Industry research on lean and six sigma implementation in government and public sector preview

LASSIB SOCIETY

INDUSTRY RESEARCH REPORT ON LEAN AND SIX SIGMA IMPLEMENTATION IN GOVERNMENT AND PUBLIC SECTOR

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Industry Research Report on Lean and Six Sigma Implementation in Government and Public Sector

Page 2 of 26 Version 1.0 Release Date: January14th 2013

Lean and Six Sigma International Board http://www.lassib.org/

An initiative of LASSIB Society

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TABLE OF CONTENTS

1. Abstract.............................................................................................................................................................................4

2. Present Day Challenges in Organizations....................................................................................................................5

3. Challenges Unique to Governmnet and Public Sector..............................................................................................6

4. Role of Lean Six Sigma to overcome these challenges .............................................................................................7

4.1. Strategic Benefits ..................................................................................................................................................7

4.2. Operational Benefits.............................................................................................................................................8

5. LASSIB’s Proposed Approach to Implement Lean and Six Sigma in Government and Public Sector ...............9

6. Case Studies of Lean and Six Sigma implementation in Government and Public Sector ................................ 11

6.1. Improving overall Permit Issuance Process for Transport Companies in Australia................................ 11

6.2. Florida Department of Revenue ...................................................................................................................... 11

6.3. One of the Largest Producer and Transporter of Energy in United States .............................................. 12

6.4. Water, Electrical and Sewer Utilities Organization in United States ........................................................ 13

6.5. City of Fort Wayne, Indiana.............................................................................................................................. 14

6.6. National Nuclear Security Administration, United States........................................................................... 15

6.7. Lean Six Sigma to Improve Tax Collection ..................................................................................................... 15

7. What is Lean?................................................................................................................................................................ 16

7.1. Toyota Production System................................................................................................................................ 16

7.2. MUDA i.e. Lean Waste Elimination ................................................................................................................. 17

8. What is Six Sigma? ....................................................................................................................................................... 20

9. Conclusion ..................................................................................................................................................................... 21

10. Bibliography ............................................................................................................................................................ 22

11. About Lean and Six Sigma International Board ................................................................................................. 23

12. About LASSIB Society .............................................................................................................................................. 23

13. About LASSIB Research Reports ........................................................................................................................... 23

14. Contributors to the Research Report .................................................................................................................. 24

15. How You Can Leverage and Support LASSIB Society ........................................................................................ 25





1. ABSTRACT

The purpose ofcreating this research report is to showcase the Return on Investments (ROI) and

Benefits of using Lean Six Sigma techniques in Government and Public Sector.

Government and Public Sectorare unique in the fundamental challenges they face, but at the

same time the priorities and goals remain pretty much the same as that of other organizations.

They also need to deliver customer value, at the same time minimize costs and build sustained

excellence.

This report looks at tools and techniques of Lean and Six Sigma, and how these can help the

Government and Public Sectoraddress these requirements. The report includes an overview of

both Lean and Six Sigma coupled with case studies on how these techniques have helped

Government and Public Sector organizations deliver value to their customers.

The report draws LASSIB Society’s experience in theGovernment and Public Sector as well as

secondary research sources. Please refer to the list of references at the end of the report for a

complete list of sources used to build this report.





2. PRESENT DAY CHALLENGES IN ORGANIZATIONS





3. CHALLENGES UNIQUE TO GOVERNMNET AND PUBLIC SECTOR





4. ROLE OF LEAN SIX SIGMA TO OVERCOME THESE CHALLENGES

4.1. STRATEGIC BENEFITS





4.2. OPERATIONALBENEFITS





5. LASSIB’S PROPOSED APPROACH TO IMPLEMENT LEAN AND S IX SIGMA IN

GOVERNMENT AND PUBLIC SECTOR









6. CASE STUDIES OF LEAN AND SIX SIGMA IMPLEMENTATION IN

GOVERNMENTAND PUBLIC SECTOR

6.1. IMPROVING OVERALL PERMIT ISSUANCE PROCESS FOR TRANSPORT COMPANIES

IN AUSTRALIA

6.2. FLORIDA DEPARTMENT OF REVENUE





6.3. ONE OF THE LARGEST PRODUCER AND TRANSPORTER OF ENERGY IN UNITED

STATES





6.4. WATER, ELECTRICAL AND SEWER UTILITIES ORGANIZATION IN UNITED STATES





6.5. CITY OF FORT WAYNE, INDIANA





6.6. NATIONAL NUCLEAR SECURITY ADMINISTRATION, UNITED STATES

6.7. LEAN SIX SIGMA TO IMPROVE TAX COLLECTION





7. WHATISLEAN?

Lean is a philosophy and a set of management techniques focused on continuous “waste

eliminating” so that every process, task or work action is made “value adding” (the real output

customer pays for) as viewed from customer perspective.

This is achieved through the implementation of the Toyota Production System and Lean Waste

Elimination, also called as Muda.

7.1. TOYOTA PRODUCTION SYSTEM

(Toyota, n.d.)Toyota Production System (TPS) has three desired outcomes:

To provide the customer with the highest quality, at lowest possible cost, in a timely

manner with the shortest possible lead times

To provide members with work satisfaction, job security and fair treatment

It gives the organization flexibility to respond to the market, achieve profit through

cost reduction activities and long-term prosperity

TPS strives for the absolute elimination of waste, overburden and unevenness in all areas to

allow members to work smoothly and efficiently. The foundations of TPS are built on

standardisation to ensure a safe method of operation and a consistent approach to quality.

Just-in-Time:





o Essentially, 'Just-in-Time' manufacturing consists of allowing the entire

production process to be regulated by the natural laws of supply and demand

o Customer demand stimulates the production of a product or delivery of the

service. In turn the production or delivery stimulates production and delivery of

the necessary parts and services, and so on

o The result is that the right products and services are produced and served, and

provided in the exact amount needed - and when and where they are needed

o Under 'Just-in-Time' the ultimate arbiter is always the customer. This is because

activity in the system only occurs in response to customer orders. Production is

'pulled' by the customer rather than being 'pushed' by the needs or capabilities

of the production system itself

Jidoka:

o In Japanese 'Jidoka' simply means automation. At Toyota it means 'automation

with a human touch'

o In 1902 Sakichi Toyoda invented the world's first automatic loom that would

stop automatically if any of the threads snapped. This principal, Jidoka, of

designing equipment and processes to stop and call attention to problems

immediately when they sense a problem is a central concept of TPS

Heijunka:(Wikipedia, 2012)

o Production leveling, also known as production smoothing or – by its Japanese

original term – Heijunkais a technique for reducing the Muda (waste)

o It was vital to the development of production efficiency in the Toyota Production

System and Lean Manufacturing. The goal is to produce intermediate goods at a

constant rate so that further processing may also be carried out at a constant

and predictable rate.

7.2. MUDA I.E. LEAN WASTE ELIMINATION

Lean “waste elimination” targets the “Eight Wastes” namely:

Motion – Mainly people, document movement, searching etc.

Waiting – For material, information, people, equipment, procedures, approvals and

more

Overproduction – Making more than what is needed by customer / market demand





Over-processing – Doing more to a product / service (but not perceived as value by

customer or business)

Defects – Errors, mistakes, non-

complying products, services,

documents, transactions

Rework and Scrap – Products,

transactions or outputs not

meeting specifications and have to

be fixed, redone, rectified, marked

down or scrapped / unusable

Inventory – Buffer stocks or

resources (Raw, Work in process,

Finished Goods, Bench staff etc.)

Transportation – Movement of products / items during or after production

Unused Creativity – People knowledge and skills that are not utilized by the

company

Lean methods help to remove / reduce waste and contributes to drive agility (velocity)

through smooth work flow across the organization resulting in rapid fulfilment of customer

needs in an optimum manner.

Lean tools and techniques are designed to eliminate waste, and every organization is subject

to generating waste.

Waste in the supply chain

Waste in the technical specifications

Waste in the staff support functions

Waste in the office processing

Waste in the manufacturing processes

Waste equates to dollars wasted, opportunities lost, and loss of human motivation. Each of

these three criteria can have a negative impact on the organization's cost.





Waste equates to dollars wasted

Every organization has an intrinsic proclivity to generate waste in the way they run their

business. Waste is the difference between the way things are now and the way things could

be if everything were perfect - no errors, troubles, problems or complexities.

The Lean Enterprise process can be simplified by first, “find the waste;” secondly, to “get rid

of the waste;” and thirdly, “prevent its return-forever." The Lean process looks everywhere

for waste and reviews every activity to evaluate whether it adds value from the external

customer’s viewpoint.

Waste equates to opportunities lost

Implementing lean tools and techniques will enable your organization, no matter how large

or small, to meet your customers’ demand for a quality product or service, at the time they

need it, and for a price that is competitive.

A Lean system also creates processes that are agile and efficient, and that will help your

company manage its total costs and provide a fair ROI.

Waste equates to loss of human motivation

For Lean management to be successful, everyone in your organization must contribute to

the effort. They must feel a part of the improvement process, and be empowered to commit

time and intellectual resources to the effort.





8. WHATIS SIX SIGMA?

Six Sigma is a break through and continuous improvement management strategy, originally

developed by Motorola in 1986. Six Sigma became well known after Jack Welch made it a

central focus of his business strategy at General Electric in 1995, and today it is widely used in

many sectors of industry.

Six Sigma seeks to help prioritize and define organizational strategies that help with:

Better delivery of value to end customers, along with

Improve Revenue Realization

Six Sigma also helps improve the quality of outcomes delivered by identifying and removing the

causes of defects (errors) and minimizing variability in processes.

It uses a set of Management methods, and creates a special infrastructure of people within the

organization ("Black Belts", "Green Belts", etc.) who are experts in these methods. Each Six

Sigma project carried out within an organization follows a defined sequence of steps and has

quantified outcomes.

In the late-1980's following the success of the initiative, Motorola extended the Six Sigma

methods to its critical business processes, and significantly Six Sigma became a formalized in-

house 'branded' name for an Improvement Methodology, i.e., beyond purely 'defect reduction',

in Motorola Inc.

In a little over ten years, Six Sigma quickly became not only a hugely popular methodology used

by many corporations for quality and process improvement.

System1979: Motorola Starts Six

Sigma Initiative

1986: Motorola Saves ~$16 Billion

1995: Jack Welch

Initiates Six Sigma in GE

1998: Allied Signal Saves ~$1.2 Billion

2000: GE Saves ~$2 Billion Annually





The tools, techniques and framework of Six Sigma have helped organizations like GE, Honeywell,

and Allied Signal save more than $2 Billion dollars annually. In addition to cost reduction,

organizations have used Six Sigma to define their strategy, identify and meet customer

requirements and overall achieve Organization excellence.

9. CONCLUSION

Far from being unable to plan and implement improvement methodologies, Government and

Public Sectororganizations have a unique opportunity to benefit from doing so. While it is true

that improvement efforts can be frustrated by changes in administration and that processes are

subject to change, there are still many opportunities for those with an eye for improving

customer value delivery. If good data is available, Six Sigma may be useful. If not, Lean or other

continuous process improvement techniques may be more appropriate. Either way, the reward

is compelling:

Savings and improvements not only for the Government and Public Sector, but also

Savings of tax payers’ money and improvements to the value delivered to the respective

communities





10. BIBLIOGRAPHY

Abbott, B. (2010, February 26). Six Sigma in Government: Focusing on the Customer . Retrieved from

isixsigma.com: http://www.isixsigma.com/industries/government/six-sigma-government-focusing-

customer/

American Society for Quality. (2008, JANUARY 30). KNOWLEDGE BASED LEADERSHIP (KBL) OR SIX SIGMA

“LIGHT BUSINESS PROCESS IMPROVEMENT" CASE STUDY SUMMARY. Retrieved from American Society

for Quality: http://rube.asq.org/gov/knowledge-based-leadership.pdf

Dominion. (n.d.). Six Sigma at Dominion. Retrieved from Dominion: https://www.dom.com/about/six-

sigma/index.jsp

Maleyeff, J. (2007). Improving Service Delivery in Government with Lean Six Sigma . Retrieved from IBM Center

for the Business of Government: http://www.businessofgovernment.org/report/improving-service-

delivery-government-lean-six-sigma

Society, LASSIB. (2010). Lean Six Sigma White Belt eLearning. Retrieved August 28, 2012, from Lean and Six

Sigma International Board: www.lassib.org

Toyota. (n.d.). Toyota Production System. Retrieved from Toyota:

http://www.toyota.com.au/toyota/company/operations/toyota -production-system

U. S. Mayor Newspaper. (2001, June 11). Best Practice: Fort Wayne Adopts Six Sigma Methodology to Improve

City Services. Retrieved from United States Conference of Mayors:

http:www.usmayors.org/usmayornewspaper/documents/06_11_01/ft_wayne_best_practice.asp

United States Environmental Protection Agency. (2010). Lean Six Sigma and Environment Case Study: JEA .

Retrieved from United States Environmental Protection Agency:

http://www.epa.gov/lean/environment/studies/jea.pdf

UVM. (n.d.). http://www.uvm.edu/~intrnatl/iew/. Retrieved from UVM.edu.

WEEK, I. (n.d.). Can Lean Six Sigma reduce Government waste? Retrieved from

http://www.industryweek.com/public-policy/can-lean-six-sigma-reduce-government-waste

Wikipedia. (2012, November 11). Production leveling. Retrieved from Wikipedia:

http://en.wikipedia.org/wiki/Production_leveling





11. ABOUTLEAN AND SIX SIGMA INTERNATIONAL BOARD

Lean and Six Sigma International Board, an initiative of LASSIB Society is an organization

pioneering and spreading the knowledge of Lean and Six Sigmato the worldwide community.

Our vision is to create and provide the world's most useful Lean and Six Sigma resource centre

and certification programs, available for the users at the lowest cost.

12. ABOUT LASSIB SOCIETY

LASSIB Society is a not-for-profit organization focussed on ‘Nurturing Next Generation

Governance Globally’.

LASSIB Society’s mission is to create and provide the world's most useful ‘Governance

Management’ resource centre and a set of certification programs, available for Individuals,

Organizations and Governments at the lowest cost.

Based on the principles on Gandhian Engineering, we deliver cutting edge industry research and

enhanced value to the community at large.

LASSIB Society organizes multiple events, enabling face-to-face interactions and virtual

interactions among the global community.

13. ABOUT LASSIB RESEARCH REPORTS

In conjunction with the Knowledge Base LASSIB Society publishes, LASSIB Society also releases a

host of research reports through primary and secondary research. These research reports get

wide audience across the industry and are sought after by International Journals as well.

Some of the research reports published by LASSIB Society around the world include:

Framework for Implementation of Lean Tools in Indian MSME Sector

Lean Six Sigma for Graduates and Post Graduates

Return on Investment after Implementation of 5S

Industry Research on Lean and Six Sigma Implementation in Logistics Industry





Industry Research on Lean and Six Sigma Implementation in Electrical and Electronic

Industry

These Research Reports are a valuable resource for the industry at large, and serve to provide

key insights that can be used by industry leaders to shape the strategy for their organizations.

Please refer to http://www.lassib.org/ for details of all research reports of LASSIB Society.

14. CONTRIBUTORS TO THE RESEARCH REPORT

Role Full Name Designation Organization

Author Mr.Rana Chetan Singh Intern, M. Tech in Industrial Engineering and

Management

Indian School of Mines University

Dhanbad

Reviewer Mr. Ujwal Tripurari Global Evangelist LASSIB Society

Reviewer Ms. Shilpa Roy Kota Secretary LASSIB Society

Reviewer Mr. Pavan Kota Executive President LASSIB Society

http://www.lassib.org/





15. HOWYOUCAN LEVERAGEAND SUPPORT LASSIB SOCIETY

Although LASSIB is a not for profit organization, it does not believe in raising funds through charitable means,

without providing direct value to the contributor. There are many different ways in which organizations, institutions, governments and individuals across the globe are working with LASSIB to deliver value to themselves and their customers. LASSIB is proud to be associated with all of them in developing and delivering

cutting edge solutions that have not only delivered quantified business value to them but also added thought leadership to the industry at large. Below are some ways in which you can leverage and support LASSIB.

Leverage LASSIB for

your initiatives

Benefits to you

Support to LASSIB

Become an Individual or Organization

Member of LASSIB. Visit https://lassib.org/index.php/membershipto

know more about LASSIB membership options.

Access complete knowledge base including

training materials, best practices, case studies, videos and webinars from LASSIB Society

Network, learn and contribute to the fastest

growing community of specialist, senior leaders from the industry

Get latest updates, insights and research from

the industry delivered to your Inbox

Funds collected through membership fees are used to

maintain and grow LASSIB knowledge base.

Leverage Training and Certification in themes of Organization

Excellence

Get trained from the leading experts from the

industry who bring together years of experience and best in class training skil ls, tools and technologies

Acquire not only knowledge but skills to

implement the knowledge in real life scenarios Attain internationally respected certifications

thereby adding value to your organization and yourself

Join the growing panel of Accredited Training

Providers (ATP) and Accredited Test Centres

(ATC) of LASSIB Society to deliver value within your organization.

Training and certification fees charged by LASSIB Society are the lowest in the Industry in

order to ensure these key components are available within reach to masses. The fees charged helps cover the

cost incurred by LASSIB Society for hiring trainers and issuing certificates

Consult with LASSIB experts to deliver business and customer value

Solve organization problems, create strategy, deliver customer value through proven tools and techniques of Lean and Six Sigma

Consulting fees derived by LASSIB Society aids LASSIB to fund research, host events and provide free consulting

services to organizations which cannot afford to pay yet.

Participate in LASSIB Events

Network, brainstorm, and learn from industry leaders, face to face, over exciting discussions

Sponsorship costs and delegate fees assist LASSIB in conducting these events and

spreading the awareness within the community.

Participate and leverage Industry Research

Understand the trends in the industry

Identify common challenges and best

practices Hear from experts on future forecasts

By participating in building these reports, you provide the opportunity to LASSIB to share your knowledge with the rest

of the industry.

Please refer to http://www.lassib.org/ for details on LASSIB or

Send a note to [email protected] get connected to a LASSIB Associate or

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