How Small Businesses Gain an Advantage with Lean Six Sigma
this is my site written on December 9, 2009 –

As Featured On EzineArticles

“Lean six sigma is an excellent way to improve the bottom line of any business“.  As a continuous improvement practitioner, I may be perceived as biased when discussing the merits of lean and six sigma so I am always on the lookout for other sources (and data) to support what I know is true from my own experience.   A recent study published by the Aberdeen Group entitled “Taking Lean Six Sigma Beyond Manufacturing” has established remarkable evidence that this claim is justified.   A survey of over 600 business executives reveals that those who use these operational excellence techniques properly, improve their performance and profitability.

The report illustrates that best-in-class performers were able to generate savings of more than $5 million dollars in the first two years of improvement initiatives.   While this seems impressive, it is probably not representative of the benefits for small and medium-sized companies (SME) so these additional indicators are much more powerful in this context; top performers increased profit margins by 19%, reduced cycle times by 24%, and improved quality by 43% in the first two years.   For a SME, this has huge ramifications.

One of the greatest challenges faced by SMEs is to manage growth effectively; how do you maintain efficiency while your business is growing?   How do you keep the same level of quality while you hire new employees?   How do you control your costs?   How do you keep yourself from getting spread too thin?   Now imagine if you worked more on the essential stuff rather than non-value added.   Imagine if you made fewer errors and had less rework.    Imagine if you were able to deliver to your customer faster.   All of a sudden, you are increasing your profit, increasing your capacity and gaining a competitive advantage.   That is what these figures mean to a small business.

There are also common characteristics of these best-in-class performers; virtually all of them have made a commitment to ingraining this culture in their companies and a large proportion (81%) have standardized their improvement methodologies throughout the company.   In addition, it has been determined that to be successful using these operational excellence approaches, companies must adopt the philosophies, methods and tools, organize and porperly oversee the improvement initiatives, and measure the results.

So how does a small business go about implementing such a program?  While it is likely not feasible to dedicate full time resources such as many larger companies do, SMEs have the advantage of easily reaching all employees and adopting a continuous improvement culture more rapidly than larger companies can.   So the sooner a business adopts the tools and techniques, the more ingrained they will become in the way things are done, and the easier it will be to manage growth afterward.

In addition, the initial investment for a SME to embark on the continuous improvement journey is much smaller that it will be for larger companies.   As a matter of fact, SMEs can probably get by initially just by training key personnel in the tools and techniques with the expectation that these will subsequently be applied in the day-to-day running of the business.   Consequently, a small investment in training (and perhaps coaching) will likely result in significant long-term payoff so it behooves SME businesses to ensure they develop this competitive advantage and position themselves to become best-in-class performers.

If you would like to know more about using these techniques in your business visit our learning category for recommended elearning courses to get you started.   On the other hand, if you are interested in coaching, please contact us and it will will be our pleasure tol find you the right coach to suit your needs.