The success of many businesses relies on a number of factors. It’s not just about having the right product or service. The speed of delivery, quality, and cost-efficiency are all important ingredients to any company’s success. This allows them to consistently produce the right product or service and satisfy their customers.
Businesses are responding to these consumer demands by taking a closer look at their processes. The way they operate determines the delivery, quality, cost-efficiency, and customer satisfaction that they get from producing their products and services. Because of this, companies are looking to process improvement methodologies such as Lean Six Sigma to gain consistency, predictability, and sustainability.
In this Lean Six Sigma resource article, we broke down the basics to understand this powerful process improvement discipline. Here, we want to discuss the five laws that govern any Lean Six Sigma implementation.
The five laws of Lean Six Sigma are based on the combined principles of Lean and Six Sigma. In our Lean Six Sigma resource article, we explained how Lean focuses on flow, speed, and cost by reducing or eliminating process waste and optimizing process flow. Six Sigma, on the other hand, focuses on consistency and quality by reducing or eliminating process variation and defects. All of these contribute to greater customer satisfaction and an overall increase in process efficiency, which then leads to higher ROI.
The observance and application of the five laws of Lean Six Sigma enable organizations to chart a path towards continuously improving their business operations and exceeding customer expectations.
The Five Laws of Lean Six Sigma
Let’s get to know the five laws of Lean Six Sigma and what they mean for business success.
Zeroth Law: The Law of the Market
While there are five laws in Lean Six Sigma, the first law is referred to as the zeroth law. This is because it is the fundamental law on which all other laws are dependent on. It is called the Law of Market. If we go back to the principles of Lean Six Sigma, the first one states that businesses should focus on the customer. We must understand that meeting customer needs and expectations are directly related to profits. In Six Sigma, the concept of Critical to Quality (CTQ) determines the success of any product or process. CTQs are derived from the Voice of the Customer (VOC) which is another Six Sigma concept. What this simply means is customers are the ones who will define quality.
The standards, requirements, and specifications for the creation and delivery of products and services are based on these CTQs. The zeroth law of Lean Six Sigma lays the foundation for sustained business growth and profits. Without understanding your customer’s needs and expectations, you can’t effectively and sustainably increase ROI.
First Law: The Law of Flexibility
The Law of Flexibility states that the speed or velocity of any process is correlated to its ability to adapt to changing requirements. So if you want to deliver fast, you need to decrease the time it takes for your process to changeover from one specification to another. Any time that is spent on changeover is essentially lost or unproductive time. Building a process that is agile and flexible will allow businesses to meet delivery requirements and expectations despite changing demands. This is especially crucial for complex businesses that offer various product and service options.
Second Law: The Law of Focus
The Law of Focus takes its cue from the Pareto Principle. This law states that 80% of the delays experienced in any business process are caused by 20% of the process activities. To increase gains from any process improvement initiative, businesses must focus on improving and optimizing those 20% activities. During your Lean Six Sigma project implementation, you’ll get to recognize these 20% activities are mostly non-value adding. Eliminating or reducing the time spent on non-value adding activities will allow your business to focus its resources on value-adding activities. This results in higher levels of cost-efficiency.
Third Law: The Law of Velocity
Also known as Little’s Law, the Law of Velocity states that the speed of a process is inversely related to the amount of Work-In-Progress (WIP) items at any given time.
Our metric for speed, in this case, is the lead time, which is the amount of time it takes for a product or service to be completed from the time the customer request is triggered. Average Completion Rate is the number of work items that get finished within a given period.
Using this formula we know that the more WIP items in your process, the slower it gets. By limiting the number of WIP items in your system, you can lower your lead time and deliver faster to customers. Kanban, one of the pillars of the Toyota Production System, complements this law. One of its key properties is to limit work-in-progress to avoid tasks from accumulating at any point in the process.
Fourth Law: The Law of Complexity and Cost
In Lean Six Sigma terms, process complexity can be described by the different types of products, services, variations, parts, options, or features that your processes handle. While some complexity or variation is beneficial as this provides options to customers and can cater to varying preferences, too much complexity can only become costly for businesses. The Law of Complexity and Cost push businesses to find the balance in terms of process complexity, cost, and speed.
Enforcing the Laws of Lean Six Sigma
Strict implementation of Lean Six Sigma is governed by these five laws. This will ensure a successful implementation and a sustainable process that can support continuous business growth. While implementing Lean Six Sigma requires significant effort and resources, proper implementation is definitely beneficial for businesses. As businesses optimize their processes, cost decreases, quality increases, delivery becomes faster, and customer satisfaction skyrockets. Truly, Lean Six Sigma is one powerful process improvement tool that companies should not miss.