Efficiency and Effectiveness: How to transform your businesses to be more competitive

Tamary Días Otero

Taking into consideration the economic situation of the island in an increasingly globalized and competitive environment, we must all re-evaluate how our companies are operating and continually identify initiatives to improve efficiency and effectiveness.

There are a number of methodologies that can be used as a guide for implementing process improvement initiatives. One of the methodologies used in both the public and private sectors, is the combination of Lean and Six Sigma. Both methods are based on customer satisfaction: businesses are composed of processes that start with customer needs and the result should be a satisfied customer. However, their approaches are different. Lean is based on processes and reducing complexity while Six Sigma focuses on the reliability and effectiveness of the products and / or services.

What is Lean?

The purpose of the Lean methodology is to identify and eliminate activities that do not add value (waste), resulting in reduced production time and / or services and costs. The wastes are classified into eight categories:

  • Unused talent 
  • Inventory
  • Movements
  • Wait
  • Transportation
  • Defects
  • Overproduction
  • Over-processing

All of us, whether at work or in our daily lives, have applied some of the tools of Lean. What this methodology does is to place order and meaning to those activities we commonly do. For example, have you ever placed the office photocopier near your desk? This is an example of removal of “movements” and “transportation” by avoiding wasting the time of getting up and going across the floor to get papers (movement) and also carry the papers to your desk (transportation).

Another interesting point of this methodology is that many organizations [1] use it more as a mode of operation that an individual activity.

What is Six Sigma?

Six Sigma improves performance by focusing on critical aspects of quality and eliminating variations in the products and / or services. All Six Sigma projects use the five-phase DMAIC method:

  1. Define
  2. Measure
  3. Analyze
  4. Improve
  5. Control

Within each phase of DMAIC, tools are used to collect and measure the necessary information. All Six Sigma improvements must be proven statistically, so data is needed before, during and after implementing the changes. Something to consider before you start using the Six Sigma initiative is that these tend to be long-term and require a team with knowledge of statistics, at least basic, to use its tools.

Lean vs. Six Sigma

Both methods have their advantages and disadvantages. Lean is easier to implement because the tools are simple and can be used independently. Another advantage is that Lean does not require accuracy in the data such as Six Sigma. If the purpose of the initiative is to control the variability of the products and services provided, and if the data and personnel with the required knowledge are available, then we recommend using Six Sigma.

Three important factors…

  1. Selection of methodologies and tools: The key is to reach a middle ground when the methodology (ies) and tool (s) used is decided. Remember that these methods are established to guide, not to add more complexity to something as complex. Educate yourself, ask people, organizations that have gone through similar transformations and / or experts in the subject. We do not want to reinvent the wheel if there is no need.
  2. Metrics: The metrics must be defined and discussed with the leadership of the organization before starting any initiative. This ensures that everyone is “on the same boat” and avoids high or unattainable expectations. There is no use in making changes throughout the organization if you do not measure what is being improved.
  3. Support of the entire organization: As mentioned above, it is essential to have leadership support and involve everyone in the organization (for example, from the CEO to analysts). The sense of belonging will be key in implementing this type of initiative, many changes are going to happen, and no sense of belonging can “get on the board”.

In the next articles we discuss further the tools used in Lean methodology.

[1] Examples of companies with systems based on Lean operations: Boeing “Boeing Production System” UTC “Achieving Competitive Excellence (ACE)”