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Even the most effective and time-tested tools must change over time, become better, adapting to the realities of the market and the companies represented on it.

A vivid example of this— Lean Six Sigma. This - in some way an innovative combination of process management methods based on the principles of Six Sigma, with an emphasis on the fact that they can be successfully used not only in production, but in any business area.

Lean Six Sigma: what is it?

Lean Six Sigma (LSS, Lean 6 Sigma, Lean Six Sigma) is an integrated methodology based on American and Japanese methodologies:

(in other words, Lean production) - actions aimed at reducing production losses (waste) and speeding up production processes finished products; standardized solutions are strongly encouraged;

(Six Sigma) - actions whose purpose is to improve the quality of products and, as a result, increase customer loyalty; the basis of decisions, often completely non-standard, is the analysis of information.

A bit of history: what is Lean manufacturing?

This philosophy is also called lean production methodology, lean methodology, lean production. The founder of this method of work was Taiichi Ono, the ideologue of the Toyota production system (although Ohno himself did not use the term, the name lean production introduced by American John Krafchik (now CEO of Waymo, a company that creates self-driving cars)).

We also worked on the lean production algorithm James Womack & Michael Vader, Shigeo Singa, Jeffrey Liker, Dennis Hobbs, who contributed a lot to the concept that the world's leading companies use today. At the same time, the concept itself has been transformed and expanded. If initially it was about lean production, today it is more correct to talk about lean enterprise.

One of the main points that is often forgotten is that a perfectly streamlined production process— nothing if the rest of the company is in chaos. Leader's priority— understand what is happening and identify hidden losses.

To further minimize them by building the right climate in the company:

As a leader in your organization, whether large or small, you can make the greatest contribution to your company by providing motivation and support to those who take on Lean change. Like the conductor of an orchestra, you do not need to play all the instruments, but you need to know the notes thoroughly and lead the orchestra... Michael Vader

Despite the fact that in Japan the lean methodology has been used for more than 60 years, and in the USA this philosophy was adopted in the 1990s, its key principles are still relevant today:

1. workers are not just interchangeable cogs in the system, they must be truly involved in all production processes, from the simplest to the most complex; this is possible only if the management sincerely respects the employees and understands the need for constant professional growth of each employee of the company;
2. management and management systems should, first of all, combine: technologies, regulations, human resources;
3. a key success factor is changing the corporate culture.

Lean is a culture of continuous operational improvement in a company. It is a continuous effort to eliminate waste and improve efficiency. This is the personal attitude of each employee to how effectively he performs his functions and how the processes in his workplace bring additional value to customers. In order to achieve maximum operational efficiency, it is necessary to improve all processes, not only from the point of view of the company, but also from the point of view of the client... Ilya Polshakov, Transformation Director, Kyivstar

Which companies use lean methodology:

• General Motors
• VALEO
• Ford Motor Company
• new balance
• Caltex
• Tikkurila
• EVRAZ UKRAINE, etc.

I am glad that processes aimed at the widespread introduction of this practice have also intensified in Ukraine:

Today, lean is one of the world's best practices for improving the efficiency of any organization, regardless of their size or field of activity. We believe that a deeper understanding and application of the culture of lean manufacturing will contribute to a serious transformation of Ukrainian business, strengthening its competitiveness in European and global markets, and as a result will become a significant contribution to the social and economic development of the country...

Sergey Komberyanov, President of Lean Institute Ukraine

A bit of history: what is "Six Sigma" (Six Sigma)?

We can say that the history of the development of the concept began with this phrase, said in 1979 at a meeting of the Board of Directors of Motorola:

The real problem with the company is that the quality of our products is disgusting!

Art Sandry

It was this statement that forced managers to reconsider the methods and principles of work, because 5-20% of the company's income (up to $ 900 million) was spent on eliminating defects in products.

It was difficult to change the situation, because the path from production lines to the end consumer is long and winding. As a result, statistics were applied, which made it possible to achieve the desired result.

The foundation of the Six Sigma concept:

1. Sigma (Greek letter σ) is the standard deviation, showing the magnitude of deviations for a particular sample (measurements of process results with different initial data).
2. The more opportunities for variation of internal and external factors of production, the higher the level of quality deviations.
3. The smaller the spread of values ​​for a certain characteristic, the higher the quality of the product.

The larger the number, the more obvious the advantage of using the Six Sigma method. So, for Motorola, the 6 Sigma rule became a way to save about $ 14 billion and increase sales by 5 times (in 10 years since the introduction of the 6 sigma method).

If a process operates at the one sigma level, then it produces more defective than good products, from the point of view of the external consumer.

Gregory Watson,
President and Managing Partner of Business Systems Solutions, Inc.

To standardize work with the 6 sigma system, a special step-by-step algorithm called DMAIC was developed:

• define (definition)
• measure (measurement)
• analyze (analysis)
• improve (improvement)
• control (control).

Visually, the process of working with the concept of 6 sigma can be represented as follows:

The methodology really works for different areas and countries, because:

1. The average salary for Six Sigma Yellow Belt certified professionals is $68,294 (Burning Glass).
2. those who mastered the principles of Six Sigma earned more than those who did not: +$12,475 in Canada (according to ASQ.org).

In addition, the technique is used by such companies as:

• General Electric
• Ford Motor Company
• FedEx
• Caterpillar Inc.
• honeywell.

Benefits of using Lean Six Sigma (Lean 6 Sigma)

If we talk about the global benefits of using the symbiosis of lean manufacturing and Six Sigma, then their list will look like a puzzle, where the disadvantages inherent in the lean methodology are successfully filled by the 6 sigma methodology (and vice versa):

• The foundation of lean manufacturing is elimination of such type of losses as marriage (defective products). At the same time, there is no question of looking for and calculating options for where this marriage can come from. And, of course, no work is being done to find ways to reduce the opportunities for variation of internal and external factors of production. But in the concept of 6 sigma, this is what is at the forefront.
• Based on the fact that the 6 Sigma methodology was originally developed in the direction of increasing the level of customer satisfaction, all of its key points are tied to tracking the relationship “features of the production process - end user satisfaction level. In lean manufacturing, such a relationship of metrics is not tracked.
• The 6 sigma methodology requires the initial construction of formalized procedures for implementing the concept. The first step is to describe the responsibilities of the leadership, the features and time of training, the metrics by which progress or regression is tracked, etc.
• Lean manufacturing deals with several types of waste that are common in manufacturing, but Six Sigma focuses on the war on defects.
• Time and "frozen" assets - very important factors that are optimized in lean manufacturing, but in the Six Sigma methodology, these criteria are not taken into account.

Principles that help a Lean Six Sigma (LSS) project succeed

1. main focus— customer satisfaction. Initially, it is necessary to set the bar below which the requirements of the client and the market as a whole do not allow to fall. You also need to understand what is valuable for the client in your product and develop it. That which is of no value- discard.
2. Recipe for success -collecting data to identify a specific problem and deal with it. Statistics— important! The causes of defects and customer dissatisfaction are often not obvious. You don't have to take on everything at once. It will only create chaos.
3. Establish communications. All participants in the workflow must know the principles of LSS, otherwise there will be trouble, not progress. Training is everything!
4. Track results and adjust them. Motivate personal and professional growth employees, without turning them into dumb executors of the initiative from above.

Skill Levels in Lean Six Sigma

• "Black belt": a person who will become a company strategist and will lead the LSS implementation process globally;
• "Green Belt": those who become the main driving force behind the implementation of the 6 sigma concept, it is optimal if, before starting the training, the employee applying for the title has chosen a mini-task in the company that requires practical study as part of the training;
• "Yellow Belt": work under the leadership of the Green Belt, performing narrow specific tasks in which they can and should be real experts;
• "White Belt": a sign that a person has mastered the basic set of knowledge and understands what 6 sigma is.

The result of applying Lean Six Sigma looks impressive:

Who benefits from using Lean Six Sigma?

Essentially, everyone. Although, of course, you can often hear conversations not about how to put this technique at the service of your company, but about why you should not even try.

There are two main reasons why people start implementing 6 Sigma. The first is that the company is in crisis and something needs to be done to get out of the "hole" or when competitors are eating you alive. The second is when a company wants to improve the quality of its products and be always in the TOP...

Rino Domenico, President and Executive Director Sterling Business School

So, who can use this methodology:

Which companies are already using the technique:

• JSC "New Style"
• wal mart
• Agrogeneration
• Starbucks
• DTEK Energy
• Merck
• Kyivstar
• PAT "Mariupol metallurgical plant named after Illich"
• Coca Cola.

Tools that will be useful for the development of Lean Six Sigma in the enterprise:

The Lean Six Sigma methodology is a solution for those who are used to using cutting-edge developments, getting results even when other market participants are still considering the feasibility of implementing a particular methodology.

As practice shows, this concept is adopted by high-level specialists who achieve impressive growth rates, regardless of the initial conditions.

Michael George A chapter from Lean Six Sigma in Service. How Lean Speed ​​and Six Sigma Quality Drive Business Improvement
Publishing house "Mann, Ivanov and Ferber"

Rice. 2. Normal distribution The limits of the normal distribution are 6 a

Six Sigma metrics allow you to compare the distribution of actual results against a range of acceptable values ​​(customer requirements). A defect is any value that does not meet the customer's requirements. The greater the area under the distribution curve falls within the range of customer requirements, the higher the sigma level. To compare different processes, instead of the number of defects, the concept of "percentage" of defects (or "defects per million opportunities") is used.

Six Sigma is a process that yields 3.4 defects per million opportunities, given expected variances.

Here is one example: any enterprise that planned to develop construction in Fort Wayne soon found out that doing business in this city was, to put it mildly, problematic. Among other things, just getting required permits it often took almost two months (average 51 days). A team of municipal employees benchmarked and identified gaps that prevented Fort Wayne from competing with other cities where a similar issue was resolved in less than a month.

The team tasked with improving the permitting process soon identified the most important steps, eliminated redundant steps, and developed standardized procedures with clear guidelines. When the process began to be implemented in a new way, 95% of permits were issued in less than 10 days. Many customers - firms that had previously been reluctant to build in Fort Wayne - immediately noticed this improvement.

The ABCs of Lean Manufacturing

Every discipline has its own language, and lean manufacturing is no exception. There are a number of terms you will need to understand and explore the possibilities of Lean (you will encounter all of them throughout this book).

Lead time and process speed

Lead time indicates how long it takes to deliver a product or service from the moment an order is received. A simple formula known as Little's law (after the mathematician who proved it) helps to understand the factors that affect the lead time:

This equation allows us to determine how long it will take to complete a unit of work (lead time), given the amount of work in progress (work in progress) and the amount of work that we can do per day, week, etc. (productivity).

Little's law means much more than it might seem at first glance. Most of us have no idea about performance, let alone variance rates. The very thought of having to follow every step of the order fulfillment process - especially if such a process lasts several days or weeks - makes us despondent. (Think back to the history of obtaining permits in the city of Fort Wayne and imagine what it's like to track a process that takes 51 days.) With the values ​​of the two variables involved in this equation, we can determine the third. In other words, if you know WIP and productivity, you can determine the lead time. If you know the lead time and productivity, you can estimate the WIP in the process.

Unfinished production

Sometimes those who deal with the provision of services avoid the term "work in progress", since this term is traditionally associated with the production line. However, the concept itself is applicable to almost any process. If you feel the need to translate this Lean term to your business, try thinking of WIP as "things" in progress. These "objects" may represent customer requirements, receipts to be processed, phone calls to be answered, reports to be completed, etc. - we are talking about any work waiting to be completed. Almost everywhere in this book, the term "work in progress" is used. When faced with it, think about own work and about how many unfinished business you have on your desk, waiting in the wings on your computer or on your answering machine. All this is a work in progress.

The goal of lean manufacturing is to create conditions so that you have enough resources and work is carried out at a given pace in accordance with customer requests. More importantly, through a standardized process, Lean allows you to quickly respond to customer signals, which means that it makes the process predictable, manageable, and stable.
Jim Kaminsky, Assistant Vice President, Bank One

Delays / waiting times

Work in progress means there is work waiting to be done. In Lean language, this job is "in line"; and the time during which it is not dealt with is called "waiting time." Time in the queue, regardless of duration and reasons, is a delay.

Value-adding and non-value-adding work

When you start tracking the flow of work, it becomes clear to you that some activities add value from the customer's point of view (and are called value-added work for this reason). To check if it adds this work value, ask yourself if your customer would be willing to pay for it if they knew it was included in the overall price of the product. If, in all likelihood, he refuses to pay for it, or prefers to do business with a supplier who does not have such costs, we are talking about work that does not add value.

Process efficiency

For any service delivery process, a very important indicator is the proportion of the total cycle time that is spent on value-adding activities. This indicator simultaneously shows the proportion of losses and is called the efficiency of the process cycle. It is the ratio of value added time to total lead time:

Process Efficiency = Customer Value Added Time / Total Lead Time.

If the process efficiency is below 10%, then the process is overloaded with non-value-creating waste and can be improved.

Losses

As we have just shown, waste is everything that does not add value from the customer's point of view: time, cost, work. There are some losses in all organizations, as there are weaknesses everywhere. It is they who should be eliminated during optimization. The volume of losses in any activity is proportional to the duration of delays in the course of work. Lean manufacturing teaches us to recognize and eliminate waste, rather than mindlessly following the beaten track. In the practice of lean manufacturing, there are seven types of waste.

Key Lean Lessons

The foregoing allows us to draw some seemingly very simple, but extremely important conclusions that say that with the help of lean manufacturing we can quickly achieve improvements. Here are the findings, which will be discussed in more detail below.

1. Most processes are not "lean" and have a process efficiency rate of less than 10%.
2. Reducing work-in-progress is paramount (because you can't control work-in-progress, you can't control lead time).
3. Each process should work on a "pull" system rather than a "push" system, which eliminates lead time variance.
4. About 20% of work generates 80% of all delays.
5. You can't improve what you can't see: you need to visualize the process based on the data.

Lesson #1 Most processes are not "lean"

I guess you won't be surprised to learn that in "lean" service processes, the bulk of the work—50% or more—is done in non-value-adding activities. This can be visualized on a process map using colors or other techniques to visually distinguish value-adding work from non-value-adding work. Yes, Fig. 3 shows the initial fragment of a basic block diagram compiled by the Lockheed Martin team. This team found that 83% of the work done between placing a purchase order and receiving a product does not add value (i.e., is a waste). This includes correcting errors, requesting quotes from wholesalers (although prices can be negotiated in advance), obtaining corrected drawings, and other actions caused by delays in earlier stages of the process.

Can speed compromise quality?

We have all been in situations where the requirement to “work faster” created quality problems and slowed down processes as a result. Therefore, it would be quite reasonable to fear: will a lean approach aimed at speeding up the process cause damage to quality? This is not happening. Why? Because lean reduces time by eliminating non-value-adding activities, eliminating queues, reducing time between value-adding activities, and so on. Lean typically leaves the critical process steps that provide value to the customer intact. The use of Six Sigma tools for value-creating operations reduces the number of defects, which in turn speeds through the value-adding stages.

However, since these stages typically account for less than 10% of the total lead time, increasing the speed of value-adding processes has little effect on the speed of the overall process. Impact only increases appreciably when non-value-adding activities are eliminated.

Rice. 3. Simple flowchart (illustrating value-adding and non-value-adding activities)

The Lockheed Martin Supply Center team has found that most of the work from the time a purchase order is placed to the receipt of materials is waste (no value added). Measures were taken to compensate for errors, omissions and delays in earlier stages of the process, as well as measures to reduce the huge variety of heterogeneous tasks (complexity). The finer detailing of the value stream (representing the 248 stages at the required level of detail) and the subsequent reduction in complexity through standardization eliminated much of the waste. The results of these improvements have allowed the company to cut procurement costs in half.

Lesson number 2. The primary task is to reduce work in progress

Let's go back to Little's law.

Lead Time = WIP / Productivity.

This equality is not just a theoretical construct, it has many practical implications. First of all, it shows that there are two ways to reduce lead time - either by reducing WIP or by increasing productivity. In any operation that does not involve direct contact with the customer, that is, where work in progress is orders, emails or reports, and not people, it is much easier to control the volume of work in progress than to increase productivity. In fact, you can speed up any process - save time - simply by reducing WIP and doing nothing to increase productivity.

This conclusion explains how, by applying the principles of lean manufacturing, it is possible to quickly achieve positive results. It should only be as far as possible to limit the amount of work received for processing per unit of time. The following explains what to do if work in progress is “people” and the best way to save lead time is to connect additional capacity to increase productivity.

Why should we prioritize work in progress? To reduce its volume, only intellectual capital is needed. Improving productivity requires investment or an increase in the payroll, both of which have a negative impact on the return on invested capital, and therefore on shareholder value. Little's Law provides a mathematical foundation that allows us to apply lean manufacturing methods to any process.

Lesson number 3. "How to cut down on this damn work in progress?" (Creating a "pull" system)

Take a look at your workplace. Is your email inbox full of unread messages? Do you have a long list of emails that will take days to review? Is your answering machine refusing to receive new messages? Is anyone waiting for the results of your work?

All these are different forms of work in progress, work that someone else is waiting for you - a colleague or a client. As a lean newcomer, you know that in order to reduce cycle times and waste, you must reduce WIP. You know that work-in-progress is like cars on a freeway: if there are more cars, the speed of traffic on a congested road drops! But how to do that?

Naturally, you can't limit work-in-progress in customer-directed processes when the work-in-progress is customers waiting for service or wanting to purchase a product (in such situations, there are other ways to maintain or reduce lead time).

For any job that doesn't have a client in front of you, the key to reducing WIP is Little's Law. In lean service processes, there is a stage that precedes the process itself, a stage in which input factors (requests for work, orders, calls, etc.) are "accumulated". Then someone controls the input of these "factors" into the process.

Consider the following example. Independent distributors to determine estimates for construction works needed information about commercial offers from the marketing department. They were unhappy that the marketing department took two to three weeks to present this information. The period that suited them was three days.

The task force collected data over the course of several weeks, showing that marketing staff could process an average of 20 offers per day. Distributors wanted a guaranteed 3 day lead time; the data obtained indicated that the deviation in the process required a more stringent target of 2.4 days.

How much work in progress was allowed in this process? Turning to Little's Law and substituting 20 (productivity) and 2.4 (lead time) into the formula, the working group received a maximum volume of work in progress equal to 48 proposals - this is the number of proposals "in work" at any given time.

Lead time = 2.4 days = (WIP = 48 offers) / (Productivity = 20 offers/day).

To manage such a system, they created a stand to visually display information about the number of proposals being processed. The work-in-progress limit was 48 requests, so until their number dropped to 47, a department employee could not start processing new requests, as shown in Fig. 4.

The secret that makes this system work is in the lower left corner of Fig. 4, which shows the drive labeled "input". (Depending on the nature of your work, this drive may be physical capacity or electronic base data.) Formally, applications do not enter the process while they are in the storage of raw material. The only signal to supply work to the input of the process is the output of a unit of output from the process - this is the "pull" system. Guaranteed service delivery time - about two and a half days is counted from the moment the application enters the process. In other words, the "pull" system in the service industry means making deliberate decisions about when to start work in the process. However, it is very important how such decisions are made: the value cannot be overlooked. In this case, it is a matter of which ticket is entered into the process when another ticket has been processed. It is hardly appropriate to process bids on a first-come, first-served basis, as some bids promise high-value promising orders, while others are small orders, questionable bids, or are likely to be rejected.

Rice. 4."Pull" system for commercial offers for sale

The issue of the processing order can be resolved by prioritizing proposals depending on the prospects. Each application is characterized by the following three parameters, each of which is evaluated on a three-point system:

• complexity of the calculation;
• competitive advantage;
• gross profit in dollars.

The scores for each of the criteria for each proposal are multiplied. The proposals with the highest rating are submitted for processing first, even if other applications are waiting for their turn for a longer time. (A new application with a rating of 9 is entered into the process faster than an application with a rating of 6 submitted earlier). Using such a system, the marketing department staff, with the same number, was able to increase gross income by 70% and increase gross profit by 80%. (Of course, the company could increase productivity by increasing the number of marketing staff and incurring huge costs.)

How to create your own "pull" system?

How to make such a system work for you? The following is an example sequence of actions.

1. Define/Approve desired level service. Ask the customer what level of service they would like.
2. Determine the speed of work of your work team (based on data).
3. Use Little's Law to determine the maximum amount of work in progress allowed.
4. Limit the amount of work in progress to the maximum value obtained.
5. Put all incoming work into the input bin.
6. Develop a prioritization system for the order in which work is put into the process from the drive.
7. Continue to further improve the process, which will allow you to increase the speed of work and achieve further reduction in lead time.

The positive impact of Lean Six Sigma on situations like this is twofold: first, in service delivery, the decision is made, which was not the case before, based on data (demand variance, work in progress, and productivity). Secondly, it uses the tools of speed and quality that are adopted by those who are willing to put in the time and effort to get things done.

Carefully! Don't treat the customer like a stock or a raw material!

The “pull” system described above works when documents, emails, phone calls, etc. are submitted for processing. But in the process of communicating directly with the client, you must maintain an acceptable level of response time and productivity of the service delivery process, which no matter what happens. When customers are work-in-progress, you cannot create inventory from them, nor can you increase the waiting time for a service, and therefore the lead time. Little's law says that the only possibility in this case is to increase productivity.

One problem with direct-to-customer operations is high demand variances, with busy hours of customers alternating with periods of downtime.

If the dynamics of this interleaving is predictable, you can improve performance by changing the number of service personnel: during peak hours it is possible to attract additional workers, as is done in call centers (call-center). If demand variances are unpredictable, queuing theory should be applied, which will allow you to calculate how different factors, such as supply or demand variances, affect WIP (and hence lead time). For example, fig. Figure 3.11 from Lean Six Sigma: Combining Six Sigma Quality with Lean Speed, reproduced in Figure 3.11. Figure 5 shows that if you have 20% performance margins, demand variation has little to no effect on customer wait time.

Rice. 5. The negative impact of the deflection is maximum when operating at the capacity limit

Spare capacity can be provided by bringing in staff from other departments who are trained in related skills, or by using a prioritization system (as in the "pull" system described above) that assigns more complex services to more experienced staff.

Lesson number 4. Process efficiency lets you quantify your capabilities

Typically, the efficiency of processes in the service sector is about 5% (Table 1), that is, 95% of working time is spent waiting. Terrible? Still would. And it's not just about delays. The old adage is true: the longer a job is left unfinished, the more expensive it is. In lean processes, the time to add value is more than 20% of the total cycle time.

Table 1. Process efficiency

Don't be surprised if your organization's processes are less than 5% effective. Don't be discouraged. Experience shows that by applying the basic tools of Lean Six Sigma, you will quickly begin to reap the benefits and be able to reduce costs by at least 20%.

The efficiency of a process can be visualized by separating value-adding time from non-value-adding time in a value creation timeline, as shown in Figure 2. 6. (Such a visual representation helps to stir up and interest people!)

Rice. 6. Time axis of value creation

The idea of ​​a value creation time map is quite simple. It is necessary to trace the processing of any unit of production and attribute the time spent to one of three categories: 1) adding value, 2) inevitable losses - they are an integral aspect of doing business (work that the client does not want to pay for, but which cannot be dispensed with - accounting, legal and other compliance) and 3) delays/losses. Then draw a timeline and plot all three categories on it. In the Lockheed Martin Procurement example above, you can see that it takes four days from the time a requisition is received by the procurement center to the time the order is placed. Value-added work (dark areas above the middle line) shows that during these four days the buyer spent 14 minutes processing the order. Most of the time that is shown as white space is waiting time. Initially, this process had an efficiency of less than 1% (14 minutes out of 4 days, or 1920 minutes).

The time axis of value creation tracks the movement of a unit of production during the process and takes into account the time spent. Above the middle line is time that adds value from the consumer's point of view; the rest is loss.

Lesson number 5. 20% of work generates 80% of delays

To achieve the main goal of lean manufacturing - speed - there is only one way: get rid of everything that slows down the process. Mapping the process and collecting data on cycle time, variance and complexity will allow you to calculate the delay time for each individual operation of the process. Experience shows that in any process with an efficiency of 10% or less, 80% of the lead time is "eaten up" by less than 20% of the operations - another example of the Pareto effect in action! This 20% is called "hidden time lost", which becomes apparent when mapping the value stream and can be represented in the form of a value time graph (as in Figure 6).

Identification of latent losses is one of the most important problems, since the priority in this case is determined by the length of the delay. Correct prioritization targets, you will have a powerful leverage on financial results improvement.

Lesson #6

If the opportunities for cost and lead time reduction in service delivery are so great, why not apply Lean Six Sigma more often?

One of obvious benefits production is the ability to see and track the flow of work. You walk along the production line and see how the product is processed and how, moving from one workplace to another, raw materials or materials turn into the final product. This flow is always documented in the dispatch department, which records value-added work. In addition, you see tangible evidence of wastage (work-in-progress, scrap, delays) in the form of piles of work-in-progress or scrap.

In the provision of services, much of the work remains invisible. With a single keystroke, someone sends a report to another office at the end of the hallway or anywhere in the world. Someone presses a button on a phone and switches a customer from one department (eg customer service) to another (technical support).

In services, it's harder to see more than just flow (process). It is almost equally difficult to estimate the amount of work in progress. Yes, some of us can estimate its volume by looking at the pile of papers on the table or counting how many people are waiting in line waiting for service. But much more often, "work" takes less visible forms - for example, reports or orders in electronic form, waiting to be processed, 20 emails to be answered, 10 customers hanging on the phone line.

But although it is difficult to make workflow visible in the service industry, understanding it and estimating the volume of work in progress is the necessary conditions applying lean manufacturing tools to increase speed and reduce waste. Various maps can be used to “make the invisible visible,” including the value stream maps that you will see many times throughout this book (an example of such a map is shown in Figure 7).

Rice. 7. Value stream map (process flow map)

In addition, fig. Figure 7 shows that many management processes are overly complex. For example, in one company, approval of a design change requires the signature of seven managers, and the approval form travels for weeks through seven incoming document trays. This process of service delivery raises serious problems in manufacturing process, because it interferes with the timely change of drawings (and products that are made according to these drawings). The long cycle of such a decision-making process means that once a quality problem has been identified, rework will continue for a very long time even after new drawings have been created from which products can be produced without defects.

When the company took a closer look at the processes for obtaining all seven signatures, it became clear that five of the seven managers do not have the knowledge and skills that are relevant to the job. It was quite enough for these five managers to receive a notification about the approval of a new document, which would not cause the slightest damage to the process. A copy was still sent to them. this document because it was helpful for them to know about the changes that had been made, but they were left out of the decision-making process. Now the two remaining managers have less than a week to study the form and resolve all issues, after which the process can continue further.

visual management

The abundance of visual management tools used by lean production is explained by the benefits of a visual representation of work in progress, costs, and employee competencies. These tools allow you to:

• identify and visualize work priorities;
• visualize daily performance indicators of the process (“was the day successful or not?”);
• create favorable conditions for communication in the work area, as well as between management and staff;
• provide feedback with work team members, foremen (supervisors) and managers and enable all employees to contribute to continuous improvement.

Rice. 8. Tact board for registering orders

At its simplest level, visual management can include posting process maps (which show how the process should be done) or a list of indicators on a bulletin board so that everyone in the work area can see how successful or unsuccessful the process is. Rice. Figure 8 shows a special kind of visual management tool called the takt board (the word takt is German for "metronome"). Such boards are used to maintain the desired rhythm or pace of the process. The board shows the desired pace of production (subject to customer requirements and WIP limits) and the actual speed at which the participants are working. The group that developed this board has defined a work in progress limit and uses it to keep the number of requests in process at 48. Next, we will talk about other visual management tools.

Examples of applying lean production tools in the service sector

A few years ago the department system integration Lockheed Martin has focused most of its supply chain operations at its Mid-Atlantic Region Materials Procurement Center (MAC-MAR). This center serves 14 regions with different addresses (“clients” of MAC-MAR). Many of these regional properties were acquired during mergers in defense industry in the 1990s and work with various computer systems inherited from the past.

Each supplier of the center is responsible for the supply of a specific list of products. Procurers connect to the computer system of the relevant site, process purchase requests, and only then move on to work with another site. This connection and disconnection presented a problem. Because different departments used different computer systems, it took an average 20 minutes for a vendor to switch from one client to another. In lean language, this situation is called long changeover times. However, at that time - before the advent of the LM21 program - none of the supply workers were trained in lean manufacturing, and therefore did not call and perceive this operation as changeover time and did not think about how this affects the process as a whole.

MAC-MAR suppliers were hampered not only long time physical switching from one computer system to another. It was also a matter of “resetting” thoughts (“learning curve”), which also presented a problem: the lack of uniformity of systems meant that suppliers had to constantly switch from one instruction to another, trying to remember 14 different designations for one part, etc. d.

How would you act in such a situation? The suppliers worked like this: first they processed all applications from one section and only then moved on to the next. On average, it took them a whole day to process requests from one client, and only after that they could switch to the next site. If we consider productivity as the number of orders placed per hour, it was quite high, but if we take into account the priority of these orders, suppliers placed orders incorrectly most of the time. And when there is an excess of work in progress in the system, you can be sure that, according to Little's law, the lead time will be very long.

Rice. Figure 9 shows how orders were handled before the process improvement. Having connected to one of the sites, the suppliers tried to process all the requests coming from there - both urgent and those that could wait.

Rice. 9. Fragment of the interface of the program that was used before

Due to non-standard computer systems, Lockheed Martin's supply center staff could not work on multiple sites at the same time. It took them 20 minutes to switch to the next section. It is understandable that, having connected to one of the sites, they wanted to immediately process all orders before switching to the next client.

Features of the philosophy of lean manufacturing

Lean processes are characterized by:

• process efficiency over 20%;
• fixed work-in-progress limit to control speed;
• use of the "pull" system, in which new job enters processing only when the corresponding output work is transferred to the next operation;
• using visual displays of information to control and monitor the process (for example, show the status of various products or services in the process, or list additional ideas to reduce lead time).

The problem was that this process did not take into account the timelines required by other customers at all: an urgent order for site D had to wait until the supplier processed all orders for sites A, B and C. As a result, the supplier took 14 or more days of the so-called time turnover time for the client (customer turnover time) to go through the full cycle of processing applications from all customers. This led to long lead times, billing delays for critical projects, and the need for overtime in production (Figure 10).

Rice. 10. Lack of flexibility in the procurement process

Since switching from one site to another was an extremely complex and time-consuming process for Lockheed Martin buyers, the standard procedure was to process all orders from one site - urgent and non-urgent - before moving on to the next, as shown in Fig. 10. It is easy to calculate that when processing data from 14 sites, it often took 14 days or more before the supplier was ready to take the next batch of orders from the site.

Moreover, the same product, such as the Intel Pentium processor, could be ordered 14 times under 14 different internal designations (while each order could be 1/14 of the total), which increased the cost per product and increased total time waiting and delivery 14 times.

The value stream map showed that most of the delays in the procurement process as a whole were caused by the "changeover" problem, which was the main hidden time loss. It was clear that if this problem was not solved, other improvements would be useless. These conclusions were confirmed by the "voice of the customer": the most important point for the consumer sites was the acceleration of the fulfillment of purchase orders and the reduction of procurement costs.

The MAC-MAR team mapped the process, determined the amount of work in progress at each stage, identified the longest delays, identified the complexity, and realized that the solution to this problem had two components:

• a program should be developed that will be compatible with the computer systems of all departments and will be able to group orders according to the types of products, displaying the summarized data together (this will avoid delays due to constant changeover when connecting to different systems);
• the structure of the program should allow suppliers to sort orders by delivery time and product types.

The result is shown in fig. 11. Instead of information on one site, now only urgent orders from all sites are brought together here. By clicking on the relevant product name, you can get information on purchase requisitions and see their history. Further transformations included expanding the range of contracted products, allowing buyers to place an order at the touch of a button (rather than reconfiguring the system to place individual orders), and many other enhancements.

Rice. eleven. Interface view after transformations

At first glance, the information on the screen does not differ much from what was originally presented (Fig. 9). However, the ability to sort orders received from all sites in order of delivery priority means that it is now possible to combine information received from different sites using different programs.

Overcoming the problems of working with different programs increased the flexibility of the procurement process.

• Changeover time was reduced from 20 minutes to almost zero.
• The lot size is now 1 order, because the supplier does not have to switch from one area to another when placing orders.
• Cycle time, which used to be over 14 days, is now less than 1 day (if the supplier starts from site A, he can process all urgent orders and return to site A on the same day).
• WIP: Customers used to wait in line for up to 14 days, with an average wait of 7 days or 56 hours. Now the maximum wait time is 2 hours and the average is 1 hour.
• Productivity has improved - instead of serving one customer per 8-hour workday, orders from 14 customers are now processed every 2 hours (which corresponds to 56 customers per day).

Who is comfortable with this work - you or the client?

The MAC-MAR working group made other changes to the process (including expanding the list of pre-agreed conditions). Altogether, these changes resulted in a 50% reduction in procurement prices, a 67% reduction in lead times for mass-market goods (from 6 to 2 months), a nearly 20% increase in plant productivity due to on-time deliveries, and an average unit cost of materials decreased by 6.4%. This example illustrates another key insight of lean manufacturing: the speed of any process is proportional to its flexibility. Lockheed Martin's original process was very inflexible (turnover rate for the consumer was 21 days); when the process of switching between clients became much simpler, suppliers were able to significantly speed up the process.

Changeover times and batch processing in the provision of services

It doesn't occur to many that there is also changeover time in service delivery. After all, if the transition from serving one customer to serving another takes you a certain period of time or you need time to reach normal productivity, we are talking about changeover time. If you delay serving a client (internal or external) because it is more convenient for you to continue executing current work, it is more convenient to process in batches. Chapter 11 explains how to eliminate these sources of process delays.

Why Lean Manufacturing Can't Do Without Six Sigma?

Lean is very effective at optimizing lead time and eliminating non-value-adding costs, yet there are some serious problems that remain unexplored even in the most advanced lean literature. Six Sigma solves these problems, which is why it is a necessary complement to Lean.

1. Lean does not contain specific culture and infrastructure prerequisites for sustainable results.

Most of the Lean sources do not address the issue of the infrastructure that is needed to successfully implement Lean projects and not only achieve the appropriate speed, but also maintain it. In fact, many companies that implement Lean willy-nilly have to develop infrastructure similar to Six Sigma infrastructure, but instead of immediately adopting the traditional Six Sigma structure, they do so only under pressure. Companies that only use Lean are often unable to implement this method throughout the organization and achieve sustainable results because they do not have a clear Six Sigma organizational infrastructure. Such an infrastructure ensures the involvement of top management in the process, allows for training, fixing the allocation of resources, etc. In its absence, the success of lean production depends only on personal initiative. I have seen many successful lean programs fizzle out when management changes. In this respect, Six Sigma is less vulnerable (although it cannot be said to be completely immune to such problems): it proceeds from the fact that the interests of shareholders should be defended first. Any book on Six Sigma deals in detail with the issue of stable infrastructure, but this issue is not addressed in any book on lean manufacturing.

2. Lack of focus on the critical important characteristics from the consumer's point of view

By requiring the identification of process components that add value, lean includes some elements of customer orientation, but its approach is introspective. The one who maps the value stream, makes a decision, considering, adds this operation value or not. In contrast to this approach, Six Sigma determines when to include the voice of the customer and the voice of the supplier in the improvement process. The most important indicator of this method is the characteristics that are critical for the client, the means to take into account the "voice of the client" are provided at the "Definition" stage of the DMAIC cycle (Define - Measure - Analyze - Improve - Control). In other words, Lean lacks the customer focus that permeates Six Sigma work.

In my experience, most people in the financial services industry are interested in Six Sigma, although they think that Lean is more appropriate in a manufacturing environment. However, having become acquainted with lean manufacturing on own experience, they change their attitude, seeing that these methods are faster and easier. Applying Six Sigma tools requires a lot of effort.
Daryl Green, Senior Vice President, Bank One

3. Lean Doesn't Recognize the Impact of Variance

Lean manufacturing does not have the tools to reduce variance and provide statistical process control. Six Sigma considers the elimination of deviations a key factor and offers a wide arsenal of tools for dealing with deviations (from statistical process control to experimental design). As mentioned above, 10% defects can lengthen lead times by 38% and increase WIP by 53%. In other words, the speed and cost savings achieved through lean manufacturing can be offset by increased variances!

Rising defect rates are not the only source of variance, which leads to increased WIP and lead times.

“Who needs lean manufacturing? I don't have time to change!"

Most service providers believe there is no changeover time in their operations. They associate it with dead zones during the transition from the manufacture of one type of product to another in production. However, there is usually a learning curve in the process of switching from one task to another before performance peaks, as we saw with Lockheed Martin's MAC-MAR Supply Center. Such a learning curve is shown in Fig. 12.

Rice. 12. Learning Curve Costs and Performance

The employee remains "attached" to each task for 20 minutes, despite the fact that the current consumer demand requires this task to run within 5 minutes. This is analogous to the situation at Lockheed Martin, where the supplier was "bound" to one client all day long, and the number of "tasks" in front of him was 14, corresponding to the number of sites (tasks A to N). In this case, the total order time is quadrupled. The application of lean manufacturing methods can significantly reduce the time taken by the learning curve.

Bottom line: Anything that lowers productivity leads to longer lead times, as people stay locked into the same type of task for longer than current consumer demand requires. Using lean manufacturing tools can significantly reduce lead times and minimize the impact of changing activities on productivity. One of the main sources of the learning curve is complexity, that is, the variety of tasks performed. The greater the number of different tasks, the less often they are repeated, the steeper the learning curve. Therefore, by reducing complexity, Lean Six Sigma solves the learning curve problem.

Variations in demand and time spent on operations to create products have a significant impact on lead time, while lean manufacturing does not imply a direct impact on these factors. This connection is illustrated in Fig. 13, which depicts the results of one of the stages of the procurement process described above at Lockheed Martin.

Rice. 13. Impact of deviations on waiting time

Let's imagine that Bob spends on average 16 minutes on a certain task. However, due to variability in 68% of cases (one standard deviation), the total time can deviate from the average in one direction or another by 8 minutes, in which case the deviation factor will be 8/16 = 50%. Now suppose that a similar variance has Bob's employment. As can be seen from the figure, if Bob is loaded to 90% of his capacity, the work he is doing will wait in line for an average of 60 minutes, which accounts for about half of the waiting time in line. If Bob encounters a particularly difficult problem, this time can increase to 100 minutes.

Deviation has little effect on processes that are running with a large margin of throughput (left side of graph). But the vast majority of service organizations operate near capacity limits, which is when variances have the greatest impact on how long a job (or customer) has to wait "in line." Processes involving direct contact with the consumer are often subject to high demand variances, since we cannot control the actions of the consumer, who chooses the time of contact at his own discretion. What is the conclusion? The higher the deviation at the input, the greater the bandwidth reserve should be provided. If the deviations are small, or we can control demand in some way (which is more likely in the case of internal processes), we can work with increased load without the risk of significant delays. When I first presented this analysis to Lockheed Martin, Manny Zulueta, Vice President of Lockheed Martin's MAC-MAR Supply Center, said, "This confirms our observations!"

The impact of demand fluctuations on waiting times is greater the higher the percentage of capacity used by the process (as seen from the steep slope of the curve on the right). The more significant the deviations, the stronger this influence.

Lean also needs DMAIC

Most Lean descriptions start problem solving from the Improve stage, bypassing the Define and Measure stages. Because the Define stage identifies the scope of the problem, and the Measure stage seeks to quantify it and relate it to resources, people often bite into a portion of Lean that they can't chew or get lost in the confusion. miscellaneous improvements.

Why does Six Sigma need Lean Manufacturing?

There are gaps in Six Sigma, as there are in Lean methods. Let's take a look at what six sigma deficiencies can be addressed by lean manufacturing.

The general idea is that, as the practice of many companies has shown, using Six Sigma can achieve a lot. But there is one difficulty. Whatever tool you choose, if there is no lean component in it, if you do not pay attention to increasing speed and reducing WIP, all your achievements will sooner or later come to naught. The process will remain slow and laborious, and the costs will be prohibitive. There are five reasons why Six Sigma needs Lean Manufacturing.

1. Identification of losses. Although process mapping is one of Six Sigma's tools, it does not collect the data (including changeover time, unit turnaround time, transportation, etc.) necessary to numerically describe the process steps and identify activities that do not add value and increase the cost of the service/product. Lean manufacturing has a powerful tool in its arsenal - the value stream map, which overcomes barriers between functional units and allows you to identify waste and delays. Six Sigma rarely looks at activities from a value-adding perspective and does little to eliminate non-value-adding activities. First of all, the Six Sigma protocol prescribes the elimination of deviations, and only if this turns out to be impossible, design according to the Six Sigma criterion (DFSS) is carried out. Lean manufacturing assumes that process reengineering (to eliminate non-value-adding activities) is necessary to some degree in all cases below 10%.

2. Increasing process speed and cycle time. Cycle time and responsiveness optimizations are often considered the result of Six Sigma. However, Six Sigma experts do not link quality and speed either practically or theoretically, nor do they set a limit on the amount of work in progress required in the "pull" system (this operation is needed to make lead time a controllable parameter with limited deviation). The volume of work in progress is the most important factor in cycle time (according to Little's law). If you do not limit the amount of work in progress to the maximum allowable limit, reducing cycle time will remain a dream.

Loss of a client

One of the most significant losses that Lean does not take into account is the loss of a customer. You are missing out on customer-related revenue, and the cost of acquiring a new customer is typically much higher than selling the same amount of service or product to an existing customer. In fact, all the waste that Lean explicitly defines is internal to the process, not external. It can be shown that eliminating these internal losses greatly reduces the chance of losing an external consumer, since you deliver services quickly, without losses and with minimal cost. However, you can waste a lot of time and effort delivering a service that the customer doesn't want, and so Six Sigma takes a more constructive approach to addressing the "voice of the customer" and defines customer loss as a defect.

3. Tools to improve speed. The Six Sigma toolkit rarely includes lean tools such as total machine maintenance (TPM), value distribution over time, 5S, etc. These are extremely effective tools speed boosters have been developed and improved over decades practical application. Of course, in order to adapt them to the service sector, some effort is required, but neglecting them, you will not achieve maximum process productivity.

4. Methods of obtaining quick results(Kaizen process, DMAIC). Lean manufacturing has a kaizen method of rapid improvement. It is a short-term, intensive project, when a group of people with relevant knowledge, within four to five days, purposefully and systematically improves the chosen process or activity. The effectiveness of such events is extremely high, the need to quickly achieve tangible results gives a powerful impetus to creative thinking. As you will learn in this book, kaizen plays a prominent role in service delivery, although the method often requires some modification. Having an operational improvement method in your arsenal provides an excellent catalyst for DMAIC projects. Lean's action-oriented approach results in faster results.

5. Six Sigma quality is achieved much faster after the elimination of non-value-adding steps in Lean. The Six Sigma Research Institute has compiled a table (Figure 14) that examines the cumulative impact of defects on actual throughput. For example, consider an invoicing process that includes 20 transactions, each at level 4a (99.379% yield). The total real throughput will be (0.99379) 20 = 88%, which is quite typical for service delivery processes. This low yield creates problems with accounts receivable and necessitates money grabbing and reprocessing.

Rice. 14. Real Bandwidth

This table clearly shows that it is very difficult to achieve high quality processes with a large number of operations, and, conversely, low quality has a much stronger effect on complex process. The most effective way to achieve Six Sigma quality is to simultaneously improve quality and apply Lean principles to eliminate non-value-adding process steps.

The use of lean manufacturing tools allows you to quickly (at most in a few weeks) get rid of non-value-adding activities, most likely there will be at least half of them (10). Thus, now, instead of 20 stages of invoice processing, only 10 pass. It is clear that even without additional quality improvement measures, a 10-stage process has a much lower probability of errors than a 20-stage process.

In this case, the real throughput increases to (0.99379) 10 = 94%. Higher output will increase the return on your improvement investment, and more importantly, the speed of the process will double, allowing you to not only deliver your services to the customer faster, but also increase the rate of return on your quality tools by doubling their effectiveness.

By combining Lean and Six Sigma, you can not only reduce the number of operations, but also increase the quality level of the remaining operations to, say, 5a, which will increase the real throughput to (0.99976) 10 = 99.8%.

A challenge for Six Sigma proponents

The question sometimes arises: is it better to start with Six Sigma process optimization (without eliminating non-value-adding steps) or eliminate non-value-adding steps first using Lean manufacturing methods and only then move on to Six Sigma process optimization. Some Six Sigma proponents believe that lean manufacturing practices (such as the "pull" system) should be applied after the process has become controlled and optimized. However, this point of view is easily challenged: “Would using lean manufacturing and a “pull” system that will allow you to control speed and reduce cycle time hurt the implementation of Six Sigma?” In fact, using the arsenal of Lean and Six Sigma tools at the same time will have the most beneficial effect on the culture of the enterprise. Projects should be selected based on their impact on improving ROIC, not on the set of tools needed to solve the problem - the one that Lean offers or the one that uses Six Sigma.

Merging Lean and Six Sigma to Improve Services

It is known that Lean Six Sigma is a powerful tool for implementing top management strategy and a tactical tool that allows managers of independent departments to achieve annual and quarterly goals. If management stays away from the Lean Six Sigma program, the company will most likely have to give way to competitors where leaders have added these methods to their arsenal.

Merging the fundamentals of Lean and Six Sigma allows us to formulate five "laws" that guide the direction of improvement efforts. Below are the first four (we started their numbering from 0, since this law is the basis for the rest).

0. Law of the market. Quality-critical issues from the customer's point of view are the top improvement priority, followed by return on invested capital (ROIC) and net present value (NPV). We call this law the Zeroth Law because it is the foundation for the others.

1. The law of flexibility. The speed of any process is proportional to the flexibility of that process (see Figure 10).

2. The law of focusing. 20% of all operations are responsible for 80% of delays in any process.

3. Law of speed. The speed of any process is inversely proportional to the amount of work in progress (or the number of "objects" in work). Little's law states that the number of items in a process increases due to long setup times, rework, demand and supply variances, time, and complexity of the product being offered.

4. The law of complexity and costs. Typically, the complexity of a proposed service or product increases non-value-adding work and work-in-progress by more than poor quality (low sigma) or slow speed (lack of lean).

History of success. New Lockheed Martin Traditions

Lockheed Martin was formed as a result of the merger of Lockheed and Martin-Marietta (one of a number of mergers) in 1995, so formally this enterprise is about seven years old. But ask the people who work here, and they'll tell you the company feels even younger because as recently as two years ago, most employees were closely tied to their former organizations, and Lockheed Martin was more of a heterogeneous group of 18 corporations than unified education.

Two years ago, the LM21 Operational Excellence program was born, based on Lean Six Sigma. According to Mike Joyce, vice president of LM21, it was this method that became the consolidating beginning for the company, which helped employees learn how to work together on common goal. Below is how they achieved this.

Business idea

The success of Lockheed Martin is largely determined by inventions, major scientific and technological achievements and quality of workmanship. This explains why so much of the improvement effort is in service delivery: development, procurement, engineering, lifecycle support, hiring, billing customers, legal support etc. Procurement is also a service that comes to the fore, since about 50-60% of the costs for each type of product are purchased or subcontracted.

As Joyce says, “It would never have occurred to us to equip new fighters with 1975-style radars, but nevertheless, it seemed quite acceptable to us that 1975 business processes were used in our supply chain. We need not only to develop a new radar, we must thoroughly work out the process of creating this radar.”

The government has contracted Lockheed Martin to do what the company defines as "software development" - developing custom software solutions to meet specific customer needs. The company says: "Scientific and technological achievements and innovative solutions are part of our daily work." No wonder 50,000 out of 125,000 employees at Lockheed Martin are scientists and engineers.

The issue of tradition at Lockheed Martin was a very important factor. Lockheed Martin incorporated former divisions from a wide range of companies, including General Dynamics, GE, IBM, Goodyear, Westinghouse, Loral and Ford, each with its own heritage. The combination of 18 different companies meant 18 different computer systems, 18 different product numbering systems, 18 different approaches to sourcing, 18 ways of making specifications, hiring employees, paying bills.

What's more, every company had a different history of quality improvement: quality circles, statistical process control (SPC), continuous streaming, six sigma, TQM, lean manufacturing. Consequently, Lockheed Martin's improvement strategies were, on the one hand, to give people the opportunity to be proud of the traditions of their company and continue them, and on the other hand, to ensure coordinated teamwork.

Movement towards this goal began in 1998, when the management of Lockheed Martin realized that the new enterprise had huge resources of quality and craftsmanship. They rolled out a program called "LM21 - Best Practices" to bring their knowledge and experience to the entire company.

Mike Joyce, Vice President of the LM21 Program (Lockheed Martin's Operational Excellence Program), Manny Zulueta, Vice President of the Material Acquisition Center - Mid Atlantic Region (MAC-MAR ), James Isaac, Director of Supply Chain Improvement, Northern Material Acquisition Center, and Miles Burke, Certified Black Belt and Supply Chain Improvement Manager.

Lockheed Martin employs 125,000 people worldwide in four core areas: Aeronautics, Space Systems, Systems Integration and Service Technology.

While sharing best practices was a good start, it had its drawbacks:

• what is "the best"? In the current business environment, the pace of change is accelerating. By prioritizing best practices, you can lose sight of the losses and opportunities for improvement in the enterprise as a whole;
• people can become complacent. Lockheed Martin strives to ensure that every employee feels the urgency of continuous improvement and never think they have reached perfection. “The best” is a transient concept;
• the system of "best practices" was too flexible. At first, factories and other departments decided for themselves which of the best methods they wanted to use. “But when Lockheed Martin makes a product, it has to mean something in terms of quality standards,” says Joyce. - We can't let our divisions refuse to improve quality, saying, for example, that they are interested in best practices for business development. Quality and speed are a must for everyone.”

The LM21 program covered all departments of the enterprise, it extended to all types of work and was aimed at increasing productivity and efficiency.
Manny Zulueta, Vice President, Material Acquisition Center

So two years later, the priorities of the LM21 program shifted from focusing on best practices to excellence in performance, with the overarching goal of Lean Processes at Six Sigma quality.

“This covers the entire Lockheed Martin system in operation,” says Joyce, “everything we do from customer invoicing and purchasing to product development and hiring people.” The new LM21 approach is based on the principles of Lean Six Sigma: all work is carefully analyzed, value-adding operations and waste are identified, which are eliminated, and the remaining operations are improved. More importantly, LM21 is not perceived as something outside or external to the organization's activities. “It's a strategy that helps managers achieve huge year-over-year goals and put in place processes to deliver sustainable long-term results,” says Joyce. "It's up to each and every one to do their job and improve the way they do it."

Preparation and deployment

As part of the deployment of the LM21 program at Lockheed Martin are the critical components of the Six Sigma infrastructure. Among them:

1. Undoubted and clear support from senior management and their participation in the program

Lockheed Martin CEO Vance Coffman has been vocal in his support for the LM21.

2. Top management trained in Lean Six Sigma concepts and how to apply them

Coffman and his entire executive committee completed a four-and-a-half-day training session (two and a half days of classroom work and two days of hands-on work on process adjustments). This course included:

• Lockheed Martin's 5 Principles of Excellence (see sidebar);
• a half-day session on Defining Value from the Customer's Perspective, including a roundtable discussion with customers giving their opinion on whether Lockheed Martin is a good fit;
• study of value streams and process flows, including simulation modeling for systems development;
• structured problem solving practice.

Lockheed Martin's Five Principles of Excellence

Mike Joyce says it was important for Lockheed Martin to predefine the principles of excellence, as they serve as criteria for choosing the approach to get the job done. These principles include elements of both Lean and Six Sigma.

1. Understand what is of value from the customer's point of view. The client appreciates you not only for what you give him, but also determines whether it is convenient for him to do business with you. Everyone should understand what is the value for his client. Understanding this question correctly is the first step, because it allows you to classify any work as either adding value or waste. If you misunderstood value, then all subsequent work will be a waste!
2. Understand what value streams are. The manager must know in detail in which departments of the organization the product or service is being created. There's no room for guesswork here: you should write it down, documenting each step, and be prepared to answer questions like, "When was the last time we saw this? Where are these observations?
3. Deeply understand the flow of work. Engineers often talk about the "top of the pyramid of requirements" - the most important need that a product or service must satisfy, and it is this need that dominates everything else. When perfection is achieved, the top of the pyramid of requirements is the design of systems that optimize the flow of data and the flow of "molecules". If you don't optimize the flow, you won't achieve optimal efficiency.
4. Prioritize cycle time and pull. The goal is to reduce turnaround time to an absolute minimum so you can instantly respond to changing customer needs.
5. Strive for perfection. For Lockheed Martin, this means Six Sigma quality at the speed of Lean manufacturing.

Leadership training has two other important aspects:

• At first, many members of Vance Coffman's team were unenthusiastic when they learned that they would have to set aside four and a half days in their schedule for training. In one of their meetings, Mike Joyce asked them, "How many of you have been trained in this way of thinking?" Of the 20 people, only two raised their hands (one was familiar with Six Sigma, the other with Lean Manufacturing). At the time, Joyce said that if this team was going to lead the company's implementation of Lean Six Sigma, they should know what they were talking about. After completing the training course, management representatives unanimously declared that it was the best training for all the time of their work. As Joyce himself said: “We were not going to make black belts out of them or to radically change the process in two days. But we hoped to provide momentum that would help them move in the right direction and support the LM21 program”;
• team senior leaders Lockheed Martin was trained in Lean Six Sigma within its divisions, not in isolation. The question arose: "Why?" As Joyce responded, “Ultimately, everyone in the company needs to be involved in the LM21 program. So instead of training all of you together, I want you to be trained along with your staff in a work environment. Let everyone see that the leadership is determined to carry out this program.”

3. Management at all levels passed basic training

When the training was completed by a team of senior managers, the basic course was required to master all Lockheed Martin employees who are included in the material reward system. In this organization, this applied to everyone who held a directorial or higher position. This five-day lean training was organized within the divisions and delivered in groups of 50 until all 5,000 managers completed it. (Now the program has expanded to include customers and supplier leaders, who have been trained in ways to get results quickly.)

4. Implementation started with value stream mapping

From a strategic point of view, the starting point for Lockheed Martin was to map the value stream at the program level, since it is at this level that cross-functional stream optimization takes place (a program is a set of processes that is used to provide a specific customer with a product or service). The value stream map reflects the current state of affairs, that is, it shows what is happening in the workplace. Value stream maps provide an opportunity to evaluate operations based on the principles of excellence: are you creating value in the mind of the customer? What are your omissions? What can you do to overcome them?

5. They continue to build stable infrastructure

All employees are involved in improvement projects and undergo just-in-time training. LM21 projects rely on an internal workforce that includes Black Belts, Green Belts, sponsors and what Lockheed Martin calls Subject Matter Experts (SMEs).

• The primary responsibility for identifying and selecting projects rests with line management (eg, departmental managers), who often act as project sponsors. They are usually the owners of the process, that is, they are responsible for maintaining and improving the process.
• The Subject Matters are a group of 20 experienced professionals who report directly to Mike Joyce. In this sense, they are like Six Sigma champions in other organizations, but at Lockheed Martin they play much more important role. These 20 professionals come from different functional areas: business operations, cash control and regulation, supply chain management, production management, development, human resources, customer relations, logistics management, software management, etc. Their main goal is to to study everything related to LM21 in a short time, and to promote the roll-out of the program at every site and in every functional unit. Their mission is to act as catalysts for the process at Lockheed Martin's 36 sites and ensure that operations in these locations are carried out in line with the corporate methodology and meet established standards.
• Lockheed Martin has set itself the goal of training 1% of its employees to become certified Black Belts (certified means that they have completed a course of several weeks, completed a number of projects and are Green Belt mentors, helping the sponsor and administration of LM21).
• Anyone can take a 40-hour training course to become a "green belt". The Green Belt is required to do only one thing: after training, he must lead a team working on a project to achieve cost savings. To date, 43 out of 160 employees of the system integration group at the Material Acquisition Center have completed such training, 32 of them have certificates.

6. Their methods are a fusion of Lean and Six Sigma.

The LM curriculum and improvement methods are a combination of Lean Six Sigma core tools and principles, such as DMAIC methodology, identifying the seven wastes (a Lean tool), process mapping, working on cycle time reduction, etc.

7. At the first opportunity, they took on the suppliers.

“Like most manufacturers, we have always paid great attention controlling incoming materials to ensure they meet our specifications and engineering specifications,” says Manny Zulueta, vice president of Lockheed Martin's Material Acquisition Center. “Then we rolled out five or six programs where we worked with major suppliers to implement Lean and Six Sigma in their factories to make them better suppliers... And we got the materials coming in almost flawless. Now, when we receive the material, we just need to make sure that it has arrived in the right quantity, have a quick check of its condition, and then we can send it to the warehouse.”

Supplier collaborations range from Lockheed Martin's Lean Six Sigma training to supplier staff to workshops where suppliers can share experiences.

However, the possibilities of such cooperation are not unlimited. With thousands of suppliers, Lockheed Martin cannot do this with all of them. “We have identified a set of criteria that allow us to determine how important this or that supplier is for us, weighed all the pros and cons, and evaluated them using the system quantitative indicators, explains Zulueta. - We took into account the following factors: how well suppliers meet our requirements, whether they have technologies that are important to us, to what extent their work affects the quality of products, etc. We have compiled a list of about 200 top suppliers that we all want to work with ".

“The secret to partnering with suppliers,” says Zulueta, “is a close relationship with the management of the supplier company. Everything works if we manage to get involved top management, because we believe that he must necessarily be engaged in the transformation of processes. Usually such work with the supplier takes several months. We cannot do without the support of senior management. If the president of the company is not interested in it, CEO or the general manager, most likely, the case will end in failure.

Lean Six Sigma Experience Helps Advance

James Isaac is an example of how the LM21 program is being used for leadership development. He is now director of supply chain improvement at MAC-MAR, a position he assumed in the spring of 2002. Prior to that, he worked for two years in the role of "specialist in the subject area." “We received a very thorough training,” says Izak. “At the same time, we received personal training in management skills, participating in the work on successful projects and improving productivity.”

Before Isaac was appointed to his current position, he was only indirectly involved in supply chain management. “Before I became a specialist, I worked with Lockheed Martin as a systems engineer for 18 years,” he says. - It was very interesting to look at the design from the point of view of the supplier. Now I look at what is happening with the developments that I used to do myself, with completely different eyes.

results

Today, the LM21 program brings together more than 5,000 projects, more than 1,000 of which are carried out in the field of business operations (management, financial management, closing deals, supply, etc.). The original goal was to reduce costs by $3.7 billion over four years - in fact, the cost savings are closer to $4 billion. As Mike Joyce noted, in an organization of the size of Lockheed Martin, it is difficult to argue that all this is the result of LM21, however the attention paid to perfection is undoubtedly one of the most important factors. Other business indicators are also improving: the company has a record number of orders; liabilities have fallen significantly from their level at the time of the merger; annual inflow Money numbered in the billions. These changes, many of which are in the service sector, have allowed Lockheed Martin to create a next-generation cruise missile with the same capabilities as other products, but at half the cost and three times the cycle time. All lean manufacturing metrics at the departmental and individual project levels have improved significantly. Handovers have been significantly reduced in many processes, resulting in faster cycle times and greater customer satisfaction.

Similar results are visible in the area of ​​production activities of a non-core nature, which is engaged in Lockheed Martin. Comparable rates of acceleration and cost reduction were achieved by the Naval Electronics and Surveillance Systems group (naval electronic systems and Surveillance Systems), which provides products and services to combat fleets around the world, including advanced shipborne combat electronic systems in combination with communications systems. These results are reflected in the ability of Lockheed Martin in relation to new orders. For example, the company was recently selected as one of the prime contractors for Deepwater, the most ambitious US Coast Guard program ever.

Billions of dollars have been committed to this Naval infrastructure overhaul program, and Lockheed Martin will lead the way. Starting its 20-year program, the company is using Lean Six Sigma tools extensively to define customer value and identify critical customer requirements through Six Sigma design and close relationships with new vendors. .

Grow your business

According to Mike Joyce, it's important that management doesn't equate "waste elimination" with "laying people off."

“The goal of LM21 is not to fire people after we eliminate waste, but to improve our operations and provide people with value-adding work without letting them waste their energy,” he says. “By eliminating losses, we can offer the client a better deal, which will allow us to develop our business.”

Like any other company, Lockheed Martin admits it cannot guarantee lifetime employment. But working under the LM21 program expands the company's ability to win major new contracts. Employees who participate in LM21 trainings and projects acquire skills that enable them to better serve customers, which means that their chances of long-term employment with the company increase. “The client provides us with work,” says Joyce, “so ultimate goal everyone and everyone is stable employment”.

Challenging tasks

Imagine how difficult it is to get 125,000 people to think and work in a new way, and you will appreciate the work done by Lockheed Martin. The company has set a goal - 60% of employees (about 70 thousand people) by 2004 must either take a week-long training course to receive a "green belt" or take part in a week-long project. Meanwhile, the company is actively engaged in the compilation of value stream maps for all implemented programs (their number is 2000). Among other tasks:

• increased demands on program managers.
  Until now, most program managers have been required to do one thing - to provide the client with what is stipulated in the contract: “Here are the costs, and here is the work schedule. Ensure timely delivery." Now they are being told that this is not enough: they must not only meet cost commitments and stay on schedule, but also care about improving the way they work in the program they are responsible for. “It's like changing the rules in the middle of a game,” says Mike Joyce. - We want to make sure that they have the knowledge and tools that will allow them to be at the level of increased requirements”;
• synchronization of work of all departments of the enterprise.
  Suppose Lockheed Martin focused solely on streamlining manufacturing operations and made them the epitome of lean manufacturing: fast, efficient, just-in-time, without unnecessary investment in inventory. However, all this work will go down the drain if the workers planning department continue to process orders in batches or if the supply has not eliminated the shortage, and suppliers have not provided the right quality or did not improve the design. Problems of this kind can affect the activities of any organization that does not adhere to systems approach to work, making sure that the puzzle pieces fit together into a single picture. Keeping track of all of these things helps companies avoid the classic state of constant failure that limits the return on investment in Lean Six Sigma;
• convince people they can't do without Lean Six Sigma.
  Your attempt to bring Six Sigma, and especially Lean, to the service industry is likely to be met with one of two replicas (and both are well known at Lockheed Martin). First: “This does not suit us ... This has nothing to do with software. legal services. to (fill in yourself). Second: “You see, we have already tried this. We did this ten years ago. It doesn't make any sense." To these objections, Mike Joyce replies, "Okay, let's watch your process and find out what's really going on." He invites people to independently go through the entire process that the document goes through, observe what happens, and collect data on the current state of affairs. People are invariably amazed by their discoveries. and begin to realize that they have plenty of room to improve quality, speed, and reduce costs!

This data is correct for a normal distribution. It should be borne in mind that not every process is characterized by normal distribution. More about statistical process control: Wheeler D., Chambers D. Statistical process control. Business optimization using Shewhart's control charts. M. : Alpina Business Books, Alpina Publishers, 2009. Approx. scientific ed.

More on Lean Terms: An Illustrated Glossary of Lean, Ed. C. Marchvinski, D. Shuka. - M.: Alpina Business Books, 2005. Approx. scientific ed.

Read more about value stream maps: M. Rother, D. Shuk. Learn to see business processes. The practice of building value stream maps. - M.: Alpina Business Books, 2005. Approx. scientific ed.

It should be borne in mind that D. Womack and D. Jones, who “formalized” Japanese “lean manufacturing” for Americans in the early 1990s, start with customer value as one of the central ideas of the entire concept of lean manufacturing. Note. scientific ed.

Extremely popular among the Japanese (and, first of all, at Toyota), control charts - the main tool for reducing variability - arose long before the concept of six sigma. Accordingly, it is difficult to agree with the author that lean manufacturing (Toyota production system) does not have such tools. In general, no improvement in quality is possible without a reduction in variation. Note. scientific ed.

Developed based on the work of James Womack, author of books such as The Machine that Changed the World and Lean Thinking : Alpina Business Books, 2005). Note. scientific ed.