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This article: Introduction Lean Six Sigma
Source: Business-improvement.eu
Lean Six Sigma: The value adding, perfect organization

^ For more articles about (Lean) Six Sigma, use the drop down menu in the top left corner. This is the introductory article about Lean Six Sigma, another article introduces Six Sigma!

Introduction Lean Six Sigma
Lean Six Sigma combines two lines of approach for business process improvement:  logistics and quality management.  While Lean Manufacturing is used to improve the flow and to remove unnecessary production steps, Six Sigma is used to improve and standardize the quality of the remaining steps. The result: more efficient ánd better production, for example manifesting itself in the form of reduced delivery times in combination with improved quality.

The value adding and perfect organization
The Holy Grail of Lean Six Sigma is an efficient (Lean) and perfect (Six Sigma) business organization. The application of Lean Six Sigma becomes worthwhile in particular when:

  1. Several consecutive steps are needed to finish a product or service (the field of application of Lean)
  2. Quality is an important, measurable and distinguishing feature (the field of application of Six Sigma).

Really different organizations meet this profile! Lean Six Sigma is for example applied by chemical companies such as Shell (see the article below) and SABIC Innovative Plastics, but is also practiced within hospitals, such as the university hospital of Groningen in the Netherlands (UMCG).

Initially, Six Sigma was dominating in Lean Six Sigma. In DMAIC-projects, lead by Black Belts, Lean-tools like Value Stream Mapping were then only applied when needed. Today, there is an increasing appreciation for the people part of Lean. Examples are frequently visiting the shop floor as a manager (Go to the Gemba), visual management, and the formation of teams that improve their own way of working. An example of a company that applies Lean and Six Sigma in a more balanced way, with both methods being equally important, is Philips.



Lean Six Sigma (introductory article)
Shell optimizes end-to-end with Lean Six Sigma
By Dr Jaap van Ede, business-journalist, editor-in-chief business-improvement.eu.
The first version was published in 2008 in “Chemie Magazine”, the specialist journal of the Netherlands Chemical Industry Association (VNCI)


Shell Chemical Netherlands (SCN) aims to optimize its business processes end to end. Key Performance Indicators are used to measure to what extent this goal is achieved. When a certain process performs under par, Lean Six Sigma is used to find and tackle the root cause of the problem.

Between 2004 and 2008, Shell Chemical Netherlands (SCN) saved as much as 30 million Euro with the aid of Lean Six Sigma!

Central point in this method is a fixed project cycle with the phases Define, Measure, Analyze, Improve, Control. This so-called DMIAC-cycle results in increasingly efficient and perfect processes, see also the box DMAIC-cycle connects Lean en Six Sigma. Because further improvement always remains possible, this cycle never stops!

The chemical plants of Shell at Moerdijk in the Netherlands form a network.
^ The chemical plants of Shell at Moerdijk in the Netherlands form a network.
   Local optimization therefore doesn’t make much sense!  Lean Six Sigma matches
   well with the idea that processes should be optimized end to end.


Process oriented thinking
The factories of Shell at Moerdijk and Pernis in the Netherlands form a network of vessels and columns. Therefore it doesn’t make much sense to optimize one unit, without taking into account the effects on adjoining activities. This does however not only hold for production, but also applies to all supporting business processes.

This leads to the following conclusion: To make a company perform optimally, all production, business and management processes should be mapped, end to end. Next, Key Performance Indicators should be defined for each process, so that it becomes measurable how efficient this process runs.

Shell calls this unit and department exceeding approach “process (oriented) thinking”.

‘In the nineties we already recognized the importance of process oriented thinking’, says Hans Boerstra, change manager at Shell Chemical in the Netherlands (SCN). ‘However, we were not completely satisfied about the application of it. The right kind of performance indicators were not always available. Besides that, we had no structured approach to improve processes that performed below standards.’

DMAIC-cycle connects Lean en Six Sigma


Lean Six Sigma
combines two improvement methods. Theoretically this will result in processes which are not only efficient from a logistic viewpoint (Lean), but which also deliver products or services of good and standardized quality (Six Sigma).

Lean Six Sigma connects Lean and Six Sigma via the DMIAC project-cycle, which is a concept borrowed from Six Sigma. DMAIC stands for the project phases Define (what is important in the eyes of the customer), Measure, Analyze (why is quality sometimes below standard), Improve and Control (prevent a return to the old process).
By repeating this DMIAC-cycle, the process concerned becomes increasingly efficient (Lean) and perfect (Six Sigma).

Lean manufacturing reduces waste in time and materials, which results in increasingly efficient (logistic) processes. Only steps which add value for customers are considered to be useful. A process flow diagram (Value Stream Map) is used to identify which processes add value, and which don’t. Seven kinds of wastage are reduced as much as possible: overproduction, inventory, manufacturing errors, manufacturing disruptions, waiting times, transport and unnessary movements.
> more about Lean

Six Sigma adds the striving for a constant and good quality of business processes. This is done by a reduction of variation. The goal is to maximize the likelihood that products or services will meet customer expectations. The term Six Sigma refers to an error probability of only 0.00034%! 
> more about Six Sigma


Change to Win
To bring the process management within SCN to a higher level, the “Change to Win” initiative was launched in 2004.

‘If a certain process does not perform as planned, then you would like to have a standard approach to find and eliminate the root cause’, says Boerstra. ‘Thereto we adopted Six Sigma, and later we added Lean tools. So nowadays we apply Lean Six Sigma: Lean to make our processes more efficient by removing steps that don’t add value, and Six Sigma to strive for constant quality in each remaining step’

Every improvement project is executed conform the DMAIC project cycle of Six Sigma. The letters in this acronym stand for the project phases Define (what are we going to measure and why), Measure, Analyze (why is quality below standard), Improve and Control (lay down the new standards)

Change manager Hans Boerstra:  "We aim to optimize business processes end to end. Six Sigma fits perfectly, because DMAIC-projects are done by multidisciplinary teams.
That way, local optimization is prevented"


Data-driven

Boerstra: ‘In Six Sigma, decision making is data-driven. That fact we found appealing, because it prevents jumping to conclusions. Let me give an example: Sometimes operators adjust process parameters themselves, purely on the basis of their experience or gut feeling. You don’t want that, because it will lead to a variable product quality. What you do want, is that every operator selects the optimal process parameters. Six Sigma sees to that.’

Another positive aspect is that DMAIC-projects are executed by multidisciplinary teams. ‘This reduces the risk of local optimization. Six Sigma thus supports process oriented thinking

Last-but-not-least: Six Sigma puts the needs of the customer first. The goal of each DMAIC-project is to improve those quality aspects which are seen as critical in the eyes of the customer. 

The persons interviewed for this article
^ The persons interviewed for this article.  From left to right:  Black Belt Nicoline
   Eikelenboom, Change Manager Hans Boerstra, Green Belt Joep van Giezen,
   Yellow belt
Cees Knook.


Jack Welch
Six Sigma came into the public eye, after Jack Welch implemented this method with big success within General Electric (GE).

‘Within GE Six Sigma became compulsory, but within Shell there is not such a diktat’, compares Boerstra. ‘It was our free choice to start with Lean Six Sigma within SCN, although we get support from Shell Learning. They train our future Black and Green Belts. Those are the people who become respectively full-time and part-time DMAIC-project leaders.’

Another difference with GE is that Lean Six Sigma is not a global excellence program within Shell. ‘We do have global programs like GAME, which stands for Global Asset Management Excellence’, Boerstra points out. ‘GAME standardizes a number of important working methods which affect the safety, reliability and availability of our factory processes.’

Theoretically, a DMAIC-project within SCN could result in the wish to change a global standard, as defined by GAME. ‘If so, we have to consult the process owner concerned. However, in most cases that will not be necessary. Within the boundaries of GAME, a lot of improvement is possible by a correct implementation of the standards.  Besides that, not all the crackers of Shell are the same.’

Reduction of accidents
Shell added an extra management level to Lean Six Sigma, to determine the priority order of the DMAIC-projects. This level is called Recognize, and is about defining the most important business goals. ‘An important part is the Business Improvement Plan’, Boerstra explains. ‘We examine in that plan where we stand as Shell today, and where we want to be in a few years.’

An example of a project which came up during the Recognize-step, was the wish to reduce the number of accidents during turn-arounds to zero. ‘During overhaul the number of incidents is relatively high by nature. This is caused by the huge amount of unusual work, done by a lot of external employees.’

This Lean Six Sigma project shows that applying a DMIAC-cycle is also suitable to improve processes outside production, as long as the (quality) characteristics of those processes can be measured. ‘We started to map which parameters influenced the risk of getting an accident the most. We found eleven things, varying from keeping workplaces clean, to strict procedures to prevent injuries to hands and fingers. No less then 50% of the accidents is related to these kind of injuries.’

Subsequently, safety experts were appointed. ‘Each day during a turn-around, these experts walk around to see how the wind blows. They summarize their findings by a score for each of the eleven points of interest. This way, even a subjective aspect as the attitude to work was made measurable. When a certain score is low, action is taken at once, so that the risk of accidents is reduced immediately. In addition, we saw that the level of security became more constant after a while.’

Value Stream Mapping in the lab
^ Value Stream Mapping identified which activities in the laboratory at Moerdijk
   add value, and which don’t.


Lean in the lab
Cees Knook is manager of the laboratory, that carries out analyses on behalf of the production sites in Moerdijk. Knook tells about a DMAIC-project in which he was involved as Yellow Belt, in the role of project owner.

In this case, the focus was on Lean: Value Stream Mapping was applied to identify which activities in the laboratory at value, and which don’t.
 
‘That way we identified eight things which could be done better’, Knook says. ‘Let me give an example. During a shift an analyst walks as much as three miles, we measured that using a footstep counter. However, we could reduce the distance by nearly a mile, simply by placing the gas chromatographs which are used the most in a central position.’

Popular analyzing equipment was relocated to central positions
^ By relocating popular analyzing equipment to central positions,
   waste in the form of ‘walking’ was reduced.


Two-bin system
Besides that, a two-bin system was introduced for the chemicals, with one bottle in use and one in reserve.

‘A third example of a simple but effective improvement was raising the time limit before the Laboratory Information Management System logs out automatically. This used to be 10 minutes and is now 30 minutes. Analysts now less often need to login.’

Interestingly, the primary focus of the project was not on logistic improvement, but on reducing the work stress. ‘Preceding the project, all employees working in shifts said that their workload was to high.  Now this has dropped to 56%.’

A new DMAIC-project should lead to a further reduction of the work stress, by leveling the demand for assays. ‘At the moment, there are three priority levels. Soon this will be raised to five, to make a better spread of the work load possible. In addition, the number of unnecessary requests for assays will be reduced.’

More efficient transshipment
On the last point there is an overlap with a DMAIC-project in a totally different business department, namely shipping. Nicoline Eikelenboom was, as a novice in process improvement, involved in this project as yellow belt. ‘I liked Six Sigma so much, that I am a Black Belt today’, she tells enthusiastically.

In Moerdijk, the lion’s share of the thirty bulk chemicals are supplied and/or removed by boat.

Sometimes ships are waiting for the result of a laboratory assay, because it is only allowed to transship chemicals if the test result is good. ‘It turned out that this time-consuming procedure is not always necessary’, Eikelenboom says. ‘Sometimes you can rely on the quality certificate of the supplier, and immediately start to pump over. This means one analysis less in the laboratory. In addition, the quay will be occupied for a shorter time.’

That fact is important, since the space at the quay increasingly became a bottleneck. ‘On one hand, there is an increasing demand for transshipment capacity. On the other hand we saw that the efficiency of that process was deteriorating. As a result, our expenses for harbor dues were increasing. In the long run, it would even become possible that timely supply of raw materials to production couldn’t be guaranteed anymore’.
 
Therefore a DMAIC-project was started, to answer the following question: Is an investment in the construction of a second quay necessary, or is it possible to make better use of the existing quay?

Measurable
In the end, the latter option turned out to be best.
To come to this conclusion, measurements again formed the point of departure.  

Eikelenboom: ‘Our improvement team started to map, per type of ship and per type of product, how much time the transshipment took. Large differences emerged. For example, each operator turned out to have his own ideas about the right pumping speed. In extreme cases, it even was agreed with the captain of a ship to pump slower then usual, so that shipping would be ready not before seven o’clock in the morning!’

It became clear that there was a need for a cultural change. From now on, everyone should have to strive for transshipments as quick as possible.

For each type of ship and for each type of product, a standard procedure was defined. ‘It really was an eye-opener that we could gain so much time by faster transshipments. In the beginning we thought that reduction of obvious wasteful steps, like waiting for assays or paperwork, would be much more important.’

Transshipment at Shell Moerdijk
^ A DMIAC improvement project, aimed at more efficient transshipments, proved
   that investment in a second quay was not necessary!


Multidisciplinary
‘This project shows the strength of having a multidisciplinary DMAIC-team’, Boerstra adds. ‘This stimulates thinking beyond the borders of departments, and thus process oriented thinking.’

Each team not only maps what can be improved, but also implements their findings, and finally secures that a return to the old situation becomes impossible.

‘That might be the biggest difference in our current approach, as compared to the situation before the adoption of Lean Six Sigma’, Boerstra says. ‘In the past, we had two teams per improvement project. The first team came with recommendations, and the implementation was done by the second team. Not only this works much slower, in addition there is a big risk that the not invented here syndrome crops up. For example, it could be that the implementation team doesn’t understand the improvement suggestions completely. If so, it might well be that they will return to the analyzing phase.’

Savings
Within Shell Chemical Netherlands, 92 DMAIC-projects started in the last three years. Half of these is finished already, with savings of 30 million Euros as a result!

‘Today we have 15 Black Belts, although some of them work part-time’, says Boerstra. ‘In addition there are 25 Green Belts.’
To make Lean Six Sigma a durable part of the company culture, a critical mass is needed of 1% Black Belts, 5-10 % Green Belts, and 25-50% Yellow Belts. ‘So we need a considerable number of extra Belts in the future’, Boerstra admits.

Besides that, inspired management is of crucial importance. Third, business priorities should always come first. ‘In addition, it should remain attractive for employees to work on Six Sigma improvement projects’, Boerstra says.

Swans at Shell MoerdijkGrip on wastewater
Joep van Giezen participated in a Lean Six Sigma project, with as goal to reduce the number of concentration-overruns in wastewater. Giezen is assistent department manager of the solvent plants of Shell Pernis.

This project clearly demonstrates the usefulness of “process oriented thinking”. It concentrated on two questions:

  1. What does the complete process look like, from the origin until the discharge of wastewater?
  2. In what way is it possible to get grip on that process?

The data-driven approach of Lean Six Sigma turned out to be perfectly suitable to solve these questions!

‘We have two streams of wastewater’, Giezen explains. ‘First, the process water from our factories, and second the rainwater.’

Process water goes to a storage tank, and from there to an installation for wastewater purification. Rainwater is immediately discharged into the harbor. ‘Unless the rainwater is contaminated, for example due to leakage of chemicals on our site.’

Wastewater purification is a biological process. Therefore the concentration of organic substances may not exceed a certain limit, which is called “chemical oxygen demand”  or COD.

Better recording
‘During the past years we strongly reduced the number of times that the maximum COD-value was overrun. Recently, this improvement stagnated. Therefore we launched a DMAIC-process, to find out why.’

First, it was mapped what were historical causes of overruns. ‘According to the Pareto-principle, in general 80% of the effects come from 20% of the causes. We hoped to find that the lion’s share of the overruns is connected to wastewater from a single production process. In that case we could have improved the process control of that part of the factory. However, we found something different: The major part of the overruns, 34%, was connected to… cause unknown!’

This lead to the following conclusion: There was a need to record incidents better!

Management tool
A water management tool was developed for that purpose. ‘It is not much more then a fancy Excel spreadsheet. In the past, the primary focus of the operators was on the production process. Recording of incidents that could affect the wastewater was sometimes forgotten. The new Excel-tool prevents that. In addition, the water management system indicates from which wells samples should be taken, to make it possible to find the root cause of a possible contamination later.’

‘The situation is comparable by pouring a bottle of aftershave somewhere into the water’, Van Giezen explains. ‘Therefore super-fast sampling is crucial, otherwise the contamination has already past by.’

The new approach bears fruit. Since the introduction of the water management tool, the number of COD-overruns was reduced by 50%!



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