Measure Twice, Cut Once

It’s all in the preparation, right? So, if your organization is looking to Lean Six Sigma to improve, say, supply chain effectiveness, Bain & Company suggests that you first perform some upfront diagnostics to make sure you’ll get the improvements you’re after.

In a Bain survey of 184 companies, 80 percent indicated that their Lean Six Sigma programs did not lead to the anticipated value. While companies such as General Electric, Dell, Xerox, and Johnson & Johnson have used Lean Six Sigma to their advantage, many of these other companies actually found that their teams of Lean Six Sigma experts (“black belts”) actually slowed down performance improvement efforts.

One of the key problems Bain identified was the failure of management to identify improvements that would yield the largest results – particularly when the high-impact problem areas were not obvious. Too often, companies give their team of black belts leave to attack all problems in an undifferentiated, unprioritized manner.

Bain prescribes a three-step “diagnostic x-ray” to be performed by a small team of black belts to identify key opportunities for improvement. The steps are:

1. Enterprise Value Stream Mapping, mapping an enterprise’s primary processes to uncover the largest opportunities to reduce cost by reducing wasted time and materials
2. Benchmarking, measuring the performance of processes against internal and external benchmarks to measure shortcomings and to set performance improvement targets
3. Prioritizing, identifying the process improvements likely to yield the greatest results when the Lean Six Sigma methodology is applied
   

Bain offers case studies of four companies that took this thoughtful approach to Lean Six Sigma implementations, including one whose diagnostic x-ray showed the company had too many suppliers and whose Lean Six Sigma work resulted in 40 percent improvement of inventory in two years.