Transaction Intensity reduction vs Lean

I am working on transaction intensity reduction. It amused me as it is different from other quality methodologies. In six-sigma, we focus more on defect reduction. Lean focuses more on reduction of cycle time. In my current project, vendor keeps sending invoices against each transaction. Lean supports single peace flow. But, it is making transaction intensity very high and unmanageable at payable end.

Someone suggested single invoice single vendor per month. However, it will create batch processing. In all this, I feel it makes sense to have optimal batch sizes than single piece flow mindlessly.  Overall cost and lead time implications should be seen.

In BPO, many calls may be automated or self-answered in FAQ format which may reduce transaction intensity. Sending bus for each passenger may not serve purpose. Batching has its own advantage. It reduces change over time in continuous process.

Six sigma experts may question need for multiple purchase order, invoices, HR training sessions, or any other voluminous activity and may plan strategy to reduce the transactions itself to make them more manageable.

Banks reduced transaction through diverting them from branch to ATM, internet or mobile. Ticket window in Indian rail has been diverted to internet, cash coupon, or monthly ticket etc.

Management learning from ANNA’s movement

Anti corruption mission of Anna hazare is big success in India. Can we implement the same change / fire in our company and organization? Some learnings can be implemented.

1. Noble Cause: We should have some cause which could drive fire among function, organization, or company. Keep individual goal aside. Change agent may get bad ratings and increments. Change agent may be most hated person in organization. Don’t bother. Give more priority to organization goals.

2. Pure Leadership : People should be able to trust your intentions. Change managers should show character. When you say someone is doing something wrong, you must be able to show that you can deliver the right.

3. Use Media effectively : Media has played major role in change. Whether it is twitter, facebook, websites, Polls, or discussion, talk in same line and lanuguage. Keep communicating with people your views and cause.

4. Keep the pressure: If buying is there, keep the pressure up. It is test of character and patiance. Take time , plan things in advance and attach again and again on same points.

5. Plan Effectively: Baba Ramdev’s plan was a failure. Anna learned from it and made plan B to tackle such disaster. During management talk, unplanned managers may bogue down by management jargons or data. Stick to your points. No legal expert is above noble cause.

Qualitative vs Quantitative problems

Which aspect is more useful in problem solving? Six-sigma focuses more on quantitative aspect i.e measurement. On other hand, Triz is mainly qualitative. No doubt, both aspects are important and just focusing heavily on one aspect may be dangerous.

Quantitative aspect has some pitfalls as quality and integrity of data. Sometimes data is not relevant and data has been picked based on someone convenience. Overload of statistical terms sometimes makes it irrelevant to use.

Qualitative discussion may go to fantasy world without any logic. Another pitfall is Triz’s focus on product innovation and relative constraints. Triz does not talk about psychological constraints and its use in service business is limited. Human behavior is unexpected. Innovation tools are more suited for physical contradictions.

Six-sigma as a methodology is very structured (DMAIC). It provides some sense of discipline in problem solving. Triz is open, risk taking, free, boundary less, and creative approach. You have to go out of problem and focus more on center of contradiction. Overall, it is structure less.

Remember, every problem is unique and both methodologies have seen success. We need to identify what kind of approach we want to follow for any specific problem. Balancing qualitative, quantitative, and psychological aspects are needed to get a problem cracked.

Six sigma journey:

I have seen interesting journey. Six -sigma is a tough journey by nature. As a mentor, my role has been more difficult. It’s like a guru telling people that you are doing wrong. All projects are problem areas and you have to push through systematic efforts. Collecting people for any change effort is a tedious task unless you have management support. We, as a human, love to do work in habitual manner. Any problem solving needs to break of this continuity and think beyond the daily routine.

In Indian prospective, it is more so as we love to cut corners. We prefer results while do talking about processes. Team thinking is needed for any problem solving. I feel major problem with six sigma methodology is excess dependence on statistical tools. It hardly provides psychological tools which are much needed to break people’s resistance.

Managing teams, collecting them from time to time and pushing them to deliver results are mammoth tasks where no statistical tool can help. You need to understand people’s requirements and interests and most importantly why they should spend their valuable time on a business problem.

As I said earlier, psychological inertia is more where management support is not there. Continuous and precise communication by various means like mail, phone, sms, or in person is needed to reinforce your objectives. Luckily, now a days in recession time, managements has huge focus on cutting down the fat and is aggressive in reducing non –value added tasks. You may see fear as a driving force in six sigma initiative.

Political interests of middle management on who will take credit of the success or project is needed to look into. Give credit to your team and each member while taking care of their ego is very sensitive part of the project. In current complex business environments, it is very difficult to exactly measure the role and responsibilities though it is desired. There are lots of perceptions about people efficiencies in management minds which may not be true always.

In day-to-day operation, managers prefer to be busy especially when six sigma meetings /trainings are planned. Sometimes, they come just to understand the concept, or to add a belt in their CV, or as their manager instructed them. I find hard to get dedicated people who want to seriously devote them on a business problem.

You can divide them in red balls (anti six sigma), yellow balls (haven’t taken the stand), or blue balls (pro six sigma). Subsequently, different strategy is needed to tackle them. Red balls want results more than process. Blue balls want process focus and training to get more maturity. And Yellow balls want more clear understanding what a six sigma professional can deliver and how?

Overall, Six sigma professionals should work around to crack this psychological barriers, or develop some tools to crack this resistance.

‘Six Sigma could change the world’

It’s not everyday that you can take a statistical methodology used for continuous improvement and apply it to solve an unwieldy 60 year-old political conflict. But if Pradeep Deshpande, president Six Sigma & Advanced Control, had his way, he’d use Six Sigma to resolve the Kashmir conflict and bring about regional prosperity. He’s even mailed a proposal to US Secretary of State Hillary Clinton outlining a formal methodology, and is confident she will express interest sooner than later.

That isn’t the only seemingly unconventional use of Six Sigma, according to Deshpande who is also Professor Emeritus of Chemical Engineering at University of Louisville. His ‘theory of national competitiveness’ using Six Sigma, he says, predicted India’s rise as far back as 1990. “I made a few presentations to that effect in Pune in 1993, and people said, “You must be joking. India has all kinds of problems’. But nobody is laughing now,” he says. His theory of rise and decline proposes that rise and decline are natural phenomena, but one can apply the Six Sigma approach to cultures by using lessons learned from the rise and fall of past cultures. “I project that the candidates for the next rise after the decline of China and India are Greece, Egypt, and Iran,” he adds.

Six Sigma, as pioneered by Motorola, states that all activities must be operated in the best possible manner, generating the least possible defects reflective of customer dissatisfaction. In the late nineties though, Deshpande articulated three natural laws that offered clarity to the explanation of Six Sigma without using any equations, and with very little jargon. Also, being a chemical engineer, he’s constantly working on extending its applicability beyond static business processes to dynamic and non-linear systems. When his ideas are combined with those developed at Motorola, it becomes possible to apply Six Sigma to any repetitive activity. “Six Sigma is really for life itself,” he says.

Deshpande founded SAC in the early nineties to offer Six Sigma and advanced process control training and consulting services. He also believes he might be the first educator to introduce Six Sigma modules in engineering and MBA programs. An author of six books and currently working on his new text Six Sigma for Karma Capitalism, he is never short of ideas. He recently guided a group of doctors, professors, and others in a study on how Six Sigma could be applied to the yogic system of Pranayam.

The most interesting case study Deshpande offers though is his study of the Gamarra community in the La Victoria township of Lima, Peru, a semi-literate textile and tailoring conglomerate. Gamarra has 25,000 businesses that employ 100,000 workers, generating $1.2 billion in revenue. These businesses import fabric from several countries and produce textile products for sale nationally and abroad. Just like Mumbai’s dabbawalas, many of the folks at Gamarra are semi-literate and do not know what Six Sigma is, but they are extremely passionate and committed to customer satisfaction. “Dabbawalas have been operating their processes for over one hundred years and it has taken them decades, and a considerable amount of trial and error, to deliver such high performance levels. Similarly, it has taken Gamarra several decades to come to where they are today in terms of performance,” says Deshpande.

Gamarra entrepreneurs are renowned and widely respected among both business customers and end-use consumers. Their text are know quality and low cost. They are also widely respected for ontime delivery. The entrepreneurs compete fiercely among themselves but they also cooperate when they need to. Each business is set up to fulfil a certain minimum number of orders but through agreements with other businesses in Gamarra, they have the capacity to solicit and execute orders virtually of any size within the overall capacity constraints of the total workforce. This arrangement assures B-to-B customers of not only high quality but also a quick turnaround. “When a business is found to be delivering very high levels of customer satisfaction, they are necessarily following Six Sigma,” explains.

For Deshpande, Six Sigma has its roots in Motorolas’s operational initiatives but it also converges with the metaphysical and the spiritual. His journey has taken him through the work of Stephen Hawkins and the wisdom of Swami Ramdev, the founder of pranayam (his book A Small Step For Man is dedicated to them) to create a process for organisational and personal development. “Isn’t that funny because one is devoted to the search for zero and the other the search for infinity,” he laughs.

Deshpande, like his hero Jack Welch, is a Six Sigma evangelist, but admits that quality movements come and go. They were all borne out of the statistical process control idea as imparted by Edward Deming, he says, so whether it’s the Toyota Way or Kaizen, it’s all pretty much the same — a drive for business excellence. “As the Rig Veda says: reality is one, the wise call it many names,” he explains.

He talks of companies that have made Six Sigma an unwavering part of their business culture. “I have two Lexus, and I didn’t take either for a test drive because there is no question of defects,” he says. The Toyota luxury car famously stands head and shoulders above other car manufacturers in customer satisfaction and retention. Plus, it accounts for 2% of Toyota’s sales but 33% of its profits. “In the old days people were content with average performance. In the new era companies must focus on low variability,” he says. And then he adds quickly, “Why limit it to companies, why not yoga, ayurveda, even homeopathy? Anything is possible.”