BY MIKE DONOVAN
Manufacturers today must become faster and more nimble than was needed in the past. Competition is getting fierce and customers have become much more demanding–and have higher expectations–than in the past.
Many companies are feeling the pressure to more aggressively pursue Lean Six Sigma to avoid the risk of losing business to lower cost and more agile competitors. Manufacturers need to place high priority on Lean Six Sigma to drive out waste and to dramatically improve on cycle time, productivity, quality, inventories and delivery.
Although Lean Six Sigma can achieve significant cost savings in the form of reduced inventory costs and improved productivity, the more significant strategic advantage comes from revenue building opportunities as customers respond more favorably to a lower cost, highly flexible, and more responsive lean enterprise.
Perceptions and lean realities
Often, the perception is that manufacturing is the weak link in the supply chain. Yet, the reality is that manufacturing operations are often besieged with constantly changing priorities, demand for product that doesn’t match forecast, suppliers not delivering on-time, product specification problems, capacity imbalances, material flow interruptions, long cycle times, and ineffective ERP systems that are of little help in dealing with these day-to-day issues. All of these variables prevent operational excellence and result in unpredictable performance. The need to correct processes internal to manufacturing as well as those external, which are often informational, is a common problem that needs management’s immediate attention.
Manufacturers have sought to meet various business performance challenges by focusing internally, hoping to correct faulty processes byapplying Lean Six Sigma techniques to bring about needed major changes. But many of these lean initiatives never achieved what they could and should have, primarily because many so-called lean manufacturing and Six Sigma efforts were not really effective at all. Many lean manufacturing efforts have failed to consider the need for comprehensive internal and external business process changes, including policies, attitudes, performance measurements, peripheral business practices, organizational behavior, and supporting information technology.
Our consultants agree that, on a scale of 1 to 10, 90% of the manufacturers with Lean Six Sigma initiatives would not score higher than a3 and only 1% could score 8 or higher by our comprehensive Lean Manufacturing Certification® standards. For most manufacturers, there are still vast performance improvement opportunities.
Tracking your track record
How can a company gauge whether it’s getting ahead or falling behind in its Lean Six Sigma initiative? One place to start would be to “benchmark” your improvement track record to some general performance criteria, and get the thought process of the entire management team into action. For example, have the entire management team gauge your company’s business operations performance improvement progress by candidly and realistically answering and, subsequently, discussing the 10 questions listed in the chart below and the recommendations to benchmark performance improvement progress.
If you answer “No” to any one of these critical questions, it’s a solid indicator that you’re not progressing as fast as you should. Using the following scoring system will help you to generally evaluate and categorize your company’s progression rate:
EVALUATION AND RECOMMENDATIONS
9 to 10 “yes” answers:
You are in an elite class of highly focused and top performing lean manufacturing companies. Of course, ‘yes’ answers do not guarantee market leadership or profitability. Your competitors may be just as aggressive. Keep the improvement momentum in high gear.
7 to 8 “yes” answers:
You are in the high performance group of companies and may actually be outperforming most, if not all, of your competitors right now. But any ‘no’ answer may present an unacceptable risk for which immediate action is necessary. Keep “leaning-out” your business and production processes by executing to a well thought-out plan to make sure you are, in fact, out-ing your competition.
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5 to 6 “yes” answers:
Some lean manufacturing progress has been made, but you need to reach new levels of performance. Delay will cost your company money. And, most importantly, remember that both domestic and foreign competition have not stopped searching for how to win.
4 to fewer “yes” answers:
You are in a very high-risk category with a need to intensify or initiate a high priority Lean Six Sigma effort. Delay most certainly has cost you money, and limited or no action will ultimately lead to customer losses and other major problems.
Lean Six Sigma equals success
A higher performance lean manufacturing enterprise will be a strong link, as razor-sharp synchronization of an entire lean supply chain will undoubtedly be a major performance success factor in the years ahead. Manufacturers with the best value-centric offers for their customers, including flexibility and responsiveness, will easily gain more market share in the future.
The successful and most profitable manufacturers will diligently and aggressively pursue Lean Six Sigma as a prerequisite to getting the weak links strengthened in their entire supply chains, from beginning to end.
Within a few years, companies that have not achieved lean supply chain management to drive out the unnecessary costs, time, and other waste so they can deliver high quality, best value products at lightning speed will run a very high risk in customer retention.
Remember, it is likely to take most manufacturers a number of years and a lot of effort to fully apply Lean Six Sigma to transform their companies into a lean enterpise. The unpleasant consequences of inaction, and the time required to get the job done, should make achieving andsustaining lean a very high business priority. CS
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MIKE DONOVAN is president ofR. Michael Donovan & Co., Inc. (www.rmdonovan.com), an international management consulting and training firm that assists manufacturers and distributors to quickly achieve significant gains in business performance. He can be contacted at: rmd@rmdonovan
