You undoubtedly have heard of Six Sigma. Maybe you have heard about Lean. Perhaps your company is pursuing one or the other – or both. But what is Lean Six Sigma? This combination of improvement methodologies is now being touted in books and seminars. It is well known in the automotive, aerospace and other discreet manufacturing industries, but not extensively in the chemical industry.
Some argue that “we are different,” and Lean Six Sigma cannot apply in the chemical industry. But that simply is not true – the combination offers significant benefits for the chemical industry. Moreover, the linkup of the two was inevitable given the overlapping roles of Lean and Six Sigma. Both are aimed at process excellence to serve the customer. Both can address batch or continuous operations and transactional as well as manufacturing processes. However, before discussing the potential of the combination, let’s start with some background on each approach.
The skinny on Lean
Lean was developed in the early 1900s to drive out waste (i.e., fat) and non-value-adding activity, and to speed throughput. Henry Ford, Frederick Taylor and others of that era are considered its pioneers. Traditionally, these efforts have centered on eliminating waste of all kinds while increasing the speed of conversion. Ford’s goal to boost overall plant throughput and speed led to the assembly line and other techniques. In those early days, the material conversion rate at Ford’s River Rouge Plant near Detroit was less than three days from raw iron ore (Ford made its own steel) to finished auto.
It would be wonderful to have a three-day conversion for chemical processing where industry average days supply inventory (DSI) is at about 73 days, or five inventory turns per year . But, unlike Ford, we have more than one model or product. It took Toyota 50 years to match Ford’s efficiencies while at the same time offering a host of model options. Certainly manufacturing automobiles is very different than manufacturing chemicals … or is it? Can we apply the principles of Lean to chemical processing? Can we take the fat out of our processes, both in production and elsewhere?
One key principle of Lean is to shorten travel distance and therefore reduce travel time. Long travel distances and their accompanying travel times typically mean larger inventories and higher DSIs. Traditionally, relatively large distances have separated chemical processes, with materials conveyed through miles of pipe and stored in dozens of vessels along the way. Due to extensive capital investments in place, chemical companies often discount the idea of rearranging processes to place them closer together. Yet, other industries frequently pursue and justify such seemingly expensive changes. Can our chemical processes be placed closer together without compromising safety and environmental performance? Can we rearrange our processes to shorten travel distances by stacking operations on top of each other in multistoried buildings? In many cases, the answer is yes. But the cost of doing so seems outrageous. Is it really?
Most companies consider inventory carrying costs (ICC) — that is, capital, warehousing costs, etc. — to be 15%-20% of the value of the material stored. But is that true? When you consider material-handling and control-related costs (management and computer resources), obsolescence, insurance and obscure costs of masking problems (scrap, rework, etc.), that figure could easily top 40% . In fact, a figure of 40%-50% probably reflects the true hidden factory. This higher, truer ICC can justify significant changes to existing units. At the same time, all-new chemical processes should be designed with attention to Lean principles, such as proximity, minimal tank storage, ease of changeover and clean-out, etc.
Since those early days of focusing on speed and waste, Lean has evolved to include attacking the various forms of the seven traditional wastes:
• inappropriate processing;
• unnecessary motion and
• unnecessary inventory.
In recent years, this list has been expanded to include four new wastes:
• untapped employee potential;
• wasted natural resources and
• inappropriate systems and materials.
A very effective tool used in Lean to identify the wastes of movement and storage and their magnitude is value stream mapping. It identifies all activities and movements within a process and the time it takes to do each. This tool and accompanying exercises often uncover that most of the time spent in the value chain (as high as 95%) is due to materials waiting and/or in movement. Actual processing or value-adding activity usually accounts for very little of the total time (5%-20%). The goal of Lean is to minimize the time materials wait or move.
Other key Lean principles include pull versus push scheduling; total productive maintenance to address extended breakdowns, as well as short stops, and to prevent such breakdowns and stoppages altogether; and dedication to the Lean Five S’s: sort, set in order, shine (housekeeping), standardize and sustain. Note: many companies have added a sixth and most important S, safety, to all their Lean efforts.
The strength of Six Sigma
Like Lean, Six Sigma (which represents a quality level of less than 3.4 defects per million opportunities) had its origins in the manufacture of discreet components, specifically electronic devices at Motorola in the 1980s. Traditionally, Six Sigma methodology and tools have focused on eliminating defective units, reducing variation by using statistical methods and sustaining the gains realized. By first clearly defining a problem or gap in performance (Define), measuring the existing situation (Measure), then analyzing the data (Analyze) before making any improvements (Improve), Motorola was able to find root causes and fix long-standing problems. By applying a control plan (Control), the company was able to sustain the gains realized.
This sequence gave birth to the acronym DMAIC, which has become synonymous with Six Sigma. Not long after applying these DMAIC principles to manufacturing, Motorola recognized that they (like Lean) could also be applied to transactional business processes.
In recent years, Six Sigma has gone beyond focused projects led by trained leaders (i.e., Black Belts) to improve existing operations. It now guides the creation of new processes, products and workflows that perform at a Six Sigma quality level. More importantly, Six Sigma generally is considered to be a leadership and management philosophy, a culture, one anchored on fact and data-based decision-making that is clearly focused on the needs and voice of the customer. (Lean also is considered a culture or management philosophy at those companies that practice it <em dash>— one that abhors waste of all kinds in all processes and drives for maximum speed.)
Strive for synergy
Many organizations struggle and debate about which methodology is best. But this is not an either-or issue. Is a wrench better than a hammer? Each tool, Lean and Six Sigma, has value. Both approaches support the larger goal of achieving product, process and operational excellence to better serve the customer. The traditional practice of Lean offers reduced waste and increased speed, whereas Six Sigma provides defect and variation reduction. Using the two methodologies and their tools together leverages the benefits of both. For those companies that have long pursued Lean, Six Sigma should be brought forward. Six Sigma companies should view and embrace Lean as a strong friend and ally.
Many companies in industries such as automotive and aerospace that first embraced Lean are already working to incorporate Six Sigma. This is because the application of Lean often can benefit from the discipline that Six Sigma provides. For example:
• Some Lean projects have lacked a well-defined project charter with clear goals and scope; efforts have wandered without focus while scope grew to an unmanageable size. This led to early confusion and wasted team effort.
• Lean often failed to use the power of statistical analysis to determine and validate the true root cause of performance problems, both key elements and features of Six Sigma.
• Lean efforts were often undertaken on a rapid trial-and-error basis. Because of this less formal approach, many gains, such as in inventory reduction, were simply not sustained. Waste and non-value-adding activities frequently crept back into the process within a few years; it was not unusual, for instance, for inventories to quickly grow back to previous levels.
Similarly, companies that adopted Six Sigma found many projects to have Lean-type goals, such as to reduce inventory, speed workflow and eliminate non-value-adding activity. These projects really did not require the rigors of full statistical analysis. Indeed, applying the full methodology of classical Six Sigma unduly lengthened the project cycle time, frustrating project sponsors and management.
Wise Black Belts quickly adjusted and addressed these problems with the appropriate Lean tools, such as value stream mapping, Praeto charting, value-add/non-value-add analyses, etc. No extensive control charting or design-of-experiment work was needed.
A merger of the power of each methodology was inevitable. By combining the two, the improvement project leader (Lean Expert or Six Sigma Black Belt) has a full tool kit from which to draw.
As Michael George states in “Lean Six Sigma: Combining Six Sigma Quality with Lean Speed”, “Lean Six Sigma is a methodology that maximizes shareholder value by achieving the fastest rate of improvement in customer satisfaction, cost, quality, process speed and invested capital. The fusion of Lean and Six Sigma is required because:
• Lean cannot bring a process under statistical control.
• Six Sigma alone cannot dramatically improve process speed or reduce invested capital.”
So, how can these methodologies and their respective, and often overlapping tools, be best applied in the chemical industry?
Faster and better operation
Chemical batch processing is in many regards similar to discreet parts manufacturing, long the domain of Lean. Raw materials must be brought in from suppliers. These materials are typically staged and must be loaded into equipment for processing or assembly. Later they are unloaded and packaged into finished form. Variation either in the raw materials (inputs) or the process cause variation and possible defects in the finished product (output). The rigors of Six Sigma statistical analysis can address variation at these points. The tools of Lean can be used to focus on the speed of the entire process and changeovers, from unloading dock to final shipment, thus eliminating waste in handling, movement, storage, changeovers and staging.
Because most batch processes are not dedicated to a single product, a key waste in these operations is the time spent changing over from one product to the next and the wasted product or flush media involved. Thus, many engineers and managers work to lengthen the production run to eliminate the frequency of changeovers. Unfortunately, this is the wrong approach; it drives up overall inventory because each product must then be made in large enough quantities to last the entire production cycle. The right approach is to focus on driving waste out of the changeover through time-reduction techniques and engineering, so changeovers are quicker.
Opting for frequent, but shorter, changeovers, while keeping total changeover time the same, provides several advantages:
• It enables faster cycling through the production schedule and results in lower net inventory.
• It gives staff more opportunity to build changeover expertise and skill, which further shortens the changeover time.
• It also helps ensure that changeovers get attention for engineering study and improvement.
It results, given well-engineered changeovers, in shorter time to steady-state operation, which, in turn, decreases defects since processes generally produce fewer defects at steady state compared to startup or shutdown.
Continuous processes mirror batch processes; they simply are on a much larger scale. Instead of lift trucks moving materials to and from warehouses to batch process, large-scale continuous processing plants use miles of pipe to transport materials to dozens of storage vessels. The waste is the same, the effects are the same.
A continuous reactor, just like a batch kettle, might have catalyst beds that must be changed at regular intervals. Some processes foul with unreacted chemicals or residue that must be removed. Changeover time-reduction techniques apply. And, of course, many continuous processes include various batch operations.
Whether we are considering batch or continuous systems, there is a key element that cannot be overlooked. Lean can only be truly effective when the process is stable and consistently capable of meeting customer specifications and needs. Lean efforts to increase speed and reduce inventory without a stable and capable process in place will likely result in a disappointed customer when the process breaks down or experiences a quality upset. The statistical analysis inherent in Six Sigma plays a crucial role in identifying the root causes that prevent establishing stability, consistency and capability.
Maintenance and waste
Speed and variation in support activities, such as maintenance and quality assurance, can have a profound impact on the overall operating performance of any chemical process. If maintenance materials, tools and personnel are not properly staged for maintenance speed and to minimize waste, the whole manufacturing process will suffer extended downtime during a repair or shutdown (Lean). Likewise, if the quality of maintenance work varies, breakdowns or poor performance of the process will result (Six Sigma).
Other, similar factors can also compromise quality assurance and related efforts, like materials sampling activities. For example, cutting travel distance and time spent in testing (Lean) might be best addressed by giving plant operators the tools and training to do their own testing close to the manufacturing process. Batching of quality assurance tests might offer benefits to the central laboratory, but at the expense of delays to the process. Whether testing is done in the central lab or the process, repeatability and reproducibility of the test results must be understood and be acceptable (Six Sigma). Lean combined with Six Sigma statistical principles can eliminate these inefficiencies.
Information technology, human resources, logistics, commercial development and other processes that support chemical operations can be similarly improved using Lean Six Sigma methodologies and tools. For example, some informational processes are batched overnight or on a set schedule. However, real-time information is critical to prevent defects and waste. Personnel practices, such as hiring and training, can also benefit from reduced variability and increased speed when waste and non-value-adding activities are removed.
As everyone knows, the company that wins is the one that has the most efficient commercialization process, delivering the shortest time to market with new, stable and capable products and services.
Lean Six Sigma concepts help to keep the focus on the true goal, supplying and serving our customers and to avoid optimizing subprocesses at the expense of this higher goal. One of our Six Sigma Master Black Belts reminds us continually, “The main thing is to keep the main thing the main thing.”
Succeeding at integration
Whether your company is a Lean shop working to integrate Six Sigma, or vice versa, several issues must be addressed. Expect significant emotional energy and commitment in support of whichever methodology was deployed first. For this reason, it is essential to employ change-management principles to bring the second methodology in place.
Impacted employees will need to understand the details of the second methodology and power of the two together. The combination will require framing. Training must be offered. Some companies relabel their initiative as Lean Six Sigma or Operational Excellence. Others simply incorporate the second methodology’s tool set into the first’s. Whatever the case, top executives must understand, endorse, support and communicate the value of the integration to head off turf wars. Lean Experts must be trained in Six Sigma; Black Belts must be trained in Lean. If both titles and roles are to be retained, then project administration becomes more complex. Sorting projects by type or maintaining separate project portfolios will be needed.
We have chosen to consider the larger, overarching methodology to be Six Sigma, with the improvement process using DMAIC/Lean and the creation process using Design for Six Sigma (DFSS). The Black Belt project leader then determines which process and tool set is to be used for the particular project.
Lean Six Sigma has a place both in discreet manufacturing and in the chemical industry, including all of its supporting transactional workflows and processes. A wise company is one that embraces both approaches equally; it is rewarded by the synergy that is created.
Douglas R. Pratt, P.E., formerly Director of Six Sigma Process Excellence for Dow Corning Corp., Midland, Mich., is now the company’s Six Sigma executive consultant. He has been with the firm for more than 30 years. E-mail him at firstname.lastname@example.org.