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Marian Pace, procurement manager for Punta Gorda, Fla., sees the city's embrace of "Six Sigma" and "Lean" business principles as a way to use new tools to continue the city's long-time quest for excellence. "We do this all the time, connecting with customers and improving operations," said Pace. Implementation of new, sophisticated quality management tools has proven "really valuable" for the city, she adds.

"Six Sigma" is a business improvement methodology that uses vigorous processes to systematically eliminate defects and inefficiencies. Originated by Motorola in the 1980s, the system initially focused on manufacturing processes, but it has also become popular in both corporate and small businesses. Along with its cousin "Lean," it has now moved into governments such as Punta Gorda.

"Lean" principles were an outgrowth of manufacturing approaches used in Japan, specifically the Toyota Production System. While Six Sigma focuses on quality and statistical control, Lean emphasizes process flow, waste and time.

The City Manager in Punta Gorda hired a business management consultant to train city employees on the use of Lean and Six Sigma principles. In the procurement area, application of the principles centered on the p-card program and on "over processing" of payment transactions.

From training to implementation

The term "Six Sigma" coined by Motorola is from a statistical concept describing how a process performs. The term sigma is a Greek letter used to refer to standard deviation, a measure of dispersion in data. Six Sigma is commonly described as a reduction in the variation in a process so that there are no more than 3.4 defects per million opportunities.

The phases of Six Sigma are known as DMAIC - Define, Measure, Analyze, Improve and Control. Punta Gorda employees were challenged to brainstorm ways to increase revenues for the city and to improve efficiencies and processes by reducing costs, waste and non-value added activities. When such an idea for improvement is put through the Six Sigma process, teams are formed and a plan is developed. Team members create a Charter Statement to identify and define the problem and the anticipated goal. Next, the team members gather information about the problem, flowchart processes, compile and analyze the data, then present suggestions for improvement. After improvements are deployed, the team creates new process maps to depict the new procedures and, on a scheduled basis, audit the project to make sure the new procedures are working properly.

The Six Sigma training covered Failure Modes Effect Analysis (FMEA) whereby each member of the group selects either a process or piece of equipment, identifies possible failures, causes of each failure, the impact of the failure, and how frequently the process/equipment should be monitored to prevent failures. The purpose of this exercise is to help a team quickly identify as well as prevent future failures in a system or process. In the next two weeks, project teams comprising mostly of city employees began meeting to work on the approved projects.

The fire department had one of the projects, looking at ways to reduce nonessential calls for service on 911 calls. Marian Pace in the procurement department led the other project, evaluating the city's payable process and the possible use of procurement cards to improve it.

"Lean production" first referred to the Toyota Production System and arose out of a Massachusetts Institute of Technology (MIT) five-year study on the future of the automobile and the differences in Western and Japanese automobile production. Despite the heavy manufacturing emphasis, Punta Gorda found that Lean is relevant to governments and internal service functions. Although profit and revenue are not cornerstones for evaluating governments' organizational performance, time often is an important driver in terms of customer and stakeholder satisfaction. The rigorous way in which value, waste and time are treated in Lean concepts provides a good roadmap for service organizations.

Define the problem

The assembled procurement team defined the problem in writing: "The current process for ordering and payment for goods and services is not efficient or cost-effective with the advancement of technology and current procurement best practices. Program transactions in FY09/10 amounted to 7,200-plus transactions and $4.5 million that may have qualified for the p-card/ePayable program."

Next, the team worked to define the project scope. Payments considered in-scope of the project were purchases under $25,000 and direct journal payments (those not requiring issuance of purchase orders, which are processed directly by Finance). Larger purchases, purchases identified by formal solicitation and construction were considered out-of-scope because of their complexity.