Page 28 - Lean six sigma demystified

Chapter 1 What iS Lean Six Sigm a ? 7

Calculate your benefits

Your Business Reduce Costs Example

1. Gross revenue $__________ $10 million
2. Annual expenses $__________ $9 million
3. Current net profit (1 – 2) $__________ $1 million
4. Reduce costs by 10% (2 × 10%) $__________ $900,000
5. New net profit (3 + 4) $__________ $1,900,000

Just think what saving a fraction of that waste could do for your productivity
and profitability!
The urgencies of any business can consume all of your time. Fortunately,
given the right gauges on your operation’s dashboard, it’s easy to diagnose
where to focus your improvement efforts even while you are still working in
your business.

The End of Common Sense

When I worked in a telephone company, managers used to say that process
improvement is “just common sense,” but what I’ve learned is that common
sense will only get you to a 1% to 3% error rate. Hospitals get to a 1% error rate
on things like infection rates and medication errors, but that’s where they reach
the edges of human perception, the end of common sense.
When you reach the end of what you can do with one problem-solving tech-
nology (e.g., common sense), you need to look to the next level: systematic

problem solving and the tools of Lean Six Sigma.

It’s Not Your Fault!

You know there are still unsolved problems in your business, but it’s not your
fault. In The Structure of Scientific Revolutions, Thomas Kuhn found that humans
are natural problem solvers. He discovered a pattern to our ongoing ability to
solve problems: an S-shaped curve. When confronted with a new type of prob-
lem, new methods are tried and the most successful one is rapidly adopted. But
over time, the method’s ability to solve that class of problems levels off.
At this point, almost everyone is fully vested in the old paradigm and a fringe
group is exploring ways to “jump the curve” to the next paradigm of solution. The