Sunday, September 19, 2010

Six Sigma - Lean Six Sigma Management System - ARTICLE 02

Organization’s Route to Achieving its Strategic Management and Profitability Goals The “Balanced Scorecard” approach to strategic management was developed in the early 1990's by Drs. Robert Kaplan (Harvard Business School) and David Norton. It is an effective approach that enables organizations to clarify their vision and long-term strategy and translate these into action.

It incorporates performance management dashboards that focus on four indicators (perspectives) to monitor progress in respect of achieving the organization's strategic goals. 

The four perspectives are:
  • The Learning and Growth Perspective.
  • The Business Process Perspective.
  • The Customer Perspective.
  • The Financial Perspective.
Many organizations have under-rated the Balanced Scorecard approach although the fault might lie in the manner in which it has been implemented. Blending the use of Lean Six Sigma with Balanced Scorecard can help an organization to achieve its strategic management goals by building on some key elements of Lean Six Sigma such as:
  • Customer-defined quality.
  • Empowering employees to work with a proactive approach.
  • Encouraging employees to work in cross-functional teams to deliver value to external and internal customers.
  • Measuring, improving and monitoring the parameters that are critical to process performance.
  • Achieving continual improvement and breakthrough improvement in the organization’s business and technical processes.
In the recent economic slowdown, a blanket solution adopted by many organizations was to lay off employees. Although this may have resulted in short-term savings, such organizations  sacrificed their ‘only appreciating assets’ in the process.

On the other hand, following long-term gains could have been achieved by implementing lean six sigma projects in the organization’s strategic areas of business:
  • Costs that the organization incurs daily due to mistakes / defects at the level of internal and external customers reduce sharply.
  • Hidden costs related to loss of customer confidence and legal claims, associated with such mistakes / defects are eliminated. Needless to mention, these costs can be enormous at times.
  • Employees stop hiding mistakes and learn to build “prevention” in their business and technical processes thereby improving the capability of these processes.
  • Utilization of employee-wisdom and ability to work in teams leads to optimum solutions for the organization’s problems.
  • People start recognizing the seven types of waste, commonly identified in “Lean Management Practices” and work towards elimination of such wastes.
  • “Value Stream Processing Mapping” is used to increase efficiency of the business processes by eliminating the “non-value adding” steps.
  • Organization enhances its ability to offer better products and services, delivered faster and at lower cost.
Due to these benefits, Lean Six Sigma is today being adopted by number of organizations worldwide. According to one estimate nearly 60 % of Fortune-500 companies are using Lean Six Sigma and that figure rises to 82% when we look at just the Fortune-100 companies. In fact organizations like GE (General Electric) have mandated that all management level persons have to be at least six sigma green belt qualified.

At times I come across senior managers who look at Lean Six Sigma methodologies as another set of tools to improve quality. Unfortunately, this is far from the truth. On the contrary, Lean Six Sigma is a very powerful management system that can lead the organization to achieve its strategic management goals and profitability goals on an on-going basis.
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G.K.K. Singh (Nickname: GKPK) is a B.Tech and Silver Medalist (IIT-Bombay), MBA (IIM-Calcutta), IRCA-UK Lead Auditor, Six Sigma Master Black Belt and Director of Asian Institute of Quality Management - Pune. He can reached at: director@aiqmindia.com

3 comments:

  1. Thanks six sigma.com. I plan to post approximately weekly real world advice and experiences on six sigma, lean and quality management topics.
    Hope to hear from you again soon.Lean Six Sigma Training

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  2. Excellent examples of how excess labor can be used to strengthen processes and deliver more value to customers.
    Why don't more companies see the value in this? I believe it's because of silo thinking and optimizing the silos instead of looking across the entire value strea. Thoughts? lean six sigma

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  3. Six Sigma is tools are used for process improvement. Six Sigma is the system preferred by businesses around the world to streamline, improve, and optimize any and every aspect of their organization. You can find the best Six Sigma tools to use and its applications to practice Six Sigma.

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