Lean Six Sigma for profit performance

Today's marketplace demands high-quality products and exceptional service for a competitive price. With many businesses delivering a high-quality product, service is often the differentiating factor. Recent surveys have shown customers are willing to pay extra for high-quality products and services, making your business' ability to effectively manage those related processes critical to your financial bottom line.

Industrial and institutional businesses are entitled to have a reasonable expectation level when it comes to producing and providing high-quality products and services at the greatest profit. Conversely, their customers expect to buy high-quality products and services at the lowest possible cost. This "business/customer entitlement" concept challenges business leaders to understand how to balance the two sides of the equation.

What Have You Done for Me Lately?
Corporate managers search the globe for supply chain and business partners that allow them to maximize profits without losing the fight on the quality battleground. This has placed significant pressure on U.S. businesses. Furthermore, customers have more choices than ever before because global is truly local, thanks to today's technology.

Customers and their business partners are more than willing to shop around the moment your market offering slips below par, or simply falls out of favor with existing or new customer requirements. We have all heard about fallout for the following reasons:

· On-Time Delivery - "When I need you to be on time, you're not!"
· Product Quality - "I don't want to have to check the quality that you say I purchased."
· Customer Service - "Now there's a laugh - your people have been as helpful as a worn-out car tire."

Is your phone the one that's ringing? Perhaps your management team is fielding these calls. Either way, there's a good chance these same customers could be giving you referrals - if they were only happy with your company's performance.

Time for A New Culture
The opportunity for business leaders is to take the desire to maximize profits and commit to developing a company culture that matches this same desire by understanding the customer and the business processes that support it.

Recall the famous line: "Failure is not an option." Well, how are today's business leaders charging their teams? As an executive, do you look around your boardroom wondering how you are ever going to turn the business around with your current team?

It all starts with one thing: committing the business vision from a strategy to a plan for action. Quite often this means overcoming the "no-decision" mindset that is as great an impediment to the business as its most ferocious competitor. As companies and institutions strive to remain vital and show marketplace distinction, they are all confronted with the pivotal question: "How will we reach our strategic goals?"

Clear and Measurable
The road decided upon is key. Will you call on your executive team to offer their work plan and accept it just as you did the previous year but expect different results? Albert Einstein had an opinion on this. He said, "Insanity … is doing the same repetitive thing over and over but expecting a different result." A lack of a clear road map to improvement prohibits the company from reaching its fullest business entitlement; it is a major roadblock that many businesses face. Challenging existing resources to become more efficient and effective without providing a comprehensive road map and a set of tools to get the job done will only drive internal operations to a less-than-desired performance.

This is why lean Six Sigma is such a popular choice among business leaders. Lean Six Sigma provides employees with a clear business philosophy that is executed by utilizing the regimented DMAIC (Define, Measure, Analyze, Improve and Control) methodology, while stripping out all wasteful, non-value-added steps. These daily, weekly, monthly, quarterly and annual actions are linked to key performance metrics arrived at by the executive team and carefully governed going forward.

As a business leader, you need to look in the mirror and ask yourself a few questions: "What continuous improvement road map do I follow? Am I willing to put it before the people who work for me?" Perhaps you don't have the answers yet, so you look away and reason with yourself, noting that you have solid systems, great people, decent employee morale and processes that work.

As a leader, however, you must look back into the mirror and acknowledge that these solid systems, great people, decent employee morale and working processes have you right where you are today - needing improvement. And perhaps needing significant improvement, because you are continually being given feedback from your customers, which is being reflected in your profit statement.

Your Customers' ‘Voice'
Lean Six Sigma is just as it says: a combination of two well-known, quality-driven initiatives, lean and Six Sigma. These complementary disciplines yield a much greater offering than either standing alone. Lean is a set of principles and methods targeted for improving cycle times and increasing quality. Six Sigma is a highly disciplined, data-driven approach that follows the DMAIC model, assuring that an implemented improvement to a process remains in statistical control.

So, in short, lean Six Sigma makes existing processes more efficient and effective while meeting critical-to-quality metrics, which in turn yield greater profits. Greater profits correlate directly to greater customer satisfaction. After all, it is the customer who defines quality.

Customer perception of your business' quality directly impacts your bottom line - it's that simple. For any business, when it comes to quality, the challenge is to create and foster ongoing performance improvements in either products or service. To assure that a business meets its marketplace requirements to do repeat as well as new business, its leader must align the company first and foremost with the customers with which it seeks to do business. Knowledge is power, and capturing the voice of your customer (VOC) is critical.

Let's think about a simple sales call at a new account. If your salesperson walks through the door and tells the customer what he/she offers in terms of products or service, the sales call will not last very long. On the other hand, if your salesperson engages the customer by truly listening to their needs, it is likely that the sales call will morph into a deeper understanding.

Capturing the VOC and turning it into critical customer requirements (CCR) allows the salesperson to truly understand whether his/her business product or service will meet the needs of the customer. Turning the CCR into critical-to-quality metrics allows the business leader to ensure that his team is working toward meeting these marketplace requirements. Delivering products or services that are not aligned to the VOC only yields lost sales opportunities and lower profits.

Any Company, Any Industry
It's no secret that lean and Six Sigma can be credited for industrial and institutional profitability results in the billions for those companies immersed in the practice. Business leaders like Motorola's Robert Galvin, AlliedSignal's Lawrence Bossidy, and General Electric's Jack Welch pioneered and made Six Sigma a world-class profit-improvement campaign. There is no doubt that this common thread will tie their individual legacies together.

Anywhere there is an existing customer, there is a process - or set of processes - that deliver against critical customer requirements. The U.S. armed forces have embraced this quality-driven approach to reduce cost and optimize the work they do.

Every industry can successfully embrace lean Six Sigma to achieve their goals. Software development companies strive to minimize programming errors, expedite application response time and improve compatibility. The healthcare sector seeks to reduce patient waiting times, improve scheduling efficiency and turn the inventory beds over as frequently as possible. Banks want fewer fraudulent cases, and to advance online and in-person customer experiences. Insurance companies work toward improved claim response times and reduced risk coverage, as well as expedited claim collections.

Studies indicate that individuals familiar with lean Six Sigma initiatives and have participated in the program clearly recognize that, when implemented and supported from the top down, their respective organizations significantly improved profits. So why doesn't every business leader jump on the bandwagon? Maybe the leader is satisfied with the status quo, or has peered into the dreaded leadership mirror we spoke of earlier and turned away.

Don't Be Afraid to Take the First Step
Reluctant to commit resources to such a campaign? Perhaps your old, influential comrades have not given consensus for various reasons. Or maybe your company's culture is so entrenched with its own genetic makeup that it fears taking a step down the lean Six Sigma road.

It has been said that it is better to drive by looking through the windshield than the rearview mirror. Business landscapes change by factors that are not in the business leader's control, but having a philosophy and methodology in place to create greater customer satisfaction and drive profits is within reach.

The next time you look in the leadership mirror, you might just want to rethink what lean Six Sigma is and what it might do for your business.  HCW

Leonard Stavish is a senior consultant and Six Sigma Black Belt with Cohn Consulting Group, a division of J.H. Cohn LLP. He can be contacted at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .