Revitalizing Lean Six Sigma at Pepsi
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As manufacturers contend with supply chain issues, labor shortages and geopolitical volatility, process improvements can seem minor by comparison.
Compared to the risk of a production line shutdown, a tweak to an operational process seems insignificant.
But, according to Les Cyfko, Director M&W, Operations, Engineering and Continuous Improvement at PepsiCo, the pandemic has exposed the direct correlation between continuous improvement and overall company performance and results.
“Lean Six Sigma, by virtue of simple tools like process mapping, identifying pain points and non value added activities can help you discover potential solutions,” he explains. “That is of paramount importance to being able to unlock some of the issues that have appeared in the macroeconomic climate as well as mitigating some of the potential future risks that might come our way.”
In this interview, Cyfko, who was instrumental in setting up Pepsi’s Lean Six Sigma program a decade ago, discusses the impact of the past few years, reflects on a decade of Lean Six Sigma at Pepsi, and reveals why he’ll be focusing on reigniting the Lean Six Sigma program at the global beverage maker in the year ahead.
Diana Davis, IX Network: What does your operational excellence program look like at Pepsi?
Les Cyfko, Pepsi Co: The continuous improvement program at Pepsi is really based on two planks. The first is Lean Six Sigma, which is end-to-end across the business.
With our Lean Six Sigma program we’re looking to reduce the seven forms of waste, which we call TIMWOOD. That stands for Transportation, Inventory, Motion, Waiting, Overproduction, Overprocessing and Defects.
These wastes are the target of Lean; we generally apply Six Sigma to Design of Experiments such as finding the right centerlines or to more complex business supply chain related business problems.
The second plan for our continuous improvement program is TPM – Total Productive Maintenance. This is geared for our manufacturing facilities to reduce downtime, increase uptime and ensure the long-term viability of our equipment.
Much of our equipment costs millions to replace; it’s also very disruptive if we have to take an asset offline. If we can extend the lifetime of our machines and assets, that helps ensure an uninterrupted supply chain.
Diana Davis, IX Network: How are you structured? Do you have a centralized team that runs the operational excellence program or is it embedded within the business units themselves?
Les Cyfko, Pepsi Co: There's not a simple answer to that. We have a sector team, which is run out of the USA. The sector team oversees our Lean Six Sigma and Total Productive Maintenance programs across Pepsi Beverages North America.
That said, within each division, we can apply Lean Six Sigma and TPM in terms of what works best for our local business.
Diana Davis, IX Network: What role do you see a continuous improvement mindset and traditional process improvement tools like Lean and Six Sigma playing to help companies respond to the disruption we’ve seen in the past few years?
Les Cyfko, Pepsi Co: I think they’ve played a very important role.
First, we had a pandemic which gave employees an opportunity to work remotely and, in many cases, to rethink their life. As a result, people have been examining their relationship with work, which has resulted in what some are calling the “great resignation,” which has impacted all businesses.
The second disruption is inflation. Without a doubt, commodities are increasing in price rapidly. It’s an unprecedented pace of inflation.
The third disruption is that global tensions have increased to a level that we haven’t seen in decades. The war in Ukraine has divided up what was a global economy into something potentially different where we may see separate economies emerging in different geopolitical regions.
These disruptions hit home to companies like PepsiCo because we are a global company. Like all companies, we are feeling some of the impact of employee turnover.
One of the first principles of a continuous improvement is standardization but it's challenging to standardize when your teams are experiencing increased flow-through. Lean Six Sigma and TPM play a vital role in maintaining standardization in a particularly volatile environment such as this.
Then, let's turn to inflation. For many companies Lean Six Sigma and TPM are applied to offset inflationary pressures. If inflation is increasing at two or three percent per year, normally companies look to harvest a 3-5% annual productivity improvement.
This is the case in the automotive industry, for instance. Often, it’s written into contracts that price must reduce - or at least not increase - within the automotive supply chain year over year. Your margins, therefore, are only grown through continuous improvement efforts - by lowering your costs to offset the inflationary pressures.
But because inflation so high now – it’s well beyond 5% - how else does one get the productivity that's required to maintain margins? That’s where continuous improvement comes in and it’s becoming much more important through that lens.
Finally, global tensions have made a significant impact on the supply chain. As a result, even if sourcing of raw ingredients and materials doesn't change, which in some cases it has to, the means of transportation might change because certain routes may no longer be friendly or feasible. The result is an inevitable increase in the cost of transportation and logistics as well as in lead times.
Lean Six Sigma, by virtue of simple tools like process mapping, identifying pain points and non-value added activities can help you know what potential solutions are ideal at any given time or in any given situation.
That is of paramount importance to being able to unlock some of the constraints that have emerged in the macroeconomic sphere as well as mitigating some of the potential future risks and headwinds that might come our way.
Diana Davis, IX Network: It sounds like Lean and Six Sigma are good problem solving tools. They give you a way of thinking and approaching problems?
Les Cyfko, PepsiCo: Sometimes people try to rethink Lean Six Sigma or rethink TPM. Many companies relabel these process improvement methodologies with different names or come up with the latest buzzwords for process improvement.
But the fact remains that these methods, much like the scientific method applied to research, are tried and true. One only has to trust and apply the process and tools to see positive and sustainable results. There is no need to re-invent the wheel in this case.
READ: Six Sigma Wanes While Lean Reigns Supreme for OpEx
Diana Davis, IX Network: It’s been a decade since you started building PepsiCo’s Lean Six Sigma program. How has the way that you approach process improvement changed since you started back in 2012?
Les Cyfko, PepsiCo: When I started building and deploying the LSS and TPM programs in 2012, there was a general lack of knowledge about continuous improvement - but there was interest. People were curious and there was a desire for something that could unlock a lot of productivity. The overall business and economic environment was relatively stable.
My main focus at that point was to train a lot of associates in continuous improvement tools and methodologies. I also spent time training managers on how to pick good projects that would drive the most benefit as well as the correct glide path to achieving lean plant operations.
Fast forward to today where there is a decent level of understanding of continuous improvement in the organization, however, there are complexities in the business that did not exist 10 years ago which compete for time and attention.
So today, continuous improvement must be approached with sensitivity to and appreciation for competing priorities in a rapidly changing economic landscape as eluded to earlier.
Diana Davis, IX Network: What have been your big learnings to deal with that challenge?
Les Cyfko, PepsiCo: The big challenge companies are facing today is how to maneuver through an ever-changing landscape. How do you continue to move forward and grow in an environment where the conditions are different from one day to the next?
I have learned that continuous improvement is even more crucial for businesses today than ever before. The reason is that, by definition, LSS and TPM reduce and eliminate variation and waste.
So, in a de-stabilized macro-environment which tends to amplify variation and waste in an organization, the antidote to that, LSS and TPM, increases in value and importance.
In practical terms, I have learned to adjust the application of these tools to fit the circumstances faced by different workstreams and departments.
Whereas before I was all about having to drive continuous improvement in top gear…the faster the better; now I realize that sometime the fastest way forward is to shift down to “first gear” until it makes sense to throttle back up to top speed.
A more flexible approach provides the latitude and agility necessary for teams to balance short-term and long-term considerations.
READ: Interview with Pepsi: Driving Culture Change through Continuous Improvement
Diana Davis, IX Network: We spoke a bit about all the new names and rebranding that process improvement tends to go by. The word ‘transformation’ is bandied about a lot now. Do you think there's something new going on or is this just a new way of packaging something companies have always done?
Les Cyfko, PepsiCo: I think that's a very interesting question. I'm not going to pretend I have all the answers but from my experience I would say that without a doubt there is a tendency out there to rebrand continuous improvement.
Of course, continuous improvement is always evolving…not so much around the actual tools and techniques but more in terms of maximizing the speed to solving business problems.
Businesses are growing less patient with the time it takes to correct issues and eliminate pain points. Hence, techniques such as Rapid Kaizen Events and Agile scrum teams have come to the forefront of late…as has an elevated interest in big data as well as Factory 4.0 technologies.
Diana Davis, IX Network: What's your focus at Pepsi in the year ahead?
Les Cyfko, PepsiCo: In the year ahead, it will be crucial to double down on leveraging continuous improvement to drive down waste and to reduce variation in the business. To that end, ramping up training and accelerating best practice sharing will be imperative.
Interested in Learning More about this Topic?
Hear from Les Cyfko and over 30 other world class transformation thought leaders at the Pan Pacific Hotel in Toronto October 17-20, 2022 at Operational Excellence Week Canada 2022.
Exciting new opportunities are emerging to accelerate digital transformation, operationalize sustainability, improve supply chain agility and boost productivity - making it easier and quicker than ever for companies to capture this value. Find out how at Operational Excellence Week Canada 2022.
