Processes develop over time and change according to people know-how and tool support. If left unmanaged, the output might become sub-optimal and costly, as defects develop over time and non-value added steps are typically performed.
Lean sigma is a tool-kit to identify issues both within and outside the value chain. If done rigorously, Lean Sigma is a solution to align the process to customer needs, eliminate waste and put in place a control environment. If you have an problem with an existing process, and fixing it could lead to increased revenue, reduced cost or improved efficiency, then a Lean Sigma 5-step approach (‘DMAIC’) would be most beneficial.
This is how the phased approach takes place:
1. Define Opportunities
In this first phase a project charter is created whereby the problem is stated in its full impact. Which processes are included in scope and what is out of scope. Also what kind of resources are needed over which time. A goal statement is made and an initial business case is calculated. Customer and business requirements are specified. A tollgate meeting is held where important stakeholders decide about project continuation.
2. Measure Performance
In this phase the baseline performance is captured for all relevant key performance indicators. The statistical variation is calculated and based on observable defects a sigma value is assigned. The business case is revisited to fine-tune calculations based on new findings.
3. Analyze Opportunities
In the Analyze phase the problem statement is solidified and all relevant root causes are identified and validated. Usually Measure and Analyze phase are presented together in a tollgate meeting to check if the necessary data transparency has been obtained to warrant a project continuation.
4. Improve Process
In this creative phase solution ideas are generated to tackle the root causes. Finding the best fit will be based on tailor-made criteria for the organization. A solution report will be presented in a tollgate meeting to decide on what to implement
5. Control Performance
After the solution has been implemented, the process is measured again and compared to the baseline. It is then managed according to the control plan. Here the agreed measures and targets are met. Best practice can then be shared and replicated across the organization.
Potential for Cost-Reducing and Efficiency-Increasing Measures in Financial Institutions
KfW-Report No. 3, 2016
Autors: Diana Cazacu, Tatyana Dolgaya, Till Bruckner, Michael Kortenbusch