Running LEAN

By Nov 15, 2007




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Maintaining the quality in the delivery of an electrical construction project is more crucial than ever in a competitive environment that forces contractors to constantly look for ways to eliminate waste and reduce costs in the process while increasing value to the customer. Six Sigma and LEAN, two methodologies of quality management, can produce significant benefits for contractors and increase their competitiveness and profitability.

Historical perspective

Six Sigma is a disciplined, data-driven approach for eliminating defects from the process, whether it is manufacturing, transactional or for providing a product or service, such as an electrical installation. The implementation of Six Sigma’s measurement-based strategy of reducing defects, variability and increasing customer satisfaction requires the contractor to define what is truly critical to the customer for quality; measure what specifications will enable it to fulfill those needs; analyze whether the customer is receiving that critical quality and, if not, why not; decide how to improve the process to deliver the customer’s required levels of quality; and establish a system of controls that will ensure the defects in the process will not recur.

Earlier quality improvement programs have primarily focused on incremental improvements in quality, while Six Sigma is dedicated to wholesale, major process improvements that are sustaining and offer a measurable financial impact. Its goal is to produce an end-product or process that will experience only 3.4 defects per million opportunities (99.9997 percent perfection).

From a practical standpoint, the sigma value is a measurement that indicates how well a process is performing. The higher the sigma value, the better. An average company performs at about three sigma, whereas a world-class company performs at four to five sigma.

Six Sigma can be traced back to Carl Frederick Gauss in the 1800s, which is when he introduced the concept of the normal distribution curve. In the 20th century, Six Sigma as a measurement standard in product variation dates to the 1920s when Walter Shewhart showed three sigma from the mean is the point where a process requires correction, according to Awad S. Hanna, Ph.D., professor and chair of the Construction Engineering and Management Program in the Department of Civil and Environmental Engineering at the University of Wisconsin-Madison.

By most accounts, the Six Sigma approach to quality management was originally developed at Motorola in the 1980s.

“The company took existing statistical analysis tools and organized them to define, measure, analyze, prove and control Motorola’s existing processes in an effort to regain their market dominance,” said Ken Cannizzaro, director of Corporate Six Sigma at Leviton Manufacturing Co. Inc., Little Neck, N.Y. In the 1990s, Motorola divulged the details of its quality improvement framework, and the methodology quickly spread.

While Six Sigma measures product quality, the LEAN methodology is a method for eliminating waste and creating efficiencies. Created by Toyota as an adaptation of Henry Ford’s flow production theories at least 30 years ago for its product systems and adopted widely by industry in the 1990s, LEAN is most commonly defined as a system for organizing and managing business processes—from product development and operations to technology and customer relations—in a way that will require less human effort, space, capital and time to make products and provide services with fewer defects and higher levels of quality. It is viewed as a structured, common-sense-based way of examining processes and adding value to the end product.

“It is, however, the integration of both Six Sigma and LEAN methodologies that will allow a company to get to the root cause of a problem and to use intricate problem-solving statistical tools to solve it quickly, effectively and permanently,” said Dan Seidel, project manager for Thomas & Betts Corp., Memphis, Tenn.

According to Perry Daneshgari, president and CEO of MCA Inc., Flint, Mich., LEAN tools take the waste out of a system by studying the measurements provided by Six Sigma and then identifying and mapping the flow of information, material, labor and money. “Working together, LEAN and Six Sigma literally make the system visible and allow the electrical contractor to use statistical-based process-control information to eliminate waste,” he said.

The migration of Six Sigma and LEAN methodologies from the manufacturing floor into the front office and corporate processes was a natural transition, as companies began to understand the improvements that they offered and the increased efficiencies that resulted from them, according to Cannizzaro.

“Six Sigma was first widely adopted by hospitals and financial institutions because of the benefits it offered,” he said.

In the end, Six Sigma and LEAN can be applied to any process. “It doesn’t matter if a company is manufacturing a product or providing electrical construction services—the methodologies reduce variability and eliminate waste and allow the company to approach the ideal end-result every time,” said Thomas E. Glavinich, D.E., P.E., associate professor in the Department of Civil, Environmental and Architectural Engineering at the University of Kansas, and Electrical Contractor contributing editor.

Differences and similarities

Although both methodologies are designed to improve processes, Six Sigma focuses on the quality of the product and on reducing deviations and stamping out errors, while LEAN primarily focuses on eliminating waste.

“Six Sigma is a measurement method, while LEAN is a process-improvement method,” Daneshgari said.

If using LEAN tools, the contractor must have a measurement process, whether it is Six Sigma or another methodology, to ensure progress is being made in improving effectiveness.

LEAN construction theory, principles and techniques, taken together, actually provide the foundation for a new form of project management. From its roots in production management, LEAN construction has produced significant improvements, particularly on complex, uncertain and fast-track projects. According to Hanna, LEAN construction project management redefines control from “monitoring results” to “making things happen;” maximizes performance and minimizes waste at the project level; promotes engineering concurrent with actual production; defines, creates and delivers value to the customer throughout the life of the project; and decentralizes decision-making through transparency and empowerment.

“LEAN construction is a production-management-based project delivery system that emphasizes the reliable and speedy delivery of value, and challenges the generally accepted belief that there is always a trade between time, cost and quality,” he said.

Concrete value

Sparked by an interest in the potential benefits of Six Sigma, Leviton successfully completed its first pilot projects in 1999, and the methodology has been deployed throughout the corporation ever since on a project-by-project basis. Management commitment, training and project selection have been the primary drivers of the company’s Six Sigma initiative, Cannizzaro said.

“In general, Six Sigma projects have generated sustained success, set common performance goals, enhanced value to our customers, accelerated the rate of improvements and delivered measurable bottom-line cost savings,” he said.

At Thomas & Betts, Six Sigma has, for example, helped the company dramatically reduce the amount of time customers had to wait for a service representative at the call center. The company first used Six Sigma statistical analysis tools to reduce the variation in the time it took to answer an incoming call. That is, it standardized the process of answering calls and then used LEAN tools to eliminate waste in the process.

“The structured methods of problem solving offered by Six Sigma and LEAN enabled the company to reduce the amount of time a customer waits for a representative on the phone to under one minute,” Seidel said.

But Leviton and Thomas & Betts are manufacturers—how can Six Sigma and LEAN benefit the electrical contractor? According to Hanna, Six Sigma can assist the electrical contractor in reducing defects or unacceptable work, thereby reducing reworking project components and overall costs to both the contractor and its customer.

“LEAN construction can help an electrical contracting firm by ensuring that every item in the process is a needed one, which delivers added value to the customer,” he said.

It is similar to value engineering, but it does not examine the design of the project as much as the contractor’s procedures and processes and requires owners to mandate the contractor’s early involvement in the design and construction process to allow the contractor to make value-added decisions.

According to Daneshgari, LEAN, together with Six Sigma, provides the electrical contractor with the measurements that allow it to recognize where the majority of non-value-added time is spent and to fix those particular problems, to use historical information to identify where variations in activities such as estimating are occurring, eliminate them, and to become more agile. Agility in electrical construction allows contractors to react to daily schedule changes and stay ahead of the curve while sticking to the same basic work plan.

“There is a statistically significant correlation between planning and productivity, which ultimately lead to profitability,” Daneshgari said.

The five S’s of LEAN—sort, set in order, shine, standardize and sustain—help improve installation time and project completion, according to Cannizzaro.

“LEAN also helps eliminate waste found in overproduction, transportation, waiting time, inventory, motion, overprocessing and defects in the process,” he said.

Time and money are required to invest in training employees in Six Sigma and LEAN methodologies, but the investment enables the contractor to remove unnecessary processes and minimize project errors that will significantly benefit the contractor and its clients.

“If a contractor desires, it can save money by having one individual trained in Six Sigma and LEAN and have that person relate the ideas company-wide,” Hanna said.

Various training and implementation resources for Six Sigma and LEAN are easily found on the Internet. With the process improvement these methodologies provide, contractors can become more efficient and competitive and become the electrical construction supplier of choice through lowest installation costs. EC

BREMER, a freelance writer based in Solomons, Md., contributes frequently to ELECTRICAL CONTRACTOR. She can be reached at 410.394.6966 or [email protected].









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