Question #2:
Is there any other methodology other than Lean Six Sigma? If there is, which methodology is the best?

Answer:
To answer this question, first we need to differentiate between “Business Improvement Methodology” and “Business Improvement Tool”.Terms are defined as follows

There are many Business Improvement Methodology exist globally. It is impossible to track exact number of methodologies that exists in this world as it multipliesall the time. However, based on our experience, below is some of the list:

Lean Applied is Lean Six Sigma specialist. Based on our years of practical experience dealing with various types of industries, we have perfected our knowledge and consultation. Hence we invite you to experience yourself the benefits of Lean Six Sigma and help drive your company towards excellence no matter the size of your company is. Join us and be aa part of global Lean Six Sigma family throughout the world.

These FAQs are based on questions that frequently ask by our clients, friends and colleagues regarding Lean Six Sigma. Hopefully this article can break your confusion regarding Lean Six Sigma and give you better understanding on this business improvement methodology. If you have any other questions or confusion related to Lean Six Sigma that you need clarification, feel free to ask us and we will promptly answer it at 1-300-88-6- SIGMA(74462), email us at info@leanapplied.com.

By: Muhamad Faizal

If you miss to read part 1, please click here

Faizal word of Wisdom:

Mr. Sakichi was impressed with US technology at that moment especially in automobile. When he went back to Japan with his new vision, he shared his vision to his own people but he was laughed at and negative response that said his vision was too fancy. This is because of what had happened to his company and at the time Japan lack resources to manufacture car. His people mentality was “we can’t do it”.

However, Mr. Sakichi never lost his vision. All negative comments he received, he took as a challenge. In 1929, he took the biggest risk of his life by selling his best product invention patent, an automatic power loom Model-G with 1 Million Yen. He dedicated all that money for research and development of his new dream, an automobile. Unfortunately he died on October 1930 before he achieved his dream. But his vision was continued by his son, Kiichiro Toyoda. In 1935, the impossible was became a reality when the first Japan prototype car model A1 was developed from scratch with just 5 years.

Today, the wisdom of never say “we can’t do it” drives Toyota to compete with western car manufacturer and became one of world’s biggest car manufacture in the world. This wisdom also drives Toyota legacy to develop structured world famous business improvement methodology called, Toyota Production System (TPS) or known as Lean.

Mr. Sakichi Toyoda once said, “Everybody should attempt one big project at least once in their life”. Wisdom of never say “we can’t do it” with vision and hardship give inspiration to all who adores him.

Let’s go back into today’s reality. In most companies, voice of “We can’t do it” is still being heard from our employees and employer alike. Why some of us still have this mentality? For me, it leads to one ultimate answer. It is because most of us have little confident for in our own capability. Why? Because we do not culture a right mind set and gain skills to be confident, faced with problems. To overcome this, we need to starts with KAIZEN mentality. Kaizen is Japanese philosophy which means “Continuous Improvement”.

Albert Einstein in his famous quote, “The definition of insanity is doing the same thing over and over and expecting different results”.To be confident in facing daily problems, we need to think in different perspectives. In other words, “think outside the box”. For you to have this ability, you must allow yourself to learn new skills and techniques. Learn by practice and gain new experiences.

Learn Lean, Six Sigma, TQM, Quality Tools, Creative Thinking, Statistical Analysis and more skills and techniques to give you opportunities in becoming a person who will never say “we can’t do it”. Be confident with your unlimited potential, grasp opportunities in front of you and start your journey to success.

Set your mindset that you are able to make yourself better and serve as a change agent in your company and also in your daily life.It is all start with never saying “We can’t do it!”.

By: Muhamad Faizal

TaiichiOhno Wisdom #1:

[Don’t confuse “value” with “price”. When a customer buys a product, he does so because that product has a certain value to him.The cost is up, so you raise your price! Don’t take such an easy way out. It cannot be done. If you raise your price but the value remains the same, you will quickly lose your customer.]

Value and price are not the same. Price is driven by the cost and internal profit requirements as well as the market place demand. If the cost increases, do not raise the price because the market is not stupid. If the value remains the same and the price increases, you will lose your customers. This is why it’s important not to confuse value with price.

There is two ways to look at the profit formula:

(Version 1): Profit = Selling Price – Cost

(Version 2): Selling Price = Cost + Profit

In the first version, the profit is obtained by selling at the higher price – obviously above the cost. It’s easy to understand this version of the profit formula. However, a substantial amount of companies use the second version of the profit formula – where the purchase price is obtained by adding “some desired” profit to the cost. This is the cost-based principle of setting prices and operating a business.

But what if the market cannot absorb the selling price based on cost + required profit? The entrepreneur or company has to either reduce their profit expectation or lose market share to lower-cost based competitors. At Toyota, the management team does not work their business off of the selling price (version 2 profit formula.) Toss it out of your mind.

The Version 1 formula indicates that profit is made based on the ability of the company to operate at lower cost. Unlike the selling price, which is a market-based function, the cost depends on the ability of the company to produce a product more efficiently. The reduction of cost is not dependent on some purchasing secret of being able to obtain lower prices from suppliers but on using the principles of Toyota Production System (TPS).

Source: www.entrepreneurdex.com

Faizal Word of Wisdom:

“Profit = Selling Price – Cost”

Above formula is a new paradigm of profit generation where profit is driven from “Cost” perspective, not from “selling price” as most companies practice today.This is the key secret for any company that wants to excel in today’s competitive world.

The fact is business processes always encompass with countless waste activities. Waiting, Inventory, unnecessary transportations, defects, reworks, over producing, and much more source of waste can be identified in your processes. This waste should be eliminated. Based on experience of practitioners, for traditional business processes,at least 75% of their processes are a waste (Non value added activities). Do you know how much cost most companies spends for all this waste? It can be millions per year! Now imagine what if this waste can be transformed into profit?This cost saving is a new paradigm of making profit. Companies that embrace this new profit paradigm, not only make more profit but becoming more competitive in their market niche.

This is the secret behind Toyota success story becoming the world most profitable car manufacture in the world. Same secret applied by Dell, the world profitable computer manufacturing in the world. Do you know that Dell manufacturing plant do not have warehouse? Without having a warehouse, Dell gain a lot of profit by cost saving as there is no cost from warehouse operation cost and other hidden cost of quality. Dell secret lies in their remarkable process flow efficiency from customer order to finish products delivered to their customer. This is also a critical reason on how Michael Dell becomes billionaire.

Toyota and Dell success story is no more a secret. Their success is because of their tremendous effort to transform their company paradigm as cost saving company by implementing Lean Manufacturing methodology. Not only them, majority of 500 Fortune Manufacturing companies also implement this methodology to improve their processes and gain more profits.

The secret now is in your hand. It start with paradigm shift of profit generation from “selling price” to “cost saving” mentality.Grasp this new profit paradigm and drive your company into excellent journey.

*TaiichiOhno (1912-1990) is a father of Toyota Production System (Lean)&Kanban System. 

Call us now at 1-300-88-6-SIGMA(74462) or email us at info@leanapplied.com to further discuss on Lean and Six Sigma improvement methodology at your organization.

By: Muhamad Faizal

No matter how small or big a company is, improvement initiative is a must. Lean Applied true to its core as pedagogical hub of business improvement and innovation, we strive to excel by continuously improve ourselves every time. 5S is a major focus. Last year, we did 5S activities in a small scale by setting teams consist of associates in charge of targeted area. In year 2012, 5S campaign is the biggest move we ever did. We launched month of February as month of 5S involving participation of entire Lean Applied’s family, from top management to non-executive. Our focus is 5S at each associates’ desks.

This campaign is on individual effort implementing 5S in each work area, where we also stress upon family values to build up team spirit. Our initiative starts with internal classes to provide this family with strong understanding of 5S philosophy and practice. The next two days are the days of 5S project execution.

On the first day, we spent half of working hours for 5S activity together starting with “sort” phase where we red tagged items that were not relevant in our work area. Next phase was “set-in-order” planning phase where we planned on how to arrange our items properly by category and use frequency with goals to be more effective and enhance comfort. Everyone is excited as we shared ideas, challenged each other, and compete in positive ways to improvise even more.

On the second day, we continued with implementation stage of “set-in-order”, where all the planning on day one was being translated into actions. Labeling, visual control and fixing small imperfection were done in “shine” phase. Last but not least, the “standardize” and “sustain” phases to ensure our efforts to improve our work will last for a long time. The rule of thumb is simple, where daily, five minutes before going back, associates must rearrange items on their desks with standard layout that they had decide.

During these activities, top management sees the opportunity to enhance integrity and teamwork among associates with the idea to standardize desk layout. To turn this idea into reality, all associates contribute ideas on what they think are the best setting for their desk layout, than the ideas were compiled and discussed among 5S committee. Items that are allowed on table were identified and the standard layout was established and approved. Below is how the standard desk layout looks like from top view.

To complete this 5S campaign in month of February, two HOD judges rated each work area to identify winner for first, second and third place. With participation from associates, the campaign was successfully closed and everybody enjoyed the benefits of work efficiency improvement and comfort.

To maintain sustainability, we are running a competition starting from March to December 2012. Internal audit will be conducted monthly and from the audit result, monthly 5S winner will be announced. He or she will hold “5S Winner Trophy” for a month with his/her name attached on the trophy. At the year end, associate with highest score, will be announce as 5S winner of the year. Additionally, all associates that able to maintain average 3.5 rating for the whole year, are eligible to receive certificate as 5S Practitioner.

This is one of our initiatives in our journey towards excellence culture in 2012. We strive to build continuous improvement culture in our company and we believe that this culture will be developed when employees share same mentality towards continuous improvement in preserving and focusing on company’s vision, mission and values. All associates must be equipped with skills and techniques, and gain experience through continuous improvement projects and they themselves must uphold the culture by implementing continuous improvement in daily work tasks and even in daily life.

Below are our winners from 5S Campaign. Before and after pictures:

1st Place

Before	After

2nd Place

Before	After

3rd Place

Before	After

By: Muhamad Faizal

TaiichiOhno wisdom #2:

[A man-hour is something we can always count. But do not come to the conclusion that “we are short of people” or “we can’t do it” Manpower is something that is beyond measurement. Capabilities can be extended indefinitely when everyone begins to think.]

TaiichiOhno considered it blasphemous to say, "We can’t do it." He hated when a factory foreman would tell him, "We don’t have the capabilities." TaiichiOhno believed that if you change the manner in which things flow and change the manner in which you arrange storage - you will discover, within a month that you can do what you’ve been saying you cannot do. He practiced by example and would actually demonstrate how to get it done on the factory floor. He was a hands-on man.

Taiichi made people realize, sooner or later, whether they liked it or not, that with Toyota Productions System (TPS) principles, workers could not only do what they thought they couldn’t - but that the venture would be left with a little extra change after paying the bills.

Most of all, Taiichi taught that you could actually eliminate some of the processes. The only thing that keeps anyone from using his principles is ignorance or stubbornness.

Source: www.entrepreneurdex.com

Faizal word of Wisdom:

Never say “We can’t do it”

Human capabilityis an element with full of surprises. I will never say human capability is “unlimited” because human is notGod. Human isGod’s creature that is imperfect and has limitation. For example, human cannot work continuously 24 hours without having to rest or sleep.

Having said that, limitation of human capability does not mean that human has limited potential. Positively, I believe human is one of the BEST God’s creation.What makes humanas the bestis becauseof our potential. Unlimited potential makeshuman limited capability becomesurprisingly heightened. Nobodywould define maximum limitation of human potential to grow. We do not know what type of era human race will become in the next 20 years. This unlimited potential is the core reasonfor a human being never give up easily and not say “We can’t do it”!

Let’s focus our perspective to individual potential as an employee or an employer. In order for our company to succeed and our personal career to grow, we should start with never saying “we can’t do it”. I will share with you a motivational success story of a man behind Toyotacompany, that with his vision, Toyota nowbecomesworld leading car manufacturer.It begins with hardship, commitment and a wisdom that never say “we can’t do it”.

In 1910, Toyota companywas facing its worst nightmare in history. Recession in Japan hadlead Toyota to financial disaster and forced the founder, Sakichi Toyoda takesblame andresigned. He felt like giving up and felt depressed as his 20 years of hardship was wasted. Mr. Sakichibrings himself to US and there he gained a new vision.

Click here to continue read Part 2..

Question :
What is the differences between Lean and Six Sigma?

Answer:
Before explaining on differences, let’s talk about similarities first. Both Lean and Six Sigma is Business Improvement methodology aims for customer satisfaction in term of quality, cost and delivery. Both of them also doing improvement by declare war on waste in business process.

These similarities make them “ideal couple” and when they together, they become glorious Best Practice business improvement for any type of business and industry. Concept of merging Lean Six Sigma as one methodology officially introduce is in 2002 by Michael George in his book titled "Lean Six Sigma: Combining Six Sigma with Lean Speed".

Enough about similarities, now what makes Lean and Six Sigma different?The biggest different is their FOCUS. Below is a simple yet comprehensive definition of Lean and Six Sigma and its highlight their differences.

Want to know more about differences between Lean and Six Sigma? Table below show other aspect of differences between both methodology.

Lamborghini is just a car. A “tool” that transport you from point A to point B.It same goes to sedan. They both just a “tool”. However, if you able to own one of them, which one do you choose? I believe most of us will select the Lamborghini fora simple reasons; speed, quality and elegance. These are same reasonswhy companies around the globe choose Lean Six Sigma as their business improvement methodology.

Drive Lamborghini (Lean Six Sigma) to its highest performance

Lamborghini Diablo GT is the fastest production car in the world with speed 345 Km/h. As a tool, it sure can drive you to your destination far further than any other car. However, the big question here is, can you drive it to its highest speed performance? You might own and drive the Lamborghini but others with Sedan still mightspeed up and go further than you if you fail to drive your Lamborghini with its full potential. Lean Six Sigma might be the best practice business improvement tool but it doesn’t mean that it canguarantee to drive your companyfarfurther than your competitors. Best tool need best infrastructure to be undefeated.

It’s Start with Fall in Love

Fall in love with Lamborghini is a first step to drive it to full speed. This Love will motivate you to learn and explore all components of Lamborghini andunderstand deeply its technical function. Love make youpassionate to learn best drivingtechniques to drive Lamborghini to its top speed. Love also make you to prepare infrastructure to support Lamborghini so it can speed to its top speed and become undefeated.
To use Lean Six Sigma to drive your company into excellent also start with fall in love.

Best Support Infrastructure

Love from you alone cannot reveal full potential of Lean Six Sigma. Everybody in your company mustshare the same love especially high management personnel. Lean Six Sigma should align with business strategic, business target and goal for short term and long term. Ultimately, Lean Six Sigma must become a company culture.

Lamborghini versus Lean Six Sigma

The biggest difference between Lamborghini and Lean Six Sigma is Lamborghini not affordable and limited to own. However Lean Six Sigma is everywhere andwaiting to be love and own. Books, e-books, internet articles, videos, youtube, training, conferences, consultants and a lot more sources to be access on Lean Six Sigma. Itis just a matter of first small step to give yourself a chance to fall in love with Lean Six Sigma and trust me, Lean Six Sigma will response your love by improving your personal skills and transform your company.

You might not afford to buy Lamborghini now. But with Lean Six Sigma knowledge and skill, it will open you an opportunity to own the Lamborghini one day.Do you agree?

Six Sigma: Streamlining the Way of Business

For most organization, business is about making profit. Referring to Wikipedia, the word profit is defined as “ In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise (whether by harvest, extraction, manufacture, or purchase) in terms of the component costs of delivered goods and/or services and any operating or other expenses.” My understanding from the definition for profit is Profit = Sales – Cost. Based on the simple equation, reducing cost or increasing sales or increasing sales and reduce cost, can contribute to a better profit margin for any business organization. Increasing sales and reducing cost have a close relation with “Product Quality, Product Delivery and Product Selling Price”. These 3 items are known as “Critical to Quality, Critical to Delivery and Critical to Cost”, amongst the Six Sigma practitioners. In a organization that embark on Six Sigma deployment, continuous improvement must be covering all these 3 pillars that eventually will help an organization to achieve the targeted profit. To ensure the good coverage of all the 3 pillars mentioned above, a structure methodology that can help people in the organization to have a quantum leap of mindset must be in place. This methodology, so called DMAIC (Define, Measure, Analyze, Improve, and Control) consists of wide range of improvement tools will surely help to change the mindset of the people in the organization. Why is that? Sociologically, people tend to resist in executing a challenging task, just because they do not know or they do not have the tools to help them. Imaging, if you were asking to deliver a package to a destination, distance 100km form you place by bare footed? Definitely, we will ignore the task because of the “complexity” that you feel upfront. But the same task, if were to be executed by car or train or post it to a courier, definitely you will execute the task without any reluctance. The same situation will be facing in doing process improvement. Without proper methodology and support by great tools, process improvement will be a dilemma in an organization. In the other hand, it will be so fun and interesting. Below images explain the DMAIC and some of the tools used for process improvement purpose.

The methodology and the tools will be explained in the Six Sigma Training.

A Set of Brainstorming Tool

To improve a process, we must know the underlying reason current process is not able to optimize. To know the underlying reason, people will seek for the root cause; mostly they will proceed with RCA or Root Cause Analysis. There are many tools and also guideline that can be used and referred to when it come to RCA. Here I would like to share the set of brainstorming tools that I preferred and it works well in all the DMAIC Six Sigma Project that I executed in the past. As of now, I also am using the same set of brainstorming tool whenever I coach a project.

This set of brainstorming tools is use at Measure Phase of DMAIC project.

The flow is visualized as below pyramid:

Process Map is a combination of Process Flow Diagram with all the inputs and outputs for each process step are listed. Moreover the type for each input is also identifying. It can be identified as Controllable Input, Noise Input or SOP Inputs. The type identification must be based on the discussion with all the team members. By having Process Map at early stage of brainstorming the root cause analysis, it helps me and the team members in a structure way of identifying all the potential inputs involve in the process. Below is the example of process map that were completed in one of my projects:

To ensure all the process inputs in the process map are listed down, I used Fishbone Diagram to help us in focusing to come out with the potential factors based on the categories(bones), as shown below:

As the same time, we also stated the cause or caused for each potential inputs that affect towards our current problem. This helped us in giving priority during the funnel process of inputs by using Cause and Effect Matrix as below:

To further funnel down the inputs, as agreed by team members only 8 KPIV were selected to the next tool (FMEA). Below is the FMEA result:

From the FMEA, we identify which potential failure for specific inputs those needs to be worked on for the improvement of the process.
Hopefully all the examples in the article can helps in having or conducting a more effective brainstorming session with the team members.

Hypothesis is an important concept in seeking for population truth through sampling. In Six Sigma project execution, belters often use hypothesis tools such as 2 Sample T, 1 Sample T, ANOVA, Regression etc to screen significant factors from potential factors. In other words, to answer question such as: Does temperature will affect the yield of product A if we change the temperature level from 100 Degree Celsius to 50 Degree Celsius? During hypothesis, there are 2 major types of possible error, TYPE I or PRODUCER ERROR and TYPE II or CUSTOMER ERROR. Type I error means “The error of detecting a change in a system but in actual the change is not existence”, in Six Sigma, Type I error means “The error to conclude a factor is significant but it is not”. As of TYPE II error, means “The error to conclude no changes happen in the system but in actual, the changes exist” or in Six Sigma, it means “The error to conclude a factor is not significant but it is significant in actual”. To minimize both TYPE of errors, sampling size data must be able to balance between Type 1 and Type II error. In many cases, Type 1 error is at 5% and Type II error is at 20%. This is called as “Cohen’s four-to-one weighting”. Below is the source that explained how the weighting was concluded:

http://effectsizefaq.com/category/type-i-error/

[There is nothing cast in stone regarding the appropriate level of statistical power, but Cohen (1988) reasoned that studies should be designed in such a way that they have an 80% probability of detecting an effect when there is an effect there to be detected. To put it another way, studies should have no more than a 20% probability of making a Type II error (recall that power = 1 - ?).

How did Cohen come up with 80%? In his mind this figure represented a reasonable balance between alpha and beta risk. Cohen reasoned that most researchers would view Type I errors as being four times more serious than Type II errors and therefore deserving of more stringent safeguards. Thus, if alpha significance levels are set at .05, then beta levels should be set at .20 and power (which = 1 - ?) should be .80.

Cohen's four-to-one weighting of beta-to-alpha risk serves as a good default that will be reasonable in many settings. But the ideal level of power in any given test situation will depend on the circumstances.

For instance, if past research tells you that there is virtually no chance of committing a Type I error (because there really is an effect there to be detected), then it may be irrational to adopt a stringent level of alpha at the expense of beta. A more rational approach would be to balance the error rates or even swing them in favor of protecting us against making the only type of error that can be made.]

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