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Lean Six Sigma@GBS

B. About Lean Six Sigma

Info Published on Dec 22, 2009

In this section you can read about the background to Lean Six Sigma and find out what we are doing with Lean in
GBS.

About Lean Six Sigma The GBS Lean Deployment

About Lean Six Sigma

Click the links below to jump to a section :

What's Lean Six Sigma?

Lean and Removal of Waste
The Five Principles of Lean Thinking
Six Sigma
IBM and Lean

What's Lean Six Sigma?

Lean refers to a set of processes and improvement techniques that are most effective at delivering greater client
value. Lean is about figuring out what the client considers as value and designing the system to meet that - no more,
no less.

Lean does not mean delivering less, or working harder; it is working smarter by avoiding any activities unrelated
to delivering client value. In other words, it is the precise matching of our capabilities to the client's needs or
wants.

Lean is an industry-proven methodology, that when executed, results in the ability to deliver more value to clients
through operational excellence. This is possible through the relentless identification and elimination of "Muda"
(loosely translated from Japanese meaning operational inefficiencies or WASTE) from our operating environment.
In contrast to Lean, Six Sigma focuses on reducing variability in a process to improve quality, ie to ensure quality
at source.

Lean and Six Sigma are both based on over 50 years of process-improvement experience based on the renowned
Toyota Production System from the 1960's, which was developed by Taichi Ohno, the Toyota Executive. Since
then, it has evolved through several quality revolutions such as Just-In-Time Production, Lean Manufacturing,
Total Quality Management and finally Six Sigma - which was popularized by Motorola and GE.

The Origins of Lean Six Sigma

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While Lean is often seen as just another set of tools, true Lean enterprises (for example, Toyota) recognize that
when properly applied, the methodology:

fundamentally changes an organization's culture

can be successfully used in all industries despite varying processes and functions, and
is built on guiding principles of customer value and waste elimination, which are fundamental to achieving
world-class status.

Its goal is growth, not just productivity. Its aim is effectiveness, not just efficiency.

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Lean and removal of "Waste"

The objective of Lean is to deliver exactly what the customers need, when and where they need it. Everything else
that does not add any value (in the customer's eyes) should be eliminated from the process. Lean does this by
focusing on the operating system, management system, and mindsets and behaviors. Typically, there are seven
"Wastes" associated with Lean and these are as applicable in services as they are in product value chains :

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The Five Principles of Lean Thinking

1. In Lean Thinking "Value" is defined from the customer's perspective. Lean has well developed tools to help
capture value.
2. A Value Stream is a sequence of steps taken to create value, and an early activity in Lean Projects is to set
out every step in a process, both value-adding and non-value-adding
3. Creating flow, allows value to flow smoothly through the value stream without obstruction
4. Work is pulled by customer and this pull works backwards through the preceding steps until it activates the
initial stage of the process. An example is a can of soft drink bought from the store shelf, triggering a chain
of activities, up till the manufacturer of the soft drink placing an order for raw materials with its suppliers,
manufacturing the soft drink can and sending a delivery to replenish the store shelf.
5. Continuously and relentlessly drive for improvement

The Five Principles of Lean Thinking

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Six Sigma

Six Sigma methods started in the early 1980s at the Motorola Corporation when it was discovered that products
making it through the production process with a high first-pass yield performed better in the field. With this
knowledge, Motorola Corporation focused on creating strategies to reduce defects in their processes.
In the mid-1980s, Motorola joined forces with other companies, including IBM, to form the Six Sigma Research
Institute. Since then, Six Sigma has been proven by many companies as a robust method to provide productivity,
quality, customer satisfaction, and other process improvements.
Six Sigma has a very strong base in statistics. The chart below indicates the "Bell Curve" that could be drawn
based on Mean and standard deviation. It is a statistical phenomenon, where any randomly occurring event, will
tend to form a pattern, typically they will cluster around the mean. Without getting deeper into statistics, a curve
of that nature is depicted below :

One of the key advantages to Six Sigma is that it provides a measurable way to track process performance. The

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performance accuracy of a process is measured with a metric known as the "Sigma Level". The Sigma Level is
based upon a comparison of the variability of the outputs versus the performance specifications of the process. The
goal of Six Sigma approaches is to reduce variability, improve predictability and quality, by systematically
eliminating defects, that is, defects as viewed by customers' eyes. A process that has reached the "Six Sigma
Level" operates with so little variation that 99.9997% of the time it is defect free. Or in other words, only results
in 3.4 defects in one million opportunities. (It should be noted that not all processes need to perform to a Six
Sigma level. In most cases, it is simply not cost-effective to be that accurate.)

So Six Sigma simply means a measure of quality that strives for near perfection. The term now applies to a
disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations
between the mean and the nearest specification limit) in any process - from manufacturing to
transactional/services and from product to service.

Six Sigma is essentially a comprehensive yet flexible system for achieving, supporting, and maximizing business
profits. It is a methodology driven by understanding customer needs, and the disciplined use of data, facts, and
statistical analysis to improve and reinvent organizational processes.

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Combining Lean and Six Sigma

What all such process improvement approaches share are certain characteristics :

Strongly repetitive/continuity over time

Significant investments in training of both experts and line organization
Clear and open communication by top management underlining its commitment
Aspirations, targets integrated in budgets
Celebration of success stories
Beside directly measurable benefits such programs also led to a "productivity culture" creating a
self-reinforcing mechanism and ensuring continuity
Productivity improvements resulted in bottom-line impact and further led to
Increased sales
Improved service/quality for customer
Sophistication of product portfolio
Upgraded management base

Combining Lean and Six Sigma tools and methods provides a complete set of tools to approach any process
problem. By utilizing lean techniques to eliminate non-value add process steps, (waste), and also applying Six
Sigma techniques to reduce variation and defects, the result is a fast efficient process with high quality and few
defects. You can read about the GBS Value Stream Improvement methodology in the Delivering Lean Projects
section of this wiki.

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IBM and Lean

IBM has extensive consulting practice experience, and through our Value Stream Improvement method engaged
with countless high profile customers such as Credit Suisse, Absa, Caterpillar, Bank of America, Barclays etc,
delivering business benefits, leaving a legacy for customers to continue in a sustainable and self-sufficient
manner. Application of Lean Six Sigma is not new to IBM. At a corporate level, IBM's Business Transformation
Group has developed a structured LSS program for several years now. This is used as a strategic process
excellence tool to improve quality and productivity. ITD (Integrated Technology Division) and IMBPD (Integrated
Managed Business Process Delivery) have been successfully using LSS since 2004 and have achieved significant
increase in profit.

Applied to GBS Projects, Lean will not only help us do things better, but it will help us do better things. It can help
our clients discover opportunities beyond operations, enhance financial performance and create organizations that

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have an inherent inclination toward innovation.

The implementation of Lean Six Sigma (LSS) in Global Business Services was formally taken up as key strategic
tool for productivity and quality improvement in 2008. The initial assessment and piloting of LSS in application
production support and testing areas indicated a potential improvement of more than 30% in productivity.
That's significant! Customers are looking for progressively better efficiency, so a sound execution of LSS will give
IBM a substantial edge over competition. Now read about our Lean Deployment in GBS .

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Added by Elizabeth Clare Orton , last edited by Elizabeth Clare Orton on Dec 22, 2009 (view change)
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