In this 3-part series, we will share with our readers on how skills in the process excellence area such as Lean Six Sigma (LSS) and Project Management (PM) can be integrated for a holistic success of professionals in industry, academic institutions as well as small business entrepreneurs.
In part 1 I am focusing on LSS and its proven benefits in the industry sector. This includes manufacturing, services, as well as transactional type environments. This part would be very useful to the PM professionals who can get a summarized version of what LSS can bring for them in their career progress and growth be it as a consultant or corporate professional. PMs are trained and coached to be practicing experts in managing and delivering projects on time, however, could lack the skills in solving the problem. LSS experts on the other hand are trained and coached to solve problems, however, could be lacking in project management skills.
In part II and III later this week, we will focus on how the integration will impact an academic institution, and entrepreneurial type environments. For the academic component we will address how students and faculty can apply the principles of PM and LSS in an academic area of interest, be it succeeding in a course they take or research thesis they would publish. While dwelling on the entrepreneurial component we will emphasize how small and medium enterprises as well as startup organizations can utilize the principles of LSS and PM toward a sustainable success on a global level.
What is LSS?
Over the last 2 decades, volumes of published materials as well as books and case studies have been made available on the principles and benefits of applying LSS in the industry. There are websites and consulting companies devoted to the application and implementation of LSS in the industry. LSS, in its core, relates to an integrated approach to solving a problem and creating the opportunity for a given customer. While solving problems it is critical that we focus on where the constraint is using the “Theory of Constraints (ToC)” technique. The ToC technique allows us to focus on areas that are constrained which when relived by using the principles of LSS will result in a profit breakthrough for the customer as well as the organization serving the former.
Over decades since the 1960s, initiatives were introduced by Dr. Deming, Dr. Juran, and Dr. Goldraat known in the industry as continuous improvement gurus. Some industries utilized the knowledge in initiatives of such gurus and succeeded sustainably, while others had a jumpstart and faded away into oblivion in a very short period of time.
Initiatives such as operational excellence, lean enterprise, six sigma, change management, and theory of constraints yet weathered the storm of increased customer demand for quality, and survived as a result of their unique value proposition for their customers. In several organizations, these initiatives became the flavor of the month or that of the ‘C’ levels such as CEO, CIO, CTO, CFO or COO.
Organizations were then exposed to a combination of Lean Enterprise and Six Sigma known as Integrated Lean Six Sigma (ILSS) including the application of theory of constraints in order to bring about an institutionalized change for a sustainable period in time. In some cases, they succeeded very well, while in others they sizzled away due to a weak plan for sustainability. This section provides reasons for success or failure of such initiatives over the last decade and how, when done right, it can help transform LSS and PM professionals into the future for the 2nd decade of this millennium.
Investment in such initiatives:
As customers become more sophisticated and get a better grip on their incoming materials and services, COG(S)S (cost of goods or services sold), their expectations for product speed of delivery (which the industry terms as OTD – on-time delivery) only increase. When the customer focuses on speed, he clearly assumes that it comes with a built-in quality, and any deviation from performance of the product or the service quality cannot be compromised. Thus the 3D’s (delays, defects, and deviations) of LSS have to be managed and contained to bring about increased business profitability.
This means most initiatives will need to focus on process cycle time keeping in mind a built-in high quality product/service at a value that the customer is willing to pay for. In some industries, customers are willing to pay a premium, while in others they are seeking aggressive pricing options. In the area of ILSS, investments by multinational organizations will increase as they can lead to multiple positive consequences such as:
a) Business enterprises will gain, regain, and maintain customer loyalty on a global basis
b) Customers demand speed and are willing to pay but seeking some unique value
c) Nations such as India, China, Thailand, and Malaysia and likes will dominate this century.
Benefits of ILSS
ILSS has shown to have provided a significantly higher benefit to business enterprises, especially when the lessons learned from previous deployments are sincerely applied with a fundamental change in approach in its implementation. To date, most initiatives of such types have been perceived as a career-based value addition to the employee (whom we designate generally as a Yellow Belt, Green Belt, Black Belt, or Master Black Belt) and primarily ignoring the customer’s benefit for the most part. Had the customer’s benefit been integrated into the forefront of such change initiatives, organizations executing and implementing the same would be bound to succeed. In this millennium, factors that Indian business enterprises need to control for sustainable success with ILSS are suggested here:
1. Three critical organizational components that have to involve and contribute are:
a. Finance leadership – CFOs
b. Information technology leadership – CIOs
c. Human resources leadership – Senior HR official
2. Kickoff initiative as pilot project, learn from pilot and then deploy at a larger level.
3. Implement change at operational levels, not above it during initial stages of the deployment.
4. An external consultant rightly chosen for sustainable success would be highly essential.
5. Establish clear project charters, and approved process ownership prior to any kickoff.
6. Project Demographics:
a. Defined, based on the application of theory of constraints
b. Goals in charters need to be directly linked to the KPIs of the project leaders
c. Project KPIs need to be linked to either of the following:
i. Preferably the EBITDA* of the external customer and/or
ii. Budget reduction assuming the sales-to-capacity ratio is > 1.0
7. Kickoff the deployment at the lowest level (yellow belt) keeping it simple but effective.
8. Utilize home-grown XYZ belt resources to develop rather than hire from outside.
9. Primary focus of the deployment needs to be‘one-time’ training and a lifetime of application.
10. XYZ belt’s role is that of an ‘enabler’ and not of a ‘stay in one area’ one.
11. Once project benefits are sustained, ILSS enablers disband, and redeploy wherever necessary.
12. With a sales-to-capacity ration running at > 1.0, focus on the process benefits such as:
a. Reduction in process cycle time
i. Assess non-value add, dead-time, idle time and eliminate it
ii. Remember built-in quality measures are assumed when cycle-time is reduced
b. Cycle-time linked directly to increase in:
i. Organizational capacity
ii. Process capacity
iii. Business capacity
13. With a sales-to-capacity ratio < 1.0, never run the deployment outside of sales to begin with.
14. With a sales-to-capacity ratio ≈ 1.0 determine what will sustain it and then execute 1 through .
15. Utilize the modern tools of technology such as:
a. Internet means to navigate deployment magnitude and direction checks
b. Avoid running deployment on MS Excel spreadsheets
c. Establish/validate clear understanding of tool/technique comprehension by XYZ belt
16. Integrate the supply chain into your plans of deployment and demonstrate potential of ILSS.
17. Start your screening and selection of suppliers based on their attitude toward ILSS.
a. Enroll suppliers into ILSS and help them duplicate steps 1-15 as you did
b. Delve at least to the second-tier level of your supply chain and beyond if necessary
18. Ensure XYZ belts are treated like customers by:
a. Managing their career options via a senior executive council
b. Total freedom in executing projects as enablers and not restricted
c. Mix and match enablers regardless of subject matter expertise
d. Encourage ‘data based-decision making across your people and culture.
The ILSS methodology for Project Managers (PMs) is applicable readily in the following areas:
1. Operational excellence in the project services delivered.
2. Excellence in effectiveness during post project closure.
3. Excellence during project solution sustenance and handover phases.
The conceptual flow of the ILSS sequential problem solving methodology is illustrated as:
• Define the problem or opportunity in any area as listed above.
• Measure the baseline performance in the area chosen for improvement.
• Analyze the root causes for defects and delays in the process area of interest.
• Improve the process by reducing and or eliminating the 3 Ds (Defects, Delays, and Deviations).
• Control the process at the improved level of performance to exceed customer expectations.
PMs can also benefit from the application of ILSS in the following ways:
1. Maintain current customer base without reducing pricing:
a. Understand customer’s latest expectations and provide with technological benefits.
b. Deliver products and services and delight them.
c. Understanding the needs of customers on a constant basis
2. Regain lost customers abroad by assuring old promises:
a. Revisiting lost customers, and demonstrating capability to deliver.
b. Re-evaluate broken promises if any and approach with a new age of commitment.
3. Gain new customers abroad by beating out competition:
a. Understand voice of such customers and provide value not easily available.
b. Pursue and ask ‘what needs to be done to woo most of them to return.
Regardless of what we think, perceive, propose, and execute there is something called ‘pulse of your customers’ culture’ and a constant touch, feel, quantify, to understand, and translate back to your process to achieve the same. PMs can cash on this opportunity in 2011 and beyond to ward off competition that is waiting to grab that market share overnight.
Additionally, any strategy you have is likely to succeed with a sound awareness of the customers’ culture. Devising a strategy by taking into account the cultural factor would result in a sustainable deployment. Organizations paying attention to the vital elements of an effective deployment will experience significant benefits over a sustainable period. Thus while ILSS professionals need a strong foundation of PM, the latter could also benefit from a solid foundation on ILSS.