Lean Thinking: As the name implies, it is a mindset — a way of viewing the world.

- Lean is about focus, removing waste, and increasing customer value.

- Lean is about smooth process flows, doing only those activities that add customer value and eliminating all other activities that don’t.

- Adding value is another way of saying generating revenue.

- If it doesn’t generate revenue then it must add cost, not value.

- Sounds easy doesn’t it, after all, this is what we do every day… or is it? Let’s see.

- Lean Thinking is about smooth process flows, doing only the things that add customer value and eliminating other activities that don’t (Waste). There are five basic steps in assessing lean operations:

* Identify the activities that create value
* Determine the sequence of activities (also called the value stream)
* Eliminate activities that do not add value
* Allow the customer to “pull” products/services
* Improve the process (start over)

- Lean Thinking is ideal for mature (energy), slow growth (automotive), low transaction industries (small business) or an organization where mathematical tools are not common.

- Lean begins to use systems thinking and considers all of the process interactions

- But lean is still a reductionism approach focused on eliminating waste (cutting costs).

- What is needed is to balance the resources released through Lean or Six Sigma improvement programs with an increase in throughput and need for resources. Otherwise you enter a cost cutting, job losing cycle and your process improvement program will grind to a halt.

Six Sigma Vs Lean Thinking:

Six Sigma

1. View of Waste: Variation is waste
2. Application: Define, Measure, Analyze, Improve, Control
3. Tools: Math-Statistics
4. Focus: Problem focused

Lean Thinking:

1. View of Waste: Non-value add is waste
2. Application: Identify Value, Define Value Stream, Determine Flow, Define Pull, Improve Process
3. Tools: Visualization
4. Focus: Process flow focused

- Six Sigma is problem focused with a view that process variation is waste.
- Lean Thinking, on the other hand, is focused on process flow and views any activity that does not add value as waste
- Six sigma uses statistics to understand variation
- Lean uses visuals: process mapping, flowcharting, and value stream mapping, to understand the process flow

- If you are in a mature, slow growth, low transaction, or non-math business then Lean Thinking will work real well for your organization.

- Six Sigma and Lean use two different approaches to get the same end result – process improvement.

- The Theory of Constraints (throughput improvement) takes the concepts of Lean Thinking to another level of systems thinking.

- Lean uses systems thinking and considers all of the process interactions, while utilizing the 5S system of organization.

- Unlike Six Sigma, it does not require a lot of mathematical analysis and works well for mature, slow growth or low Transaction business.

There are five basic steps in assessing lean operations:

* Identify the activities that create value
* Determine the sequence of activities (also called the value stream)
* Eliminate activities that do not add value
* Allow the customer to “pull” products/services
* Improve the process (start over)

Example of Lean Thinking

For example, let’s take a look at the most fundamental cycle within a lean operation, the order-to-delivery cycle. The top level activities, in sequence, are taking an order, building the order, and delivering the order. The activities that do not add value are such things as: order entry, backlog, inventory, and shipping delays.

In a lean operation we could have the customer enter their own orders; products made on demand, so we would have no backlog or inventory, and then product could be shipped overnight for minimal shipping delay.

Companies with very short order-to-delivery cycles (and not using inventory as a buffer) are lean operations. Lean operations have a strong cash cycle. In general, the shorter the cycle the leaner the operation

Six Sigma: Six sigma is all about variance reduction. By variance, we are referring to the amount of control you have over your processes. Another way to look at it is how good you are at or forecasting the future outcomes of a given process. Six Sigma uses a scientific approach called DMAIC to analyze a specific problem. DMAIC stands for Define, Measure, Analyze, Improve and Control, which is also known as the learning loop or PDCA.

Scientific and numbers-based organizations can benefit the most from Six Sigma. If you are in a high technology, high transaction, or expensive error environment then Six Sigma could work very well for your organization.

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