Lean or Six Sigma: Which one is right for you?
In the past few years, the terms Lean Manufacturing and Six Sigma, have been tossed around as companies look for proven methodologies in improving operations and reducing expense. Both approaches have been widely adopted in many industries with impressive results. For a small business owner, there are two challenges: first, to understand what these two terms mean, and second, determining which one they should choose to implement so as to maximize their Return on Investment (ROI). In this blog, we will describe the two approaches, their pros and cons, benefits for retailers and manufacturers, and how small companies can begin utilizing the approaches in a cost-effective manner.
Let’s start with Lean Manufacturing. This is a philosophy that looks at all business processes with the goal of eliminating waste. The “7 Deadly Wastes” are shown in the diagram below.
Transportation: Unnecessary movement of parts
Inventory: Raw material, finished goods, slow movers
Movement: Excessive movement of people.
Waiting: Idle people, parts, equipment
Overproduction: Making/buying too much
Over-processing: Too much shipping protection, or extra coats of paint etc.
Defects: Non-conforming product or damaged components during manufacturing.
Targeting these “7 Deadly Wastes” should result in a 20 to 25% gain inefficiencies!
So how is Six Sigma different? Simply put, “Sigma” is a Greek term used to describe variation, and Six Sigma is a methodology used to reduce variation. For companies seeking to improve business operations, the goal is to reduce the variation in the output of their processes. In other words, provide more consistent and predictable products or services. Imagine that the coffee making process at Starbucks is full of variation, and your coffee tastes different every time you stop by to grab a cup. Would you go back to Starbucks again? Similarly, in the furniture industry, if you have wide variations in the manufacturing processes, the distribution centers, or the showrooms customers will receive inconsistent service and product quality. Providing more consistent merchandise quality and predictable delivery service will improve the customer experience while reducing unnecessary expenses associated with handling product returns and price concessions.
In short, Lean is about eliminating waste, while Six Sigma emphasizes consistent product quality and service. Both approaches are intended to improve quality and service while driving operational efficiency. So, which one is right for you? Well, it depends on the current state of your business processes and what you would like to achieve. But you probably will benefit from either one!
We have experts that can help you with both Lean and Six Sigma:
Profit Chain is a management consulting firm specializing in supply chain and logistics operations for the Furniture, Mattress and Appliance industry. We are helping clients across the country make informed decisions in Distribution, Home Delivery, and Customer Service. For more information please visit our website to schedule a free consultation.