Six Sigma, Just in Time Production and Lean Manufacturing Thinking



Six Sigma; reduce defects, errors to leverage opportunities

Six Sigma is a Total Quality Management technique and a registered trademark of Motorola Incorporated, where a defect is defined as any process output that does not meet customer specifications, or could lead to creating an output that does not meet customer specifications. According to (What is Six Sigma?, 2013) “the fundamental objective of the Six Sigma methodology is the implementation of a measurement-based strategy that focuses on process improvement and variation reduction through the application of Six Sigma improvement projects.” Six Sigma comes from the Greek letter sigma which means to statistically measure how far something deviates from perfection, and is a quality standard that specifies there can be no more than 3.4 defects per million “opportunities”. An opportunity is defined as “a chance for non-conformance, or not meeting the required specifications”. (Six Sigma, 2009)

Six Sigma is also “a generic term for a quality-control approach that takes nothing for granted and emphasizes a disciplined and relentless pursuit of higher quality and lower costs” (Goding, 2001) and has been championed at such companies as General Electric and DuPont.

Within the Six Sigma program are three levels of experience and training represented by “Green Belt”, “Black Belt” and the highest, the “Master Black Belt”. A Six Sigma Green Belt is acquired by receiving training and demonstrating a basic understanding of Six Sigma. A Black Belt requires a full-time job of leading a team implementing Six Sigma, and a Master Black Belt is one who will “champion the exercise throughout the organisation and to watch over the Black Belts and ensure that they are consistently improving the quality of their team’s output” (Six Sigma, 2009)

On the surface, manufacturers most easily apply Six Sigma, but service organizations can also utilize its principles. The company moves “up the sigma ladder” gradually achieving two, three and four sigma before six, by reducing defects. Computer programs are fed the goals (the specifications of a perfect product or process) of achieving six sigma and perform the necessary calculations. Changes are continually made to the machines and processes until six sigma is achieved, which is roughly 3.4 defects per million parts. When comparing a 99% reduction in defects to a Six Sigma reduction, the following examples can be used. Instead of 7.2 hours per month without electricity, there is only 9 seconds. Instead of 800,000 mishandled personal checks each day, there are only 3.

Six Sigma is designed to reduce defects through statistical and mathematical proofs, so the risks include misinterpretation or misapplication of the results of the calculations. As with any methodology, the quality of the output from these calculations is only has good as the information entered.

Just in Time Production has a “love hate” relationship with the business

According to Toyota, Just in Time (JIT) Production means to make only “what is needed, when it is needed and in the amount needed” (Just-in-Time — Philosophy of complete elimination of waste, 2013) Just in Time Production strives to reduce overall business costs via eliminating in-process excess inventory and their associated costs, thereby improving return on investment in a shorter period of time. JIT uses Kanban (Japanese for sign or billboard) cards to communicate between processes. Kanban cards typically consist of relevant product information, such as inventory or parts.

JIT has a simplistic philosophy – “the storage of unused inventory is a waste of resources” (Just in time (business), 2013) which sounds nice and really should be followed by any producer or service provider, but in reality it is difficult and expensive to truly achieve.

One important distinction of JIT is the idea that rather than production being pushed by available inventory, production “pulls” from inventory based on customer demand. Toyota uses the example where much like how supermarket shoppers only buy what they need when they need it, production only takes what it needs when it needs it from inventory, rather than continuing to produce units until the inventory is gone and there are unsold units that then need to be stored.

The benefits of a successful JIT implementation are; funds that were tied up in inventory can be used for more important functions, areas used for the storage of inventory can be used for other purposes of production, throughput time is reduced resulting in greater potential output and quicker response to customers, and defect rates are reduced resulting in less waste and greater customer satisfaction.

These benefits come with high risks however. If there is downtime in a process integral to the production, or an unforeseen shut down of even a minor component in the supply chain, the results can be lost sales and unsatisfied customers. If a company is going to only produce what is demanded only when it is demanded, they must be able to react quickly when there is a failure in their production, otherwise the costs associated with implementing JIT outweigh the benefits in a short period of time. Such an event happened to Toyota when a fire at a plant stopped the delivery of all brake parts. Within days, Toyota had to close down all of its Japanese assembly lines. By the time the supply of brake parts had been restored, Toyota had lost an estimated $15 billion in sales. (Toyota to Recalibrate, 1997)

Lean Manufacturing Thinking means reducing waste, reducing steps

According to the Lean Enterprise Institute, “The core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources.” (What is lean?, 2009)

There are five steps to the lean philosophy. First is to identify value by product family from the standpoint of the end customer. Second, identify all steps in the value stream for each product family and wherever possible eliminate the steps that do not create or add value. Third, make the steps in the value stream operate in tight sequence so the product will flow smoothly to the customer. Fourth, as the product flow is introduced, let the customer pull value from the value stream and fifth, seek perfection by reducing the number of steps and amount of time needed to serve the customer.

Henry Ford is credited with implementing the first lean production model in 1913 by integrating the idea of using replaceable parts in an assembly line rather than having skilled workers fit each part into the automobile when it was time to do so in the manufacturing process. Also, by implementing Lean Thinking Ford Motor Company was able to drop the retail price on an automobile so low even the workers could afford one, something unheard of at the time, and throughput was so high the company could overturn inventory in just a few days.

However, Ford suffered from lack of product variety. Henry Ford is quoted as saying “You can have any color you want, as long as it’s black”. Indeed, the Model A and Model T automobiles were only available in black, but in the early days of the automobile there were few competitors, so at first this wasn’t a problem. But Ford’s popularity with the automobile would soon betray them and more competitors were able to produce cars with greater variety, diminishing Ford’s sales.

Then in the 1930’s Kiichiro Toyoda discovered that by modifying the philosophy only slightly the problem of product variety could be solved. This modification began with shifting the focus of the engineer from individual machines to the flow of the product through the total process. To accomplish this, each machine should be the correct size for the amount of volume it produces, self-monitoring controls should be introduced to ensure quality, the machines should be lined up in a process sequence (assembly line), each machine should make small volumes of many part numbers, and finally each process step should notify the previous step of its current need for materials. By doing so, low cost, high variety of products, high quality and rapid cycle times could be achieved and information management would become easier.

The whole must always be greater than the sum

The three production philosophies all exemplify the same purpose – reducing waste in turn progresses the business towards perfection in delivering greater value to the customer. As with any theoretical and academic methodology or philosophy, the business must be able to adapt both its internal processes and use the methodology where appropriate. Ideally, a manufacturer using all three philosophies would benefit from them the most. Six Sigma reduces defects and in effect waste, JIT creates efficiency across all processes reducing overhead and excess inventory, and the tenets of Lean Thinking imply reusability and minimized resources to deliver greater value in shorter periods of time.

A very intriguing picture has developed in how the three philosophies are in effect time epochs in the evolution of mass production, and are in step with the technology associated with each of them. The industrial revolution brought giant machines working independently with labor intensive processes. Then came Lean Thinking and with it the assembly line with smaller production machines and reduced labor, evolving into Just in Time production with its reduced cycle times and reduced on hand inventory. Finally Six Sigma uses a collection of tiny integrated circuits (computers) to perform statistical calculations on reducing defects per millions of units.  The evolving principles of mass production has increased the amount and quality of output over the last 225 years by continually reducing the amount of labor and material required to create a single product.

 

References

Blakeslee, D. S. (2002). The New Strategic Six Sigma. Training and Development, 45-52.

Goding, M. H. (2001). Putting Six Sigma in Perspective. Quality, 58-62.

Just in time (business). (2013). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Just_in_time_(business)

Just-in-Time — Philosophy of complete elimination of waste. (2013). Retrieved from Toyota Global: http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html

Kanban. (2013). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Kanban

Lean Manufacturing. (2013). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Lean_manufacturing

Six Sigma. (2009, November 6th). Retrieved from The Economist: http://www.economist.com/node/14301440

Six Sigma. (2013, March). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Six_Sigma

Toyota to Recalibrate. (1997, February 8). International Herald Tribune.

What is lean? (2009). Retrieved from Lean Enterprise Institute: http://www.lean.org/whatslean/

What is Six Sigma? (2013). Retrieved from SixSigma: http://www.isixsigma.com/new-to-six-sigma/getting-started/what-six-sigma/