The Benefits of Six Sigma

"What are the benefits of Lean Six Sigma for your company?"

Written by: John Wellwood January 2011

Why should any company undertake Lean Six Sigma?  Lots of companies ask us this question as do people who want to be trained as Green or Black belts and want to explain the benefits to their managers. If you are a company who are thinking of deploying Lean Six Sigma then there are distinct advantages but there are also some potential issues you should consider.  This document is to help you understand the pluses and possible obstacles you need to over come when undertaking Lean Six Sigma.

The benefits of Lean Six Sigma fall in to key 7 categories:

1. Financial benefits
2. Strategic benefits
3. People development benefits
4. Customer benefits
5. Competitive position
6. Stakeholder benefits
7. Standardisation benefits

Financial benefits

The financial benefits associated with Lean Six Sigma and Six Sigma are well documented. Companies such as GE, Motorola and Honeywell have been posting amazing numbers for decades based on Lean Six Sigma projects.  Typically we see projects which on average save around £50k. Projects which save less than £50k either have not had the right support or they were not chosen correctly in the first place.  We frequently see projects which save well over £100k.

Allied Signal - Cost savings exceeding $800 million since 1995.
General Electric - Most admired company three years running, and consistently increasing growth and profit – cost saving exceeding $2 billion.
US ARMY- Lean Six Sigma techniques implemented throughout the Army continue to prove successful, and leaders anticipate reaching $2 billion-savings.

Financially if you put a person onto Lean Six Sigma training and they successfully complete a project then you would typically expect then to save around £50k.  This does depend upon the project.  The typical Green Belt or Black Belt will also complete around 3 projects in a year as well as doing their day job.  Which means that on average a typical Green Belt will save their company around £150k if they are given the projects and support to complete them.  This has to be a major advantage to any company.

Companies can also be confident that the savings are real.  This is a result of a key structural element of Lean Six Sigma.  The finance department sign off any savings, they say if the savings are real or not.  It is no longer just enough for an employee or manager to run a project and say we saved X, Y or Z.  In Lean Six Sigma it is only a saving when finance can see it.  A major benefit of Lean Six Sigma is therefore that the savings are real.  This gives companies the confidence to say we saved X amount and is why GE, Motorola can publish their savings with confidence.

The average savings per project also mean that most delegates will pay for their training many times over just by completing one project a fantastic return on investment.

Strategic benefits

Companies who deploy Lean Six Sigma also see benefits of a strategic nature.  This is achieved by taking your trained Green or Black Belt and asking them to complete projects which are of a strategic importance – solving major problems in the business.  The skill set that a Green or Black belt will obtain through their Lean Six Sigma training will enable them to solve complex problems for good. They will not just put out fires but they will remove the root causes stopping the fires from starting again.  How much time and money have you spend fire-fighting over the last year?  Lean Six Sigma is about putting out major fires permanently.

As Lean Six Sigma Green and Black Belts are trained to analyse data they can also assist you in understanding where your current problems are, how large they are and develop solutions to solve them.  You can then reassess or develop a strategy for the business based on fact.

People development benefits

The vast majority of people who are trained as Lean Six Sigma Green and Black Belts provide many softer benefits for their organisations.  They obtain an amazing amount of self confidence, the training and being able to speak with data enable them to challenge the norm, suggest new ideas and solve problems.  The result of this confidence normally means that Green and Black Belts want to see things in the organisation change and as such become change agents for the business.  If they have influence in the business in any way then they start to affect those around them to change as well.  The result is an organisation that can implement change, develop and grow.

The trained Green and Black Belts also start to understand the need for change in the organisation. They understand and can not only identify but eliminate waste they start to explain this to other members of the organisation and the business improves without formal projects.

Green and Black Belts also become very enthusiastic about applying the tools and spending time solving problems.  They will in fact start to use the Lean Six Sigma methodologies and tools in all aspects of their jobs, meetings and interactions.  Your people will have a whole new set of skills to apply in all aspects of their jobs.  You therefore see that your people change to become more focused, data driven and have more energy.

An issue however becomes the expectations which are set in the Green or Black Belt.  They want to change the business and many become frustrated if the business will not embrace this change.  The result therefore can be a highly fired up individual who becomes frustrated which can lead to many negative consequences for the business.

Customer benefits

The benefits to your customers normally take the form of better service, better delivery and even better quality.  As a result many customers are now asking their suppliers if they use Lean Six Sigma in their business.  We have clients who have started their programs as a direct result of a request from their customers.  So you can start to advertise the fact that you are using state of the art process improvement and problem solving methodologies to further enhance your offering to your customers.  You can also at that point ask them to get involved and as a result become closer to your customer.

The immediate benefit to your customers would of course be the result of your Green and Black Belt projects.  If you have customer issues then having a project in that area will dramatically improve the situation.  So if you have delivery issues or quality issues then your customer will see the difference meaning at worst secured continual sales and at best improved sales.

Competitive advantage

As you improve your performance you will start to see a difference between yourselves and your competitors.  You can then use this in your marketing and sales pitches.  On the other hand if you don’t start to implement Lean Six Sigma you can bet your bottom dollar that your competition either are or will implement Lean Six Sigma.  That will leave you trailing them and will ultimately cost the business.

Stakeholder benefits

The key benefit in this area is the engagement of your workforce in transforming your business.   Companies who have deployed Lean Six Sigma successfully see this engagement and reap the benefits – the whole workforce identifying and solving problems how much power would that give you.

It also means you can engage with suppliers and customers to jointly solve problems.  Even the shareholders can benefit as many city analysts are now asking why if you are not deploying Lean Six Sigma.

Standardisation benefits

Every company’s processes would benefit from standardisation.  If you implement Lean Six Sigma a major benefit would be that all projects would be run in a standardised same way following the same process – DMAIC.  This means that as managers you can be confident that the problem is being solved properly with data to back up any decision.  It means that you can monitor progress of projects easily as you can see which stage each project is in.  If you have to change the person running a project then it is easier for others to pick up where they left off.  It also means that your decisions will be based on accurate data, analysis and processes giving improved solutions.

List of Companies who are implementing Lean Six Sigma

The benefits for any company are therefore vast.  Not only will the training be paid for many times over the culture of the organisation will be changed and the attitude of staff transformed but customers and ultimately all stakeholders will see advantages.  That is why the vast majority of major businesses worldwide are deploying Lean Six Sigma in some way.  Below is a very short list of just some of them.

3M, A.B. Dick Company, Abbott Labs, Adolph Coors, Advanced Micro Devices, Aerospace Corp, Airborne, Alcoa, Allen Bradley, Allied Signal, Ampex, Apple Computers, Applied Magnetics, ASQC, Atmel, Baxter Pharmaseal, Beatrice Foods, Bell Helicopter, Boeing, Bombardier, Borden, Bristol Meyers – Squibb, Bryn Mawr Hospital, Campbell Soup, Cellular 1, Chevron, Citicorp, City of Austin, TX, City of Dallas, TX, Clorox, Cooper Ind, Dannon, Defense Mapping Agency, Delnosa ( Delco Electronics in Mexico), Digital Equipment Corp, DTM Corp, Eastmen Kodak, Electronic Systems Center, Empak, Florida Dept. of Corrections, Ford Motor Company, GEC Marconi, General Dynamics, General Electric, Hazeltine Corp, Hewlett packard, Holly Sugar, Honeywell, Intel, Junior Achievement, Kaiser Aluminum, Kraft General Foods, Larson & Darby, Inc, Laser Magnetic Storage, Lear Astronics, Lenox China, Littton Data Systems, Lockhee Martin, Loral, Los Alamos National labs, Martin Marietta, McDonnell Douglas, Merix, Microsoft, Morton Int’l, Motorola, NASA, Nat’l Institute of Corrections, Nat’l Institute of Standards, Nat’l Semiconductor, Natural Gas Pipeline Company of America, Northrop Corp, PACE, Parkview Hospital, Pentagon, Pharmacia, PRC, Inc, Qualified Specialists, Ramtron Corp, Rockwell Int’l, Rohm & Haas, Seagate, Society of Plastics Egineers, Solar Optical, Sony, Star Quality, Storgae Tek, Symbios Logic, Synthes, Technicomp, Tessco, Texaco, Texas Commerce Bank, Texas Dept. of Transportation, Texas Instruments, Titleist, Trane, TRW, Ultratech Stepper, United States Air Force, United States Army, United technologies, UPS, USAA, Verbatim, Walbro Automotive, Walker parking, Woodward Governor, Xerox, Lloyds TSB, BAA, BT, Nissan, Renault, Vodafone, Tesco

Source: http://100pceffectivetraining.com/blog/index.php/training/benefits-lean-six-sigma-company/

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Integrated Products & Services Inc. was established in 2006 as a lean manufacturing and material handling consultation firm and have grown into a leader in the distribution of modular pipe racking and shelving systems in Canada. 

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