Lean Six Sigma (LSS) is a methodology utilizing a set of strategies & data-driven tools to improve processes in terms of cost, quality & time. Lean is a systematic method for the elimination of waste, while Six Sigma is a set of tools & techniques for process improvement, mainly focused on reducing variation & defects.
The benefits of utilizing Lean Six Sigma are impressive, and many major corporations have found that the processes found within Record-to-Report are often ideal candidates in which to leverage the capabilities of this quality discipline to their fullest extent.
A recent Peeriosity PeercastTM featured a large global company with over USD $50 billion in annual revenue that has utilized Lean Six Sigma to improve the overall operational effectiveness of their Record-to-Report processes. The company has implemented LSS across the entire enterprise, with a formal organization established that provides training, tools, and central leadership for the company’s efforts in this area.
Within the Global Accounting & Financial Services (GAFS) organization, Lean Six Sigma has a defined value cycle, which consists of the following:
- Financial Impact – Green Belt projects > $75K USD in net present value, Black Belt projects > $1M in net present value.
- Competitive Advantage – LSS professionals are leaders in Business Process Management (BPM), innovation, advanced analytics, and project management.
- Strategic Alignment – LSS is a key enabler for global efficiency goals.
- Lean Culture – Culture of Continuous Improvement based on Lean principles and rules.
- Customer Experience – Reduction of visible defects and throughput time.
The Lean Six Sigma program within Finance has an executive sponsor that provides funding and resources and a Program Office to define the program strategy and direction, as well as lead the LSS community and provide coaching and training. There are four active Black Belts, along with over 150 Green Belts carrying out LSS related activities within the Finance organization.
During the PeercastTM, the team shared their experiences using LSS to streamline the accounting close process within the GAFS organization. The problem statement for this project indicated that this was an overlapping Finance process with significant investment, but poor stakeholder feedback. Using the DMAIC methodology and several Lean Six Sigma tools, this is what they determined as issues:
- Voice of the Customer – Generating process deliverables with no value to customers.
- Value Stream Mapping – Numerous areas of duplication.
- Cost/Benefit Analysis – Investment in controls not aligned with risk magnitude.
As a result of this effort, they were able to eliminate 3,500 hours of employee effort a year, along with improving overall customer alignment for the accounting close process.
Some of the key learnings the company has had in this area include realizing that LSS is a tool box, and not a “one size fits all” solution. Multiple continuous improvement methodologies should be utilized and LSS is not a replacement for process acumen and judgement. Finally, it is important to focus on bottom line results and utilizing a formal Business Process Management (BPM) methodology to sustain improvements.
iPollingTM Results Review
In conjunction with this PeercastTM, a poll was administered using the iPollingTM technology to better understand the status at member companies with using a formal quality methodology within the Record-to-Report process. The variety of responses was significant, with 64% of companies utilizing a quality methodology, and no one approach (besides some variation of LSS) being dominant.
The second poll question then looked at the effect on Record-to-Report as the result of utilizing formal quality tools to streamline the process. A large percentage (57%) of the responding companies have experienced significant improvements in this area, while 29% report a moderate level of improvement. Just 14% said that the improvements were on a limited basis.
Some of the poll comments from Peeriosity members related to this topic include the following:
Consumer Products Member: For 2017, the program has already delivered 9,500 whitespace hours. Expectation is to deliver another 10,000 hours for the remaining of the year.
Food Products Member: We have not fully implemented Lean or Six Sigma processes. Implementation has been started with a focus on waste. Over 150 tasks were identified and over 100 improvements were made to remove work, leverage automation or perform the work differently. Weekly meetings are conducted to track movement from idea to in process to complete.
Consumer Products Member: Utilized a combination of Lean Six Sigma and other approaches, such as Theory of Constraints.
Lean Six Sigma has achieved wide acceptance at large corporations across the globe because it delivers tangible results in a structured manner that is consistent and repeatable with a reasonable amount of effort. As companies continue to apply this proven methodology to different aspects of their Shared Services organization, including Record-to-Report, the benefits will be exponential as improvements spawn additional streamlining and innovation.
What is the status at your company with respect to the implementation and utilization of Lean Six Sigma? Does your current approach to process improvement meet your needs or is it time to take another look at this important methodology as a way to drive additional improvement of your Record-to-Report operation?
Who are your peers and how are you collaborating with them?
“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion. Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content. Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member. Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.
“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPollingTM.
Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers. Membership is for practitioners only, with no consultants or vendors permitted. To learn more about Peeriosity, click here.