The economy in the UK is officially growing and businesses across the country are more positive about their outlook. But, while many organisations are looking to grow, the continued uncertainty in the UK economy means business leaders remain jumpy.
Indeed, the Trends and Success Factors in Business Process Excellence 2014 by PEX found that sustained growth is considered a top business challenge in the year ahead by 47.7% of executives. Some 25% cited it as a primary challenge.
Interestingly, more than 40% said that implementing operational efficiency would also be one of their top three challenges this year. That both sustainable growth and process excellence come out top of the list illustrates just how closely the two are linked.
But how can process excellence (or business improvement to give it one of its other incarnations) help with sustainable growth?
From the horse’s mouth
To find out the actual impact Lean Six Sigma and Business Improvement have on a company, we asked those with first-hand experience. We polled Black Belts who have certified with us and completed projects in their own place of work and asked them how their training had impacted their workplace.
More than two-thirds said they had made meaningful change in how the company operated, with 66.7% saying they are personally responsible for introducing significant cost savings. In addition, more than 30% said that they had played a vital role in improving the end product for customers.
Our previous conversations with past delegates show that each Green Belt will identify average savings of over £25,000 per completed project, with average annual savings at around £75,000. For Black Belts, these averages rise to over £50,000 and £112,000 respectively.
These figures come from implementing the core tenets of reducing waste and variation, and introducing standardisation. Projects identify areas of waste, or where money is being spent on mistakes and rework as a result of excessive variation, and implement bespoke solutions. Every problem is thoroughly explored to identify a solution that fixes the problem permanently, but also prevents new problems arising from the solution.
To be effective improvements must not only fix the issue, but also be accepted by the employees involved in the process.
The bigger picture
It’s clear then that Lean Six Sigma can increase efficiency and deliver savings on a project by project basis, but it’s when the ideas become absorbed in a company’s culture that things really start to make a difference.
According to the 1990 book, The Machine that Changed the World by James Womack, early Lean adopter Toyota’s gross assembly hours were more than 50% lower than competitor GM in 1986. Defects per car were lower, as was assembly space per car. Inventories of parts took two hours rather than two weeks and, as a result, lead time was significantly lower.
With lead time reduced, Toyota can produce more cars in a shorter space of time and deliver them to buyer more quickly delivering increased profits and happier customers.
Indeed, research in 2006 by Aberdeen Group and sponsored by Minitab, revealed that organisation with a formal Six Sigma programme (which included adopting a DMAIC methodology, requiring Black Belts to produce results to certify and have outcomes validated by a finance department) saw 40% higher savings than those with less rigorous programmes.
If organisations save money on their costs, while improving quality and output, those savings become available for investment in growth-generation within the company. Furthermore, companies with an embedded continuous improvement culture are more innovative as they are constantly looking for ways to advance their business.
Combining this cost saving with a more engaged, innovative team paves the way for a future of sustainable growth.
100% Effective can help you use Lean Six Sigma to generate growth at your own company, get in touch to find out how we can help.