Why Lean is Replacing Six Sigma - and Lean Six Sigma Isn't
The History of Six Sigma Versus Lean Engineering
In the 1980s and 1990s, Six Sigma quality was, to put it succinctly, a big deal. There was concern in the US that companies needed to reach Japanese levels of quality to compete with Japan (ironically achieved by the advice of industrial engineering pioneers like Deming and Juran who were ignored in the US for years). Since the Great Recession started and arguably never ended, Lean has grown in prominence and may supplant Six Sigma as a priority. Let’s look at the reasons why.
Why Lean is Growing in Importance
The Great Recession of 2007 started with the housing bubble bursting, leading to a spike in unemployment, high levels of underemployment and financially squeezed consumers. The slight recovery since then led to a hollowing out of the middle of the market, where growth was mostly at the luxury end and cheap end. In such a market, making a product good enough for the consumer is more important than a perfect one unless you’re in the luxury / premium market. And the luxury/premium market can make its markup from perceived shortages, good branding and other methods that don’t necessarily cost more money to create.
For every other business and operation, the race was on to lower costs in order to stay in business. They needed to lower costs whether it was reducing wasted material, idle time on the shop floor or eliminate overtime in order to stay in business when sales declined. Or they needed to implement Lean principles to reduce cycle time to get production levels up at lower prices per unit. In some cases, Lean engineering meant reducing the number of machines and processing steps required to make something so that the factory needed less of everything to stay running, or it even managed to put together a more flexible factory so that it could switch between products more rapidly.
Economic factors also impeded the very idea of implementing Six Sigma projects in some areas. For example, if quality was good enough for customers, the money spent improving quality was better spent paying down debt, making acquisitions or saving for a potentially worse fiscal quarter. If quality of a product was declining relative to customer expectations or a multi-faceted problem, it might be cheaper to simply kill the product line than try to invest money to improve its quality and then try to salvage the reputation with customers.
Six Sigma declined in importance except for the few areas where perfection is critical, such as medical device manufacturing where even a few failures risks the financial survival of the operation. To quote Scott Adams, “quality is one of the luxuries you can afford when the marketplace is spraying money in your direction and you have time to tinker”. Then there is the fact that streamlining operations like reducing material handling and processing steps can indirectly raise quality levels by reducing the number of defect opportunities in the first place.
Lean engineering projects did bring the potential of increased branding in a way Six Sigma quality couldn’t. If your Lean implementations reduced waste or resource usage, it could lead to green branding that would generate a higher premium in the marketplace or better positioning with certain customer demographics.
Will Lean Six Sigma Grow in Importance?
Lean Six Sigma is an attempt to merge Six Sigma quality with lean philosophies. There are several reasons why lean will remain far more important than lean six sigma.
First and foremost is simplicity; lean six sigma is a complicated endeavor, and if you’re motivated to improve your bottom line by using less labor, materials or time per product/service delivered, you want the simpler solution – Lean Engineering. The more complex the project, the more likely it will fail, and if you’re driven by economic factors to implement Lean principles, you can’t afford a complicated project that has greater odds of being a waste of money.
The second reason LSS won’t gain ground is that quality has lower return on investment than saving time, money and resources if the market won’t pay more for higher quality products. There is no point to invest resources in a project that produces leaner operations and higher quality if you won’t see higher profits for the effort. Conversely, a lean engineering project that does reduce costs or shorten cycle time to increase throughput almost always has a high ROI, and you don’t have to worry about what the market will bear.
The third reason Lean Six Sigma won’t grow in importance relative to Lean or Six Sigma is the fact that it attempts to merge two different goals – higher quality levels and more efficient operations – while businesses are more likely to simply go with the project type based on their goal of today. If they want to focus on quality, they’ll run through several Six Sigma projects, not LSS. If they want to streamline operations, they’ll usually go with Lean engineering or Lean management projects, not LSS.
For these reasons, Lean projects will be undertaken far more often than Lean Six Sigma ones, instead of switching from a Six Sigma emphasis to LSS.