Lean Six Sigma Yellow Belt MBAs Reduce Costs & Waste

I recently wrote a blog article for GoLeanSixSigma.com on the merits of having both an MBA and a Lean Six Sigma Yellow Belt certification. That blog, published in April 2020, was written from the perspective of my teaching Business Process Improvement to MBA students at Hamline University School of Business.

It is my assertion that combining an MBA with a Yellow Belt Certification provides a unique opportunity for graduate students to come face-to-face with three (3) key “Life Skills” that will serve them well their entire life.

Life Skills:

• Courage to Step Forward
• Knowledge of Tools and Methods for Process Improvement
• Commitment to Life-Long Learning

It would be good to review that blog and these three (3) key Life Skills as a primer for this new blog article on Real-Life Success Stories from the Front-Line.

Now, as Paul Harvey would say, here is “the rest of the story…”

What Do Your Customers’ Value?

Imagine if your customers could peer into the inner workings of your company and make decisions on what work they would pay for. What do you think would happen? Let’s unpack this a bit more.

Every “for-profit” company has a profit & loss statement that broadly states what the company’s revenues and costs are. Revenues would be all of the things that the customer buys from your company—be it products, services, or solutions. Costs (labor and materials) are all of the activities that go on inside the company (or from an outsourced supplier) that are needed to produce the product, service or solution the customer buys from you. The difference is Profit—and the wider the gap between revenues and costs—the higher the company’s profits.

So let’s say you are like most companies and are subject to the two (2) unchangeable truths! No, I don’t mean “death and taxes”—though both certain truths! In companies, these would be that shareholders and business executives are always trying to improve profitability. And, that the way to do this is to continually reduce costs and improve efficiency. It would be nice to think we could simply raise prices to achieve higher profits—but competition and market realities usually preclude this.

Let’s focus on the “cost” side.

The Reality of Costs

Raise your hand if your boss has ever asked you to find a way to do more work with less cost. You know, upgrade the product features and add some pizzazz to the marketing collateral and website without spending more money. What tasks and costs would you stop in order to achieve this new directive? And what if your boss and team-mates can’t agree on what these tasks and costs are—so you end up doing everything. Feel exhausted, yet?

Well it just got tougher.

Back to my opening line. What if your customer could literally “peek behind the curtain” and see every task your company does and the work you and your cross-functional team-mates do every day? What do you think they would gladly pay for? And what things would they say they wouldn’t pay for—because the tasks did not provide “value” in their eyes? It’s a deceptively hard question to answer because most of us who go to work every day don’t look at our jobs at the task level. And we certainly believe that the work we do has great “value”!

What if your customer could literally “peek behind the curtain” and see every task your company does and the work you and your cross-functional team-mates do every day?

Unfortunately, reality is not on your side. Several prominent studies have estimated that between 25 and 35% of the “costs” in a company are really waste. They provide no value to the customer. And, if given the choice, the customer would elect not to pay for them. Ouch!

Reducing Waste to Reduce Cost

This is why thinking about costs strategically and trying to find ways to reduce waste through process improvement is so critical. In fact, in this post-COVID 19 work environment—with so many people working remotely and social distancing rules applying in the office—companies have learned (much to their surprise) that many of the meetings they used to hold were not important. And the number of steps to accomplish a specific task could be significantly shortened—though we stumbled on this discovery out of sheer necessity.

But here’s the good news! There are ways to eliminate costs and make a person’s job even more enjoyable—either remote or in the office! And, whether you are one of my MBA students who goes on to achieve their Yellow Belt Certification or you are a professional without an MBA but trained as a Yellow Belt—you have the ability to help your company improve business processes that will both reduce cost and provide more value to your customers. It’s a “win-win” for your company and your customers.

Real-Life Examples

What follows are three (3) real-life examples of how my MBA graduate students led significant business process improvement projects within their companies. Each achieved success by focusing on a different type of “waste” to eliminate. To retain confidentiality, I use only the first names of the people involved and I don’t mention their company’s names. Each story was provided by the respective person. My role was to put them all together to form a consistent style.

To set the stage, GoLeanSixSigma.com has defined eight (8) different types of waste. They are noted in the graphic below—and to make it easy to remember—spell the acronym DOWNTIME.

The DOWNTIME acronym for the eight types of waste are:

• D = Defects
• O = Overproduction
• W = Waiting
• N = Non-Utilized Talent
• T = Transportation
• I = Inventory
• M = Motion
• E = Extra-Processing

The three examples of waste described below cover Defects, Non-Utilized Talent, and Motion.

Story #1 – DEFECTS

Mark is an engineer for a prefabricated concrete panel company. Mark was recruited by this company once he finished his MBA and his Lean Six Sigma Yellow Belt certification. In class, Mark did a tremendous job—and now had a real-world opportunity to make a difference at his new company.

The issue facing Mark was a significantly high defect rate (double digit %) in prefabricated concrete panels. This defect rate showed up mostly in the winter months in the Midwest and created a very poor surface finish on the concrete panels. This poor surface finish led to chipping and cracking—and ultimately to scrapping complete panels.

It’s one thing to scrap a part—it’s another to scrap the finished product! The impact of this resulted in decreased profitability due to a lot of rework. More importantly, customers grew concerned about overall product quality and shipping delays (due to rework). When Mark joined the company, the atmosphere was one of frustration given what seemed like an unsolvable problem.

Digging to Root Cause

This just energized Mark and he formed a cross-functional team and got to work. Utilizing all of the tools he learned in his Business Process Improvement class and from earning his Yellow Belt Certification (Process Mapping, Fishbone Analysis, and 5 Whys), Mark was able to determine the “root cause” of the problem. The data collection and follow-on analysis pointed to something that just wasn’t apparent to anyone.

Mark and his team discovered that the root cause of the defects in the prefabricated concrete panels was due to using frozen aggregates (sand in rocks) during the product process of prefabricated concrete panels. Once the defects were correlated to this aspect, the process was changed. The results were remarkable. Zero defective prefabricated concrete panels during the winter of 2020!

Excitement returned to the workplace and customers regained confidence in the company’s quality and on-time delivery. Mark, as the life-long learner, also gained additional insights to help him and company. These included spending more time with the subject matter experts to better determine what additional input variables to the process could make for an even better product! Mark continues to shine as a process improvement champion in his company!

Who would have thought that making concrete was such a complex process!

Story #2 -Non-Utilized Talent

Mary is a medical laboratory scientist supervisor for a large healthcare organization. Her seven (7) labs and 30+ direct reports serve almost 90 primary care and specialty care clinics. While Mary had been with the healthcare company for 9 years, she has been in her current role for less than 2 years. Mary also knew that she was stepping into a role that had issues.

What sparked Mary’s interest in process improvement was taking my Business Process Improvement class and completing her MBA as well as her Lean Six Sigma Yellow Belt Certification. What Mary saw through the new lens of “continuous improvement” was a need to restructure the highly decentralized laboratory work teams to a flatter, more efficient centralized structure. This new structure would also have fewer “managers” and more front-line workers with the clear opportunity for lab staff to optimally support the business needs across all of the clinic sites while improving employee engagement and patient satisfaction.

What Could Go Wrong?

Here was the real conundrum. Staffing shortages within the clinic labs and the resulting frustration among employees and patients was already a problem. And now this proposed structure change looked to make things worse—not better (in the eyes of the employees).

Mary set out to interview several employees from various departments and levels of authority within the clinics—along with some process mapping—to truly understand the impact of the proposed change. She learned that the existing structure had evolved over time into silos with a “grab bag” of different job titles—mostly management roles—that left fewer people to do the real lab work on which patients depended. This evolved structure also created an environment where trust was “missing in action” and transparency of decisions had vanished.

Here is where Mary’s skills really shined. She had the data on late patient lab analyses and the low employee engagement scores. She could show through process mapping—done with the team—several “pain points” due to differences in each clinic’s processes, job expectations, and employee performance standards. Using this information and creating a strong working team to help drive the transformational change, Mary embarked on the improvements needed.

Key Accomplishments and Learnings:

• All team members gained clarity on the “how” and the “why” of the changes that were taking place. This was a huge win over the previous lack of transparency
• Specific programs were put in place to share information around career paths
• A re-focus on improving the patient’s experience with clear accountability
• Actual costs went down while employee engagement scores went way up
• Employee turnover declined

The one really significant step that Mary also put in place was a Control phase (remember the “C” in DMAIC?). This created not only a feedback loop for all employees but was instrumental in ensuring that there were direct connections at each site as changes were implemented. The daily huddle meetings and the monthly feedback sessions created a transparent way to raise issues and address concerns before they became larger problems.

Story #3 – Motion

Lydia works for a major retail company and was recently promoted to a senior analyst. Prior to her promotion, she was an operations manager at one of the retailer’s distribution centers. Lydia recently received her MBA and was a star performer in my Business Process Improvement class. In fact, she not only achieved her Yellow Belt, she went on to also become a certified Lean Six Sigma Green Belt! She proudly states that her process improvement work success as the operations manager was key to her recent promotion.

While working in her operations role, Lydia could see that process inefficiencies were creating unnecessary rework and delays in the supply chain—leading to “stock outs” in the stores and frustration for end customers. It was a perplexing issue since the retailer prided itself in its supply chain management IT systems. This is where Lydia dug deep and discovered a quirky anomaly. The very systems that the company depended on to drive efficiency and consistency were, in fact, creating the same inefficiencies Lydia was about to address.

Unpacking the Root of the Problem

Let’s unpack this a bit further. Team members from various departments worked specific aisles in the distribution center to draw products to send to the many retail outlets. There were long delays and a re-routing of the workflow when two departments had to work the same distribution aisle at the same time. Why was that? When Lydia tried to find out, there was no good reliable data to guide her. Furthermore, team members were held to high productivity standards—so when processing time exceeded the norm, creating delays and inefficiencies, the team “looked bad.”

So, Lydia and her team did a process map of how the process was supposed to work and gathered data along the way. From there, the team created Pareto charts to determine if the issue was related to a specific day or shift. What they found was that the issue of high rework and long delays was spread across two specific departments.

And here’s the kicker. The very systems that were applauded by the company as critical infrastructure, were in fact exacerbating the problem! How could this be? Well, when the system saw that two departments were in the same aisle of the distribution center at the same time, it re-routed both to different aisles to do work before bringing them back to the original aisle at different times. The data and process mapping showed this to be highly inefficient and created processing delays.

That said, an IT system modification was not needed. Rather, one department had flexibility in how it processed its supply chain needs without causing a loss of productivity. That change was made eliminating the need for these two departments to be in the same distribution center aisle at the same time.

The Results:

• Team members were excited that their voices were heard and an actual positive change came about from their process improvement work
• An “orange flag” system was implemented to prevent any other team from working in an aisle where another team was already working. The company’s IT system could more efficiently re-route one team vs several
• Several thousand dollars were saved from reducing wasted time and motion
• “Stock outs” declined and end customers were more satisfied
• Employees gained a strong appreciation for the power of process improvement
• And… Lydia got promoted!

The Common Thread

What do all of these stories have in common?

• First, they were led by people with an enthusiasm for process improvement trained in the use of DMAIC and the tools associated with it.
• Second, employees involved were at first skeptical—and sometimes fearful—of the “change” that comes from process improvement.
• Third, each of the improvements highlighted saved the companies money, increased employee engagement, and drove higher customer satisfaction.

I would submit that there is probably a similar process improvement project waiting to be successful somewhere within your company. What are you waiting for? Let’s get started!