Application of Six Sigma in Supply Chain Management
Abstract: This paper hypothesises that, whilst Six Sigma as a change and improvement strategy is delivering significant business benefit to practitioner organisations, it has not been successfully adapted to deliver similar benefits across supply chains. It demonstrates by reference to the literature that most published applications of Six Sigma in supply chains are related to the application of traditional internal Six Sigma methodologies to the internal processes of a supplier to the “Six Sigma Organisation”. In this paper, the issues particular to an application of Six Sigma in a broader supply chain context are discussed, with reference to specific supply chain issues. It is concluded that Six Sigma does have something novel to offer organisations over and above the contribution of existing approaches to supply chain improvement, and a conceptual model is proposed that is consistent with the literature and has potential to support such an introduction. Although rooted in the supply chain realm, SCOR adherents see a role for the methodology as the gatekeeper – identifying the projects most likely to render ROI using SCOR, Lean or Six Sigma. There is already a natural link between Lean and Six Sigma at the program and project execution level. The model integrates the Balanced Scorecard, SCOR model (Supply Chain Reference model) and Six Sigma DMAIC (define, measure, analyse and improve) methodology in a two-level framework. This is a strategic-level cycle, developing focused projects to generate maximum business benefit, and an operational-level cycle, applying Six Sigma and lean tools in a DMAIC cycle to deliver supply chain improvements. Cautions and requirements for the success in practice of such a model are discussed and it is concluded that the model should be tested in practice to validate and develop further the methodology.
Keywords: Six Sigma; Supply chain improvement; Lean; SCOR model; Variability reduction
1.0 INTRODUCTION
1.1 General Introduction
Six Sigma Process Improvement is a rigorous approach to improving business processes by addressing the underlying causes of variation that lead to poor performance as experienced by the ‘customer’, who is the recipient of the outputs. The early exponents were Motorola and GE in the 1980s. Since then, many organisations ranging from manufacturing to service in all sectors, have successfully deployed Six Sigma to deliver measurable cost, quality and time based improvements.
2.0 LEAN - SIX SIGMA
In the past, Lean and Six Sigma have at times been viewed almost as rival methodologies, with some companies choosing one or the other as their primary improvement vehicle.
The procedure of Lean Manufacturing has been the principle concerns and issues of numerous manufacturing companies all through the world. Numerous procedures paving the way to lean manufacturing have affected this significantly, for example, Interchangeable parts, Just in Time Production, the Ford Assembly line, and the Toyota Production Systems.
Business improvement techniques such as Six Sigma, Lean Management, Theory of Constraints (TOC) and Continuous Process Improvement (CPI) are successful and accepted worldwide. Many successful firms, for instance Toyota uses production planning techniques to achieve world class quality output. AGI in this paper illustrates the before and after stages by implementing various business improvement techniques to achieve the desired output. Also, high end business such as, U.S Navy implements the integrated blend of TOC, Lean and Six Sigma approach- “AIR” to eliminate the problems arising from uncertainty and inefficiency. Furthermore adding speed and direction to their project. On the other hand, Youngman demonstrates the production planning using
There are many people that benefit from Lean Six Sigma which include mainly customers, suppliers, employees, and also stockholders. Lean Six Sigma is a way for businesses to improve, to reduce waste and to become more successful. In the future, more and more organizations will adopt or practice some of the Lean, Six Sigma, or both in order to stay competitive in today’s market. In some cases, blending both Lean and Six Sigma can be costly and difficult; however the end result can create an organization that focuses on quality, accuracy, and speed to meet the goal which is profitability.
1) Six Sigma should not be viewed as a quality program that is commissioned to reduce defects but as a methodology that helps companies better meet the needs of their business. KM shares this goal.
These methods provide a logical solution to the various problems and help in enhancing the quality and efficiency of products and processes [7]. The critical power of Lean Six Sigma is its focus on finding the variables impacting the majority of variations in process {3]. Thus Lean Six Sigma methodology together helps in achieving project goals and the targets
As you can see from the figure the lean six sigma is customer driven, targets variation, focuses
Barnard, W., De Feo, J. (2004). Juran Institute’s Six Sigma Breakthrough and Beyond. New York, NY: The McGraw-Hill Companies
The Six Sigma process, developed by Motorola focuses on saving time, lower costs by improving quality, identifying the causes of defects and removing the causes of defects, and minimizing variability in manufacturing and business process (Satterlee, 2013). The acronym, DMAIC represents the Six Sigma improvement model. The steps in the DMAIC process are to define the purpose, scope and output and then define quality; measure the process and collect data; analyze the data ensuring reliability; to improve by modifying existing process or procedures; and controlling the new processes to ensure increased performance levels are maintained (Satterlee, 2013). The foundation of the Six Sigma processes is to eliminate waste and improve
The article, “Where Process-Improvement Projects Go Wrong,” by Satya L. Chakrvorty, WSJ.com, January 25, 2010 (http://online.wsj.com/news/articles/SB1000), offers a great example of how and why many Six Sigma and other process improvement projects fail. He examines what happened at an aerospace company that initiated a number of process improvement projects, half of which ultimately failed.
Six Sigma is a system used both in manufacturing and service organizations to maximize business success by minimizing defects and process variability (Krajewski, 2013). While Six Sigma relies heavily on the principles of Total Quality Management (TQM), it has a different focus. It is driven by a close understanding of customer needs; the disciplined use of facts, data and statistical analysis, and diligent attention to managing, improving and reinventing business processes. Six Sigma focuses on reducing variation in processes as well as centering processes on their target measures of performance. Either flaw, too much variation or an off-target process, degrades performance of the process. Six Sigma is a rigorous approach to align processes with their target performance measures with low variability.
Sitnikov, C. (2012). Six sigma as a strategic tool for companies. Young Economists Journal / Revista Tinerilor Economisti, 94-102.
The methodology of Lean Six Sigma is the merger of two business tools that includes Lean Manufacturing and Six Sigma. Six Sigma focuses on improving current business processes and performance while Lean Manufacturing focuses on the improvement of the processes of an organization by using highly skilled employees to increase speed and quality. Combining the two methodologies creates an organization that focuses on quality, efficiency and speed to lower operational costs and increase profits. By following the Lean Six Sigma methodology, many companies have attempted to create a lean, waste-free environment ultimately at the expense of the employee and occasionally at the expense of the organization.
The Six Sigma approach was designed by Motorola in 1986. The primary objective of the concept was to develop a tool for tallying the process defects and, as the result, improving business operations. The foundations of the approach are the customer needs, statistical analysis of data and facts, and timely execution. The method promises numerous benefits such as increasing performance and profitability of an organization, improving product or service quality and employee morale, decreasing costs, the growth of market share, the higher level of satisfying customer needs, etc. (Meredith & Shafer, 2013). The primary advantage
Even though I have no real experience in software development I know that dealing with software is not easy and can be very frustrating. Six sigma incorporates many tools that help organizations determine their customer requirements. Before reading this article I thought six sigma was just about statistics and improving processes. It is so much more than that. It’s also about managing all given information or data quantitative or not. Six sigma can help with customer requirements and also with understanding processes capability.
In past few years, companies and industries of various sizes have become aware that they need to improve business processes such as product development, order fulfilment, planning, distribution, and customer service. So everybody is now focusing on doing process improvement or redesigning.