Lean Six Sigma Black Belt E-Book

ir. H.C. Theisens

• Herausgeber: Van Haren Publishing
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 676

Veröffentlichungsjahr: 2021

Beschreibung

The structure of this book is based on the LSSA Skill set for Lean and Six Sigma Green Belt All of the techniques described in these Skill set will be reviewed in this book. The Lean elements will be discussed in chapter 1 to 6. The Six Sigma elements will be discussed in chapters 7 and 8. This book can be used for two purposes. Firstly, it acts as a guide for Green Belts undertaking a Lean or Six Sigma project following the DMAIC roadmap (‘Define – Measure – Analyze – Improve – Control’). Secondly, this book serves to determine where the organization stands and what the best strategy is to get to a higher CIMM level.

Leseprobe

Title:

Lean Six Sigma Black BeltMindset, Skill set and Tool set

Series:

Climbing the Mountain

Author:

ir. H.C. Theisens

Publisher:

Van Haren Publishing, ’s-Hertogenbosch, www.vanharen.net

Edition:

Third edition9789492240354 / 9789401809764NUR 100

Copyright:

© Van Haren Publishing

All rights reserved. No part of this book may be reproduced in any form or by any means, electronic, photocopying or otherwise, without the prior written permission of the publisher.

Portions of information contained in this book are printed with permission of Minitab Inc. All rights reserved. MINITAB® and all other trademarks and logos for the company’s products and services are the exclusive property of Minitab Inc. All other marks referenced remain the property of their respective owners. See minitab.com for more information.

The structure of this book is based on the LSSA® Skill set (rev 3.2, 2021) and the Continuous Improvement Maturity Model – CIMMTM. You have the permission to share and distribute this model in its original form by referencing the publisher and author, (LSSA®, Theisens et. al., 2021).

Printed in the Netherlands.

Content

INTRODUCTION

HOW TO USE THIS BOOK

PREFACE

1   WORLD CLASS PERFORMANCE

1.1   CONTINUOUS IMPROVEMENT

1.1.1   Continuous Improvement history

1.1.2   Continuous Improvement values and principles

1.1.3   Continuous Improvement Maturity Model (CIMM)

1.1.4   Continuous Improvement roles and responsibilities

1.2   CUSTOMER VALUE

1.2.1   Voice of the Customer (VOC)

1.2.2   Critical to Quality (CTQ)

2   POLICY DEVELOPMENT AND DEPLOYMENT

2.1   POLICY DEVELOPMENT

2.1.1   Vision & True North

2.1.2   Transformation roadmap

2.1.3   Performance and financial metrics

2.2   POLICY DEPLOYMENT

2.2.1   Management of change

2.2.2   Leadership

2.2.3   Hoshin Kanri (X-matrix)

2.3   COMPETENCE DEVELOPMENT

2.3.1   Learning organization

2.3.2   Coaching and intervision

2.3.3   Effective communication

3   PROJECT MANAGEMENT

3.1   MANAGING A PROJECT

3.1.1   Project selection

3.1.2   Project charter

3.1.3   Project team

3.1.4   Project planning

3.1.5   Project execution

3.2   PROCESS IMPROVEMENT ROADMAPS

3.2.1   Kaizen roadmap (PDCA)

3.2.2   Lean Six Sigma roadmap (DMAIC)

3.2.3   Problem-Solving roadmap (8D)

3.2.4   Scrum

3.2.5   Design for Six Sigma roadmap (DMADV)

4   CIMM LEVEL I – CREATING A SOLID FOUNDATION (STRUCTURED)

4.1   PROFESSIONAL WORK ENVIRONMENT

4.1.1   Organized Work Environment (5S)

4.2   STANDARDIZED WORK

4.2.1   Standard Operating Procedure

4.2.2   Training Within Industry (TWI)

4.3   QUALITY MANAGEMENT

4.3.1   Quality Management System

CIMM ASSESSMENT LEVEL I – CREATING A SOLID FOUNDATION

5   CIMM LEVEL II – CREATING A CONTINUOUS IMPROVEMENT ENVIRONMENT (MANAGED)

5.1   VISUAL MANAGEMENT

5.1.1   Visual work environment

5.2   PERFORMANCE MANAGEMENT

5.2.1   Daily stand-up meetings

5.2.2   Kaizen events and problem solving

5.3   BASIC QUALITY TOOLS

5.3.1   Brainstorm techniques

5.3.2   Visualization of data

CIMM ASSESSMENT LEVEL II – CREATING A CONTINUOUS IMPROVEMENT CULTURE

6   CIMM LEVEL III – CREATING STABLE AND EFFICIENT PROCESSES (PREDICTABLE)

DEFINE

6.1   PROCESS MAPPING

6.1.1   High level process description and SIPOC

6.1.2   Process Flow diagram

MEASURE

6.2   PERFORMANCE METRICS

6.2.1   Performance metrics (Time)

6.2.2   Performance metrics (Quality)

6.3   BASIC STATISTICS

6.3.1   Data types and Measurement scales

6.3.2   Data collection tools

6.3.3   Descriptive statistics

ANALYZE

6.4   VALUE STREAM ANALYSIS

6.4.1   Value adding versus Non-value adding

6.4.2   Value Stream Mapping (Current State)

6.4.3   Process Mining

IMPROVE

6.5   REDUCING MUDA (WASTE)

6.5.1   Waste identification and elimination

6.6   REDUCING MURI (OVERBURDEN)

6.6.1   Flow

6.6.2   Work balancing

6.6.3   Resource management

6.7   REDUCING MURA (UNEVENNESS)

6.7.1   Pull

6.7.2   Volume and Type leveling

6.7.3   Quick Change Over (SMED)

6.8   VALUE STREAM IMPROVEMENT

6.8.1   Value Stream Mapping (Future State)

6.8.2   Control Plan

CONTROL

6.9   PROCESS AND QUALITY CONTROL

6.9.1   First Time Right (FTR)

6.9.2   Process FMEA (PFMEA)

6.10   TOTAL PRODUCTIVE MAINTENANCE (TPM)

6.10.1   TPM principles

6.10.2   Overall Equipment Effectiveness (OEE)

CIMM ASSESSMENT LEVEL III – CREATING STABLE & EFFICIENT PROCESSES

7   CIMM LEVEL IV – CREATING CAPABLE PROCESSES (CAPABLE)

MEASURE

7.1   STATISTICAL TECHNIQUES

7.1.1   Variation

7.1.2   Sampling

7.1.3   Basic probability concepts

7.2   DISTRIBUTIONS

7.2.1   Continuous distributions

7.2.2   Discrete distributions

7.2.3   Data transformation on non-Normal data

7.3   MEASUREMENT SYSTEMS

7.3.1   Measurement System Analysis (MSA)

7.3.2   Attribute Agreement analysis

ANALYZE

7.4   HYPOTHESIS TESTING AND CONFIDENCE INTERVALS

7.4.1   Hypothesis testing

7.4.2   Confidence Intervals

7.5   TESTS FOR MEANS, PROPORTIONS AND VARIANCES

7.5.1   Tests for means

7.5.2   Tests for variances

7.5.3   Analysis of Variance (ANOVA)

7.5.4   Tests for proportions

7.5.5   Chi-square test

7.5.6   Non-parametric tests

7.6   CORRELATION AND REGRESSION

7.6.1   Correlation coefficient

7.6.2   Regression analysis

7.6.3   Logistic Regression analysis

7.6.4   Multivariate studies

7.7   PROCESS CAPABILITY AND PERFORMANCE

7.7.1   Process Capability

7.7.2   Short-term and Long-term Capability

7.7.3   Process Performance

7.7.4   Process Capability for Attributes data

IMPROVE

7.8   DESIGN OF EXPERIMENTS (DOE)

7.8.1   Principles and terminology

7.8.2   Two-level Full Factorial experiments

7.8.3   Two-level Fractional Factorial experiments

7.8.4   Response Surface Modeling

CONTROL

7.9   STATISTICAL PROCESS CONTROL (SPC)

7.9.1   Control charts

7.9.2   Tests for special causes

CIMM ASSESSMENT LEVEL IV – CREATING CAPABLE PROCESSES

8   CIMM LEVEL V – CREATING FUTURE-PROOF PROCESSES (SUSTAINED)

8.1   PRODUCT LIFECYCLE MANAGEMENT (PLM)

8.1.1   Product Lifecycle

8.1.2   Innovation management

8.2   DESIGN FOR SIX SIGMA

8.2.1   Design for X (DFX)

8.2.2   Quality Function Deployment (QFD)

8.2.3   Design FMEA (DFMEA)

8.2.4   Reliability

8.2.5   Tolerance analysis

8.3   THE FOURTH INDUSTRIAL REVOLUTION

8.3.1   Industry 4.0

CIMM ASSESSMENT LEVEL V – CREATING FUTURE-PROOF PROCESSES

APPENDIX A – THEORETICAL ASSESSMENT

APPENDIX B – PRACTICAL ASSESSMENT

APPENDIX C – STATISTICAL TABLES

STANDARDIZED NORMAL DISTRIBUTION

STUDENT’S T-DISTRIBUTION

CHI-SQUARE DISTRIBUTION

F-DISTRIBUTION

BINOMIAL DISTRIBUTION

POISSON DISTRIBUTION

APPENDIX D – FACTORS FOR CONTROL CHARTS

APPENDIX E – SIX SIGMA CONVERSION TABLE

APPENDIX F – REFERENCES

APPENDIX G – ABBREVIATIONS

INDEX

Introduction

Would you consider buying a new smart phone from a certain phone provider if your friends keep complaining about connection problems or bad service? You probably would not. You also would probably not want to go to a school with a reputation for poor teaching, a hospital with a high rate of infections due to bad hygiene, or to eat in a restaurant that had served you bad food before. It does not matter what type of product or service we keep in mind; good service, good quality and a proper response time are important for all products and services that we buy. We expect a product to meet our expectations and to do so without defect.

Because of the internet, consumers can obtain a huge amount of information about the performance of products and organizations. It is very easy to compare prices of different suppliers and a product or service can be ordered at any time. If we book a restaurant we ask our friends if the food and service are good. If we have to wait two weeks for a new TV to be delivered we would probably order it somewhere else. If we call the service desk of our internet provider, we expect to talk to a person within a few minutes and they should have the knowledge to answer our question. If we buy a book, a jacket or a new laptop, we expect to receive the product within 24 hours. On top of that we expect companies to develop new models every year. Of course, we expect the price of a new model to be the same as the old model or even less. Do you, as a consumer, have any idea what this means for companies that have to develop and deliver these products? In past decades the increasing quality expectations and shorter Lead Times has had a huge impact on innovation, production, quality management and supply chain management. If a company is not able to keep up with this, it will not survive. Each year many companies, both small and large, have to close their doors because they cannot meet the increasing expectations of customers. Companies and organizations must constantly improve their knowledge of processes and quality control in response to increasing customer requirements for higher quality and shorter Lead Times.

Since process improvement has been going on for decades, process improvement techniques have been applied for decades. Different methodologies have been developed over the years like Lean Manufacturing, Kaizen, ‘Theory of constraints’ (TOC), ‘Total Quality Management’ (TQM), ‘Total Productive Maintenance’ (TPM) and Six Sigma. Many books have been published about process improvement and quality management by people like Deming, Imai, Taiichi Ohno and Eliyahu Goldratt. These methodologies have helped companies to make significant improvements. The methodology that is most suitable for your organization depends very much on where it stands right now and what it needs to do in order to reach a next level of performance. It is important to determine the level of Operational Excellence before an improvement program is deployed. Over past years, an integration has taken place based on best practices from improvement methodologies like Kaizen, Lean, Six Sigma and others. This book will explain these methodologies and an all-inclusive approach of the most commonly applied tools and techniques.

You may think that these methodologies are only applicable for car manufacturers or high-tech companies. It is correct that Lean and Six Sigma have made it possible for these types of companies to become better and faster. However, the same methodologies that served these manufacturers can also help service organizations, government and healthcare organizations to improve their quality, improve their response times and effectiveness, and lower their operational costs.

The ascent to the top of the mountain can be tough, as the path is full of technical and organizational obstacles. You will discover that the journey is also a very interesting, instructive and satisfying one. The roadmap and techniques described in this book will give insight and understanding of a number of powerful tools and techniques to improve processes and quality. As the entire journey of becoming World Class cannot be taken overnight, you do not have to read this book entirely at once. We recommend that you begin by identifying the current state of your organization using the CIMM framework described in paragraph [1.1.3]. This will clarify which chapters will be interesting for you to read and which approach and techniques will be useful to apply in order to reach the next level.

How to use this book

Hundreds of books have been published over the years about process improvement and quality management. You can find many different books on Lean Manufacturing or Six Sigma. This book is different because it addresses the relation between Lean and other improvement methods that have been proven to be successful over the past decades, such as TQM, Kaizen, TPM and Six Sigma. These methods, tools and techniques have been united in the ‘Continuous Improvement Maturity Model’ (CIMMTM). CIMM is an open standard and is maintained by the ‘Lean Six Sigma Academy’ (LSSA). The framework describes the process of Continuous Improvement from a very early stage through to delivering World Class products and services. The CIMM framework connects Lean, Six Sigma and other improvement methods. The framework incorporates the best practices, methods and techniques of process improvement, quality management and new product development. The framework also connects the so-called ‘Hard’-elements of process improvement and the so-called ‘Soft’-elements of organizational development and change management.

The structure of this book is based on the LSSA Skill set for Lean and Six Sigma Black Belt [19.]. All of the techniques described in these Skill set will be reviewed in this book. The Lean elements will be discussed in chapter 1 to 6. The Six Sigma elements will be discussed in chapters 7 and 8. We also advise you to use the accompanying exercise book with exercises and answer keys. In case you would like to subscribe for LSSA certification, we advise you to review the criteria described in Appendix A and B. Those who would like to apply Lean at the Yellow or Green Belt level are advised to read the specific book within the ‘Climbing the Mountain’ series.

This book can be used for two purposes. Firstly, it acts as a guide for Black Belts undertaking a Lean or Six Sigma project following the DMAIC roadmap (‘Define – Measure – Analyze – Improve – Control’). Secondly, it is a guide for (Master) Black Belts that are involved in improving the overall performance of the organization and to lead the continuous improvement transformation process.

How to execute a Lean or Six Sigma project

Typical objectives of a Lean project are to reduce Lead time or processing times. A Lean project can also aim to reduce operational costs or improve quality. The typical Lean approach is about reducing Waste. Running an improvement project is rarely just about applying techniques only. Those who participate in Lean or Six Sigma training and have been assigned an improvement project should realize that skills like project management and managing change are critically important elements. These elements are specifically discussed in chapters 2 and 3.

Different roadmaps can be applied to manage a Lean project, such as the PDCA roadmap (Plan – Do – Check – Act), the Value Stream Map or the DMAIC roadmap. Chapter 4 is about creating a solid fundament to become a Lean organization. Techniques like 5S, standardization and implementing a quality management system are the focus in this phase. Chapter 5 is about creating a Continuous Improvement culture. Daily standup meetings and executing many small improvement projects (Kaizen events) is the approach followed in this phase. Chapter 6 is about creating stable and efficient processes by mapping the Value stream, reducing Waste and by implementing the Flow and Pull concepts. At the beginning of this chapter an overview of recommended Lean tools is provided that can be used within a Lean DMAIC approach. This overview is a good starting point to help you out. But keep in mind that each improvement project will be different and selecting the proper tools for a certain problem in a certain phase is something you learn with experience.

Typical objectives of a Six Sigma project are to improve process ‘Capability’ (Cpk) in order to reduce performance outside specification. The focus of these type of projects is about reducing variation. Six Sigma projects are very much data driven. This requires additional techniques which are reviewed in chapter 7. Without data available, it will be very difficult to execute a project on this level.

How to bring your organization to a higher maturity level

Those who are involved to develop the performance of the entire department or organization may use this book to develop an improvement policy and to learn which elements are important to address in order to involve the entire organization in the policy deployment process. Chapter 2 reviews the development and deployment of a continuous improvement strategy. In this chapter, we will review how to define a clear strategy (True North), Lean leadership, management of change and explain how to create a Continuous Improvement culture. Defining the current maturity level of the organization is the starting point here. The Continuous Improvement Maturity Model is discussed in paragraph [1.1.3]. At the end of Chapters 4 to 8, an assessment is presented that can be used to define the maturity at a certain CIMM-level.

The main role of the Champion, Deployment leader or (Master) Black Belt is to develop the improvement strategy and to lead the deployment of the strategy. Hoshin Kanri [paragraph 2.2.3] is a valuable tool to support the process of policy deployment. (Master) Black Belts support and coach Green and Black Belts in execution of the improvement project. Guidelines are given in the first part of this book that will help you and your organization from the very beginning until World Class performance.

Preface

What would it be like to work in an organization where everything is predictable and runs smoothly? How would it be if you as a quality employee or process owner no longer have to deal with errors or incidents? How would it be for a manager if the strategy is clear, everyone knows what his or her contribution is and there is enough time for all projects? Unfortunately, reality is very different for most organizations. Even though organizations often look beautiful from the outside, there is still a lot to improve and processes are not nearly as stable and predictable as you would like.

Many organizations currently apply Lean Six Sigma as a holistic approach for continuous improvement. This approach is supplemented with principles and techniques from other improvement methods such as Total Productive Maintenance (TPM), Theory of Constraints (TOC) or Agile. It is the combination of different methodologies that helps organizations best.

It is important to realize that applying improvement techniques is only one side of the story. The creation of a Continuous Improvement culture is also important. This covers matters such as strategy, leadership, organizational structure, change management and team development. This is also referred to as the 'Soft' side of continuous improvement, but in practice this is often the most difficult aspect. It is necessary to make people work in a different way. However, changing the organization is not easy. People, in general, do not like change unless they see the benefit of the change. Implementing an operational excellence successfully is a major challenge for management and Belts. This book has been a guidance for thousands already; it is useful as a guideline for selecting the right projects, successfully executing these projects and to lead change within an organization.

I want to thank everyone who helped with reviewing this book. In total, around 25 experts from various companies and organizations made a valuable contribution in the past years. I would also like to thank the people who have contributed to the development of the 'Continuous Improvement Maturity Model' that has already helped many organizations in determining their improvement strategy. This model has been the basis for this book.

ir. H.C. Theisens

Master Black Belt Symbol B.V. (the Netherlands)

“It always seems impossible until its done.”

— Nelson Mandela —

1 World Class performance

World Class Performance is the highest level that an organization can reach within its own sector by developing new products and services that exceed customer expectation in a very short time-to-market. In order to achieve World Class Performance, organizations need to develop and produce products and services that are the best in the world. Its production and delivery process should perform at the level of Operational Excellence and the organization should continuously improve its processes.

World Class Performance is not something that you can realize in a few months. Unfortunately, there is no golden roadmap to success. Working to become World Class is a long and bumpy journey with successes and setbacks. There will be roadblocks on the winding way to the top of the mountain. It is very unlikely that all people involved will reach the summit. Some will fall behind while others will drop off. Although this is not a joyful perspective, it is a path that must be followed if you want to stay competitive in the future as most of your competitors work on Continuous Improvement.

1.1 Continuous Improvement

"We can't manage to deliver on time; We suffer a lot from errors and internal rejection; The involvement of employees in continuous improvement is not up to standard; We suffer a lot from disruptions in our supply chain; Our customers' requirements are becoming increasingly complex; We have no control over the work in process; We would like to involve our suppliers in our continuous improvement process."

Maybe you recognize some of the aforementioned issues within your organization or maybe other issues are at play. Each organization has the challenge to provide products and services with maximum value for their customers at the lowest possible cost and with the shortest delivery time. In order to achieve this, organizations must constantly work to improve their processes and develop the organization. Continuous Improvement is not only about improving the processes, but also about developing the organization and the employees. In this section we will review the culture, values, principles and roles within a Continuous Improvement organization.

1.1.1 Continuous Improvement history

In the last few years, the Lean and the Six Sigma philosophies have merged to Lean Six Sigma as a holistic view and approach for continuous improvement. Lean Six Sigma is a combination of Lean Manufacturing and Six Sigma and uses a combined set of both Lean and Six Sigma tools. It also embraces best practices from other improvement methods like Total Quality Management, Total Productive Maintenance and Theory of Constraints. Lean Six Sigma includes a common goal of Lead Time reduction, operational cost reduction and overall quality improvement. Combining the synergies of Lean and Six Sigma provides organizations with greater speed, less variation and more bottom-line impact. Lately, many organizations have also added Agile to their continuous improvement strategy.

The origin of managing quality goes back thousands of years. The construction of the great pyramids of Cheops in 2560 BC could not have taken place without Quality Management. Even today, people are still amazed at how the 5.5 million tons of limestone, 8,000 tons of granite and 500,000 tons of cement were used in the construction of the Great Pyramid (Romer, 2007). The accuracy of the pyramids is such that the four sides of the base have an average deviation of only 58 millimeters in length (Cole, 1925). The base is horizontal and flat up to ±15 mm (Lehner, 1997). The ratio of the circumference to the height is equal to 2π with an accuracy higher than 0.05%. "Although the ancient Egyptians could not define the value of π precisely, we can conclude that they actually used it in practice" (Verner, 2003).

The four industrial revolutions

In the past two centuries, development has progressed rapidly and four industrial revolutions can be distinguished. The first industrial revolution (1780-1850) is characterized by the steam engine. In 1777, James Watt's first steam engine was set up in a quarry in Cornwall. With the arrival of the steam engine, it became possible to replace work done by people, animals or windmills with a machine. This period marks the transition to new production processes.

The second industrial revolution (1850-1970) is also known as the technological revolution. The best-known example of the second industrial revolution is Ford's production line. Henry Ford designed his first running assembly belt in 1913 for the T-Ford which unleashed a revolution in manufacturing. It was Henry Ford's goal to "Set the world on wheels" and produce an affordable car for the general public, with the simplest design at the lowest possible cost. This assembly line became the benchmark for mass production methods worldwide. The introduction of the diesel engine in 1894, as an alternative to the steam engine, made an important contribution to the further development of production lines. Furthermore, the First and Second World War had a major influence on the development of mass production.

The third industrial revolution (1970-2010) is characterized by the introduction of the computer in the 1950s. Digitization made it possible to transfer data from analogue data carriers to digital data carriers. This allowed information to be shared and consulted easily and anywhere in the world. Partly because of this, it became possible for companies to globalize their business. Production and delivery could take place worldwide, so that economies of scale were realized. Examples of the third industrial revolution are the use of 'Programmable Logic Controllers' (PLCs), 'Computer Aided Design & Manufacturing' (CAD / CAM), mechatronics and robotics. The first applications of robotics have been made in the Automotive industry, where, among other things, welding activities and assembly work is carried out by robots.

Currently we are at the beginning of the fourth industrial revolution (i4.0). The digital revolution, 'Internet of Things' (IoT), technology platforms and artificial intelligence play an important role in this era. The development of new technologies introduces a service mentality in the industry, similar to the development of Smartphones and Apps. Systems, machines and goods will communicate with each other about logistics, operations and performance while the human interference with the product will be reduced. Disciplines such as planning, engineering, delivery, maintenance, quality and service are further integrated. Industry 4.0 will drastically change the world in the coming decade and will require new business models. This is a threat to those who stand still while offering opportunities for those who are moving.

History of Total Quality Management (TQM)

The concept of quality, as we think of it now, first emerged during the Industrial Revolution. Previously, products had been made from start to finish by the same person or team of people, with handcrafting and tweaking the product to meet 'quality criteria'. Mass production brought huge teams of people together to work on specific stages of production where one person would not necessarily complete a product from start to finish. In the late 19th century, pioneers such as Frederick Winslow Taylor and Henry Ford recognized the limitations of the methods being used in mass production at the time and the subsequent varying quality of output. Henry Ford (1863 – 1947) was the founder of Ford Motor Company and sponsor of the development of the assembly line technique of mass production. Many would say that Lean started with Henry Ford. Initially this was more a Lean initiative than a quality management initiative. Each T-Ford was supplied in any desired color (as long as it was black) and was supplied with a tool box in the trunk. Later, Ford emphasized standardization of design and component standards to ensure a standard product was produced. Management of quality was the responsibility of the Quality department and was implemented by inspection of product output to 'catch' defects.

Walter Andrew Shewhart (1891 – 1967) was an American physicist and known as the father of statistical quality control. He has set the basis for the control chart and bringing the production process into a state of ‘Statistical Process Control’ (SPC). He is also the founder of the PDCA circle (then called PDSA). The application of statistical control evolved during World War II where quality became a critical component of the war effort.

Sir Ronald Aylmer Fisher (1890 – 1962) was an English statistician. According to some, he created the foundations for modern statistical science. His important contributions to statistics include the ‘Analysis of Variance’ (ANOVA) and ‘Design of Experiments’ (DOE).

After World War II, the Japanese welcomed the input of Americans Joseph M. Juran (1904 – 2008) and W. Edwards Deming (1900 – 1993). Juran was a management consultant and engineer. He wrote several influential books on quality management. This was illustrated by his ‘Juran Trilogy’, which is composed of three managerial processes: quality planning, quality control and quality improvement. He was one of the first to write about the Cost of Poor-Quality (COPQ). He is also known for the ‘Vital few versus Useful many’ statement, also known as the Pareto tool or ‘80/20 rule’. Deming was an American statistician after whom the Deming Prize for quality is named (1951). Deming proclaimed the PDCA circle for solving problems from Shewhart. Deming is regarded as having had more impact upon Japanese manufacturing and business than any other individual of Japanese heritage. He was only just beginning to win widespread recognition in the U.S. at the time of his death in 1993.

Quality management in the United States came much later as a direct response to the quality revolution in Japan. By the 1970s, U.S. industrial sectors such as automobiles and electronics had been broadsided by Japan’s high-quality competition. The U.S. response became known as ‘Total Quality Management’ and consists of continuously improving the ability to deliver high-quality products and services to customers. TQM typically relies heavily on the previously developed tools and techniques of quality control. TQM enjoyed widespread attention during the late 1980s and early 1990s before being overshadowed by ISO 9001, Lean Manufacturing and Six Sigma. Many of its principles and tools, however, are still present in today’s quality management programs.

History of Kaizen

Masaaki Imai (born 1930) is a Japanese organizational theorist and management consultant, known for his work on quality management. Masaaki Imai wrote the groundbreaking book ‘Kaizen: The Key to Japan’s Competitive Success’ (1986). Through this book, the term Kaizen was introduced in the western world. In the same year, he founded the Kaizen Institute Consulting Group (KICG) to help Western companies introducing the concepts, systems and tools of Kaizen.

“It does not matter how slowly you go as long as you do not stop.”

Confucius

The Japanese word Kaizen means ‘Change for better’, in the same sense as the English word ‘Improvement’. Another definition of Kaizen is ‘To disassemble and put together again in a better way’. Today Kaizen is recognized worldwide as an important pillar of Continuous Improvement, especially small incremental improvements at the shop floor, also called the ‘Gemba’.

History of Total Productive Maintenance (TPM)

Within machine intensive factories such as food, pharma, chemical and automotive, ‘Total Productive Maintenance’ or ‘Total Productive Management’ (TPM) is a commonly used Continuous Improvement approach. The method focuses on the effective and efficient use of equipment by avoiding breakdowns, delays and machine-related rejections. This is achieved to ensure that more is produced using existing machinery.

Preventive maintenance was developed by U.S. factories that supplied the military during the Second World War. After the war, preventive maintenance was introduced in Japan (1951). Nippon Denso (Toyota Group) was the first company to introduce preventive maintenance plant wide (1960). Nippon Denso was the first company to receive the prestigious prize from the ‘Japanese Institute of Plant Maintenance’ (JIPM) for the implementation of TPM. In 1987 the first real TPM initiative in the U.S. was developed by the Kodak's Tennessee Eastman facility.

History of Lean

Lean focuses on stability and elimination of Waste. Lean Manufacturing began with Henry Ford who was the first person to truly integrate an entire production process. He did this by lining up fabrication steps in process sequence using Standardized Work and interchangeable parts. Ford called this ‘Flow’ production (1913). The problem with Ford’s system was its inability to provide variety. As mentioned, the Model-T was limited to one color and to one specification. As a result, all Model-T chassis were essentially identical until the end of production in 1926.

In the 1930s, and more intensely just after World War II (1950), Kiichiro Toyoda, Taiichi Ohno and others at Toyota started looking at Ford’s situation. While Ford was producing 8,000 vehicles per day, Toyota had produced only 2,500 vehicles in 13 years. Toyota wanted to scale up production but lacked the financial resources required for the huge quantity of inventory and subassemblies as seen at the Ford’s plant. What impressed Ohno even more than the visit to the Ford factory was the visit to the ‘Piggly Wiggly’ supermarket. At that time, Japan did not have a supermarket where customers could pick up their products themselves and where the stock on the shelves was frequently replenished from the warehouse. This process inspired Ohno to set up production in the Toyota factory in the same way and only produce what the next process needed. Toyota developed its famous 'Toyota Production System' (TPS) to avoid the problems and high costs of large inventories. TPS includes some of Ford's ideas, but also incorporated the philosophy of 'Just In Time' (JIT) and 'Pull', based on Piggly Wiggly's supermarket concept.

In 2008, Toyota became the world’s largest auto manufacturer in terms of overall sales. Over the past two decades, Toyota’s continued success has created an enormous demand for further knowledge concerning Lean Thinking. There are literally hundreds of books, papers and other resources currently available to this growing Lean Management audience.

The Lean thought process is thoroughly described in the book ‘The machine that changed the World‘ (Womack and Jones, 1990) and in a subsequent volume, ‘Lean Thinking’ (1996), which specifically describes the five Lean principles. The concepts of Lean have been widely distributed around the world. Lean principles and tools are being applied in production, logistics and distribution, services, trade, health, construction, maintenance and even in government with the common goal of reducing turnaround time and operational costs while at the same time improving quality. One of the most important activities within Lean programs is the identification and elimination of Waste, also called ‘Muda’. Within a value stream eight types of waste can be distinguished: over-production, waiting, transport, over-processing, inventory, movement, defects and unused expertise. We will review value and waste in more detail in Chapter [6].

History of Six Sigma

It was 1979 when Motorola was engaged in a painful process of self-discovery and began to realize the extent to which it had lost market share in many key segments, including televisions, car radios and semiconductors. That same year, during a company officers' meeting, Motorola's President and CEO Bob Galvin asked the question, ‘What is wrong with our company?’ Many officers and corporate chiefs began voicing the standard, politically correct excuses. Blame it on the Japanese, blame it on the economy in general, blame it on weak research and development. While all this was going on, a lone voice in the back of the room spoke up loudly and clearly saying, ‘I will tell you what is wrong with this company... Our quality stinks!’ That voice was Art Sundry, a sales manager for Motorola's most profitable business at the time. Everyone thought he would be fired for this ballsy assertion. How could someone make such a statement in such horrible and turbulent times? Surely Motorola had always been and still was among the world's best manufacturers, regardless of the hard times it was facing (Mikel J. Harry). Motorola was at a major turning point in its history. It could continue on a downward trend relative to competitors, or it could break that trend with an ambitious culture change and quality improvement initiative. This was the moment Motorola began its search for ways to eliminate Waste and improve its quality. Two Motorola engineers, Bill Smith and Mikel Harry, were credited for their pioneering work aimed at improving processes and for finding and resolving defects. Their work on process capability, tolerance, critical-to-quality characteristics and design margins laid much of the foundation for what today is called Six Sigma.

Six Sigma focuses on capability and reducing variation. Recognizing a link between fewer defects and lower costs, Motorola set out to incorporate this connection into their manufacturing processes, which they called ‘Six Sigma’. Motorola's Six Sigma quality program was so radical that managers were forced to think about the business differently. Applying these concepts to Motorola's electronics manufacturing delivered more than $2.2 billion in benefits within four years and $16 billion within 15 years. Motorola's CEO Bob Galvin cited the work of Bill Smith and Mikel Harry in achieving these benefits.

One of the companies that embraced the Six Sigma philosophy was General Electric (GE). GE Chairman, Jack Welch was told that Six Sigma could have a profound effect on GE’s quality. Although skeptical at first, Welch initiated a huge campaign called ‘the GE Way’. He made an official announcement and launched the quality initiative at GE's annual gathering of 500 top managers in January 1996. Welch described the program as ‘The biggest opportunity for growth, increased profitability and individual employee satisfaction in the history of the company’. His goal was to take quality to a whole new level and to become a Six Sigma quality company, producing nearly defect-free products and providing nearly defect-free services and transactions. Welch’s intention was to infuse quality into every corner of the company. He later called Six Sigma ‘the most difficult stretch goal’, but also suggested that it was ‘the most important initiative GE had ever undertaken’. General Electric saved more than $12 billion with Six Sigma in the five years after implementation.

1.1.2 Continuous Improvement values and principles

In the previous paragraph we have discussed that within the domain of Continuous Improvement, various methodologies have been introduced over the past few decades. Each of these methodologies contains a certain set of tools and techniques, but before we review these, it makes sense to first review their values and principles. In this paragraph, we will discuss the values and principles of the most important methodologies like Kaizen, Lean, Six Sigma and Agile. Although there is no common, global set of values and principles of Continuous Improvement, there are certainly similarities between them. For instance, all have a strong foundation of improving customer value by involving the entire organization in the Continuous Improvement efforts.

Kaizen principles

Kaizen is about teamwork and empowerment. Participation is voluntary, but not without commitment. It is a bottom-up approach and encourages the involvement of all employees. As such, Kaizen is an approach that is often used to create a culture of Continuous Improvement. Kaizen is carried out at the place where it happens: the shop floor or ‘Gemba’. When problems occur, you should ‘Go to the Gemba’ rather than looking for solutions behind a desk or in a meeting room. Problems on the shop floor are experienced mostly by employees on the shop floor, rather than by managers sitting behind spreadsheets and PowerPoints. Employees on the shop floor very often have good ideas for solutions and improvements. The only issue is that managers forget to ask them and involve them.

The five foundations of Kaizen are listed in Table 1.

Kaizen principle

Description

Teamwork

Create commitment for all

Personal discipline

Follow the standards

Better moral

Ensure good work morale

Quality circle

Follow the PDCA improvement cycles

Suggestion for improvement

Be receptive to new ideas and suggestions

Table 1 – Kaizen principles

Lean principles

Womack, Jones and Roos published two successful books entitled ‘The machine that changed the World’ (1990) and ‘Lean Thinking’ (1996) [21.]. Both books address the revolution in manufacturing represented by the Toyota Production System of the Toyota Corporation of Japan. They compared this way of working with the traditional mass production system that was used by other companies in the Western world. They described in their book ‘Lean Thinking’ the following five principles:

Lean principle

Description

Value

Define what is of value to the customer

Value stream

Identify the value stream and eliminate Waste

Flow

Create a constant flow

Pull

Deliver based on demand

Perfection

Continuously improve the process

Table 2 – Lean principles

We will describe each of these five principles briefly. In Chapter 6 we will review them in more detail and also show how applying these principles will result in shorter Lead Times and better quality.

1 – Value

The first principle is to define who your customer is and understand what the meaning of value is for your customer. Lean takes the customer as the starting point because in the end, satisfied customers are the reason for the existence of your organization and your job. But who is your customer? Sometime it is very clear to define your customer, but sometimes it is less obvious. Once you can point out who your customer is, it is also important to be able to define customer value, also called the ‘Voice of the Customer’.

2 – Value stream

The value stream is the operational process, or all concatenated activities that ultimately lead to the product or service as delivered to the customer. Not every activity can be classified as value-adding. A value adding activity must meet the following requirements: the customer is willing to pay for it; it must be performed correctly the first time and the activity must alter the product or service in a certain way. If one of these criteria is not met, the activity is classified as a non-value-adding activity or Waste. One of the main objectives of Lean is to identify and eliminate Waste.

3 – Flow

Lean is focused on getting the right things in the right place at the right time in the right amount to achieve a perfect Flow. The easiest way to observe Flow is to take a look at the shop floor. At one side you see orders entering the shop floor (e.g. parts, components, sick patients, clients, bins, trucks, requests, etc.)., while at the other side you see finished products leaving the shop floor (e.g. finished product, healthy patients, products, passports, answers, etc.). At the shop floor itself, employees and equipment are busy adding value to the products or services. The more products are idle or waiting, the less Flow is present. If no Flow is experienced, there is no Lean.

4 – Pull

Imagine what would happen if each step in the process produces the amount that it is capable of, without accounting for what is actually needed. This would result in true chaos with huge piles of stocks and work in process between process steps. To prevent this, it is necessary to work according to the ‘Just In Time’ principle. This means that activities only take place at the right time and in the right amount. This can be achieved by applying Pull. Pull means that the subsequent process step determines the amount to be delivered by the previous process step. This starts with the customer who Pulls first. Working according to Pull instead of Push will prevent piles of work and overproduction.

5 – Perfection

Lean focuses on continuous improvement of processes through the implementation of many small improvement projects, also known as Kaizen events. Typical for this type of project is the elimination of Waste and the reduction of Cycle Times. The continuous execution of Kaizen projects is an important element of the fifth Lean principle. Many small improvement steps will result in a major improvement in the end.

In addition to the main five principles, Dr. Jeffrey Liker, a University of Michigan professor of industrial engineering, published ‘The Toyota Way’ [14.] in 2004. The book describes the ‘Toyota Production System’ (TPS). TPS borrowed ideas from Ford but added the ‘Just In Time’ (JIT) philosophy and the ‘Pull Concept’ to address the issues of high cost associated with Ford’s large inventories. The Toyota Production System is an integrated system that comprises its management philosophy and practices. In his book Liker calls this "a system designed to provide the tools for people to continually improve their work”. Liker defines 14 principles, organized in four sections.

Figure 1 – Toyota Production System (Liker, 2004)

Philosophy – ‘Base your strategy on a long-term philosophy’:

1.    Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

Process – ‘The right process will produce the right results’:

2.    Create a process flow to surface problems.

3.    Use Pull systems to avoid overproduction.

4.    Level out the workload (Heijunka).

5.    Stop when there is a quality problem (Jidoka).

6.    Standardize tasks for Continuous Improvement.

7.    Use visual control so that no problems are hidden.

8.    Use only reliable, thoroughly tested technology.

People & Partners – ‘Add value to the organization by developing your people and partners’:

9.    Create leaders who live the philosophy.

10.  Respect, develop and challenge your people and teams.

11.  Respect, challenge and help your suppliers.

Problem Solving – ‘Continuously solving root problems drives organizational learning’:

12.  Go see for yourself to thoroughly understand the situation.

13.  Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly.

14.  Become a learning organization through relentless reflection (Hansei) and Continuous Improvement (Kaizen).

Within Lean, identifying and eliminating waste is one of the most important activities. Wastes are also referred to as Muda. We distinguish eight forms of Waste, which are listed in the figure below. In Chapter 6 we will discuss in detail a number of techniques to eliminate Waste.

Figure 2 – Muda: 8 types of Waste

Six Sigma principles

The main focus of Six Sigma is to reduce variation in order to improve the quality of a product or process. Variation is everywhere. A driver has variation when parking his car; the arrival times of trains have variation; the human race shows enormous variation and products extracted out of a process are never the same. Every process demonstrates variation. The less variation a process has, the better we can predict its outcome and control the level of defects produced. Therefore, Six Sigma has a strong focus on reducing variation. If we want to base our decisions within problem-solving projects on facts, we have to know how to analyze and interpret data.

The difference between the so-called ‘Old view’ of variation and the ‘Modern view’ of variation is shown in Figure 3. The old approach is about approving the product when it meets the specification and rejecting the product when it does not meet the specification. There were only good and bad products. A much better way of looking at products meeting specification is to realize that a product that is exactly in the middle of the specifications is better than a product that is very close to one of its specification limits. Furthermore, a process that demonstrates little variation is better than a process that demonstrates a lot of variation.

Figure 3 – Quality (Old view versus Modern view)

Genichi Taguchi (1950) claimed that customers do not necessarily define quality as Good or Bad, but that there is a certain optimum. Customers can recognize a deviation from this optimum, so one product may be slightly better (or worse) than the other. Deming was a supporter of this philosophy and striving for the optimum was one of the foundations for continuous improvement. This philosophy is also completely in line with the Six Sigma philosophy, where reducing variation is the primary focus.

Taguchi further claimed that poor quality costs increase as products deviate from the optimum. Adverse costs can occur even when a product conforms to the design but is not nominal. The 'Taguchi Quality Loss Function' (QLF) is the graphic representation and shows that when a critical quality characteristic deviates from the target value, this leads to a decrease in the quality experience for the customer, called ‘Loss’. Taguchi claimed that tolerance specifications are determined by engineers and not by the customer.

Taguchi's Quality Loss Function includes the following principles:

•    A deviation from the optimum leads to a loss for the customer.

•    A loss for the customer leads to costs for the organization.

•    Quality can be improved by reducing variation.

•    Costs can be reduced by reducing variation.

Figure 4 – Taguchi Quality Loss Function

Six Sigma is a long-term, forward-thinking initiative designed to fundamentally change the way organizations do business. It is first and foremost a ‘Business improvement method’ that enables companies to increase profits by streamlining activities, improving quality and eliminating defects or mistakes in everything an organization does. While traditional quality programs have focused on detecting and correcting defects, Six Sigma encompasses something broader. It provides specific methodologies to recreate the process in a way that defects are significantly reduced or even completely prevented [8.].

‘Critical to Quality’ measures (CTQs) are the key characteristics of a product or process which performance standards or specification limits must meet in order to satisfy the customer. CTQs can be measured and its data can be analyzed. A measurement that falls outside the CTQ specification limits is called a defect. A ‘defect’ does not necessarily mean that the product is damaged or broken, but that the CTQ is outside its specification. Products that perform outside their specification can still be functional, but it is not perfect. The objective of Six Sigma is to reduce the variation of the CTQ measures by identifying and removing the causes of variations. This can be done in both manufacturing and business processes.

The maturity of a process can be described by a Sigma rating, indicating the yield or percentage of defect-free products it creates. A process performing at a Six Sigma level means that 99.99966% of the products produced are within specification and 0.00034% are outside specification (defective). Processes that perform at the level of 6 Sigma are assumed to produce less than 3.4 defects per million opportunities (DPMO). Six Sigma's implicit goal is to improve a process, but not with the intention that in all cases the above-mentioned level of 6 sigma (eq. to 3.4 DPMO) should be achieved. Actually, the Six Sigma philosophy is to realize breakthroughs in quality performance. A process that originally operated at the level of 2 sigma (equal to 31% defective or 308,538 DPMO) and after a Six Sigma project now operates at the level of 3 sigma (equal to 6.7% defective or 66,807 DPMO) can still be called a Six Sigma improvement project because a significant improvement has been achieved.

Six Sigma is more sophisticated than applying simple problem-solving tools. Six Sigma applies statistical tools to identify and remove causes of variation. For applying statistical tools, you need to keep in mind the statistical fundamental rules. Most noteworthy is that you have to be very careful about how you apply statistical tools when the set of data represents an instable process. For instance, to apply a normal distribution analysis on a set of data that contains outliers from an instable process or measurement is not allowed. The first step in a breakthrough process should always be to investigate the stability of the data set and the process performance over time. The Six Sigma toolbox contains a number of tools that can be applied to visualize and analyze the stability performance of a process. When the defects are mainly caused by an instable process, the process of searching for its root causes is more likely to involve the application of basic problem-solving tools. A proper maintenance program or a Lean or Kaizen approach should be applied in order to remove causes for instability before continuing with a variation reduction initiative with sophisticated Six Sigma tools.

Agile principles

Within the field of project management and Continuous Improvement, Agile is one of the biggest revolutions in the last two decades. In 2001, a group of 17 software developers published the Agile Manifesto in which the starting points of Agile were elaborated. The Agile Manifesto sought to change the traditional software development approach, drastically reduce development time and improve quality. Nowadays, Agile is not only used in software development but has become one of the most practiced project management approaches. We will describe the four fundamental Agile values briefly:

1.    ‘Individuals and Interactions’, over processes and tools.

It is the people who respond to business needs and customer requirements, which should drive the development process. If the process or the tools would drive the development process, the team is less responsive to change and less likely to meet customer needs. Communication is an example of the difference between valuing individuals versus process. In the case of individuals, communication is fluid and happens when a need arises. In the case of process, communication is scheduled and requires specific content.

2.    ‘Working Products’, over comprehensive documentation.

Within traditional project management, an enormous amount of time is spent on specification, requirements, interface design, testing, approvals, etc., When all preparation work is finished the execution can start. This is called the Waterfall approach. In the execution phase there is little room for adapting specifications. Within Agile, requirements and documentation are still necessary, but its aim is to avoid working out all the details before the development work can actually start. Within Agile, user stories are utilized which describe the minimum requirements for the team to start the development process. The aim is to deliver a first working version of a product or service at an early stage. This is called a ‘Minimum Viable Product’ (MVP). In this way, feedback is quickly obtained from the customer or users. This feedback is important for determining the most important next steps.

3.    ‘Customer Collaboration’, over contract negotiation.

Within the Waterfall approach, it is common that customer requirements are discussed prior to the start of the development process and at the point the product is completed. During the development process, there is little room to change any requirements or add functionality. Within Agile, the customer is heavily involved throughout, giving room for changing requirements along the development process.

4.    ‘Responding to Change’, over following a plan.

Within the Waterfall approach, any change of requirements during the development process is a burden and costs are associated with it. So, all parties are inclined to avoid any change. The idea is to develop and to follow a very detailed and elaborate plan. Within Agile, short development loops are used, called ‘Sprints’. At the start of each Sprint, requirements and functions are agreed between the customer and the development team. Priorities can be shifted from iteration to iteration and new features can be added. The belief within Agile is that changes always improve the product rather than it disturbs the process.

Within an Agile organization, the customer is the focus of the development process; employees have a positive attitude; changes are seen as a chance rather than a threat and activities should be aligned with business needs. There is a good balance between standardized work and the ability to respond to special customer wishes. Instead of a large inert organization and stuck employees, self-organizing teams will improve agility and speed within the organization. These teams have their own result area, are accountable and empowered. Techniques that contribute to an Agile organization are Short Interval Management and Scrum [section 3.2.4].

Principles behind the Agile Manifesto:

(Source: Agilemanifesto.org)

1.    Satisfy the customer:

Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.

2.    Welcome change:

Welcome changing requirements, even late in development. Agile processes harness change for the customer's competitive advantage.

3.    Deliver frequently:

Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.

4.    Work together:

Business people and developers must work together daily throughout the project.

5.    Trust and support:

Build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done.

6.    Face-to-face conversation:

The most efficient and effective method of conveying information to and within a development team is face-to-face conversation.

7.    Working product:

A working product is the primary measure of progress.

8.    Sustainable development:

Agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a constant pace indefinitely.

9.    Continuous attention:

Continuous attention to technical excellence and good design enhances Agility.

10.  Maintain simplicity:

Simplicity--the art of maximizing the amount of work not done--is essential.

11.  Self-organizing teams:

The best architectures, requirements, and designs emerge from self-organizing teams.

12.  Reflect and adjust:

At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly.

Lean versus Agile

Because nowadays Lean and Agile are the most common applied improvement methodologies, we will discuss their similarities and differences. Both methodologies have a clear customer focus (‘Customer Value’ and ‘Satisfy the customer’). Nothing is more important than meeting customer requirements and expectations. Products delivered must create value for the customer which is the most important goal of development and production processes. Both methodologies instruct that regular checks of the results and working method should be carried out in order to evaluate possible improvements and simplification of the process (‘Continuous Improvement’; ‘Continuous attention’; ‘Reflect and adjust’; ‘Maintain simplicity’). Both methodologies incorporate stand-up meetings with the team around visual management boards and they work according short interval management (‘Kaizen’; ‘Face-to-face conversation’; ‘Self-organizing teams’). Within Lean these efforts are called Kaizen events and within Agile these are called Sprints. Also, both methodologies expect the delivery of objects in the least possible number of lots because it is the most efficient way and because it will reveal quality issues at an early stage (‘Deliver frequently’). Within Lean this is called ‘One Piece Flow’, while within Agile this is called a ‘Product Increment’. Another similarity between Lean and Agile is the strong focus on employee development and working in teams. Both emphasize that development of people is more important than applying tools (‘Team-work’; ‘Work together’; ‘Trust and support’).

But Lean and Agile are also very different. The main difference is that Agile concerns the optimization of the development process, while Lean concerns the optimization of the operational process. In most cases the development process concerns one unique product, while the operational process concerns a series of products. Within a Lean environment the end-goal is clearly defined while within an Agile environment the end-goal is not. The focus within a Lean environment is to deliver as many high-quality products or services as possible in the most economical way possible. Within a Lean environment the product or service and the operational process are predefined, and employees working in the delivering process are well trained and follow standard work instructions. Even if we consider different variants of the product, they are all predefined. Within a Lean environment it is the objective to avoid variation and iterations, while in an Agile environment there is a lot of room to discover and investigate to come up with the best solution. During the Agile development process, factors are continuously reviewed and changed according to new information or feedback. Lean principles and tools are being applied in environments like production, logistics, services, healthcare and in government, with the common goal of reducing Lead Time and operational costs while at the same time improving quality. The Agile methodology finds its origin in the creative and development environment, like software and new product development.

We can therefore not say that one methodology is better than the other. The question that needs to be asked is where we should apply Agile and where we should apply Lean? Agile is the most appropriate methodology to apply to the development processes, while Lean is the most appropriate methodology to apply to operational processes. Since, most organizations have both types of processes: development processes and delivery processes, it can benefit from both methodologies. A car manufacturer also needs to develop new cars and an IT-organization benefits from standardized processes for providing services and administration. Take a look within your organization and review where you should apply Lean and where you should apply Agile.

Flipped pyramid

Traditional organizations are hierarchies. Authority and decision-making power are concentrated at the top. Within traditional organizations, directions flow primarily from top to bottom; the top management establishes the objectives, guidelines, information, timing and budgets. This top-down approach may be convenient in some ways, but it also obstructs organizational agility, communication, creativity and the capacity for solving problems.

It appears that traditional organizations lack the bottom-up approach, which is a roadblock for creating a powerful Continuous Improvement organization. Change cannot be sustained for a longer period of time if managers are the only ones to ever lead improvement initiatives. Even a top-down approach should encourage and involve all people of the organization in the improvement process (Kotter, 1996). By encouraging the bottom-up in the organization, collaboration will become much more efficient and the workforce will work together more productively. The bottom-up approach will also increase the motivation of employees as they are empowered, involved, responsible and appreciated.

Organizations that truly embrace Lean have long abandoned the traditional top-down approach and have adopted the Lean leadership model of the ‘Flipped pyramid’. They have implemented a bottom-up approach in a successful attempt to mobilize the full capacity of the workforce. The inverted pyramid is a metaphor for a reversal of traditional management practices. Employees who are the closest to clients or operational processes are placed at the top and managers at the bottom. The workforce is empowered with greater decision-making authority and freedom of action. The manager’s role becomes the one of a facilitator and coach.

This bottom-up approach will improve the agility and productivity of problem solving, especially for so-called ‘Low-hanging fruit’ projects where there is no need for management involvement to identify and implement solutions. Problems are solved by the employees who are experiencing the problems every day. It is in their benefit that these problems are solved because it makes their lives easier. Very often it appears that employees think creatively and already have ideas on how to solve problems, but in traditional organizations the issue is that they are not encouraged and empowered to do so. Another advantage of the bottom-up approach is that it involves the entire organization rather than having projects done by a small group of senior staff.

Figure 5 – Dual Pyramid model

Flipping the organizational pyramid is difficult for both sides of the pyramid. It requires a behavioral change from everybody. The manager is expected to communicate objectives and values rather than activities and detailed planning. An effective manager learns to trust subordinates and rely on their ability to achieve organizational goals. A proactive input and execution, as well as decisions about the course of action, are taken by the workforce rather than by the manager. The workforce is encouraged and empowered to develop the necessary steps and to make their own choices of techniques to achieve the expected results.