the business will not embrace this change. The result therefore can be a highly energized individual who becomes frustrated which can lead to many negative consequences for the business.
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white paper the benefits of lean six sigma
COMPANIES IMPLEMENTING LEAN SIX SIGMA The benefits for any company are vast: • • •
Large training ROI Organization culture change Attitude of staff transformed
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Customers see advantages Stakeholders see advantages Energized workforce
This is why the majority of major businesses worldwide are deploying Lean Six Sigma in some way. 3M A.B. Dick Company Abbott Labs Adolph Coors Advanced Micro Devices Aerospace Corp Airborne Alcoa Allen Bradley Allied Signal Ampex Apple Computers Applied Magnetics ASQC Atmel BAA Baxter Pharmaseal Beatrice Foods Bell Helicopter Boeing Bombardier Borden Bristol Meyers – Squibb Bryn Mawr Hospital BT Campbell Soup Cellular 1 Chevron Citicorp City of Austin, TX City of Dallas, TX
Clorox, Cooper Ind Dannon Defense Mapping Agency Delnosa (Delco Electronics in Mexico) Digital Equipment Corp DTM Corp Eastmen Kodak Electronic Systems Center Empak Florida Dept. of Corrections Ford Motor Company GEC Marconi General Dynamics General Electric Hazeltine Corp Hewlett Packard Holly Sugar Honeywell Intel Junior Achievement Kaiser Aluminum Kraft General Foods Larson & Darby, Inc Laser Magnetic Storage Lear Astronics Lenox China Littton Data Systems Lloyds TSB
Lockheed Martin Loral Los Alamos National labs Martin Marietta McDonnell Douglas Merix Microsoft Morton Int’l Motorola NASA Nat’l Institute of Corrections Nat’l Institute of Standards Nat’l Semiconductor Natural Gas Pipeline Company of America Nissan Northrop Corp PACE Parkview Hospital Pentagon Pharmacia PRC Inc Qualified Specialists Ramtron Corp Renault Rockwell Int’l Rohm & Haas Seagate Society of Plastics Engineers
Solar Optical Sony Star Quality Storgae Tek Symbios Logic Synthes Technicomp Tesco Tessco Texaco Texas Commerce Bank Texas Dept. of Transportation Texas Instruments Titleist Trane TRW Ultratech Stepper United States Air Force United States Army United Technologies USAA UPS Verbatim Vodafone Walbro Automotive Walker parking Woodward Governor Xerox
THE BENEFITS OF LEAN SIX SIGMA RESOURCES
1. “What are the benefits of Lean Six Sigma for your company?” 100% Effective Training, 100pceffectivetraining.com, 2013 Improve your company’s performance. Contact Motorola Solutions Learning by visiting us on the web at: motorolasolutions.com/leansixsigma MOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. ©2013 Motorola, Inc. All rights reserved.