Advanced Performance Management · Performance improvement models and techniques

Lean, Six Sigma and Total Quality Management for APM

Updated 11 October 2026 · Fact-checked

Lean removes waste from a process. Six Sigma cuts defects and variation using DMAIC: Define, Measure, Analyse, Improve, Control. TQM builds a quality culture where every employee owns quality. To solve an APM question, identify the problem, pick the right approach, apply it to the scenario, then discuss benefits and limits.

Understand Lean, Six Sigma and Total Quality Management

All three approaches aim to improve performance by doing things better, not just cutting cost. They differ in what they attack and how.

Lean focuses on waste. Waste is any activity that uses resources but adds no value the customer will pay for. Lean thinking starts by defining value from the customer's view. You then map the value stream, make work flow without delays, let customer demand pull work through (rather than pushing output), and keep improving. The classic wastes are overproduction, waiting, transport, over-processing, excess inventory, unnecessary movement, defects and unused staff talent. Lean works in services too. Waiting time, duplicate data entry, rework and unnecessary approvals are all waste.

Six Sigma focuses on defects and variation. It is data-driven. The aim is a process that produces almost no output outside customer requirements. A sigma level shows how many standard deviations fit between the process mean and the nearest specification limit. A higher sigma level means fewer defects. The standard improvement method is DMAIC:

Define: the problem, customer requirements and project scope.
Measure: current performance with reliable data.
Analyse: find root causes of defects, not symptoms.
Improve: design and test solutions that remove the causes.
Control: put in standards, monitoring and training so the gains last.

Total Quality Management (TQM) is a philosophy, not a single tool. Quality is the responsibility of everyone, from the board to the front line. It stresses getting it right first time, zero defects as a goal, continuous improvement (kaizen), customer focus (including internal customers and suppliers), and prevention rather than inspection. Costs of quality are often split into prevention, appraisal, internal failure and external failure costs. TQM expects spending on prevention to reduce failure costs.

The approaches combine well. Lean speeds up and simplifies the process. Six Sigma makes it consistent. TQM provides the culture that keeps both going. In the exam you must also judge fit. Lean and Six Sigma need good data, management commitment and training. TQM can fail if it is treated as a slogan, if staff are not empowered, or if rewards still push for short-term output.

Key rules to remember

Lean: five principles: Specify value → Map value stream → Create flow → Establish pull → Pursue perfection; Use as a checklist when asked how to apply lean to a process or service.
Six Sigma: DMAIC: Define → Measure → Analyse → Improve → Control; Use for improving an existing process. Always name the stage and link it to the scenario.
Defects per million opportunities: DPMO = (number of defects ÷ (units × opportunities per unit)) × 1,000,000; Measures process quality. Six Sigma performance is commonly quoted as 3.4 DPMO, which allows for a long-term 1.5 sigma shift in the process mean.
Costs of quality: Total cost of quality = prevention + appraisal + internal failure + external failure; TQM aims to raise prevention spend to reduce failure costs. Do not treat appraisal spend as a substitute for prevention.
Process cycle efficiency: Value-adding time ÷ total lead time; A common lean measure. A low result shows much of the time is waiting or other waste.

How to solve Lean, Six Sigma and Total Quality Management questions

Use this method for any lean, Six Sigma or TQM question. It keeps your answer tied to the scenario, which is where the marks are.

1Read the requirement and note the verb: explain, evaluate, recommend, or calculate.
2Diagnose the problem in the scenario. Is it waste and delay (lean), defects and variation (Six Sigma), or weak quality culture (TQM)?
3Name the approach and give a one-line definition in your own words.
4Apply it with scenario facts. For lean, identify specific wastes. For Six Sigma, walk through DMAIC for this process. For TQM, cover culture, prevention and customer focus.
5Suggest measures to track progress, such as defect rate, lead time, cost of quality or customer complaints.
6Evaluate: benefits, costs, data needs, staff resistance, and whether the approach suits this business.
7Finish with a clear recommendation and any implementation risk. Write in the requested format to earn professional skills marks.

Quickest way: Waste, defects, culture: a 3-question diagnosis

When to use it: Use when time is short and you need a structure for a 10 to 15 minute written answer.

Ask: where is time or effort wasted? Name two or three wastes from the scenario. This is lean.
Ask: where are errors or inconsistency? Propose DMAIC with one action per stage. This is Six Sigma.
Ask: who owns quality? Suggest empowerment, training, prevention and customer focus. This is TQM.
Add one limitation: cost, data, culture or short-term pressure.
Close with one recommendation and one measure.

Common mistakes in Lean, Six Sigma and Total Quality Management

Treating lean and Six Sigma as the same thing.
Both are called process improvement and are often combined.
Fix: State the difference: lean removes waste and delay; Six Sigma reduces defects and variation. Then say how they complement each other.
Listing DMAIC stages without applying them.
Students memorise the acronym and stop.
Fix: Give one specific action per stage using scenario facts, such as what to measure and which root causes to test.
Describing lean only for manufacturing.
Textbook examples use factories and inventory.
Fix: In services, look for waiting, rework, repeated data entry, extra approvals and handoffs. Customer waiting time is a lean waste.
Saying TQM is just inspection or a quality department.
Confusing quality control with quality management.
Fix: Stress that TQM is company-wide, prevention-led, and driven by culture, empowerment and customer focus.
Giving only benefits and no limitations.
These approaches sound obviously good.
Fix: Add costs of training, need for reliable data, resistance to change, risk of over-cutting, and the need for sustained management commitment.
Ignoring measures and the link to strategy.
Focus stays on the technique rather than the business goal.
Fix: Tie the approach to a strategic aim such as customer satisfaction or cost leadership, and name KPIs to track results.

Worked examples

Example 1

A bank takes an average of 12 working days to approve a small business loan. Customers complain, and about 18% of applications are returned because of missing or incorrect information. Briefly explain how lean thinking and Six Sigma DMAIC could improve the process. (10 marks)

Show the solution

Diagnose: the delay points to waste (lean). The 18% returned applications point to defects (Six Sigma).
Lean: define value as a fast, correct decision for the customer. Map the value stream from application to payout and identify waiting between teams, duplicate data entry and extra approvals for small loans.
Lean: create flow by removing handoffs and approval steps that add no value. Let demand pull work, for example by assigning each application to one case handler.
Six Sigma Define: the problem is applications returned in 18% of cases, which causes delay. The requirement is a correct application at first submission.
Six Sigma Measure: record the reasons for returns and the time at each step.
Six Sigma Analyse: find root causes, such as an unclear form or staff not checking documents at intake.
Six Sigma Improve: redesign the form, add an online checklist that blocks incomplete submissions, and train staff.
Six Sigma Control: track the return rate and cycle time monthly, and standardise the new process.
Evaluate: the approaches support each other because fewer defects mean less rework and shorter lead time. Risks include staff resistance and the need for good data. Recommend a pilot at one branch first.

Answer: Use lean to remove waiting, duplication and unnecessary approvals so loans flow faster. Use DMAIC to cut the 18% error rate by finding root causes and controlling the fix. Together they shorten lead time and improve customer satisfaction. Pilot first and track return rate and approval time.

Example 2

A factory makes 50,000 units a month. Each unit has 4 opportunities for a defect. In one month 600 defects are found. Calculate the DPMO and comment briefly. (5 marks)

Show the solution

Total opportunities = 50,000 × 4 = 200,000.
Defect rate per opportunity = 600 ÷ 200,000 = 0.003.
DPMO = 0.003 × 1,000,000 = 3,000.
Compare with the Six Sigma benchmark of 3.4 DPMO: 3,000 is about 880 times higher, since 3,000 ÷ 3.4 ≈ 882.
Comment: the process is far from Six Sigma level. DMAIC would help to find root causes and reduce variation. Cost of quality data would show whether the saving justifies the effort.

Answer: DPMO = 3,000. This is far above the 3.4 Six Sigma benchmark, so there is a large opportunity to cut defects using DMAIC and to reduce failure costs.

Exam tips

Always link the approach to scenario facts. A generic definition earns few marks. Name the specific wastes, defects or cultural issues you can see.
Use DMAIC as your structure for Six Sigma answers, with one scenario-based action at each stage.
Show professional skills by giving a balanced view: benefits, costs, risks and a clear recommendation.
For services, translate manufacturing ideas. Inventory becomes queues or backlogs of work. Defects become errors, rework or complaints.
If a calculation appears, such as DPMO or cost of quality, show workings and then add a sentence of comment.

Practice questions from Performance improvement models and techniques

Lean, Six Sigma and Total Quality Management: frequently asked questions

What is the difference between lean and Six Sigma?

Lean aims to remove waste and delay so work flows smoothly to the customer. Six Sigma aims to reduce defects and variation using data and DMAIC. They are often combined because a fast process also needs to be consistent.

What does DMAIC stand for in Six Sigma?

DMAIC stands for Define, Measure, Analyse, Improve and Control. It is a structured method for improving an existing process. In the exam, apply each stage to the scenario rather than just listing them.

Can lean be used in service organisations?

Yes. Services have waste such as waiting time, repeated data entry, rework, handoffs and unnecessary approvals. Map the customer journey, remove steps that add no value, and measure lead time and error rates.

How is TQM different from Six Sigma?

TQM is a company-wide philosophy built on culture, customer focus, prevention and continuous improvement. Six Sigma is a more technical, project-based method that uses statistics to cut defects. Six Sigma can be one of the tools within a TQM approach.