Out of the Crisis, W. Edwards Deming, 1982

Chapters 1-2, 6-9, 11 and 16 provide a good introduction to the science of variability and quality.  The author’s unique personality makes this a memorable work, even though some content is repeated and some of the author’s personal views must be ignored or discounted.

The Goal, Eli Goldratt and Jeff Cox, 1984

This 300 page novel illustrates how a sequence of variable events operates and how it can be managed effectively.

The Toyota Way, Jeffrey K. Liker, 2004

Chapters 1-4, 7-20 describe the power, principles and components of the Toyota Way.

The Six Sigma Way, Peter S. Pande, Robert P. Neuman and Roland R. Cavanaugh, 2000

Chapters 1-5 provide an executive overview of Six Sigma and why a firm might invest in this approach to operations excellence.  Chapters 6-11 outline a common approach to staffing and organization.  Chapters 12-18 provide a high level overview of the major tools and processes used in Six Sigma.

The Six Sigma Handbook, Thomas Pyzdek and Paul Keller, 3^rd ed., 2010

Chapters 1-4 outline the management of a Six Sigma organization and projects.  Chapters 5-12 provide a comprehensive explanation of Six Sigma tools and techniques.  A modest amount of technical statistics is included.  Often used as a textbook for Six Sigma black belt courses.

Lean Six Sigma Pocket Toolbox, George, Rowlands, Price and Maxey, 2005

Quick reference guide to 100 commonly used tools.  Best used by individuals with lean six sigma training and experience or significant statistics background.

Lean Six Sigma (LSS) is a term which describes a complementary set of tools and insights used to improve business processes.  It is based upon the statistical understanding of variation and the sequence of steps in a process.  It provides a comprehensive approach to setting business goals, improving processes and delivering results.  It builds upon the modern quality movement and the Japanese manufacturing emphasis on process flows.  It includes ISO 9000 standards for quality assurance within an overall management system.  It takes a long-term view of processes, investing in measurements, staff skills, feedback systems and the pursuit of near perfect goals reflecting customer needs.  The insights and tools originated in manufacturing firms, but are successfully applied to many business processes, functions and industries.

A mature Lean Six Sigma (LSS) implementation commonly has six distinct components: a comprehensive quality management system, operations measures and goals integrated into an overall planning and control system, a supplier management program, a supply chain management system which integrates suppliers, internal processes and customer processes, process improvement projects and a product development process.

The comprehensive quality management system is designed to meet the ISO 9000 standards.  At all levels and functions, processes are defined, measured and improved.  The “Plan, Do, Check, Act” improvement cycle is used.  “Say what you do, do what you say, be able to tell the difference” forms the basis for decentralized continuous improvement.  Quality control, quality assurance and quality cost programs are implemented.  Senior and functional managers understand and support the role of quality, measurement and improvement.  Front-line employees learn quality concepts and tools and begin to apply them effectively.

Standalone quality management systems have a history of becoming technical functional silos or disappearing due to lack of support.  Successful LSS initiatives proactively define company level operations measures to meet perceived customer needs.  These measures are integrated into some version of a balanced scorecard that includes financial, customer, operations and asset measures.  Operations measures cover the customer goals of quality, speed, flexibility, value, information and personal service (QSFVIP).  The limitations of purely financial measurement systems are overcome.  Process improvement projects are prioritized together with other capital investments and strategic initiatives.

Organizations soon discover that they are constrained by the limitations of their suppliers and undertake supplier management programs.  They translate their customer goals into supplier goals.  Formal supplier qualification, scorecard and preferred supplier programs are implemented.  Supplier management coordination is centralized.  Individual supplier goals and improvement programs are defined.  Overall company goals and improvement programs are defined.  The quality supplier management program is enhanced.  Organizations adopt the supplier perspective as a complement to the product and financial perspective.  The supplier base is consolidated.  Supplier assets and risks become strategic management factors.

Purchasing, sourcing, freight, distribution and customer service functions are aligned, combined and upgraded within a formal supply chain management process.  Internal processes are revised to more directly and effectively meet core and exceptional customer needs for products and services.  Organization level delivery goals are defined for product availability, on-time shipping and recovery.  Future goals are defined and investments are made to reach these goals.  Internal capacity and cycle times are elevated in importance.  Customer requirements are translated into supplier requirements.  Lead-time, capacity, on-time shipping and minimum order quantity improvements are requested of suppliers.  Forecasting and MRP systems are modified to deliver what they can.  Investments are made in creating “just-in-time” supply systems.

Process improvement projects are formalized.  Quality, industrial engineering, purchasing, accounting, IT and project management professionals learn Lean Six Sigma skills and work with functional staff to define process improvement opportunities.  Projects are divided into continuous process improvement, Kaizen quick-fixes and total process re-engineering projects.  Typically, physical processes are addressed first, followed by transaction and support processes. 

Finally, product development is formalized as a well-defined and consistent process.  Standard development stages, approval gates and documents are defined.   Cross-functional teams, roles and participation are emphasized.  Business justifications support business requirements which are translated into technical requirements.  The clear project scope allows for a project task plan and timeline to be defined.  Templates, forms and guidelines are used to systematize the collection, review and sharing of key information.   The statistical principles of variability and queuing theory are used to effectively manage various functional resources in the portfolio of active development projects.

In summary, Lean Six Sigma takes a probability and statistics approach to managing and improving repetitive tasks and sequences of events.   It does not diminish the importance or value of the individual tasks which are often the province of functional experts.  It does not discount the importance of staff management, but highlights the limits of motivational approaches.  It does not ignore the need to handle exceptions or the value of exceeding customer expectations, but emphasizes the value of consistently meeting negotiated customer requirements.   It does not dispute the need to set and achieve short-term financial goals, but focuses on long-term improvements to meet escalating customer expectations.  It does not challenge the value of improving individual operations steps, but notes that only final product delivery earns customer value.

 Lean Six Sigma directly challenges the common sense view that the whole is the sum of the parts.  It emphasizes processes that span suppliers, all internal functions and customers.  The process view (including quality and customer perspectives) often differs from the functional, financial or product views.  Effective managers learn to integrate these perspectives to make superior business decisions.

A Lean Six Sigma (LSS) approach to operations management delivers many benefits:

1. A comprehensive operations management system, processes and staff aligned with organizational priorities through a balanced scorecard.
2. Engaged staff who understand what actions deliver customer satisfaction and increase long-term profits.
3. An improved root cause oriented decision-making process that includes all functional perspectives.
4. A system which naturally identifies potential process improvement projects.
5. Improved supplier loyalty and willingness to invest in customer success.
6. Satisfied customers, sales growth, pricing power and a more effective sales force.
7. Less fire fighting.  Exceptions are managed effectively with less negative impact.
8. Increased ROI from the existing ISO 9000 infrastructure.
9. Finished goods defects below 1%.  Defect rates cut in half.
10. Total cost of quality cut in half, especially scrap, waste and rework.
11. Individual process quality levels are measured so that risks are understood and managed.
12. Customer expectations are made explicit, holding operations accountable for delivery and limiting the power of individual staff or customers to lobby for exceptional (unprofitable) results.
13. Delivery cycle times are reduced by 33-80%, with clear understanding of process capabilities to avoid overpromising.
14. Consistent on-time delivery improves from 98% to near 100%.
15. In-stock product availability increases from 95-97% to 99%.
16. Peak period delivery capacity doubles.
17. Real conversion cost per unit improves by 2-3% per year.
18. Product costing better reflects the real cost of low volume products.
19. Buying and selling transaction costs are reduced by 50%.
20. Risks are reduced through process definition, staff engagement, cross-training and supplier experience.
21. A constructive culture is built which engages staff in continuous improvement towards near perfection goals in quality, delivery time, capacity, cost, product variety, transaction costs, risk management and customer engagement.