Lean Manufacturing And Six Sigma And How They Can Impact Accounting Essay

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The two concepts to be explained here are lean manufacturing and Six Sigma and how they can impact the business of Arrod Widget Company if implemented as per the instructions given. Given the whole scenario of working in the company having many production lines to produce widgets categorized in small, medium and large size as per their capacity and robustness and not their size the concepts of lean manufacturing and Six Sigma become very important and significant to understand and implement in an optimal manner to get high quality results. So in the sections below we will realize all these aspects along with talking about few real time examples as reference.

Lean Manufacturing-


Question would be what is lean manufacturing and answer in very simple terms is that lean manufacturing process is a comprehensive method to remove or reduce the wastes of all types be it waste of time or the waste of material to be used for manufacturing process.

Now elaborating the above lines if we go into a little bit history then the principle of lean manufacturing was originated from Japanese manufacturing industry in 1988 brought first by John Krafcik in an article. Lean is taken as a set of tools that helps in recognizing and eliminating the waste as doing so improves the quality of production which ultimately reduces the time taken and hence the cost of manufacturing. Toyota promoted the method of lean manufacturing which focuses on improving the smoothness of work hence eliminating the waste. In addition to that this method provides optimum quality by building in a method where each product is inspected after manufacturing and if defect is found then production lines are stopped so that defect can be tackled and removed as earliest as possible. The method is an integral part of Total Quality Management strategy. (What is lean manufacturing?)

Studies have measured the amount of waste typically produced in manufacturing process and it came as very shocking as well as revealing. Talking about the company in reference here The Arrod Widget company which manufactures widgets of different sizes and capacity and have different production lines for them has a very good chance of generating a lot of material waste during the making of the chips. Now the raw material used is basically silicon and its components which can be reused so that we can identify and remove the waste and use it again as raw material then we can increase our efficiency along with this in chip making process. There is a very important step of continuous checking for defects as a defected widget is of no use and if one chip is defected and is not detected then the widgets produced further will have the same defect hence the whole manufacturing process will be corrupted. Hence continuous checking is a very important step and which is constituted in the lean manufacturing process to make production process more sophisticated and robust. Hence this concept is very important for us when talking about the company in reference which is Arrod Widget Company. (Grooms)

Six Sigma -

Six Sigma is a business strategy which enables you improves the quality of outputs of your production processes by identifying and removing the causes which have been responsible for defects in the products. This strategy was developed by Motorola USA in 1986 and has been used since then in almost every sector. It includes removing defects as well as minimizing the manufacturing and business variability by using different quality management methods.

The term "Six Sigma process" comes from concepts in statistics that if one has six standard deviations between the mean of the process and the specification limit then there will be no item failing to meet the specifications.

The term was originated as a set of methods to improve manufacturing processes and eliminate defects. The defects is defined as the output that customer does not want.  The term comes from field of statistics known as process capability studies. Processes that operate with Six Sigma specification produce long term defects of level 3.4 defects per million opportunities so the implicit goal here is to improve the quality of production.

The main methods to apply this Six Sigma strategy are DMAIC (define measure analyze improve and control) and DMADV (define measure analyze design and verify). Define is to define the voice of the customer and goals accordingly, measure is to identify key characteristics as product capabilities and risks, analyze is to investigate and verify cause and effect relationships, improve is to optimize the current process with the help of techniques available same as design and verify is to set up the testing runs and verify the quality of the product. (What Is Six Sigma? )

There are many different methods used to perform the analysis and make sure that the wastage is the least and efficiency of manufacturing increases.

Talking in reference of a chip making company such as Arrod widget the importance of defect detection and removal becomes even more as a widget is of no use if it is even slightest defect and products coming after the defected one will also be defected if the defect is not identified and removed. So both the concepts mentioned here have a very important role to play in the business management strategy of the company hence now we will discuss how implementing these concepts might help us to increase the quality and quantity of our production.


How these concepts might help in Arrod Widget -


Lean manufacturing and Six Sigma are the processes, techniques and strategies to be implemented in companies with the aim of reducing unnecessary wastes and defects in the products. It not only reduces operational costs but also boosts and raises the competitiveness of a company. Pointing out on few advantages that can be seen in the company by implementing these techniques we can discuss them as following.

The manufacturing time for making widgets can be reduced by implementing these techniques. As there are three different production lines for small, medium and large widgets by reducing the manufacturing time we can increase the production on each line hence the total production. By utilizing the skilled staff wisely on all the production line this can be achieved and production can be increased.


Other things are further linked with the operational time as when time is lowered to manufacture the chips the operational cost which is incurred from the material,machines, use of energy and utilities and wages and salaries of the laborers will also be reduced which will ultimately reduce the final cost of the product hence the share of the Arrod widget will be more in the market as the cost is being reduced without compromising with the quality of the widgets.

Detecting the defects earliest possible and removing them at the production level is of high priority at Arrod widget as once defected components reaches into the market it not only reduces the earning of the company but also the credibility of the company is affected as people will start suspecting on the product produced by the company so by applying Six Sigma and finding out the potential defects and removing them at early stage we can ensure the quality of our product as whosoever uses the widget in its devices he will be sure about the performance as we have already resolved all the defects. (Does Lean manufcaturing really help in business success)

Space is also one area where we will be at advantage as it has been shown already that companies using these techniques will require lesser space than usual and effectively utilizing the techniques will ensure the quality and quantity of the product. It might look very small advantage but it contributes significantly in the savings of the company.

It has been found that by adopting the lean manufacturing practices the productivity of the companies have boosted by great percentage.The same we can expect for Arrod Widget as increasing the production , reducing the cost and making sure the quality of the product the productivity and profitability is bound to increase. The idea behind this advantage is that lean manufacturing practices target the time and effort relationship thus by eliminating the wastes and unnecessary objects in the work place we can help workers to perform their tasks easily and increase the productivity.

The waste profit relationship has been analyzed already as reducing the earlier will make sure the later but the bigger advantage of these techniques is that we are being able to achieve customer satisfaction because whosoever is using our widgets in their products will build credibility in market not only for themselves but for Arrod Widget as well. By providing quality product we can always ensure good relations with customers and clients.

Another advantage that has been counted and we can expect in our company can be the improvement in the culture as we have people from different cultures with different practices but with these techniques we can standardized the culture which will reduce the conflicts among the people and also it fills the differences between the management and personal.


These are few advantages and positives of lean manufacturing techniques including Six Sigma that we can expect in Arrod Widget Company as per the given information. Properly and effectively using these techniques we can make sure the rise in production and profit of the company and also the trust factor with clients and customers becomes stronger and more prominent. 



Approach to implement-


Lean manufacturing process can either be outsourced to a different organization or we can hire a consultant at a fix pay to analyze these aspects of manufacturing.

The COO of the company who is responsible for all the operation being held in the organization holds the responsibility of implementing these techniques with the help of his peers and juniors. Manufacturing head along with managers of different stages can collectively work on these things and efficiently implement them.

In starting of implementation everyone in the organization will require significant training and we will need to form an overall strategy and training plan to recognize the importance and significance of the steps to be taken and also that it is a big commitment between the management and the employees. Here are few steps that can be implemented to bring down the approach into the reality in our organization. (Lean manufacturing implementation)

First step would be determining which aspect of the whole process suits our organization the most according to our needs and capabilities from here we can see that both lean manufacturing and Six Sigma will play a very vital role in widget company as removing the waste and detecting the causes of defects both are equally vital for the given scenario so both the techniques are needed to be adopted.

Next would be training people to implement these techniques now we need to make groups among our employees according to our needs. Here at Arrod widget we have 34 employees in which there are very few skilled so we need to divide those skilled employees in different groups such that every group is equal and have atleast one or two skilled employees which will help at production level.

Third step would be identifying your programs and make a chart accordingly along with training the groups formed according to your needs for example here we have 3 production lines and each one requires different technique so training would be different for different group.

Last but not the least is to prepare the time frame and schedule according to work area and people and begin the implementation of the techniques.

These Lean manufacturing processing concepts have been implemented by almost every organization around the world and positive results have been seen. The major reason behind that is that they make the whole manufacturing process more structured and efficient which ultimately results in good earnings and profits.

(What is lean manufacturing)

Some charts and figures-

Pareto chart for six sigma analysis

Improvement Percentages 

From the UK MAS over last 8 years


SCRAP -26%

SPACE -33%



OEE +45%


Concluding the discussion here we can say that lean manufacturing is the process to minimize the waste in the manufacturing process while six sigma is the techniques which is used to remove the defects of the production process as both contribute in making the whole production process more efficient which will ultimately result in high production hence high profit . In Arrod widget where we are producing widgets of different sizes on different production lines these concepts are very essential to understand as applying them wisely will save a lot of time and money along with enhancing our production capabilities.