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.