Insights for Implementing
Lean and Six Sigma and
Other Productivity Platforms
Global Benchmarking Council Survey
Best Practices, LLC
www.best-in-class.com
Research Objective
Best Practices, LLC administered this survey and compiled the results
on behalf of the Global Benchmarking Council.
Study Objective
The purpose of this
benchmarking exchange is
to identify lessons learned
and valuable insights
regarding the
implementation and
management of lean and six
sigma and other productivity
approaches.
Copyright Best Practices, LLC
Key Topic Areas
• Comparing Experiences with
Productivity Tools
• Choosing & Integrating
Productivity Tools
• Implementing Lean & Six Sigma
Productivity Improvements
• Focusing Lean Sigma for
Optimal Gains
BEST PRACTIC
Benchmark Class
The following companies comprise the benchmark class.
•Ford Motor Company
•Norcold, Inc
•Agilent Technologies
The
benchmark
class
included
the
following
companies.
•G&H
Technology,
Inc
•Northrop Grumman
•Allergan, Inc
•Avaya
•Bank of America
•Baxter Healthcare
•Bechtel
•Belden
•Bell Helicopter
•Boeing Commercial Airplane
•Bombardier Transportation
•British Telecom
•Candle Corporation
•City of Whittlesea
•Comair Rotron
•Conocophillips
•Consolidated Container Company
•Dana Heavy Axle
•Danfoss A/S
•Dell
•Deluxe
•Dow Corning Ltd
•DSM Pharmaceuticals, Inc
•DuPont
•Eastman Kodak Company
•Eaton Corporation
•Entergy Corporation
•FCI Electronics
•First Data Corporation
•Fletcher Building Ltd
Copyright Best Practices, LLC
•GE
•GE Consumer Finance
•Goodrich Corporation
•Haemonetics (UK) Ltd
•Handi Quilter Company
•Heartland Health
•Hewlett Packard
•Honeywell
•Hubbell Electrical Products
•IMC Phosphates
•Irwin Financial Corporation
•ITT
•J.M. Huber Corporation
•Johnson Controls, Inc
•Johnson&Johnson
•JP Morgan Chase
•Kodak Electronic Shanghai Co. Ltd
•Korry Electronics
•Kuwait Oil Company
•Lear Corporation
•LEGO Systems
•Mayflower Vehicle Systems
•Medtronic
•Mercedes Homes
•Motorola, Inc
•NCR
•Ortho-Clinical Diagnostics
•Perkin Elmer
•Pfizer
•Raytheon
•Rockwell Automation
•Saint-Gobain Performance Plastics
•Satyam Computer Services Ltd
•Siemens
•Sigue Corporation
•Sony Electronics
•State of Ohio Auditors Office
•Stratos Broadband Networks
•Sunstar Investment (H.K.) Ltd
•Tata Engineering
•Teccor Electronics
•TeleTech
•Telkom SA
•The Home Depot
•Transcom Worldwide
•Transitions Optical
•US Army
•Verizon
•Western Union
•Williams
•YKK (U.S.A.) Inc
BEST PRACTIC
Key Findings
The following key findings emerged from the survey data.
1.
Lean sigma and six sigma are chosen by the majority of the benchmark class as the
most often used productivity approaches.
2.
All of the productivity approaches are best geared to reducing costs and cycle time
and improving supply chain. Productivity approaches are viewed as less beneficial to
improving human resources, sales and marketing.
3.
Lean sigma receives the most number of votes as a critical approach to all areas.
4.
More than half (55%) of the benchmark class expect to achieve between 1-7% of
savings/revenue enhancement through lean or six sigma. Across the benchmark class,
companies’ average targeted 2003 savings/revenue goal is $71 million.
5.
One quarter of the benchmark class report that black belts must contribute from
projects to meet 2003 performance goals. Of this quarter, 32% contribute up to
$500,000; 86% contribute up to $5 million.
6.
88% of the benefit of productivity approaches is accrued to operations, followed by
manufacturing (49%). IT, followed by sales, finance, support services, human
resources and marketing receive less benefit.
Copyright Best Practices, LLC
BEST PRACTIC
I. Benchmark Class Characteristics
II. Choosing & Integrating Productivity
Tools
III. Implementing Lean & Six Sigma
Productivity Improvements
IV. Focusing Lean Sigma for Optimal
Gains
Copyright Best Practices, LLC
BEST PRACTIC
Industry Breakdown
Manufacturing companies represent one-third of the benchmark class.
Transportation, health care, communications and financial services also figure
prominently.
IT Utilities
2%
2%
Manufacturing
37%
Chemical/
Petroleum
4%
Government
4%
Other
4%
Financial Services
10%
Communications
11%
Transportation
13%
Copyright Best Practices, LLC
Health Care
13%
BEST PRACTIC
FTEs By Industry
Across industry, transportation and manufacturing cite the highest average of FTEs,
while other industries such as communications and financial services have about half
that average. Why aren’t more industries outside of manufacturing and transportation
engaging more employees in productivity initiatives?
How many employees work within the operating unit on which your responses are based?
# of FTE
3,602=Average
for segment
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
10,947=Average
for segment
55% of respondents
45% of respondents
11,698
1,185 1,443
Copyright Best Practices, LLC
2,583 2,600
4,513
2,769
Industries
5,039
8,624
BEST PRACTIC
Productivity Approach
More than half of the benchmark class uses lean or six sigma to improve productivity.
Sixteen percent of companies cite “other” methods—often home-grown approaches
combining several elements of quality approaches. In what ways do “home-grown”
approaches work or not work? What approaches might appeal to industries other than
manufacturing and transportation?
Which productivity improvement approach best describes that employed by
your organization?
Lean Sigma
38%
Cycle Time Reduction
6%
Lean
11%
Other*
16%
Six Sigma
29%
Copyright Best Practices, LLC
*Other approaches include:
• Black Belt methodologies
(process streamlining)
• DFSS
• PDCA
• Lean with Kaizen
• Basic TQM and Baldrige
• Process management &
reengineering
• Combination of all or some
BEST PRACTIC
Standard Inputs Into Productivity
Approaches
Surveyed companies value customer input into improvement initiatives. 85% of
companies apply a standard method to ensure customer perspectives are
reflected in projects.
Standard Inputs
Do you have a standardized method to embed the following perspectives into
your improvement processes?
Ensure customer
perspectives are reflected
in projects
YES
Ensure world-class
performance
benchmarks are
reflected in projects
YES
Ensure competitor
performance benchmarks
are reflected in projects
Copyright Best Practices, LLC
48%
44%
YES
0%
20%
85%
40%
60%
% of companies
80%
100%
BEST PRACTIC
Maturity and Scope
Two-thirds of the benchmark class began their productivity initiatives since
2000. These initiatives tend to be split in scope—53% focus on the company
and 47% fall within a business unit only. What are the pros and cons of a
centralized versus decentralized approach?
What year did your unit start its improvement journey, and what is the typical
scope of its implementation?
23%
2000
18%
1999
16%
2001
2003
13%
2002
13%
Before
1998
1998
Company-wide
53%
12%
Business
Unit
Only
47%
5%
0%
5%
10%
15%
% of companies
Copyright Best Practices, LLC
20%
25%
BEST PRACTIC
I. Benchmark Class Characteristics
II. Choosing & Integrating Productivity
Tools
III. Implementing Lean & Six Sigma
Productivity Improvements
IV. Focusing Lean Sigma for Optimal
Gains
Copyright Best Practices, LLC
BEST PRACTIC
Productivity Approach: Six Sigma
More than 90% of respondents report that six sigma is either useful or best
suited to reducing costs and cycle time. Only 15% of respondents view it
as best suited to HR improvements. What have been your experiences with
six sigma? What have been its strengths and weaknesses? How can it be
improved?
BEST SUITED TOOL
Cost Reduction
68%
Cycle Time Reduction
51%
33%
New Product Improvements
53%
43%
39%
15%
63%
Sales Improvements
18%
51%
Marketing Improvements
18%
48%
0%
Copyright Best Practices, LLC
93%
38%
38%
Finance Improvements
96%
28%
55%
Supply Chain Improvements
HR Improvements
USEFUL TOOL
20%
40%
60%
% of companies
80%
100%
BEST PRACTIC
Productivity Approach:
Lean/Simplification
Eighty-eight percent of the benchmark class consider lean/simplification a
useful or best suited tool for cost and cycle time reduction. How can the
lessons learned from lean, particularly in the manufacturing sector, benefit
other industries?
BEST SUITED TOOL
Cycle Time Reduction
20%
68%
53%
Cost Reduction
Supply Chain Improvements
48%
24%
HR Improvements
13%
Sales Improvements
13%
Marketing Improvements
44%
52%
39%
16%
0%
88%
45%
20%
New Product Improvements
88%
36%
38%
Finance Improvements
Copyright Best Practices, LLC
USEFUL TOOL
35%
20%
40%
60%
% of companies
80%
100%
BEST PRACTIC
Productivity Approach: Cycle
Time Reduction
Cycle time reduction is considered useful to over half of all improvement areas.
Why don’t other functions find that cycle time reduction is best suited to
reduce costs and improve supply chain?
BEST SUITED TOOL
USEFUL TOOL
Cost Reduction
36%
49%
Supply Chain Improvements
33%
New Product Improvements
Finance Improvements
21%
46%
14%
46%
Sales Improvements 5%
Marketing Improvements
HR Improvements
45%
52%
14%
43%
9%
0%
45%
20%
40%
60%
80%
100%
% of companies
Note: The clear majority of respondents report that cycle
time reduction is best suited for cycle time reduction.
Copyright Best Practices, LLC
BEST PRACTIC
Productivity Approach: Lean
Sigma
Lean sigma is viewed as well-suited to all goals. Well over half the benchmark class
considers it best suited for cost and cycle reduction and supply chain. Over a quarter
consider it best suited to improving sales, new products and financial processes. What
has been your experience/knowledge of lean sigma? How different is it from lean or six
sigma approaches?
USEFUL TOOL
BEST SUITED TOOL
Cycle Time Reduction
71%
67%
Cost Reduction
21%
55%
Supply Chain Improvements
32%
32%
Finance Improvements
46%
36%
New Product Improvements
39%
22%
HR Improvements
47%
25%
Sales Improvements
40%
22%
Marketing Improvements
0%
Copyright Best Practices, LLC
17%
40%
20%
40%
60%
% of companies
80%
100%
BEST PRACTIC
Productivity Approach:
Reengineering
Reengineering receives the fewest votes compared to other productivity approaches as a
“best suited” approach across improvements goals. However, close to half of the
benchmark class consistently view reengineering as “useful” across goals. As with all
other approaches, reengineering is seen as least useful to marketing, sales and human
resources. How is reengineering best implemented?
BEST SUITED TOOL
USEFUL TOOL
Cost Reduction
31%
47%
Cycle Time Reduction
29%
48%
Supply Chain Improvements
21%
Finance Improvements
33%
New Product Improvements
38%
25%
HR Improvements
17%
Sales Improvements
16%
Marketing Improvements
15%
0%
Copyright Best Practices, LLC
53%
41%
48%
45%
40%
20%
40%
60%
% of companies
80%
100%
BEST PRACTIC
I. Benchmark Class Characteristics
II. Choosing & Integrating Productivity
Tools
III. Implementing Lean & Six Sigma
Productivity Improvements
IV. Focusing Lean Sigma for Optimal
Gains
Copyright Best Practices, LLC
BEST PRACTIC
Targeted 2003 Saving/Revenue
Goal
IT and finance have the loftiest goals for their productivity efforts, with between $270$407 million in expected annual savings/revenue. How can more industries such as
health care with a great potential for savings benefit from productivity approaches? Why
is the target for financial services so high?
$Savings/Revenue
What is your operating unit’s targeted 2003 six sigma, lean, etc. value contribution?
$450,000,000
$400,000,000
$350,000,000
$300,000,000
$250,000,000
$200,000,000
$150,000,000
$100,000,000
$50,000,000
$25,000,000
0
$311 m =
Average for
segment
$34 m =
Average for
segment
$13 m
Copyright Best Practices, LLC
$15 m
$17 m
Industries
$45 m
$407 m
$270 m
88% of respondents
$31 m
12% of respondents
$49 m
BEST PRACTIC
Productivity Ratios
The majority of companies save up to 7% of their unit’s revenue target through
lean or six sigma or both. Few companies (7%) are able to achieve greater than
10%.
What is the best estimate of your 2003 productivity improvementto-sales ratio?
Over 10 Percent
1-2 Percent
35%
55% of
respondents at
or under 7% of
target
8-10 Percent
7%
18%
20%
3-4 Percent
20%
5-7 Percent
Copyright Best Practices, LLC
BEST PRACTIC
Ratios of Black to Green Belts
Almost 75% of responding companies staff their six sigma initiatives with from
one to ten green belts per black belt.
What numbers of green belts (entry level training) and black belts (expert project
managers training) are engaged in your six sigma or lean performance
improvement process?
35
29
30
75% of
respondents
# of companies
25
21
20
15
10
5
2
4
6
0
1 to 1-5
Copyright Best Practices, LLC
1 to 6-10
1 to 11-15 1 to 16-20
Ratio of black to green belt
1 to >20
BEST PRACTIC
Savings Contributions Target
One quarter of responding companies have specific targets against which their
black belts must deliver contributions from their projects to meet performance
targets. How do companies without annual contributions by black belts
measuring their results? What might be the reason that more industries aren’t
reporting annual contributions as a means of performance measurement?
Do you have an annual aggregate financial value contribution target that your black
belts must contribute from their projects to meet overall performance targets?
64% of companies with an annual
contribution are in the manufacturing
industry. Transportation is the second
largest industry group with annual
contributions.
Yes
24%
No
76%
Copyright Best Practices, LLC
BEST PRACTIC
Black Belt Contribution
Of those companies that have a contribution target for their black belts (25%),
86% have targets less than $5 million annually. What do you feel is a
reasonable contribution from black belts to reach objectives?
What are the estimated values of the annual contributions that black belts must make
to meet 2003 performance targets?
% of companies
35%
30%
32%
27%
25%
27%
20%
15%
14%
10%
5%
0%
$100K-500K
Copyright Best Practices, LLC
$>500K-1M
>$1M- 4.99 M
Range of $ Contributions
 $5M
BEST PRACTIC
Black Belt Productivity
Close to 60% of companies report having black belts oversee between one to
three projects annually to achieve their annual contributions, followed by
another quarter of the benchmark class completing four to five.
What is the average number of projects overseen by a black belt per year to achieve
the annual value contribution required?
57%
60%
% of Companies
50%
40%
30%
25%
20%
10%
9%
Six to Ten
Over Ten
10%
0%
One to Three
Copyright Best Practices, LLC
Four to Five
# of Projects
BEST PRACTIC
Average Cycle Time Per Project
Close to 40% of companies report completing their improvement projects
within between four to six months. Six to nine months is the next most
common cycle time. How do you think that quality projects can be
accomplished faster?
Which of the following best describes the average cycle time of your unit’s six sigma,
lean or other improvement projects?
39%
% of Companies
40%
35%
30%
30%
25%
16%
20%
15%
10%
5%
0%
10%
4%
One
Month
or Less
Copyright Best Practices, LLC
One to
Three
Months
Four to Six
Months
Project Duration
Six to Nine
Months
Ten
Months
or More
BEST PRACTIC
I. Benchmark Class Characteristics
II. Choosing & Integrating Productivity
Tools
III. Implementing Lean & Six Sigma
Productivity Improvements
IV. Focusing Lean Sigma for Optimal
Gains
Copyright Best Practices, LLC
BEST PRACTIC
Percentage of Benefit Per Function
Companies find that 88% of productivity efforts benefit operations, followed by
manufacturing and “other,” such as collections and administration. What are
the implications for industries with a heavy emphasis on sales and marketing
like the pharmaceutical industry?
What percentage of your unit’s six sigma, lean or other improvement projects benefit the
following functions?
88%
Operations
Manufacturing
49%
Other*
Supply Chain
Engineering
20%
16%
15%
Customer Service
15%
13%
12%
10%
8%
8%
7%
5%
R&D/New Product Development
IT
Sales
Financial Services
Support Services
Marketing
HR
* Legal, Collections,
Administration, Health care
Copyright Best Practices, LLC
0%
20%
40%
60%
% of Companies
80%
100%
BEST PRACTIC
Self-Rating of Effectiveness
By Function
Benchmarked companies feel that they are most effective applying lean and six sigma
efforts to manufacturing. Overall, over half of responding companies find that they are
effective across all areas, except marketing where 44% of companies feel effective.
What is your effectiveness in applying six sigma, lean or other improvement
approaches to the following opportunity areas?*
HIGHLY EFFECTIVE
Manufacturing
Supply Chain
Engineering
Customer Service
Service Support
Financial Services
R&D
IT
HR
Sales
Marketing
* Note: Operations was not a
category for this scale.
Copyright Best Practices, LLC
EFFECTIVE
62%
23%
34%
46%
39%
34%
32%
40%
26%
41%
20%
46%
20%
43%
22%
40%
13%
44%
41%
10%
33%
11%
0%
20%
40%
% of Companies
60%
80%
100%
BEST PRACTIC
Capability Summary
This presentation is the result of primary research.
Executives at top companies turn to Best Practices, LLC for
actionable and insightful solutions based on the world-class
operations of other leading organizations.
Let our researchers uncover the next great insights for your
operation through our Internet surveys.
Best Practices, LLC
6350 Quadrangle Drive, Suite 200
Chapel Hill, NC 27517
919-403-0251
[email protected]
www.best-in-class.com
Copyright Best Practices, LLC
BEST PRACTIC