Lean Six Sigma

Categories: Company Management

What do Toyota’s lean manufacturing process, Motorola’s (and the old good version of General Electric's) Six Sigma quality improvement process, and colon cleanses have in common? They’re all about eliminating waste. Though, for today’s discussion, we’re only going to focus on the first two.

When we combine lean and Six Sigma, we get something new and exciting called…wait for it…Lean Six Sigma.

Lean Six Sigma is a team-based approach to improving efficiency and productivity at work through the elimination of waste. According to this philosophy, there are eight kinds of waste, or muda: Defects, Overproduction, Waiting, Non-utilized talent, Transportation, Inventory, Motion, and Extra processing. We capitalized those terms so everyone could see that they even come with their own fun acronym: DOWNTIME. Get it? ‘Cuz downtime is wasted time? Cleverness squared.

Anyway, the whole point is that anything a business does that doesn’t create value—like holding onto a lot of extra inventory of something, for example—is muda, and should be eliminated. How this happens will differ depending on the type of business we’re talking about, but as long as it’s a team approach that ends up adding value to the organization through the elimination of muda, it’ll have Lean Six Sigma Master Black Belts nodding in approval.

Wait, did we just switch topics from waste elimination to the martial arts? No, we did not; we were simply making a reference to one of the levels of Lean Six Sigma certification a person can receive. There are four standard certifications, or belts—yellow, green, black, and master black—though individual industries (like construction, for example) may add their own certifications for issues specific to them.

Find other enlightening terms in Shmoop Finance Genius Bar(f)