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Lean Six Sigma is a methodology that creates processes within an organization to cut waste and improve the company’s performance. However, studies have shown that over the past decade applying Lean Manufacturing and Six Sigma can create problems for companies financially and potential problems for employees. Companies should take great care before implementing a Lean Six Sigma solution because in some instances, going lean can do more harm than good both financially for the organization as well as destroying employee loyalty and moral.
The Effect of Lean Six Sigma on the Employee and the Organization
The methodology of Lean Six Sigma is the merger of two business tools that includes Lean Manufacturing and Six Sigma. Six Sigma focuses on improving current business processes and performance while Lean Manufacturing focuses on the improvement of the processes of an organization by using highly skilled employees to increase speed and quality. Combining the two methodologies creates an organization that focuses on quality, efficiency and speed to lower operational costs and increase profits. By following the Lean Six Sigma methodology, many companies have attempted to create a lean, waste-free environment ultimately at the expense of the employee and occasionally at the expense of the organization.
Variability and Failing the Lean Test
Creating a process is not always the answer to every organization. Organizations attempting to reduce waste may find themselves stuck trying to understand precisely where vital financial cuts need to take place. Variability can actually prevent Lean Six Sigma from working in a business environment and can sometimes impact flow in a negative way (Locher, 2007, p. 54). As demand in many organizations can be unpredictable, many employees will find the need to multitask in order to get the job done. Multitasking itself creates highly skilled employees that are required in a lean environment. Companies that employ individuals who are capable of multitasking benefit from these employees as the organization see’s a high degree of flexibility and responsiveness with a reduction in operational costs. Companies looking to cut waste in an environment where employees are already stretched thin by performing multiple duties and tasks beyond their job description could find its employees becoming even more overworked and see a larger degradation of performance due to understaffing in an effort to cut costs. These cost-cutting measures could actually do more harm than good to an organization.
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Within the last decade, companies in the United States have invested heavily in implementing a lean environment. Many companies have attempted to cut costs wherever they see an opportunity to save money. There have been many cases documenting Lean Six Sigma successes in defect reduction, high investment returns, cycle time reduction, waste reduction, significant process improvement and an increase in customer satisfaction (Edgeman & Bigio, 2004, p. 27). The truth of the matter is, for every successful documented implementation of a Lean Six Sigma environment, there are an equal if not higher number of undocumented failures. Occasionally, even the successes are not wholly attributed to the Lean Six Sigma process.
The question currently being asked, are United States companies doing poorly with lean and is lean faltering? Studies over the past 10 years have shown that United States companies are not only doing poorly, but that they have become worse over the past five to seven years (Schonberger, 2007, p.22). Lean Manufacturing was a brilliant idea that achieved great success with car manufacturers like Toyota. However, these practices have actually hurt many organizations when companies attempt to apply them internally to certain practices. Too many companies have attempted to correct problems internally using certain lean methods that should only be applied to manufacturing. Companies have applied the Lean Six Sigma approach to cut waste within the organization by reducing raw materials, work-in-progress and finished goods inventory. Companies have also streamlined their own employees reducing headcount and hiring or retraining remaining staff that can perform many tasks instead of specific jobs. In-fact, organizations that have applied Lean Six Sigma and Lean Manufacturing internally are still seeing losses. Companies have neglected to look externally for waste instead of constantly focusing on internal processes and problems. Creating these reductions, companies are actually seeing two to 10 times more lead-time externally than internally (Schonberger, 2007, p. 22). Just-in-time (JIT) inventory was thought to reduce company waste by allowing a company to concentrate on manufacturing instead of worrying about spending money on resources and finished product. However, after dramatically changing the corporate environment to reduce waste internally, it appears that the external waste is having the ultimate impact on not only the employees who are stretched to perform multiple tasks once the materials arrive for manufacturing, but also to the organization that is still losing money due to very long lead times in ordering materials for manufacturing. Some large organizations have been able to effectively synchronize demand with supply chains like Dell and Wal-Mart; however, many organizations are suffering because of a lack of this understanding.
Problems with Teams and Middle Management
Lean Six Sigma’s implementation counts heavily on the project team. The Lean Six Sigma process applies consultants who create project teams within a company to solve problems. These well-led cross-functional teams build ownership of problems that they are tasked to solve. The issues begin when many individuals begin to think that problems can only be solved in these teams (McManus, 2007, p. 20). Relying on teams for problem solving can also lead to sustainability after the improvement is implemented. Instead, organizations should have a process improvement team in place that involves much of the workforce. By creating specific teams who implement improvements, an organization is ignoring the fact that these improvements will not always stay in-place after implementation. Departments might resist or be unable to sustain certain improvements once an external team implements specific changes. These teams can also create employee animosity in that employees might feel that their jobs are threatened due to outside team members implementing department changes at the direction of a consultant. This can led to high stress for employees, diminished work capacity as well as diminishing department cohesion. These effects can also be seen in a company’s bottom line as deadlines slip and projects fail to be complete.
Middle management resistance, employee resistance and lack of implementation know-how are the top three reasons listed as to why Lean Six Sigma might fail (Jusko, 2007, p. 36). Application of lean management can expose department or specific employee issues (Danford, 2007, p.42). Middle managers can feel threatened by the exposure of these issues as they might feel that these issues might point to their own inability to manage. Many middle managers also feel that cutting organizational costs could mean cutting middle management, as many companies have demonstrated in the past. This creates a great deal of friction within the organization and within entire departments. Certainly, employees will begin to fear for their jobs when discussion of lean processes and implementations reach their own departments as organizations attempt to cut waste. Employees have good measure to be fearful as many organizations have demonstrated in the past that cutting departmental waste often spells a reduction in force (RIF).
Fixing Problems, Not Employees
Lean Six Sigma preaches identifying the problem and fixing the process, not the employees (Cveykus & Carter, 2006, p. 26). Using this method, a company should be able to become more efficient and reduce waste. However, many companies have often seen losses after implementing lean processes and have resorted to cutting the ultimate visible cost; the employee. “An intense focus on productivity can often lead to legal, moral and ethical compromise” (Stimson, 2005, p. 67). Organizations strive to cut operational costs in order to show a higher profit. Often, publicly traded companies need to satisfy the bankers and the investors before they ever look to taking care of their own employees. For many companies, the bottom line is highly significant for continued operations. A company needs to be able to afford its employees. When a company desires to cut costs, it desires to increase efficiency, customer service, quality, profitability, cost reduction and finally, the elimination of unproductive positions (Simone & Kleiner, 2004, p. 125). As Lean Six Sigma strives to reduce company and department waste, unproductive positions can fall under the category of waste. Likewise, employees could be tasked to learn multiple positions in order to keep operational expenses down. An organization with an excellent culture could destroy that culture overnight through position elimination and over tasking remaining employees. Employees that remain would be fearful of losing their jobs. However, in reducing organization headcount, a company would lose the most important thing an employee can give; loyalty. Such an organization could possible see employee attrition as disgruntled employees leave for greener pastures effectively leaving the company less staffed and in a time-sensitive predicament where project deadlines will not be met. This situation could hurt an organization even more in the long run than applying the Lean Six Sigma methodology by reducing production, customer service and profits. Organizations may in-fact experience more waste do to Lean Six Sigma practices.
Lean Six Sigma is considered to be an excellent methodology used to reduce company waste and cost while increasing efficiency, profitability and customer satisfaction. However, a company’s application of Lean Six Sigma could hurt its overall organization and employee base if the company decides that the employee should figure in to the formula of cost reduction. Implementing position elimination within an organization can hurt employee morale, create stress within the organization due to more work and fewer employees and ultimately can led to hurting the company as a whole by increasing costs through employee attrition and reducing profits and customer service. Implementing lean manufacturing can hurt the organization as well. Companies that do not take the time to properly research their supply and demand infrastructure will find that even though internal factors see a lean implementation, external factors will still suffer costing the company more financially in the long run. Organizations must perform the proper research when implementing a lean manufacturing environment to ensure that supply and demand is taken into account. Not performing the proper research will see an organization lose money due to delays in actually getting product in to the manufacturing process. Resources will be wasted and the organization and employees will suffer due to long lead times from suppliers.
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