Eliminating the Hidden Factory with Lean - Six Sigma

The "hidden factory" is a name given to the wasteful and inefficient activities that occur across an enterprise, which can greatly increase costs in time, resources, and money. The effects of the hidden factory are delays, errors, higher inventories, and customer dissatisfaction. The financial consequences are higher costs and lower profits.

Waste Not, Want Not: The "Hidden Factory"
The "hidden factory" is a name given to the wasteful and inefficient activities that occur across an enterprise, which can greatly increase costs in time, resources, and money. The effects of the hidden factory are delays, errors, higher inventories, and customer dissatisfaction. The financial consequences are higher costs and lower profits.

By shutting down the hidden factory, i.e., making the business transactions and processes efficient, an enormous improvement in financial performance can be achieved. To do this, an organization needs to become "Lean" and attack the variations in its processes through the implementation of "Six Sigma".

It's Easy Being Lean
Lean thinking and lean excellence is a coordinated response to today's highly competitive environment. Its roots lie in manufacturing and are strongly influenced by the production system principles originally developed at Toyota.  These principles have been widely published and applied at numerous companies worldwide, not only in manufacturing, but also in companies specializing in services and administration.

"Lean" is a philosophy that focuses on value-added expenditures of resources from the customers' viewpoint and shortens the lead-time between a customer order and the shipment of the products through the elimination of all forms of waste.  Examples of waste are:

• Rework - Any process steps that are not done correctly the first time
• Material Waste - Any material that does not wind up in the end product or is not actually needed to produce the item.
• Over-production - Output produced in greater quantity or faster than the subsequent process steps require.
• Transportation Waste - The unnecessary movements of materials within the process
• Waste of Movement - The unnecessary movements of the operator, e.g. in searching for instructions, materials or tools
• Waiting - Idle time by the operator or equipment
• Waste of Human Skills - Time spent by employees who are not fully utilized, according to their skills, training and potential.

What is Six Sigma?
To successfully attack the hidden factory and eliminate the waste, the implementation of Six Sigma is recommended.   Six Sigma is a management strategy for change with a key focus on the end customer and their specific needs. Six Sigma uses the very best from Total Quality Management, Process Control, Statistical Analysis and Control, and a new paradigm of Total Customer Satisfaction to deliver almost zero defects, and it can also deliver a dramatic increase in profits. Financial return and gains for the bottom line are also emphasized. Factual statistical data are central to the target of perfection, which is 3.4 defects in every million opportunities.

Six Sigma has its own methodology for process improvement, which includes design of new products and services. The methodology is DMAIC (Define- A Charter and Guidelines, Measure - Key Parameters, Analyze- Failure Mode and Effects Analysis FMEA, Improve - Cost and Benefit Analysis, and Control- Implementation Plan).

Lean Six Sigma Process will enable the focus to be on the customer, i.e., what the customer wants, when they want it, where they want it, at a competitive price, in the quantities they want, and always in the expected quality.  The process includes the following:

• Key Roles and Responsibilities - This provides your company's senior leadership with goals and direction to include time, resources and inspiration. Six Sigma Solutions LLC institutionalizes training, implementation, and support. WE will educate the Functional Managers to support the appropriate decisions, and the Supervisors and Leads to become process owners. The Employees will then have a commitment to support goals and objectives.
• 5 Steps for Lean Implementation: 5 Steps is a tool to improve product and information flow through the application of visual tools and standard practices.

     Elements of a 5S program
         Sort - Identify what is not needed. Sort through and sort out.
         Store - Identify what must be kept and make it visible and self-explanatory.
         Shine - Everything that remains. Clean the equipment and the work place.
         Standardize - Implement best practice. Keep organized.
         Self-discipline - Making a habit maintaining correct procedures, creating a culture of
         continuous improvement.

     Implementation of 5S Program
          Specify value  - This will define the costs savings and return on investments
          Map the value stream -  "Order to Cash" - This is a review from the time you receive
          order until the time you receive payment.
          Create flow - This is a balance of the operation to create consistent flow of products or
          services
          Pull - This is a process by which the order is systematically pulled through the value
          stream to the end user.
          Pursue perfection - Doing it right the first time, eliminating all forms of waste

• Kanban - This is a JIT (Just-In-Time) process that shortens lead-time, reduces inventory, and provides visibility to control process.
• Team Building - The process of empowering all employees to attain the common goals and objectives
• Charts and Diagrams - This is the "Line-of-Sight" tool of using Visual Management Boards, Flowcharts, Parteo Charts, Cause and Effect Diagram, and Control Charts in the operations environment showing statistical data to identify key performance metrics.

Lean Six Sigma: A Winning Combination
There is a growing trend to add additional management practices alongside Six Sigma. Lean is the most notable for elimination of waste while eliminating defects.  As a result, Six Sigma has evolved into an enhanced state known as   "Lean Six Sigma."  Both concepts have the same objectives - continuous improvement of business processes.  Both follow a structured approach to identify the root causes of problems and find the optimal solution to avoid a recurrence. Both concepts are focused on business needs as defined by the customer.  Both concepts require the full participation of all interested parties supported by a well-organized training and communications program.  Both concepts use cross-functional teams to address business problems in project work.  And, both concepts were initially developed to improve manufacturing processes, but today they are also being applied to transactional businesses.

In conclusion, the most important element in eliminating the hidden factory from your company is our people.  Our expertise in providing Lean Six Sigma solutions is the key to success for your company and your customer. We at Six Sigma Solutions, LLC will improve your business, keep you competitive, and place you in a position to WIN.

Contact details:
Carl E. Watson, Jr.
President
Six Sigma Solutions, LLC
E: cwatson@sixsigmasolutionsllc.com
www.sixsigmasolutionsllc.com

Carl earned his Bachelor of Science Degree Athens State College, Alabama. He is a certified Lean Master and a certified Six Sigma Master Black Belt from Villanova University, PA. He is also a member of TMA Turnaround Management Association.