Lean is about eliminating waste. Waste could be in terms of action, workflow, finance, time, or any other aspect involved in a given framework. It can be as simple as cooking only as much food as required. In business, lean could be optimising inventory purchases, using more efficient devices, lowering team strengths, etc.
Six Sigma is about reducing variations or faults. The objective of Six Sigma is to achieve the lowest possible variation or defect rate in output or results. Although the concept was built around production efficiency its relevance makes it applicable to other processes. While Lean is subjective, 6 Sigma is a quantitative approach.
The coming together of Lean and Six Sigma could be perceived as ‘waste reduction and process accuracy’. That could be put in a hundred different ways but the essence would not change. SOPs come into the picture because it is a highly-useful language for defining processes and operations.
Further in this blog, we shall see how SOPs can help adopt Lean and 6 Sigma with emphasis on Lean versus Six Sigma from time to time.
Why does your business need Lean and Six Sigma? (LSS)
Higher output levels
When you eliminate or minimise these wastes and make your processes more efficient, it has a positive cumulative impact on the output levels of your business. The output could be in terms of how much inventory your warehouses/FCs could handle, how many customers are served or how many complaints are addressed every day, how long customers have to wait in the checkout queues, delivery timelines, etc. These results could not be undermined especially if you are operating via retail, eCommerce, or omnichannel. Take the example of any departmental store that uses parking lot striping to help customers park their vehicles in an organised manner. It is an important juncture in the customer shopping journey. Poorly parked vehicles could cause incoming customers to turn away or wait longer till parking space is available. Even if there are only a few such instances throughout the day, it is a lost opportunity for the store. And the task to ensure that people park their vehicles properly is generally assigned to the store security team. Then it becomes a part of one of their routine processes or operations.
Take the example used of parking lot striping in the point above. Parking spaces are always limited. The problem is not with big stores with colossal spaces. It is the relatively smaller, urban stores that must put in measures to ensure routine judicious use of space. Applying Lean and Six Sigma means that you are consciously making an effort to see how wastages or variations can be limited to achieve one or more business or functional objectives. If you are not doing that, you might be housing inefficiency in resource utilisation in your business.
Output & Operational Precision
When you put in measures to eliminate wastage and reduce process variation, improved output and operational precision are unavoidable. If you are doing better parking management than yesterday, it also means you are managing the parking space better than yesterday. Provided nothing else changed, this is a good outcome you cannot prevent from happening. This is one of the reasons why concepts like Lean, Six Sigma, Poka-Yoke, or Kaizen are so powerful. The virtue of higher output and operational precision is unavoidable.
Superior customer-client experience
So what else happens if a departmental store begins to use parking stripes? Customers could enter the store premises and park their vehicles more easily. The same applies when they leave. Making the shopping journey of your customers shorter and more convenient goes a long way in keeping them closer to your brand. The ‘physical accessibility’ of a store plays a big role in attracting customer footfall. Compare your own experience as a customer with two different stores – one with good accessibility and another without. And the parking factor is important here. Sometimes even big brand outlets proudly display ‘Parking Full’ as if it is some kind of an achievement. What customers also read is ‘Not Now’. They will simply choose to visit another store or buy from somewhere else online or offline.
Positive Residual Effect
What will happen if you improve the parking management of your store? Customers will flow in more easily. There will be more customers on the floor. This will force you to relook at and improvise your other store operations. For example, the heavy glass door at the entrance slows things down; you may have to replace that with an air curtain. If the situation necessitates, you may need to install one more checkout counter. You may need a bigger customer support team on the floor. Do you see what is happening to your business by making one small supporting change emanating from applying LSS? Your store has become capable of handling more customers and higher business volumes.
How do SOPs help adopt Lean and Six Sigma?
Analysing the as-is processes
To do something better, it is good to know how you do it currently. That is also why it is important to work with defined operational planning. Once you have the process maps, it becomes easier to compare the desired and actual performances. This creates the opportunity to spot wastages and deviations. Take the example of registering for a public benefit scheme. If there are a rising number of complaints, it means that there is a problem somewhere in the registration framework. It could be related to technology, processes,
human errors, etc. But the problem areas cannot be identified without the analysis of the as-is processes. SOP-defined processes are useful here because of their comprehensiveness and detailing.
Developing the would-be processes
The analysis of process deviations and wastage control possibilities is something that has to be done by you as a business owner and your think tanks. SOPs will help you to implement the changes or develop the affected processes anew. If you already have your business processes defined using SOPs, giving effect to the changes to the operational planning should be a cakewalk. But if the task involves fundamental changes, the process mapping and development activities have to be done from scratch. Using SOPs to define the new processes will help you eliminate the identified wastages with high precision and make your processes more speedy and accurate.
Prevention from workflow deviations
Because process and operational workflows are mapped in SOPs, there is no reason to diverge from the established procedures. Workflows represent the procedures or the SOPs to carry out a process or operation. Even deviations are anticipated and planned. Then they can no longer be called deviation. Thus, by implementing SOPs, organisations can prevent process deviations thereby helping the cause of implementing Six Sigma. The Lean part i.e. wastage control could be already addressed within the SOPs. To examine this, think about how your business manages product returns. Have you defined the process or just given some broad guidelines to your store manager? Are your employees following the process SOPs religiously? You could know this by maintaining and keeping track of the records of the instances of product returns. Some amount of follow-up with the aggrieved customers may be necessary. Thereafter, it is easy to check any process deviation.
Results and Standards Established
The adoption of LSS is successful only if the set results are achieved; otherwise what is the point of taking all the pain? Here we are talking about results at the level of execution or implementation i.e. process or operation output. If the identified wastes and process deviations still remain, then LSS adoption could not be classified as successful. LSS would still be a failure if new deviations or wastages emerge. So, how do SOPs help here? In SOPs, we do not just define the workflow procedures but also the results and operational standards. This means that every juncture in the workflow will have certain standards. Deviating from these standards means the final output may stand deviated including the scope of waste created in the process. Think of this as how trains run. They are given green signals at important junctures. If the sign is green, it moves. If it is not, it does not. SOPs are developed keeping in mind that ‘red signs’ do not emerge. If there is a red sign, either it must be removed or it is a process constraint or requirement to live with.
Pinpoint Accountability & Responsibilities
One of the important requirements of SOPs is that accountability and responsibilities be assigned to tasks in a process definition. This is important for the success of LSS because it is humans who make mistakes whether it is in planning or in the execution of duties. And among many reasons, mistakes also happen because of a lack of clarity in roles and responsibilities. Having this loophole is counter-productive for LSS. But with SOPS, this problem gets addressed. SOPs do not name people; it names the specific positions for specific tasks. After SOP implementation, the scope of doubt and confusion could be eradicated from a process definition.
Achieving operational superiority cannot come by itself. It takes some effort. These two traditional concepts – Lean and Six Sigma have helped numerous companies make drastic turnarounds in their performances. Whether you manufacture cars or needles or sell via retail or eCommerce, there is always a scope for improvising your business processes and optimising wastages. Lean and Six Sigma take you there directly. Two important methods in the Six Sigma process are the DMAIC method and the DMADV method. There are also professionals with Six Sigma certification. But from analysis to implementation, SOPs help you do LSS right. It takes care of the operational re-planning required to succeed at the adoption of Lean and Six Sigma.
BPX is a management consulting brand with expert capabilities in developing solutions for business process management. We design SOP solutions and provide implementation assistance. From planning to implementation, sticking to calculated and proven processes is our way; customisations come next. A team of expert business process consultants oversees and executes the service design and delivery. Today, we are a brand with ascending international presence with more dream projects in the pipeline.
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Dr. Rupal’s “Everything is possible” attitude helps achieve the impossible. Dr. Rupal Agarwal has worked with 300+ companies from various sectors, since 2012, to custom-build SOPs, push their limits and improve performance efficiency. Rupal & her team have remarkable success stories of helping companies scale 10X with business process standardization.