A benefit costing process for Lean Six Sigma programs

Abstract

Purpose: This study aimed to bridge the gap between the financial measurement of process improvement ideas and Lean Six Sigma measurements. It was required to increase employee engagement in process improvement initiatives. Design/methodology/approach: Through both a practical and theoretical application of the Design for Lean Six Sigma methodology, the researcher was able to design a process and a benefit measuring methodology that was acceptable by finance and aligns with the benefits expected from the elimination of the Lean wastes. Findings: The project found that benefit measurement methodology is not understood by most employees, which leads to a lack of engagement in working on improvements. The result of the study was a model for employees to identify and quantify these benefits. This has resulted in a model for cost-benefit analysis aligning financial costs with non-value add waste costs and cost of poor-quality costs resulting in increased process improvement ideas and activity. Research limitations/implications: While this study was limited to one company, applying this methodology could benefit any company experiencing the same difficulties. Originality/value: This is one of the first studies to try and cost the benefits of LSS projects both from an organisational and generic viewpoint.