Lean – Jason Walker Consulting LLC

In Six Sigma we talk a lot about X and Y variables. We have to talk this way because, after all, Six Sigma is statistics. Then you hear about ‘lead’ and ‘lag’ measures. What are these and how do they relate to X and Y variables. And what about ‘dependent’ and ‘independent’ variables. Where do they fit in? How do I know what to measure and when? Relax. It’s really not that complicated so lets step away and pull the covers back a little on some of the mystery.

X and Y and Independent and Dependent Variables

Ok…maybe you already knew this but these are the same thing. X is the algebraic representation for the independent variable and Y represents the dependent variable. Dependent or independent of what? Well…of each other. Let’s use a simple example to illustrate:

Let’s say it’s the New Year and you just made a resolution to loose weight (the most common of all resolutions and the one least likely to be kept by the way). But your weight loss or gain doesn’t just happen in a vacuum. There are things that you decide to do to help you loose weight. You work out, control your calories and your eating patterns for instance. I have just described one dependent variable (Y) and three independent variables (X’s).

Dependent (Y) Variable – Your weight. It is dependent on the other variables of how often and long you work out, how many calories you consume and whether you eat half a pint of Ben and Jerry’s Urban Bourbon ice cream at 11pm like I just did (I feel shameful but it was really gooood).
Independent (X) Variables – These are the variables that drive the Y variable. The more you work out, the more you control your calories and the less you eat a large meal right before bed, the more you move the needle on the scale.

What is Y=f(X)

Do you suffer from algebraphobia? Same here but this is really easy. This equation is used commonly in Six Sigma to represent the relationship between the X and Y variables. Read ‘Y=f(X)’ as ‘Y equals f of X’ or ‘Y is a function of X’. Think of a function as a process. X’s go into your function and a Y comes out. The type, magnitude or other characteristic of X, determines the output of the function Y. My weight loss (Y) is a function of my exercise habits (X1) or the extent to which I control my calories (X2) or how often I eat a big dinner late at night (X3). Got it? Cool.

Lead Versus Lag Measures

Ok…so we went from algebra to this lead and lag thing. Again this is easy peasy. ITS THE SAME THING! Lead measures are the X values and lag measures are the Y values. The reason we use lead and lag in this way is to describe their temporal relationship. A lead measure is something you measure that is predictive of what will come after, or, the measurement that lags behind. If I track my calories and keep them under a certain threshold everyday, I can reasonably expect the effect that lags behind will be weight loss. The lag measure (weight loss) depends on the extent to which the lead measure (controlling calories daily) is met .

Think of lead measures as the lever that moves a big rock. Consistent pressure on the lead measure, will eventually lead to the desired lag measure. We act on and measure the lead measures as we are trying to affect change. Measuring the lag measure doesn’t have any effect. It only tells us at the end if we met our goal or not. If I woke up everyday and all I did was weigh myself and say: “Boy, I’m really going to loose some weight today”, I probably would not be very successful. But if I woke up every day and focused on the things in my control, my three X variables, it’s likely I’ll drop some lbs.

When to Measure What

In your improvement efforts, there are a lot of things that you will find that can be measured. The key is to find the primary Y that you want to affect first and then find the levers to pull that are most likely to affect it…the X’s. Once you have identified these key relationships, you first measure the Y (185lbs) before making any changes to the X’s. This is your baseline measurement taken in the…yep…you guessed it…Measure phase of the DMAIC process. Once you establish the baseline, then measure the X’s.

How many calories am I currently consuming daily? (3,000…yikes)
How often do I exercise each week? (2 times…er…ok 1 time)
How often do I eat after 9:00pm each week? (4 times…not including Ben & Jerry’s)

These are your X baselines; your levers for changing the Y. Adjust them up or down to affect a change from the baseline in the target Y variable. Then, measure the Y again to see the effect.

These concepts are cornerstones of process improvement and quality management principles. Try to think of some other examples in every day life of lead and lag measures, X and Y variables and instances where Y=f(X). Once you start to play with these concepts a bit they get easier and easier to see. You begin to see causal relationships as levers to be pushed and pulled to deliver an outcome.

Have you ever gotten to the end of hectic day full of back to back meetings and deadlines and wondered, “what did I really accomplish today?” I think we’ve all experienced this right? The fact is that activity is not synonymous with productivity. The vast majority of our lives is spent performing actions that do not really add value. Some of the leanest processes in the world are still 80% waste. Often, when we first start really analyzing processes, we find that less than 1% of our activities actually are really adding value.

Time and energy spent eliminating waste has a far greater ROI to the overall process efficiency than does working to increase the speed at which a wasteful activity is carried out. But before we can begin to eliminate waste, we must first learn to see it. Use these three criteria for evaluating your business process activities as value add or waste:

The activity must physically change the object.
Remember that lean has its roots in manufacturing so this rule was developed around processes that produce physical products like cars, shovels or squeegees. So this means that an action that turns raw material into a part that can be used in the end product passes this value rule. Think cutting a shape out of a piece of metal or painting a car body. But for those of us not living in the world of manufacturing, this principle still applies. Think about a business process like preparing a report. You add information or maybe some charts and graphs which have now physically (or virtually) changed the report. Then you send the report to your manager who reviews it and sends it back for revision. The review does not change the report and therefore does not satisfy this first rule and leads us to the second rule.
The activity must be done right the first time.
Keeping in line with the above manufacturing example after the piece is cut out it is sent to the next station that files off burrs and saw marks after cutting. De-burring and filing both physically change the piece. Lean thinking teaches us though to ask, “why is deburring and filing necessary”. The answer is that the cutting activity is not “done right” the first time requiring more downstream work. Could burrs and saw marks be reduced or eliminated by using a sharper blade or changing the speed or pressure of the saw? Instead of focusing on how to improve the filing and de-burring step, lean encourages us to think about what we can do to eliminate it altogether. In business, we see this kind of refinement and rework all the time. A project plan that needs an adjustment to scope or schedule. A sales order that has to go back to the sales rep multiple times for clarification. An expense report that is rejected for insufficient documentation or violation of policy. Instead of focusing on improving the corrective or refinement activity, we need to ask, how can we eliminate the need for it altogether.
The activity must be something the customer is willing to pay for.
The problem many people have in applying this rule in business processes is understanding who the process customer is and what that customer values. We must think of the customer in specific terms relative to the process in question. The customer of the expense reporting process for instance is the employee getting reimbursed. While the employee does not “pay” for this service, if he or she did, what parts of the process would be seen as valuable? Certainly the actual reimbursement would be seen as valuable. But what about filling out the report? Scanning receipts? Reviewing and approving? Required to be reimbursed because the process requires it but the steps themselves are likely not things the employee would view as valuable.

When you begin to look at your business processes through the lens of these rules, you will be shocked at just how much action is really waste. But don’t despair. This is the beginning of every lean journey. Learning to see the waste around us is the first step to improvement. First we see waste, then we look deeper to analyze how to reduce or eliminate it and only then can we take actions that truly improve the way we work and live.

Read on here:

http://leanmanufacturingtools.org/89/value-add-vs-non-value-adding-processes/