The two chapters reviewed below are discussing the applicability of different process improvement strategies in various systems. The main points of the discussion and choice of process improvement strategy will be outlined below.
Six Sigma Approach
Choosing Six Sigma. According to the author, selecting the Six Sigma approach is appropriate when there are too many variations in the system but there are no fundamental flaws in the process. Therefore, to re-design a complete business process, it is not advisable to reach for the Six Sigma management tool, however, improving service, production and customer satisfaction, it is proven to be the right method. In order to decide which method to use, however, managers need to be aware of the options and methods involved.
Business Process Design. When systems are not fully developed or are fundamentally flawed, there is a need for a process design approach, instead of process improvement. In business life, it is often hard to decide whether the system is fundamentally designed right and the faults are in the processes, or the other way round. In the 21st Century, companies need to employ the tools provided by technology available to redesign systems.
Business Process Design is Dramatic. The idea of BPD is not to make adjustments in order to make small improvements. It is a tool that can create performance breakthroughs and turn a struggling business that is losing money into a prospering one, by making processes cheaper, faster and simpler, while less of the company’s resources are used to complete the process.
Six Sigma Benefits. Examples of the chapter show that profitability, cost-effectiveness, customer and employee satisfaction, as well as lower variations. Lower variations would provide managers with more information necessary for planning processes and eliminating unproductive processes.
Lean Process Improvement Method
Integration of Lean and Six Sigma. Incorporating Lean process improvement into Six Sigma approach (see Xerox) can bring companies additional benefits; for example higher customer retention, lower costs and better efficiencies across the business.
Lean for Eliminating Waste. Waste can be determined as idle, unproductive time, wasted resources, talent or materials. Excess time spent on processes decrease the system’s efficiency, and therefore, it needs to be eliminated through a customer oriented approach. This has a great impact on the company’s competitiveness, as well as customer outcomes. Eliminating waste results in lower operation costs, lower inventory, more competitive prices, benefiting the company’s market position and the customer as well.
The Lean Principles, The road to accomplishing more while using less resource is determined through various steps managers have to take. These are: specifying the value from the customer’s perspective, identifying the value stream, eliminating non-value-added processes, making customers pull value through the stream and perfecting the system.
Lean Across the System. Lean deals with every value-adding activity within the organization: priorities of the market, product design, capacity planning, (keeping capacity at the minimum), layout of workplace, warehouse in order to reduce storage, delivery and handling costs, workforce utilization, inventories, suppliers, planning and control, as well as maintenance.
Eliminating Waste. Creating value is the opposite process of generating waste. Therefore, the processes that create no value for the customers are determined as waste. These can appear in the form of overproduction, inventory waste, waiting time, unnecessary activities within the company and defects. By successfully identifying the value stream, these processes can simply be spotted; non-value-added activities eliminated resulting in better outcomes for the company and the customer.