The Role of Lean Operations on Company Performance Mediated by Six Sigma at the Yogyakarta Regional Public Service Agency (BLUD)

Abstract

Rapid development and intense competition demand that organizations, including those in the public sector, improve service quality and efficiency. Methodologies like Lean Operations and Six Sigma have proven effective in the private sector; however, their application and synergistic effects, particularly in public service entities like Regional Public Service Agencies (BLUD), remain underexplored. Purpose: This study aims to analyze the effect of Lean Operations on the corporate performance of the Yogyakarta BLUD, with Six Sigma tested as a mediating variable. Methodology: This quantitative study employs a survey method, collecting data via a Likert-scale questionnaire from 89 respondents within the Yogyakarta BLUD. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to test the direct and mediating effect hypotheses. Results: The findings confirm that Lean Operations has a significant positive effect on corporate performance. Furthermore, Six Sigma not only has a direct positive effect on performance but also significantly mediates the relationship between Lean Operations and corporate performance, indicating that Six Sigma's data-driven methodology is a crucial mechanism for translating Lean's efficiency gains into sustained performance improvements. The model demonstrates strong predictive power, explaining 70% of the variance in corporate performance. Contribution: This research makes both theoretical and practical contributions by validating the integrated role of Lean and Six Sigma in a public sector context, providing BLUD management with a strategic roadmap for enhancing performance by first establishing Lean principles and then leveraging Six Sigma for controlled, high-quality outcomes.